2013 (6) TMI 392 - AT - Central Excise

Refund of excess duty paid - unjust enrichment - Held that - It is undisputed that the respondent is not liable to pay 4% SAD on the clearances of the goods to DTA on which VAT/CST is levied. On being pointed out, the respondent informed the purchasers who has reversed the cenvat credit and respondent herein has raised a credit note indicating the reversal of the amount to be received to their respondent purchasers. - It is also undisputed that M/s. Element Chemilink Pvt. Ltd. has not paid an amount of Rs.8,10,578/- to the respondent. - assessee has been able to pass the hurdle of contentions of the department regarding unjust enrichment. It is then, contended by the revenue, that mechanism of issuance of debit note and credit note, if countenanced, it will open flood gates for pilferage of revenue. Firstly, we do not agree with the preposition, that it can open flood gates, in as much as, where false, fictitious or shame Debit note and credit note are issued for adjustment, the revenue can very well lead evidence, or can lead evidence in rebuttal. Simply because the revenue fails, and is not able to rebut evidence, it cannot be assumed, that it will open flood gates for pilferage of the revenue. - Refund to be allowed - Decided in favor of assessee.

Summary

Issues:
1. Refund claim allowed by the first appellate authority but rejected by the adjudicating authority.
2. Question of unjust enrichment regarding the refund claim.
3. Whether the respondent reported unjust enrichment satisfactorily.
4. Settlement of the issue by the Hon'ble High Court of Rajasthan regarding the burden of excise duty.

Analysis:
1. The appeal was filed by the Revenue against the order allowing the refund claim by the first appellate authority, which was initially rejected by the adjudicating authority. The respondent had paid 4% Special Additional Duty (SAD) of Customs despite VAT/CST payment on goods cleared from EOU to DTA. The respondent claimed a refund of the excess paid SAD, which was sanctioned by the Assistant Commissioner. The first appellate authority set aside the impugned order, leading to the appeal.

2. The main contention raised by the Revenue was the question of unjust enrichment. The Revenue argued that the respondent purchaser had taken cenvat credit and reversed the amount but failed to prove whether the effect of this reversal was passed on to the ultimate consumer. The Larger Bench decision of the Tribunal highlighted that subsequent credit notes would not eliminate the bar of unjust enrichment as the duty had already been collected.

3. The issue revolved around whether the respondent adequately addressed the charge of unjust enrichment concerning the refund claim due to an error or mistake. The respondent had informed the purchasers to reverse the cenvat credit and had raised a credit note indicating the reversal of the amount. The respondent had not received the amount from the purchasers, indicating that they had not been unjustly enriched.

4. The judgment referred to a settled law by the Hon'ble High Court of Rajasthan, emphasizing that if the burden of duty had not been passed on or appropriately reversed, the burden would fall on the assessee. The court rejected the notion that issuing debit or credit notes could be a paper transaction for undue benefit, highlighting that the burden of duty should not be presumed to be passed on. The judgment emphasized that the revenue could lead evidence to counter false transactions, and the inability to rebut evidence should not lead to assumptions of revenue pilferage.

In conclusion, the Tribunal upheld the impugned order, stating that it was correct and legal, without any infirmity. The Revenue's appeal was rejected based on the settled law and the findings regarding unjust enrichment in the case.