2008 (7) TMI 114 - AT - Central Excise

Appeal allowed due to lack of evidence on duty passing to customers. Importance of Chartered Accountant certificate highlighted.

SWEET TRADE Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-IV

SWEET TRADE Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-IV - 2008 (230) E.L.T. 363 (Tri. - Mumbai) Issues:Appeal against refund credited to consumer welfare fund due to lack of evidence on duty passing on to customers.Analysis:1. Issue of Duty Incidence Passing On:The appeal concerns a refund sanctioned but credited to the consumer welfare fund as the appellants failed to prove that the duty incidence was not passed on to customers. The appellant argued that duty was forcibly recovered for alleged sales that never occurred, supported by a balance sheet showing duty payments as deposits and a Chartered Accountant certificate confirming non-recovery from customers. The appellate authority rejected the evidence, emphasizing the absence of debit notes. The burden of proof on duty non-passing was on the assessee, as per legal precedents like Chambal Fertilisers & Chemicals Ltd. v. Commissioner of Customs and Sahakari Khand Udyog Mandal Ltd. The Tribunal found that in the absence of sales, duty passing on should not arise, and the Chartered Accountant certificate was crucial in proving non-passing. The Commissioner (Appeals) failed to address the certificate's validity, leading to the allowance of the appeal for refund.2. Relevance of Chartered Accountant Certificate:The Chartered Accountant certificate played a significant role in the judgment, as it confirmed that the duty incidence was not passed on to customers. Despite the Revenue's objections and references to previous cases disputing similar certificates, the Tribunal emphasized the importance of this certificate in establishing the non-passing of duty. The Tribunal differentiated this case from previous decisions where certificates were disputed, highlighting the lack of buyer and sales in the present case, making duty passing on irrelevant. The Tribunal's decision to set aside the Commissioner (Appeals) order and allow the appeal was primarily based on the credibility of the Chartered Accountant certificate and the absence of sales transactions.3. Doctrine of Unjust Enrichment and Precedents:The judgment referred to the doctrine of unjust enrichment, emphasizing the need to prove that duty incidence was not passed on to claim a refund. Legal precedents like Memirex & Company v. Commissioner of Central Excise and Eltech Enterprises were cited to support the requirement of proving non-passing of duty for refunds. The Tribunal clarified that in cases where no sales occurred, recovery through debit notes should not apply, and the burden of proof lies with the assessee. The judgment highlighted the relevance of Chartered Accountant certificates in such cases and the necessity of considering the absence of sales transactions in determining duty passing on.In conclusion, the Tribunal's decision in this case revolved around the crucial role of the Chartered Accountant certificate in proving non-passing of duty, the absence of sales transactions rendering duty passing on irrelevant, and the burden of proof on the assessee to establish non-passing for claiming refunds. The judgment set aside the Commissioner (Appeals) order and allowed the appeal, emphasizing the significance of credible evidence in refund cases involving duty passing on issues.