2015 (10) TMI 1809 - AT - Central Excise

Tribunal Upholds Partial Refund, Rejects Balance Refund Claim for Wood Timber Processing

The Tribunal rejected the appellant's refund claim on the processing of Wood Timber, determining that it did not amount to manufacture. A partial refund ... Denial of refund claim - unjust enrichment - manufacture - processing of Wood Timber - Held that:- balance amount of refund was rejected on the ground that the appellant failed to produce documentary evidence or other evidence to establish that the incidence of duty had not been passed on by them to their customers/buyers. The Commissioner (appeal) had given detailed findings on his issue. In the grounds of appeal, it is contended by the appellant that the refund can be sanctioned to Govt of Gujarat Dept, on a simple indemnity as provided in the Treasury Rules. It is further contended that the Govt of Gujarat cannot be considered to be enriched, as amount of duty is paid on Timber was sold to jails and other Govt. Depts. - There is no provision in the Central Excise law that the state government authorities would be are outside of the principles of unjust enrichment. - Decided against assessee. Issues:Refund claim on processing of Wood Timber, rejection of refund claim, burden of proof on unjust enrichment, applicability of principles of unjust enrichment to state government authorities.Analysis:The appellant filed a refund claim of Rs. 17,99,308.82 paid on the processing of Wood Timber, which was rejected by the Adjudicating Authority. The Tribunal determined that the processing of Wood Timber did not amount to manufacture. Consequently, a partial refund of Rs. 1,45,383 was sanctioned, and the remaining amount of Rs. 16,53,919 was directed to be credited to the Fund under Section 11B of the Central Excise Act 1944. The Commissioner (Appeal) upheld the rejection of the balance refund amount.The impugned order rejected the balance refund amount due to the appellant's failure to provide documentary evidence demonstrating that the duty burden was not passed on to their customers. The appellant argued that a refund could be granted to the Government of Gujarat Department based on a simple indemnity as per the Treasury Rules. They contended that the Government of Gujarat did not benefit from the duty paid on Timber sold to jails and other government departments.Citing the case of Bombay Tyres International Ltd vs CCE, the Hon'ble Supreme Court emphasized that the burden of proof lies with the assessee to show that the duty burden was not passed on to consumers. Failure to provide such evidence disentitles the claim for a refund. Additionally, there is no provision in Central Excise law exempting state government authorities from the principles of unjust enrichment.Based on the above considerations, the Tribunal found no merit in the appellant's appeal and subsequently rejected it. The judgment highlights the importance of substantiating claims with evidence and upholding the principles of unjust enrichment, even concerning state government authorities.