2012 (12) TMI 798 - AT - Central Excise

Refund claim for the excise duty - denial of claim - Held that - Purchaser being the defence organisation of Government of India, the question of passing on the excise duty to any other person does not arise and ordnance depot not being a manufacturer of any goods, could not have taken Cenvat Credit - Refund claim of respondent accepted - against Revenue.

Summary

Issues:
1. Whether the respondent is eligible for a refund of excise duty paid in excess.
2. Interpretation of section 11B of the Central Excise Act, 1944 regarding the passing on of duty liability.
3. Application of Cenvat Credit rules to the purchase of tyres by a government defense organization.

Analysis:
1. The respondent supplied tyres to a government entity at a higher rate than specified in the purchase order, resulting in an excess payment of excise duty. The respondent issued a Credit Note for the differential amount and claimed a refund of the excess excise duty paid. The first appellate authority accepted the refund claim, emphasizing that the duty was not passed on to any other person. The revenue appealed this decision.

2. The Revenue argued that the issuance of a Credit Note and payment of excise duty did not automatically warrant a refund. They highlighted that under section 11B of the Central Excise Act, 1944, a claimant must demonstrate that the duty liability was not passed on to "any other person," not just the immediate purchaser. Citing a Tribunal decision and subsequent Supreme Court validation, the Revenue contended that the refund claim should not have been allowed based solely on the issuance of a Credit Note.

3. The respondent's counsel supported the decision of the first appellate authority, asserting that the excise duty was not passed on to any other entity as the defense organization was not eligible for Cenvat Credit and did not sell the tyres to a third party. The counsel argued that the Commissioner's decision aligns with the law, given the nature of the purchaser and their inability to take Cenvat Credit, as certified by the Commandant.

4. Upon considering the arguments, the judge concurred with the respondent's counsel, emphasizing that the burden of proving that excise duty was not passed on to any other party, beyond the immediate buyer, lies with the claimant. In this case, as the purchaser was a government defense organization that could not avail Cenvat Credit and did not transfer the duty liability, the refund claim was deemed valid. The judge found the decision in line with statutory provisions and dismissed the Revenue's appeal, upholding the refund granted to the respondent.