2024 (2) TMI 1249 - AT - Central Excise

Principles of unjust enrichment - Refund amount ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant - HELD THAT - The appellant paid the disputed amount as differential duty after the SCN was issued and it was not paid at the time of clearance of the goods nor was an invoice raised for this amount at that time. It is also an admitted fact that the appellant had attempted to recover the differential duty from its customers M/s Bharat Broadband Network Ltd. by issuing a supplementary invoice, but the customer refused to pay it on the ground that central excise duty @ 10.3% was already paid as per the purchase order and the differential duty paid after calculating excise duty at the higher rate of 12.36% was not required to be paid by it. The appellant had borne the burden of the differential duty and had not passed it on to its customer or to anyone. Thus, the appellant s case falls squarely under Clause (e) of the third proviso to section 11B of the Central Excise Act, 19445, i.e., the duty of excise and interest paid on such duty were borne by the appellant manufacturer and it had not passed on the incidence of such duty and interest to any other person. The appellant is entitled to the refund of the amount sanctioned which should be paid to it instead of it being credited to the Consumer Welfare Fund. Needless to say the consequential interest must also be paid as per section 11BB. The refund amount along with interest under section 11BB should be paid to the appellant instead of being credited to the Consumer Welfare Fund - the impugned order is set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the rejection of a refund claim by the Commissioner (Appeals) and the subsequent appeal by the appellant against the order-in-appeal dated 15.06.2021, which upheld the order-in-original dated 22.04.2020 passed by the Assistant Commissioner, Alwar.

Issue 1 - Rejection of Refund Claim:
The appellant, M/s. Paramount Communication Ltd., filed a refund claim of Rs. 43,25,984/- after a previous Tribunal order in their favor. However, a show cause notice was issued proposing to reject the refund claim on grounds of limitation and unjust enrichment. The Adjudicating Authority eventually sanctioned the refund but directed a portion of the amount to be credited to the Consumer Welfare Fund. The appellant contested this decision, arguing that the amount in question was not passed on to the customer and should be refunded to them directly.

Issue 2 - Passing on the Burden of Differential Duty:
The appellant's consultant argued that the differential duty amount was not passed on to the customer, M/s Bharat Broadband Network Ltd., as evidenced by a letter from the customer refusing to pay the additional duty. The appellant had also written off the amount in their books of accounts, further supporting their claim that the burden was not transferred. The Tribunal found that the appellant had indeed borne the burden of the differential duty and had not passed it on to any other party, making them eligible for a refund as per the Central Excise Act, 1944.

Conclusion:
After considering the submissions and perusing the records, the Tribunal ruled in favor of the appellant. It was established that the appellant had not passed on the burden of the duty to the customer and was entitled to the refund amount. The impugned order was set aside, and the refund amount along with interest was directed to be paid to the appellant instead of being credited to the Consumer Welfare Fund, in accordance with section 11BB of the Central Excise Act, 1944.