2013 (11) TMI 485 - HC - Central Excise

Revenue appeal dismissed, assessee granted refund under Central Excise Act Section 11-B

COMMISSIONER OF CENTRAL EXCISE, BELGAUM Versus GOKAK MILLS

The Court dismissed the revenue's appeal against the Customs, Excise and Service Tax Appellate Tribunal's decision to allow the assessee's refund claim of ... Refund claim u/s 11-B of Central Excise Act,1944 – Duty paid by mistake – Burden to prove - Held that:- The material on record clearly show that CT-3 certificate had been obtained - thus there was no liability on the part of the assessee to pay excise duty - The burden of paying duty has to be borne by the assessee that there is no liability on him to pay the duty excise duty and the duty paid under mistake - Relying upon ADDISON & CO. Versus COMMISSIONER OF C. EX., MADRAS [2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS] - 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 - Mafatlal Industries Ltd. v. Union of India [1996 (12) TMI 50 - SUPREME COURT OF INDIA ] - assessee is entitled to refund and conditions of Section 11B are satisfied – Decided against Revenue. Issues:1. Refund of excise duty paid by mistake under Section 11-B of the Central Excise Act.2. Interpretation of relevant case laws and applicability to the present case.3. Eligibility for refund based on issuance of CT-3 certificate and burden of excise duty.Issue 1: Refund of excise duty paid by mistake under Section 11-B of the Central Excise Act:The appeal was filed by the revenue against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowing the assessee's refund claim of Rs. 45,468 under Section 11-B of the Central Excise Act. The assessee had paid excise duty wrongly for cotton yarn cleared under a C.T.E certificate, intending for duty-free removal under C.T. 3. The assessing officer rejected the refund application, citing the need for credit notes issued before duty payment. However, the CESTAT allowed the appeal, stating that the burden of duty was borne by the assessee due to the CT3 certificate, making them eligible for refund.Issue 2: Interpretation of relevant case laws and applicability to the present case:The revenue argued that no refund can be ordered without credit notes issued before duty payment, referencing the MRF Ltd. v. Collector of Central Excise case. In contrast, the assessee relied on the Commissioner of Central Excise v. International Auto Ltd. case, emphasizing that the liability to pay duty did not exist due to the CT-3 certificate and excess duty was paid by mistake, justifying the refund. The Division Bench of the Court in a similar case held that if credit notes are raised without passing the duty burden to the customer, the assessee is entitled to a refund.Issue 3: Eligibility for refund based on issuance of CT-3 certificate and burden of excise duty:The Court examined that the CT-3 certificate absolved the assessee from duty liability, yet they paid Rs. 45,468 under a mistake. The Division Bench's decision in a similar case supported the refund entitlement when credit notes are issued without transferring the duty burden to the customer. Referring to the Mafatlal Industries Ltd. v. Union of India case, the Court concluded that the assessee met the conditions of Section 11B for a refund. Consequently, the substantial question of law was answered against the revenue, and the appeal was dismissed in favor of the assessee.This detailed analysis of the judgment highlights the issues, arguments, and conclusions drawn by the Court, providing a comprehensive understanding of the legal aspects involved in the case.