2003 (4) TMI 187 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for refund claim by the buyer of excisable goods.
2. Compliance with conditions of Notification No. 78/90.
3. Applicability of Section 11B of the Central Excise Act.
4. Requirement of show cause notice under Section 11A.
5. Interpretation of exemption notifications and procedural compliance.

Issue-wise Detailed Analysis:

1. Eligibility for refund claim by the buyer of excisable goods:
The department contended that only the manufacturer, who paid the duty, is entitled to claim a refund under Section 11B of the Act. The respondent (buyer) argued that post-1991 amendments to the Central Excise Act, specifically proviso to sub-section (2) of Section 11B, allows buyers to claim refunds if they have borne the duty and not passed on the incidence to another person. The Tribunal concluded that the buyer is eligible to claim a refund, as the law does not restrict this right solely to manufacturers.

2. Compliance with conditions of Notification No. 78/90:
The Assistant Collector initially rejected the refund claim, stating that the manufacturer did not fulfill the conditions of Notification No. 78/90, which required a certificate from the Ministry of Environment and Forests. The Collector (Appeals) reversed this decision, noting that the buyer had installed and used the machinery for pollution control and provided the necessary certification. The Tribunal upheld the Collector (Appeals)'s decision, emphasizing that the notification did not specify that only manufacturers could procure the certificate or the timing of its procurement.

3. Applicability of Section 11B of the Central Excise Act:
The department argued that under Section 11B, only the entity that paid the duty (manufacturer) could claim a refund. The respondent countered that the 1991 amendment allowed buyers to claim refunds if they bore the duty and did not pass it on. The Tribunal agreed with the respondent, interpreting the law to include buyers as eligible claimants for refunds, thus upholding the Collector (Appeals)'s decision.

4. Requirement of show cause notice under Section 11A:
The respondent argued that since the Assistant Collector had granted the refund in 1996, any challenge to this should have been preceded by a show cause notice under Section 11A within six months. The Tribunal noted that no such notice was issued, rendering the department's appeal devoid of merit on this procedural ground.

5. Interpretation of exemption notifications and procedural compliance:
The Tribunal examined whether the lack of a classification list by the manufacturer claiming the exemption could invalidate the refund claim. It was noted that procedural lapses by the manufacturer should not preclude the buyer from claiming the exemption if the substantive conditions (intended use for pollution control) were met. The Tribunal emphasized that exemption notifications should be interpreted strictly, but not in a manner that defeats the purpose of the law.

Separate Judgments by the Judges:

Member (Judicial):
The Member (Judicial) dismissed the appeal, holding that the buyer was entitled to claim the refund and that the procedural requirements of Section 11A were not met by the department. The decision emphasized the buyer's right to claim refunds under the amended Section 11B and the fulfillment of substantive conditions of the exemption notification.

Member (Technical):
The Member (Technical) allowed the department's appeal, arguing that the manufacturer, not the buyer, should claim the exemption. The decision focused on the procedural compliance required by the manufacturer at the time of clearance and the strict interpretation of exemption notifications.

Third Member (Technical):
The Third Member (Technical) agreed with the Member (Judicial), noting that the appeal should be dismissed due to the lack of a show cause notice under Section 11A and the eligibility of the buyer to claim the refund under Section 11B. The decision highlighted the legislative intent behind the 1991 amendments to include buyers as eligible claimants for refunds.

Final Order:
In view of the majority opinion, the appeal from the Revenue does not succeed and is dismissed. The Tribunal upheld the buyer's right to claim the refund and confirmed the Collector (Appeals)'s decision.