2019 (3) TMI 1176 - AT - Central Excise

Refund of excess duty paid - rejection on the ground of time bar and unjust enrichment - Held that - Section 11B deals with the refund of excess duty paid. It does not distinguish between duty paid in cash and duty paid through CENVAT Credit. If duty paid by the assessee using CENVAT Credit is not covered by Section 11B no portion of that Section should apply to such refunds. In other words, the refund itself would not have been admissible if the limitation would not apply simply because the duty was paid using CENVAT Credit. There is no provision other than Section 11B for the assessee to claim refund whether it is paid using cash or by debiting CENVAT account. If the assessee is not covered by Section 11B then his entire application under Section 11B needs to be dismissed because Section 11B is made only for refund of excise duty whether paid in cash or through CENVAT Credit - there is no force in the argument of the appellant that what they paid is not excise duty. In this case the appellant has paid duty in pursuance of contract between them and their customers in which they billed their customers in excess and have subsequently returned the money through credit notes and corresponding debit notes of their customer. It is evident that the burden of excess excise duty had not been passed on to their customers. Time Limitation - Held that - The application has been submitted under Section 11B on 20.10.2014 covering the period March 2013 to June 2014. Evidently, large part of it is within time. The officer could have rejected the claim if it was not supported by documents or issued a show cause notice asking the assessee why it should not be rejected for want of required information. Instead, time was passed by seeking additional information twice and returning refund application twice before finally issuing the show cause notice - the delay on the part of the appellant is less than the delay on the part of the department themselves in processing the refund claim. The applicant is entitled to refund reckoning the original date of application as the date of application for filing refund - the appeal needs to be partly allowed reckoning the original date of filing of refund of application on 20.10.2014 as the date of application. Appeal allowed in part.

Summary

Issues:
1. Rejection of refund claim based on time bar and unjust enrichment.
2. Applicability of Section 11B to refund claims for excess duty paid.
3. Burden of proof regarding unjust enrichment.
4. Consideration of limitation of time for refund application.

Analysis:
1. The appeal was filed against the rejection of a refund claim by the department based on time bar and unjust enrichment. The appellant, a manufacturer of excisable goods, had billed their customer excessively and subsequently issued debit and credit notes to rectify the error. The refund claim was initially rejected for not submitting relevant details and documents in a timely manner, leading to the appellant seeking redress through the appellate process.

2. The key argument presented by the appellant was that the refund application should not be subject to time limitations under Section 11B as it pertained to excess duty paid, not CENVAT credit. The tribunal clarified that Section 11B applies to all refund claims for excess duty paid, regardless of the mode of payment. The appellant's contention that the duty paid was not excise duty was dismissed, emphasizing that Section 11B governs all refund applications related to excise duty.

3. Regarding unjust enrichment, the tribunal highlighted the burden of proof on the claimant to demonstrate that the excess duty had not been passed on to customers. The appellant successfully showed through documentary evidence that the excess duty had been refunded to their customers, thereby negating the unjust enrichment argument raised by the department.

4. The tribunal considered the limitation of time for the refund application, noting that the delay in processing the claim was primarily on the part of the department. Despite delays in seeking additional information and returning the application, the tribunal ruled in favor of the appellant, allowing the refund claim based on the original filing date of 20.10.2014. The appeal was partly allowed, recognizing the entitlement to refund within the specified time frame.

In conclusion, the tribunal upheld the admissibility of the refund claim on merits, rejected the arguments against the applicability of Section 11B, accepted the evidence presented to refute unjust enrichment, and granted the refund based on the original application date, providing consequential relief to the appellant.