2011 (3) TMI 1443 - HC - Central Excise

Refund under Section 11B: Fresh claim partly time-barred, unjust enrichment rejected, assessee entitled to partial refund

HC held that the refund application filed on 7-3-2002 was a fresh claim, not a continuation of the earlier claim withdrawn on 27-2-2002. Accordingly, ... Refund of excess excise duty paid - claim made is withdrawn and a fresh claim is made - bar of limitation - unjust enrichment - assessee offered discounts to their customers - assessee assailing that, though 7-3-2002 is beyond the period of limitation of one year it is nothing but a continuation of the earlier claim - contended on merits that admittedly, the assessee levied and collected excise duty on a higher rate - HELD THAT:- The claim for refund of excise duty paid was made on 29-11-2001, that is well within the time. However, when the revenue issued a notice pointing out the defects in the said claim and also called upon the assessee to produce the supporting documents it was open to the assessee to produce the supporting documents or file an amended claim but the assessee did not choose to amend the claim or produce the supporting documents. It chose to withdraw the earlier claim made to cure the defect and filed a fresh claim. The said withdrawal was made on 27-2-2002. After the said withdrawal a fresh claim was made on 6-3-2002 but was acknowledged on 7-3-2002. The claim which is made on 7-3-2002 is a fresh claim. It is not a continuation of earlier claim. If there was no defect earlier and when the earlier claim was pending consideration if one more claim Petition is filed giving correct facts to substantiate the said claim interpreting this provision liberally it is possible for this Court to take a view so far as limitation is concerned the date to be reckoned from 30-12-2001. Therefore when a fresh claim is made on 7-3-2002 the limitation is to be computed from that day. If limitation is to be computed from that day the claim for refund from 1-1-2002 up-to 6-3-2002 was clearly barred by time. However, the claim for refund from 7-3-2002 up-to 31-3-2002 was well within the time. Therefore though the authorities justified in holding that claim is barred by time to the extent of rejecting the claim from 7-3-2001 to 31-3-2001, the said order is incorrect. To that extent, the order passed by the authorities requires to be modified. Refund of excise duty pre-supposes - As is clear from Section 11-B of the Act when a claim for refund is made within the period stipulated, if the appropriate authority on consideration of such claim comes to the conclusion that the applicant has paid excess duty, after holding so, he should pass an order directing crediting of the said excise duty to the welfare fund. It is only if the assessee claims refund on the ground that he has not passed on the burden of duty to his customer by a specific plea and substantiating the same by producing acceptable evidence, then the appropriate authority shall direct payment of the refund amount to the assessee. As indicated in the invoice, it is only a subsequent event which makes that demand illegal, not warranted, not authorized and gives the assessee a right to seek for refund. In that context, if credit notes are raised and benefit is passed on to the customer, thus not passing on the burden of excise duty the assessee is entitled to refund of the same. Though the adjudicating authority or the appellate authority denied relief relying on the Judgment of the CESTAT in Addison’s case, when that Judgment has been set aside by the Madras High Court, the Tribunal was in total error in following the Judgment and dismissing the appeal of the assessee. Merely because the matter is now pending before the Apex Court, that is not a reason to disregard the Judgment of the High Court. The High Court has set aside the Judgment rendered by the CESTAT and the said Judgment is not operating and therefore the Tribunal was wrong in ignoring the Judgment of the Madras High Court. In that view of the matter, the first question of law raised is answered in favour of the revenue and against the assessee and the second question of law is answered in favour of the assessee and against the revenue. Ordered accordingly. Therefore, the finding of the Tribunal as well as the lower authorities cannot be sustained and accordingly is hereby set aside. Issues Involved:1. Continuation of refund claim after withdrawal and refiling.2. Entitlement to refund of excise duty based on credit notes issued after clearance of goods.Issue-wise Detailed Analysis:Point No. 1: Continuation of Refund Claim After Withdrawal and RefilingThe primary issue was whether a fresh claim for refund, filed after withdrawing an earlier defective claim, could be treated as a continuation of the original claim. The assessee initially filed a refund claim on 29-11-2001 for the period from 1-11-2000 to 31-3-2001, which was within the stipulated time. However, upon being notified of defects and the need for additional documents by the revenue, the assessee chose to withdraw this claim on 27-2-2002 and subsequently filed a fresh claim on 6-3-2002, acknowledged on 7-3-2002. The court held that the new claim filed on 7-3-2002 could not be considered a continuation of the earlier claim. It was deemed a fresh claim, and therefore, the limitation period had to be computed from the date of the new filing. Consequently, the claim for the period from 1-11-2000 to 7-3-2001 was barred by time, while the claim from 8-3-2001 to 31-3-2001 was within the time limit.Point No. 2: Entitlement to Refund of Excise Duty Based on Credit Notes Issued After Clearance of GoodsThe second issue revolved around whether the assessee was entitled to a refund of excise duty when credit notes were issued after the clearance of goods, thereby not passing on the burden of the higher excise duty to customers. The court examined Section 11-B of the Central Excise Act, which mandates that the incidence of duty should not have been passed on to any other person for a refund claim to be valid. The court emphasized the doctrine of unjust enrichment, which prevents a person from collecting duty from both the purchaser and the state. The burden of proving that the duty was not passed on lies with the assessee. The court found that the Tribunal erred in relying on the CESTAT judgment in Addison's case, which had been set aside by the Madras High Court. The Tribunal should have acknowledged the High Court's decision despite the pending appeal in the Apex Court. Thus, the court ruled that the assessee was entitled to a refund for the period from 8-3-2001 to 31-3-2001 and the entire period from 1-4-2001 to 31-12-2001, as the burden of duty was not passed on to the customers.Conclusion:1. The appeal is partly allowed.2. The rejection of the claim for the period from 1-11-2000 up to 7-3-2001 is upheld as barred by time.3. The assessee is entitled to a refund of excess demand made from 8-3-2001 to 31-3-2001.4. The entire claim for the period from 1-4-2001 to 31-12-2001 is within time, and the claimant is entitled to a refund.