Refund of excess excise duty allowed where records showed the duty burden was not passed on to the customer.

Excess special excise duty paid under the higher rate could be refunded where the assessee proved that the duty incidence was not passed on to the customer. The authority's reliance on a later debit note was insufficient, because the accounts and supporting records showed that the customer had not paid the excess amount. Once excess payment and non-passing on were established, denial of refund was unsustainable and the refund claim had to be allowed.

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Issues: Whether the assessee was entitled to refund of excess special excise duty on proof that the duty burden had not been passed on to the customer.

Analysis: The assessee had paid special excise duty at a rate higher than the reduced rate applicable under Notification No. 11/2003-C.E. for the relevant period. The adjudicating authority rejected the refund claim on the basis that the duty incidence had been passed on, relying principally on a debit note raised later. The Tribunal found from the accounts and other records that the customer had not paid the excess amount and that the later debit note did not establish passing on of the duty burden. Once excess duty payment and non-passing on of the incidence were established, refund could not be denied.

Conclusion: The assessee was entitled to refund of the excess duty paid, and the rejection of the refund claim was unsustainable.

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