2006 (2) TMI 183 - HC - Central Excise

Summary

Issues:
1. Whether duty paid at the time of clearance of goods and collected from customers can be refunded if post clearance transaction is made through credit notes?

Analysis:
The appeal before the High Court was made by the Revenue under Section 35(G) of the Central Excise Act, 1944, challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal. The respondent-assessee had applied for a refund claim on the grounds of passing discounts to buyers through credit notes. The adjudicating authority agreed with the assessee but directed the refund to be credited to the Consumer Welfare Fund as per Section 11-B of the Act. The Commissioner (Appeals) allowed the appeal, noting that the duty claimed for refund was borne by the assessee and not passed on to customers. The Commissioner relied on a previous Tribunal decision. The Revenue appealed to the Tribunal, which dismissed the appeal, leading to the current appeal before the High Court.

The Revenue contended that the Tribunal and the Commissioner erred in relying on previous decisions, arguing that the issues in those cases were different. The assessee's counsel argued that the Tribunal's finding that the duty incidence was not passed on to customers was a factual finding, not raising any legal question. The High Court found merit in the assessee's argument, stating that the core issue was whether the adjudicating authority was correct in directing the refund amount to be credited to the Consumer Welfare Fund based on the doctrine of unjust enrichment. Both lower appellate authorities had found that the duty incidence was not passed on to customers, a factual finding not challenged. Consequently, the High Court declined to entertain the appeal and dismissed it.

In conclusion, the High Court upheld the lower authorities' decisions, emphasizing that the finding regarding the duty not being passed on to customers was a factual matter and not a legal question. The appeal was dismissed, affirming that the refund amount due to the assessee should not be credited to the Consumer Welfare Fund based on the doctrine of unjust enrichment.