CENTRAL EXCISE REFUND, Central Excise

[girish kumar]

Hello

I had paid duty under protest through a company XYZ to central excise since XYZ had central excise registration . Now XYZ has won all the issues and duty paid has to be refunded by department with order of supreme court .XYZ has written to us saying to claim refund from department under 11D but when I applied to department the same they sent back letter saying you are not enritled to claim as you are under their jurisdiction and XYZ has to claim since he has the excise registration .

Please share your views .

Posts / Replies

[Anil Mishra]

11D pertains to recovery of amounts collected in excess of the statutory levy. If you have proof of bearing the incidence of such EXCESS without passing it further , you are rightly entitled.

[girish kumar]

But department has written to us saying to claim from XYZ company as they had excise registration and not us . We paid through XYZ . Also we are not under their jurisdiction and XYZ is under their jurisdiction .

[Anil Mishra]

A.Take a certificate / affidavit from XYZ that:

1. Contains a disclaimer from XYZ that they won't claim refund.

2. That incidence of duty has been passed on to you.

B. Take a certificate from your CA if you have not further passed on the incidence of such amount.

C. Apply for refund with above additional documents.

Excess collected has to be returned to the person who has ultimately born the incidence.

[girish kumar]

I had submitted all the above documents . Dept has written to us saying since we are not under their jurisdiction and also XYZ is registered with them and its under their excise regn that duty has been paid we should ask XYZ for refund .

So what should be way forward .

[MARIAPPAN GOVINDARAJAN]

You may request XYZ to claim refund and returned the amount to you.

[Rajagopalan Ranganathan]

Dear Shri. Grish Kumar,

In my opinion it is better that the refund claim be filed by M/s. Sanghi Textile P. Ltd., because as per Supreme Court’s judgment in the case of CCE vs. Allied Photographics India Ltd. [2004 (166) E.L.T. 3 (S.C.)] = 2004 (3) TMI 63 - SUPREME COURT OF INDIA that-

“The point which still remains to be decided is - whether the respondent herein was entitled to refund without complying with Section 11B of the Act on the ground that it had stepped into the shoes of NIIL (manufacturer) which had paid the duty under protest. It was argued on behalf of the respondent that NIIL had paid the excise duty under protest pending final assessment, which was ultimately decided in favour of NIIL and since NIIL had sold the product to the respondent herein, the respondent was entitled to the benefit of the second proviso to Section 11B(1) which inter alia stated that limitation of six months shall not apply where duty had been paid under protest. We do not find any merit in this argument. In the case of Bombay Tyre International Ltd. (1983 (10) TMI 51 - SUPREME COURT OF INDIA), it has been held by this Court that Section 3 of the said Act is a charging section whereas Section 4 is a computation section which covers assessment and collection of excise duty. That the basis of assessment under Section 4 was the real value of excisable goods which included manufacturing cost and manufacturing profit but excluded selling cost and selling profit. That the price charged by the manufacturer for sale of the goods represented the real value of the goods for assessment of excise duty. In the case of Atic Industries Ltd. v. H.H. Dave, Asstt. Collector of Central Excise reported in [1978 (2) E.L.T. (J444) (S.C.) = 1975 (2) TMI 27 - SUPREME COURT OF INDIA ], this Court has held that the resale price charged by a wholesale dealer who buys goods from the manufacturer cannot be included in the real value of excisable goods in terms of Section 4 of the said Act. Therefore, it is clear that the basis on which a manufacturer claims refund is different from the basis on which a buyer claims refund. The cost of purchase to the buyer consists of purchase price including taxes and duties payable on the date of purchase (other than the refund which is subsequently recoverable by the buyer from the Department). Consequently, it is not open to the buyer to include the refund amount in the cost of purchase on the date when he buys the goods as the right to refund accrues to him at a date after completion of the purchase depending upon his success in the assessment. Lastly, as stated above, Section 11B dealt with claim for refund of duty. It did not deal with making of refund. Therefore, Section 11B(3) stated that no refund shall be made except in terms of Section 11B(2). Section 11B(2)(e) conferred a right on the buyer to claim refund in cases where he proved that he had not passed on the duty to any other person. The entire scheme of Section 11B showed the difference between the rights of a manufacturer to claim refund and the right of the buyer to claim refund as separate and distinct. Moreover, under Section 4 of the said Act, every payment by the manufacturer, whether under protest or under provisional assessment was on his own account. The accounts of the manufacturer are different from the accounts of a buyer (distributor). Consequently, there is no merit in the argument advanced on behalf of the respondent that the distributor was entitled to claim refund of “on account” payment made under protest by the manufacturer without complying with Section 11B of the Act.”

Though it can be argued that you are not a buyer but the principal who had sent the semi processed goods to Sanghi Textiles for further processing under job work, in view of the above judgment you cannot get relief. Therefore in my opinion it is better the refund claim is filed by M/s. Sanghi Textiles P. Ltd. Here there is another hitch. If M/s. Sanghi Textiles P. Ltd., has already collected the amount paid under protest from you, the department will say since M/s. Sanghi Textiles had passed on the duty burden to you the doctrine of unjust enrichment will be attracted and the refund amount will be credit to consumer welfare fund.

I request you to take a decision after considering the above aspects.

[girish kumar]

We have sales invoices to prove we have not passed the duty to consumer and also we are principal manufacturers and sanghi is job worker .

[Rajagopalan Ranganathan]

Sir,

The question is not whether you have passed on the duty to your ultimate customers. The question is whether Sanghi Textiles P. Ltd. has collected the duty paid by them under protest from you through their invoice(s) or gate pass(es). If Sanghi Textiles filed the refund claim the first question the department will ask is whether Sanghi Textiles collected the duty paid under protest from you.