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2020 (11) TMI 352 - HC - Central ExciseRefund of Excise Duty - allegation that the incidence of duty not passed on to the buyer - Revenue submitted that not only the show cause notice clearly refuted the claim of the Assessee to claim such refund, inter alia on the grounds of 12B Presumption, but also on the ground that the Appellant/ Assessee was not entitled to any refund of such Excise Duty - HELD THAT - The scheme of the Act contained in Section 11B of the Act read with other relevant provisions of the Central Excise Act as it then prevailed before the introduction of GST regime with effect from 1 July 2017, with regard to refunds is very clear viz., that it is only the person who has borne the incidence of Excise Duty, which was not leviable in law is entitled to claim refund of the same, subject to his locus standi and the limitation prescribed in Section 11B of the Act. There is hardly any doubt on facts in the present case, where, admittedly, the invoice of the appellant for the supply of raw naptha which is a dutiable product, was raised by the appellant M/s.CPCL on its marketing company M/s.IOCL, which is a separate company, who in turn raised invoice on the purchaser or buyer of the said raw naptha M/s.PPN, who in turn, manufactured power by use of such raw naptha and other raw materials. If at all, duty can be said to have been collected in excess on account of over valuation of the supplies, it is the consumer of the said raw material/raw naptha, viz., M/s.PPN who could have claimed the refund of Excise Duty as per the settled legal position. Merely because M/s.IOCL issued a credit note to the buyer M/s.PPN, it cannot be said that the incidence of Excise Duty was not passed on to the purchaser M/s.PPN. Once the incidence of Excise Duty has been passed on, whether it is further passed on to the ultimate buyer or consumer or not, is not the relevant question. The appellant Assessee M/s.CPCL, cannot be said to have borne any incidence of Excise Duty illegally levied and therefore, the right of the appellant Assessee to claim any refund cannot arise. The question raised before us relates to question of locus standi of the person who is claiming the refund and not on what basis it is claimed. Whether on the basis of Credit Note issued by M/s.IOCL, a refund of Excise Duty could be made or not is not the question, and the claim of the Assessee is not fortified merely because the show cause notice refuted the claim of the Assessee on the basis of credit note alone - The facts are clear and undisputed and there is no material or facts available on record which even prima facie could indicate that the appellant Assessee has borne the incidence of Excise Duty which in law could not be charged from it. The moment it raised the invoice on M/s.IOCL and M/s.IOCL issued Invoice on M/s.PPN, the incidence of Excise Duty is definitely passed on to the buyer or consumer of raw naptha, viz., M/s.PPN. Therefore, the right to claim refund by the Appellant M/s.CPCL is completely lost. Appeal dismissed.
Issues Involved:
1. Whether the Tribunal erred in finding that the amount claimed as refund had been passed on to the buyer. 2. Whether the Tribunal committed a fundamental error in concluding that the buyer of the excisable goods had suffered the duty claimed as a refund by the appellant. 3. Whether the issuance of credit notes towards excess duty charged affects the eligibility for refund. 4. Applicability of the Supreme Court judgment in Addison & Co. Ltd. case to the present case. 5. Whether the ultimate consumer suffered the excess duty claimed as a refund. 6. Whether the refund of excess duty can be rejected based on the issuance of credit notes. 7. Interpretation of Section 11B of the Central Excise Act regarding the mode of proving that the excess duty claimed as a refund has not been passed on to the ultimate consumer. 8. Whether showing that the ultimate buyer had not borne the duty claimed as a refund is sufficient for eligibility for a refund. Issue-wise Detailed Analysis: 1. Whether the Tribunal erred in finding that the amount claimed as refund had been passed on to the buyer: The Tribunal held that the refund claim was rejected based on the doctrine of unjust enrichment, stating that the duty had been passed on to the buyer. The issuance of credit notes alone was not sufficient to establish that the duty had not been passed on to another. The Tribunal relied on the Supreme Court's decision in Addison & Co. Ltd., which clarified that mere issuance of credit notes cannot be the sole basis for holding that the duty has been borne by the assessee and not passed on to another. 2. Whether the Tribunal committed a fundamental error in concluding that the buyer of the excisable goods had suffered the duty claimed as a refund by the appellant: The Tribunal's decision was based on the fact that the appellant had initially passed on the duty to the buyer. The statutory presumption under Section 12B of the Act was applied, which assumes that the duty has been passed on to the ultimate consumer unless proven otherwise. The Tribunal found no evidence to suggest that the buyer did not pass on the duty to any other person. 3. Whether the issuance of credit notes towards excess duty charged affects the eligibility for refund: The Tribunal and the Supreme Court in Addison & Co. Ltd. held that credit notes issued for trade discounts or excess duty charged do not automatically entitle the assessee to a refund. The appellant must prove that the incidence of duty was not passed on to the buyer. In this case, the issuance of credit notes by IOCL to PPN was not sufficient to establish that the duty had not been passed on. 4. Applicability of the Supreme Court judgment in Addison & Co. Ltd. case to the present case: The Tribunal correctly applied the Supreme Court's judgment in Addison & Co. Ltd., which emphasized that the burden of proving that the duty was not passed on lies with the claimant. The Tribunal found that the appellant failed to provide sufficient evidence to rebut the presumption under Section 12B of the Act. 5. Whether the ultimate consumer suffered the excess duty claimed as a refund: The Tribunal found that the ultimate consumer, in this case, PPN, had borne the duty. The appellant's argument that the duty was not passed on because PPN used the raw naptha to manufacture electricity was not accepted. The Tribunal held that the duty was passed on to PPN when the invoice was raised by IOCL, and the refund claim by CPCL was not justified. 6. Whether the refund of excess duty can be rejected based on the issuance of credit notes: The Tribunal held that the mere issuance of credit notes does not establish that the duty was not passed on. The appellant must provide concrete evidence that the duty was not passed on to the buyer. In this case, the credit notes issued by IOCL to PPN were not sufficient to prove that the duty was not passed on. 7. Interpretation of Section 11B of the Central Excise Act regarding the mode of proving that the excess duty claimed as a refund has not been passed on to the ultimate consumer: The Tribunal emphasized that under Section 11B of the Act, the claimant must prove that the incidence of duty was not passed on to the buyer. The mode or method adopted to establish this fact is not relevant. The appellant failed to provide sufficient evidence to prove that the duty was not passed on to PPN, and therefore, the refund claim was rejected. 8. Whether showing that the ultimate buyer had not borne the duty claimed as a refund is sufficient for eligibility for a refund: The Tribunal held that merely showing that the ultimate buyer had not borne the duty is not sufficient. The appellant must also prove that the duty was not passed on at any stage. In this case, the appellant failed to provide sufficient evidence to rebut the presumption under Section 12B of the Act, and therefore, the refund claim was rejected. Conclusion: The appeals were dismissed as the Tribunal correctly applied the legal principles and found that the appellant failed to prove that the incidence of duty was not passed on to the buyer. The issuance of credit notes was not sufficient to establish that the duty had not been passed on, and the refund claim was rightly rejected based on the doctrine of unjust enrichment and the statutory presumption under Section 12B of the Act.
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