2021 (9) TMI 24 - AT - Central Excise

Violation of principles of natural justice - grant of refund of excess excise duty paid on the transaction value without seeking an adjustment for discounts to the Appellant - incidence of duty on discount not passed to its dealers - HELD THAT - The law in this regard is well settled by the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. 2016 (8) TMI 1071 - SUPREME COURT that the onus is upon the person claiming refund of excise duty on post clearance discount to establish that the incidence of duty on such discount has not been passed on to any other person. The Hon ble Supreme Court in the Addison case has held in unequivocal terms that Credit Notes are valid instrument for the purposes of passing post clearance discounts and that an assessee is entitled for filing the claim for refund on the basis of Credit Notes raised by him towards discount. The CA certificate produced by the Appellant in the instant case goes to show that the Appellant has not passed on the incidence of duty on discount to its dealers. It is also found from the sample certificates issued by the dealers that such dealers were not registered under the Central Excise Law for the purposes of availing or passing of Cenvat credit. Therefore, the question of any double benefit in the form of refund of excise duty on the component of discount as well as Cenvat credit on the said component does not arise. Further, certificate from the dealers also confirms that the incidence of duty was not passed on by them to their buyers. These evidences establish that the duty element on the discount component was borne by the Appellant himself. Applicability of judgement in the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. 2016 (8) TMI 1071 - SUPREME COURT - HELD THAT - The Hon ble Supreme Court had rejected the revenue s Civil Appeal No. 8488 of 2009 wherein the assessee had produced evidences in the form of CA certificate to show that the incidence of duty on discount was borne by the manufacture himself. Therefore, the decision of the Hon ble Supreme Court in the Addison case cannot be said to be against the Appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Provisional assessment for discounts on TMT bars.
2. Refund of excess excise duty on discounts.
3. Principle of unjust enrichment regarding refund claim.
4. Validity of Credit Notes for post-sale discounts.
5. Interpretation of legal precedents in support of refund claim.

Detailed Analysis:
1. The Appellant sought provisional assessment for discounts on TMT bars due to the inability to quantify them at the time of clearance. The Tribunal allowed the provisional assessment for a block period of four months. The Adjudicating Authority finalized the assessment, determining excess excise duty payable on discounts passed to dealers. The excess duty was ordered refundable subject to unjust enrichment principles.

2. The revenue appealed the assessment, contending that the duty component on discounts was passed on to consumers through dealers, invoking the principle of unjust enrichment. The Appellate Commissioner set aside the assessment, citing lack of documentary evidence except Credit Notes. Legal precedents like Fenner India Ltd. and CCE, Madras Vs. Addison & Co. Ltd. were relied upon to support this decision.

3. The Appellant argued that the duty on discounts was borne solely by them, supported by a Chartered Accountant's certificate and dealer certificates. They contended that the excess duty should be refunded as it was not recovered from dealers' buyers. Legal precedents such as Commissioner of C.Ex. & S.T. Allahabad Vs. Ual Uttar Pradesh and Eastman Cast & Forge Ltd. were cited in support of their claim.

4. The Tribunal examined whether the refund claim without adjusting for discounts would violate the principle of unjust enrichment. Citing the Addison case, it emphasized the importance of proving that duty on discounts was not passed on to others. The Tribunal acknowledged Credit Notes as valid instruments for post-sale discounts, as per the legal precedent.

5. After considering the evidence presented, including the CA certificate and dealer certificates, the Tribunal found that the duty on discounts was borne by the Appellant. It distinguished the present case from Fenner India case where insufficient evidence was provided. The Tribunal upheld the Appellant's refund claim, setting aside the impugned order and allowing the appeal with consequential relief.

This detailed analysis outlines the issues related to provisional assessment, refund of excess excise duty, unjust enrichment principles, validity of Credit Notes, and the interpretation of legal precedents in the context of the judgment delivered by the Appellate Tribunal CESTAT KOLKATA.