2012 (4) TMI 444 - HC - Central Excise

Refund of duty on finalization of Provisional assessment - Unjust enrichment - held that - the present case is rather old and there are several rounds of litigation. The petitioner had succeeded before the tribunal, who had passed a detailed order dated 27th March, 2002. The respondents thereafter did not adjudicate and passed the consequential orders till 2007. This is in spite of the fact that the petitioner had filed an application on 18th February, 2003 before the respondents to process their claim for refund. There is no explanation for delay of five years. The order dated 20th July, 2007, in fact, makes reference to another refund claim application dated 24th February, 2004. Respondents directed to refund the duty amount along with interest as per rules.

Issues Involved:
1. Classification and excise duty applicability on remoulded chocolates.
2. Refund claims and the burden of proof regarding the passing of duty incidence.
3. Admissibility of refund claims under Section 11B of the Central Excise Act, 1944.
4. Delay in adjudication and processing of refund claims by the authorities.
5. Examination and verification of gate passes and invoices.

Issue-wise Detailed Analysis:

1. Classification and Excise Duty Applicability on Remoulded Chocolates:
The petitioner, Munch Food Products Limited, contended that remoulded chocolates were non-excisable, a stance accepted by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The Tribunal's final order confirmed that no excise duty was payable on remoulded chocolates, which was a significant point in the refund claim.

2. Refund Claims and the Burden of Proof Regarding the Passing of Duty Incidence:
The initial rejection of the refund by the Assistant Collector was based on the assertion that the duty incidence had been passed on to customers, as indicated in gate passes and invoices. The petitioner argued that the prices shown in the invoices did not include the duty incidence, supported by comparison with invoices from periods when no duty was paid. The Commissioner of Customs (Appeals) examined the invoices and gate passes, noting that the duty element was shown as 'NIL' but concluded that prices were inclusive of duty, a finding later deemed incorrect by the Tribunal.

3. Admissibility of Refund Claims Under Section 11B of the Central Excise Act, 1944:
The Deputy Commissioner of Central Excise, in a subsequent order, reiterated that the burden of proving that the duty incidence had not been passed on to customers lay with the petitioner. Citing Section 11B and relevant Supreme Court decisions, the order sanctioned the refund amount but credited it to the Consumer Welfare Fund due to the lack of evidence from the petitioner showing non-passing of duty incidence.

4. Delay in Adjudication and Processing of Refund Claims by the Authorities:
The Tribunal's detailed order in 2002 directed the refund of duty on remoulded chocolates and remanded the matter regarding chocolate confectionery for re-evaluation. Despite this, the refund was not processed, leading to further litigation. The High Court noted the significant delay and lack of action by the authorities, emphasizing the need for timely adjudication and processing of claims.

5. Examination and Verification of Gate Passes and Invoices:
The High Court called for the production of gate passes during the hearing, but the respondents failed to provide them, citing the age of the documents. The Court found the respondents' affidavit, which claimed that duty was charged to customers as per gate passes, to be incorrect. This discrepancy led the Court to accept the petitioner's prayer for a refund.

Conclusion:
The High Court allowed the writ petition, directing the respondents to refund the duty amount along with interest as per rules, to be completed within six weeks. The Court's decision underscored the importance of accurate record-keeping and timely processing of refund claims, as well as the proper burden of proof regarding the passing of duty incidence.

← Previous Next →