2011 (2) TMI 1240 - HC - Central Excise

High Court overturns Tribunal decision, stresses fair assessment in tax appeal.

McNALLY BHARAT ENGINEERING CO. LTD. Versus COMMR. OF C. EX., RANCHI

The High Court allowed the Tax Appeal, quashing the Tribunal's order and remanding the matter for a fresh hearing. The Court emphasized the importance of ... Refund of the excess excise duty paid - appellant had made claim for refund under Section 11-B of the Act, 1944, excise duty was payable only on sale value, which was Rs. 30,50,000/-. By mistake, the appellant has miscalculated the sale value by adding cost of machining of Rs. 5,01,760/- and by adding the cost of packing and forwarding of Rs. 15,052.80/- in a sale value of Rs. 30,50,000/- Held that:- Tribunal has travelled beyond the show cause notice and has given a reasoning in paragraph 5 of the order passed by the Tribunal that the appellant has not established whether incidence of excess paid duty was not passed to the customer in the form of availment of MODVAT/CENVAT credit. Had this reason been given in the show cause notice, the appellant could have given detailed answer. Moreover, the customer is not a manufacturer of the goods and, therefore, no question of availment of MODVAT/CENVAT credit, whatsoever, arises, Tax Appeal is allowed and disposed of Issues:Claim for refund of excess excise duty paid by the appellant under Section 11-B of the Central Excise Act, 1944.Analysis:The appellant, a company, was engaged in job work for Bharat Heavy Electricals Limited (BHEL) and mistakenly paid excess excise duty by including additional charges in the sale value. The appellant claimed a refund of the excess excise duty paid, which was rejected by the authorities. The appellant contended that the excess duty was not passed on to BHEL, as confirmed by a Chartered Accountant's certificate. The authorities, including the Tribunal, failed to appreciate this fact and dismissed the appellant's appeal.The Tribunal's reasoning for dismissal included the presumption under Section 11B that the duty incidence is passed on to the customer. However, the appellant provided evidence that the duty was not passed on to BHEL. The Tribunal also raised an issue regarding MODVAT/CENVAT credit, which was not mentioned in the show cause notice, leading to unfair treatment of the appellant.The High Court observed that the authorities did not properly consider the Chartered Accountant's certificate and the unique circumstances of the case. The Court quashed the Tribunal's order and remanded the matter for a fresh hearing, emphasizing the need for a fair assessment without influence from the previous order. The Court allowed the Tax Appeal and provided directions for further proceedings.In conclusion, the High Court's judgment highlighted the importance of a thorough evaluation of evidence and legal provisions in refund claims under the Central Excise Act, ensuring a fair and just decision-making process.