2014 (5) TMI 166 - AT - Central Excise

Denial of refund claim - area based exemption - Whether or not the education cess and S&H Education Cess paid by the assessee in cash through PLA account would be refundable under Notification No. 56/2002-CE - Held that - in this appeal, we are only concerned with the legality of rejection of refund order within the parameters of Notification No. 56/2002 CE. If at all, there is any force in the contention of the appellant, that the collection of education cess and S&H cess is without the authority of law, the appellant could apply for refund of erroneously paid excise duty under Section 11B of the Central Excise Act, 1944. Otherwise also, admittedly the excise duty as well as education cess and S&H Education Cess paid by the appellant at the time of removal of excisable goods from his unit has been passed on the customers, therefore, any refund of the excise duty or education cess given to the appellant would amount to unjust enrichment, which is not permissible, in view of Section 11B of the Central Excise Act which provides that refund in term of the provision shall be allowed if the incidence of duty paid erroneously has not been passed on to any other pers on. Thus, viewing from any angle, the claim of the appellant for the refund of Education Cess and S&H Education Cess is not sustainable. Thus, we are of the view that the refund claim in respect of the aforesaid cess in terms of exemption Notification No. 56/2002 CE has been rightly rejected by the authorities and there is no cause for interference with the impugned order - decided against assessee.

Summary

Issues involved:
Refund claim for Central Excise duty, Education Cess, and S&H Education Cess under Notification No. 56/2002-CE.

Analysis:
The appellant, engaged in manufacturing Aluminum Alloy Ingots and Steel Scrap, filed a refund claim for Central Excise duty and education cess paid through PLA. The Jurisdictional Assistant Commissioner sanctioned the refund of excise duty but rejected the claim for education cess and S&H Education Cess. The Commissioner (Appeals) affirmed this decision, leading to the appellant's appeal to the Tribunal.

The main issue in this appeal was whether the education cess and S&H Education Cess paid in cash through the PLA account were refundable under Notification No. 56/2002-CE. The Revenue argued that a previous Tribunal decision favored them on this issue. The appellant did not dispute the correctness of the previous decision but contended that the levy of these cesses in Jammu & Kashmir violated Article 370 of the Constitution, making them refundable.

The Tribunal found the appellant's argument misconceived. The legality of the rejection of the refund order under Notification No. 56/2002-CE was the focus of the appeal. The appellant could seek a refund under Section 11B of the Central Excise Act if the collection of the cesses was without legal authority. However, since the excise duty and cesses had been passed on to customers, any refund would lead to unjust enrichment. Therefore, the claim for refund of Education Cess and S&H Education Cess was deemed unsustainable, and the rejection of the refund claim was upheld. The Tribunal dismissed the appeal accordingly.