2020 (10) TMI 471 - AT - Central Excise

Refund of excess paid excise duty - finalization of provisional assessment - Department had credited the same to the Consumer Welfare Fund, created under Section 11D of the Central Excise Act, 1944 - amount credited to the Consumer Welfare Fund on the ground that the incidence of excess duty has been passed on to the dealers of the excisable goods - Principles of Natural Justice - HELD THAT - The amount in question, for which the refund claim was filed by the appellant was all along been reflected as claims receivable from the government authorities . The said entry made in the balance sheet for the period 31.03.2009 was all along reflected in the balance sheet prepared as on 31.03.2019. It is an admitted fact on record that the excess paid central excise duty by the appellant during the provisional assessment of the excisable goods were not reflected as part of expenditure in the profit and loss account prepared for the relevant period. Thus, in absence of reflection of such amount as an element of expenditure in the profit and loss account, the profitability of the company has not suffered. Further, reflection of the refund amount in the balance sheet under the head of loans and advances , clearly depicts that the incidence of excess paid duty amount has all along been borne by the appellant. Therefore, it cannot be said that the element of excess paid central excise duty had been transferred to the dealers and for that purpose, the appellant should not be entitled for the benefit of refund and the amount in question should be transferred to the Consumer Welfare Fund. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of excess central excise duty - Crediting to Consumer Welfare Fund.

Analysis:
The appeal challenged the order passed by the Commissioner (Appeals) regarding the refund of excess central excise duty paid during provisional assessment. The appellant contended that the refund amount was not considered as expenditure in the profit and loss account but was reflected in the balance sheet under "Loans and advances." The appellant argued that the duty incidence was not transferred and cited precedents where refunds were granted to the appellant instead of being credited to the Consumer Welfare Fund. The Revenue, however, claimed that since the duty element was passed on to the ultimate consumer, the refund should be transferred to the Consumer Welfare Fund. The Tribunal analyzed the financial records and observed that the excess duty amount was never reflected as expenditure, ensuring the company's profitability was not affected. The balance sheet entry under "loans and advances" indicated that the duty incidence was borne by the appellant. The Tribunal noted that in a similar case involving the appellant's other unit, the refund was sanctioned to the assessee. Relying on the Chartered Accountant's certificate confirming the duty incidence borne by the appellant, the Tribunal concluded that the refund should be eligible for the appellant instead of the Consumer Welfare Fund. The Tribunal distinguished the Revenue's cited judgment, emphasizing the unique circumstances of the present case.

The impugned order upheld the decision to credit the refund amount to the Consumer Welfare Fund based on the presumption that the duty incidence had been passed on to the dealers. However, the Tribunal found that the appellant's financial records and the balance sheet entry indicated that the duty incidence was not transferred, and the profitability was unaffected. The Tribunal highlighted the appellant's compliance with the conditions for refund eligibility and the absence of duty transfer to buyers or any other person. The Tribunal referred to previous decisions where refunds were granted based on similar circumstances and the confirmation by the Chartered Accountant regarding the duty incidence. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant with the consequential benefit of refund.