Consumer pass-on bar does not apply where disputed excise duty was not shown to have been recovered from buyers.

The article explains that refund of disputed excise duty cannot be denied on consumer pass-on grounds where the assessee consistently maintained a lower tariff classification and the record showed no recovery of the higher duty from consumers. The dispute concerned tyre cord fabrics and the shift from Heading No. 59.02 to Heading No. 59.09, but the decisive point was the absence of material proving that the excess amount was collected from buyers. On that basis, the consumer recovery bar was held inapplicable and the assessee was entitled to retain the refund.

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Issues: Whether the respondent-assessee had recovered the excess excise duty from consumers so as to disentitle it to refund of the amount collected under Heading No. 59.09 of the Central Excise Tariff Act, 1985.

Analysis: The dispute concerned classification of tyre cord fabrics and the consequent duty liability under the tariff headings in force from 01.08.1986. The respondent had consistently maintained that the goods fell under Heading No. 59.02, under which only basic excise duty was payable. The show cause notice invoking Heading No. 59.09 was issued only on 25.02.1993, and the record showed that, until then, the respondent had not treated the duty as payable under Heading No. 59.09. On that basis, the Court found no material to hold that the respondent had recovered the excess amount from consumers.

Conclusion: The respondent-assessee had not recovered the excess duty from consumers, and the amount recovered by the Department was not required to be refunded to consumers. The appeal was therefore without merit.

Final Conclusion: The claim of consumer pass-on failed, and the assessee's entitlement to retain the refund was upheld.

Ratio Decidendi: Where the assessee consistently contests the higher duty classification and the record does not show recovery of the disputed duty from consumers, the bar of consumer recovery is not attracted for denying refund.

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