2024 (2) TMI 12 - AT - Central Excise

Refund of wrongly paid Central Excise Duty on Retail Sale Price (Maximum Retail Price- MRP) - period of January and February, 2007 - Section 11B of the Central Excise Act, 1962 - whether the refund of duty, if eligible, is payable to the appellants instead of being credited to the Consumer Welfare Fund in terms of Section 11B ibid? HELD THAT - In order to determine whether the claim for refund is eligible to be refunded to him, a person has to submit to the jurisdictional authority within the prescribed period, an application for refund in the form and manner prescribed thereof, providing the documents to establish that the refund amount which is claimed was collected from him or paid by him, and the incidence of such duty had not been passed on by him to any other person. The amendments made in the said legal provisions, one given only for completeness, as these came into effect subsequent to the disputed period and thus do not have any impact and are not relevant to the present case in hand. Notification No. 2/2006-C.E. (N.T.), dated 1-3-2006, as amended, issued in exercise of the powers conferred by sub-section (1) and sub-section (2) of section 4A of the Central Excise Act, 1944 (1 of 1944) provide for the list of goods on which the payment of central excise duty has been prescribed on the basis of Retail Sale Price (MRP) along with allowable deduction towards abatement provided as the percentage of retail sale price in a Table annexed to the said notification. On perusal of the list of goods covered under the Retail Sale Price (MRP) based levy of Central Excise duty, as listed in the Table annexed to the said Notification, it is found that the goods classifiable under tariff item 3005 1000, 9018 3100, 5602 1000 being manufactured and cleared by the appellants are not at all covered therein. The payment of duty on the basis of MRP/Retail Sale Price less abatement for two months by the appellants, is not required and the same being higher, in the present case, than the duty payable as per law, the differential higher amount paid in excess is refundable. Whether the amount of refund is payable to the appellants or is it payable to the Consumer Welfare Fund? - HELD THAT - There is no case made out by the appellants in their appeal to claim for refund of higher excise duty and that it is liable to be refunded to them. It is also found that on the contrary the impugned order has clearly laid down with evidence as to why the refundable amount is payable to the Consumer Welfare Fund. Further, it is also found that despite a number of opportunities being given to the appellants for producing relevant documents for proving the element of unjust enrichment angle, particularly that the incidence of higher amount of excise duty having not been passed on by evidencing relevant credit notes for having credited respective amounts in the buyer s account, the same was not produced before the authorities below even at the time of de novo proceedings. Any refund of excise duty is required to be examined for all aspects of Section 11B ibid and in case of such refund being eligible to be paid, then in the absence of the proof of the burden of duty being not passed on to any other person, such refund is required to be credited to the Consumer Welfare Fund. The appeal filed by the appellants claiming for refund of higher excise duty paid by them instead of being credited to the Consumer Welfare Fund does not have any merits and is thus liable to be dismissed.

Summary

Issues Involved:
1. Eligibility of refund claim for Central Excise duty paid at a higher amount.
2. Crediting the refund amount to the Consumer Welfare Fund versus refunding it to the appellant.

Summary:

Issue 1: Eligibility for Refund Claim
The appellants, engaged in manufacturing excisable goods, initially filed a refund claim for Rs. 29,30,174.60/- on the grounds of wrongful payment of Central Excise Duty on MRP basis during January and February 2007. The claim was returned due to incomplete documentation. Upon resubmission, the jurisdictional Range Superintendent verified the claim and reported that the appellants paid the duty voluntarily without departmental instructions, and the products were not under the MRP-based scheme of assessment. Consequently, a show cause notice was issued for rejection on grounds of delay and unjust enrichment. The original authority and Commissioner (Appeals) rejected the claim, leading to an appeal before the Tribunal, which remanded the matter for fresh adjudication. The original adjudicating authority, upon re-examination, sanctioned the refund but credited it to the Consumer Welfare Fund, concluding that the appellants passed on the duty incidence to the buyers.

Issue 2: Crediting to Consumer Welfare Fund
The Tribunal examined whether the refund, if eligible, should be credited to the Consumer Welfare Fund or refunded to the appellants. Section 11B of the Central Excise Act, 1944, mandates that refunds are credited to the Consumer Welfare Fund unless specific exceptions apply, such as the manufacturer not passing on the duty incidence. The authorities concluded that the appellants did not provide adequate evidence to prove that the incidence of duty was not passed on to the buyers. Despite opportunities, the appellants failed to submit buyers' ledgers or proof of non-availment of Cenvat Credit by the buyers. The Tribunal upheld the original authority's decision, noting that the appellants did not meet the burden of proof to establish that the duty incidence was not transferred to third parties.

Conclusion:
The Tribunal dismissed the appeal, affirming that the refund amount should be credited to the Consumer Welfare Fund as the appellants failed to demonstrate that they had not passed on the duty incidence to their customers. The impugned order was deemed sustainable both legally and factually.