2009 (12) TMI 529 - HC - Central Excise

Refund - Burden of proving the duty of incidence has not been passed on to its customers - assessee has sold its products under loss which was evidenced from the Chartered Accountant s certificate and thus incidence of duty has not been passed on to its customere - certificate covers only one model of the vehicle and it cannot be taken as base for presuming that the cenvat credit on input is not included in the cost of other products or that all other products have suffered losses - Cost Analysis Certificate is sufficient to demonstrate that it is borne by the respondent itself and it has not been passed on to the customers and it would be a laborious process to produce 40,000 to 50,000 invoices raised on customers to demonstrate the name and this fact may be taken note off in view of the fact that more than 10 years have lapsed Held that - certificate produced before the adjudicating authority and the certificate now produced by the respondent s counsel before this Court is different and certificate which has now been pressed into service was admittedly not available before the adjudicating authority for being considered - also such other material may be produced by the respondent to demonstrate that the incidence of duty has not been passed on to the customers for considering the refund claim of the respondent. In the event of such materials being placed before the adjudicating authority, the same shall be considered in accordance with the provisions governing refund claim and in accordance with law.

Issues Involved:
- Whether the CESTAT is legally justified in concluding that the respondent has not passed on the burden of duty to the buyers, despite Section 12B of the Central Excise Act, 1944, and in the absence of sufficient evidence to rebut the presumption under the said section.
- Whether it is permissible for the CESTAT to ignore the effect of Section 12B of the Central Excise Act, 1944.

Detailed Analysis:

Issue 1: Justification of CESTAT's Conclusion on Duty Burden
The primary issue was whether the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) was justified in concluding that the respondent had not passed on the burden of duty to the buyers, despite the presumption under Section 12B of the Central Excise Act, 1944. The respondent, a manufacturer of excisable goods, claimed a refund of Rs. 60,77,117/- for the special duty paid on inputs, arguing that they had not passed on the duty burden to the buyers.

The Deputy Commissioner rejected the refund claim due to non-submission of an end-use certificate and lack of evidence proving that the duty incidence was not passed on. The Commissioner (Appeals) upheld this decision, citing the respondent's failure to demonstrate that the duty burden was not transferred to buyers. The Tribunal, however, accepted the respondent's contention based on a Cost Analysis Certificate from a Chartered Accountant, which indicated that the respondent sold its products at a loss, thus bearing the duty burden themselves.

The appellant argued that the burden of proof was on the respondent to show that the duty was not passed on to the customers, which was not adequately discharged. The Tribunal's reliance on the Cost Analysis Certificate for one vehicle model was insufficient to generalize for all products. The High Court agreed with this argument, stating that the Cost Analysis Certificate alone was not enough to prove that the duty incidence was not passed on to buyers.

Issue 2: Ignoring Section 12B of the Central Excise Act
The second issue was whether the CESTAT could ignore the effect of Section 12B, which presumes that the duty incidence has been passed on to the buyer unless proven otherwise. The High Court emphasized that Section 12B raises a presumption in favor of the revenue, placing the burden of proof on the respondent to show that they bore the duty burden themselves.

The High Court noted that the Cost Analysis Certificate should be corroborated with additional evidence, such as invoices, to demonstrate that the duty was not passed on. The Tribunal's decision to accept the certificate without requiring further evidence was deemed erroneous. The High Court found that the Tribunal failed to provide adequate reasons for accepting the certificate and ignoring the statutory presumption under Section 12B.

Conclusion and Remand
The High Court concluded that the Tribunal erred in its judgment and set aside its decision. The case was remanded to the adjudicating authority to reconsider the refund claim, taking into account the Cost Analysis Certificate dated 17-6-2002 and any other relevant evidence that the respondent may provide to prove that the duty incidence was not passed on to the customers.

The appeal was allowed, and both questions of law were answered in favor of the revenue and against the respondent. The High Court ordered the adjudicating authority to reassess the refund claim in accordance with the provisions governing refund claims and applicable law. No order as to costs was made.

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