2023 (12) TMI 564 - AT - Central Excise

Refund of the excess duty paid - principles of unjust enrichment - issuance of credit note by the appellant at a later date to the customer - post-clearance activity or not - section 11B of CEA - HELD THAT - The question arises whether the incidence of duty which has been passed on to customers can be neutralized by the assessee issuing a credit note so as not to attract the bar of unjust enrichment - the issue has been examined and decided by a Coordinate Bench of this Tribunal in its decision pertaining to COMMISSIONER OF CENTRAL EXCISE, RAIPUR VERSUS IBP LTD. 2013 (10) TMI 263 - CESTAT NEW DELHI . In the instant case goods were cleared to M/s. Kalpataru Power Transmission Ltd. without payment of duty availing the benefit under Notification No. 108/95-CE dated 28.8.1995. They had paid excise duty to the tune of Rs.6,08,053/- during November 2010 on five consignments made in respect of the additional quantities, due to delayed receipt of amendment certificate. Having subsequently received the certificate which entitles them to duty exemption they have raised a credit note on their customers and sought a refund. In the circumstances it becomes the duty of the Department to facilitate such an assessee caught in difficult circumstances and not to put him to financial hardship especially when he has shown proof of having neutralized the passing of the tax burden. Trade facilitation makes true meaning in sensitive handling of such instances. Only if the Department had evidence to show that in spite of the credit note issued to their customer, the appellant in some other way had unjustly enriched himself in this matter, should the refund have been denied. Otherwise, the provisions of Section 11B (2) (d) of the Central Excise Act stand satisfied. The impugned order is hence set aside - Appeal allowed.

Summary

Issues involved:
The appeal against the Order in Appeal dated 10.2.2014 passed by the Commissioner of Central Excise (Appeals), Chennai.

Details of the Judgment:

Issue 1: Refund claim due to payment of excise duty
The appellant, a manufacturer of Transmission Line Hardware, cleared goods without payment of duty under Notification No. 108/95-CE dated 28.8.1995. Subsequently, they paid excise duty of Rs.6,08,053/- on additional quantities due to a delayed amended certificate. The appellant filed a refund claim in June 2011, which was rejected by the original authority and the Commissioner (Appeals). The appellant argued that they issued a credit note to the customer, neutralizing the duty incidence, making them eligible for a refund under Section 11B(2)(d) of the Central Excise Act.

Issue 2: Unjust enrichment and relevance of credit note
The Revenue contended that the duty incidence had been passed on to the customer, making the credit note issued by the appellant irrelevant for refund sanction under Section 11B. The appellant cited precedents where the burden of proof shifts to the department once credit notes are issued to neutralize the duty incidence. The Tribunal referred to a judgment affirming the rebuttable presumption that the duty incidence passed on can be neutralized by issuing credit notes, shifting the burden of proof to the Revenue.

Conclusion:
The Tribunal found that the appellant had neutralized the passing of the tax burden by issuing credit notes to the customer and seeking a refund after delayed receipt of the amendment certificate. Emphasizing trade facilitation and sensitive handling of such instances, the Tribunal set aside the impugned order and allowed the appeal based on the legal position established in previous judgments. The judicial discipline required concurrence with the ratio of the Coordinate Bench's judgment in IBP Ltd., thereby granting the refund to the appellant.

*(Pronounced in open court on 13.12.2023)*