1997 (5) TMI 153 - AT - Central Excise

Summary

Issues:
1. Refund claim for excess excise duty paid.
2. Interpretation of Rule 56A(3)(vi)(b) regarding refund in cash.
3. Applicability of Section 11B of the Central Excise Act, 1944.
4. Claim for refund of excess duty paid on final product.
5. Admissibility of refund in cash under Rule 56A(3)(vi)(b).
6. Applicability of judgments by High Courts and understanding of department regarding payment of duty.

Analysis:

1. The case involves a refund claim by M/s. Rashtriya Chemicals and Fertilizers Ltd., Mumbai, for excess excise duty paid on fertilizers due to a reduction in duty rates by the Central Government. The claim was for the period from 1-3-1979 to 15-3-1979, amounting to Rs. 22,55,162.66. The Asstt. Commissioner allowed a partial refund, leading to the appeal.

2. The appellant contended that the lower authorities erred in denying cash refund based on Rule 56A(3)(vi)(b). They relied on judgments by the Bombay High Court and Andhra Pradesh High Court, arguing that the rule only prohibits a surplus benefit beyond duty payable on the finished product. The Tribunal's decisions in similar cases were also cited.

3. The Respondent argued that Section 11B of the Central Excise Act, 1944, applies, requiring the appellants to prove they did not pass on the duty burden to buyers. The Larger Bench of the Supreme Court's judgment in Mafatlal Industries v. UOI was cited to support this argument.

4. The Tribunal noted that the refund claim was for excess duty paid on the final product, not credit of duty. Rule 56A(3)(vi)(b) only restricts refund of proforma credit, not excess duty paid on the final product. The judgments by the Bombay High Court and Andhra Pradesh High Court were considered, emphasizing that cash refund is distinct from cash payment.

5. The Tribunal referenced a Trade Notice by the Bangalore Central Excise Collectorate, indicating that payment of duty through proforma credit account RG. 23 Part II is akin to cash payment. The appellants utilized proforma credit for duty payment on the finished product, justifying their claim for cash refund.

6. Considering the above arguments and precedents, the Tribunal held that the lower authority's denial of cash refund under Rule 56A(3)(vi)(b) was not justified. The appellants were entitled to a refund under Section 11B of the Central Excise Act, 1944, for the excess duty paid on the final product. The appeal was disposed of accordingly.