2017 (7) TMI 332 - AT - Central Excise

Refund claim - unjust enrichment - Held that - It is not in doubt that the assessee had deposited the duty liability on road delivery charges subsequent to the discharge of duty liability on clearance of the vehicles manufactured by them. It is also not in doubt that the Tribunal had held this levy to be beyond the scope of the provisions of section 4 of Central Excise Act, 1944 with consequential relief in the form of refund - It is also common ground that the respondent had made entries in the books of accounts leading to the inclusion of the disputed amount as receivables in the final accounts pertaining to 2011 and that a Chartered Accountant had certified that the duty burden had not been passed on to customers. The original authority having found that this was not sufficient evidence and the first appellate authority having taken the contrary view that deposit of duty made after clearance was sufficient to establish the incidence of duty having been borne by the assessee, the sole point for determination is the sufficiency of compliance with the requirement to establish that the burden of duty had not been passed on - appeal dismissed - decided against Revenue.

Issues:

1. Appeal against quashing of credit refund by Commissioner of Central Excise.
2. Sufficiency of evidence to establish burden of duty not passed on.
3. Interpretation of accounting treatment regarding duty payments.
4. Compliance with requirement to prove burden of duty not passed on.
5. Application of doctrine of unjust enrichment in refund claims.

Analysis:

1. The appeal was filed against the order quashing the credit refund of &8377; 20,50,896 sanctioned by the original authority to M/s Mercedes Benz India Private Ltd. The Commissioner of Central Excise (Appeals) held that the obligation to prove that the duties paid were not passed on to customers was not adequately discharged by the applicant, despite a certificate from a Chartered Accountant. The first appellate authority directed the release of the sanctioned amount to the applicant, leading to the appeal.

2. The first appellate authority considered that the duty payment post-clearance did not automatically imply passing on the duty burden. The certificate of the Chartered Accountant was deemed sufficient proof, and the presumption under section 12B of the Central Excise Act, 1944 was discussed in the context of duties paid on assessment and clearance.

3. The Revenue contended that the duty amounts should have been shown as 'current assets' in the balance sheet for the relevant periods, as they were paid 'under protest'. The booking of these amounts as expenses led to the presumption of passing on the duty burden, as per the Tribunal's decision in Rajasthan Spinning & Weaving Mills Ltd v. Commissioner of Central Excise. The principle of unjust enrichment, as recognized in the amendment to section 11B of the Act, was also highlighted.

4. The Tribunal noted that the duty liability on road delivery charges was beyond the scope of the Central Excise Act, leading to a refund. The dispute centered on whether the burden of duty had been passed on by the assessee, with conflicting views between the original authority and the first appellate authority.

5. The Tribunal emphasized the obligation to establish that the duty burden was not passed on for any refund claim. The evidence provided by the claimant must be scrutinized within the framework of unjust enrichment, as per the legal recognition in section 11B of the Act. The certificate of the Chartered Accountant was deemed sufficient, and the accounting treatment of duty payments was analyzed to determine the burden of duty passing on to customers. The decision ultimately upheld the first appellate authority's view, dismissing the appeal.

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