2023 (8) TMI 355 - AT - Central Excise

Appeals on Refund Claims Yield Mixed Outcomes: Revenue Wins Some, Loses Others. Unjust Enrichment Key.

The appeals involving refund claims were decided with varying outcomes. Appeals by the revenue against the Commissioner's decision to allow refund claims ... Rejection of Refund claim - assessee is an intermediary in the entire chain, who collects the duty from his customer and deposits the same to exchequer - burden of duty on appellant or not - applicability of bar of unjust enrichment - time limitation - HELD THAT:- On the issue whether the bar of unjust enrichment will not apply to refund claims filed by the manufacturer, if he issues the credit notes subsequent to clearance of the goods from the place of clearance, refunding the excess duty recovered by him at the time of clearance of the goods, a three judges bench of Hon’ble Supreme Court has in the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON & CO. LTD. [2016 (8) TMI 1071 - SUPREME COURT], observed The word ‘buyer’ in Clause (e) to proviso to Section 11B(2) of the Act cannot be restricted to the first buyer from the manufacturer. Another submission which remains to be considered is the requirement of verification to be done for the purpose of finding out who ultimately bore the burden of excise duty. It might be difficult to identify who had actually borne the burden but such verification would definitely assist the Revenue in finding out whether the manufacturer or buyer who makes an application for refund are being unjustly enriched. If it is not possible to identify the person/persons who have borne the duty, the amount of excise duty collected in excess will remain in the fund which will be utilized for the benefit of the consumers as provided in Section 12D. In the present case, admittedly the application for the refunds have been filed by the appellant in respect of the goods which were cleared by them on payment of duty assessed by them on the value determined at the place and time of removal. It is settled law that the duty has to be determined and paid by the appellant assessee at the time of clearance of the goods on the invoice made by them. It is also settle principle of accounting that the accounts are maintained on the accrual basis and the appellant assessee recovers determined on the invoice from his customer the moment he clears the goods after assessing the duty on the invoice. Central Excise Duty, is indirect tax and is tax on the consumer of the goods. The assessee is only an intermediary in the entire chain, who collects the duty from his customer and deposits the same to exchequer. Thus the burden of the duty is always on the customer and that forms the basis of the principles of unjust enrichment enshrined in section 11B of the Central Excise Act, 1944. This principle of unjust enrichment has been held by the Hon’ble Apex Court, in case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [1996 (12) TMI 50 - SUPREME COURT] as constitutional. Section 12D creates a statutory presumption to the effect that the burden of the duty reflected on the invoice has been passed on to the consumer of the goods. It is also interesting to note that “credit notes” which form the basis of the refund claim filed are the documents which have no statutory recognition under any of the provision of the Central Excise Act, 1944 - Further the seller is not having any authority to refund any excise duty the burden of which has been passed on by him to the buyer of goods. In case of the Mafatlal Industries ltd & Addisson & Co referred, Hon’ble Supreme Court has after referring to the provisions of the Section 11 B, concluded that the purchaser/ buyer of the goods could have claimed the refund of any excess duty paid. It is settled law that when statute provides for a manner of doing a thing it should be done in the manner as provided or not at all. The basic crux of the above referred decision of the Hon’ble Apex Court is that the claim for the refund of any excess duty paid should be made in accordance with the provision of the Section 11 B of Central Excise Act, 1944 by the person who has borne the burden of duty and adjudicated accordingly. It can be the first purchaser or the second purchaser or so on of the goods cleared on payment of duty sought as refund. Hon’ble Bombay High court has in the appellant case M/S. VILSON ROOFING PRODUCT PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE KOLHAPUR COMMISSIONERATE [2018 (10) TMI 24 - BOMBAY HIGH COURT], referred to para 35 and 36 of the decision of the Hon’ble Apex Court in case of Addisson & Co. - As directed by the Hon’ble High Court vide order dated while remanding the matter for reconsideration to the tribunal vide order dated 24.09.2018 we refer to the Certificate of Chartered Accountant produced by the Appellant Assessee - From the above certificate what is evident that certain amounts paid towards central excise duty is shown as amount receivable in the books of account of the appellant. Said certificate is totally silent on the aspect as to who has borne the burden of duty as the same do not refer to any invoice or the credit notes issued by the appellant assessee. Hon’ble Supreme Court has dismissed the appeal against this order by referring to the Chartered Accountant certificate which clearly contained the details of credit notes and the cheques issued. There are no such details in the CA Certificate produced, hence it cannot be said that this CA Certificate establishes that the burden of the duty claimed as refund has not been passed on to the customers. Thus there are no merits in the submission made to remand the matter for consideration of the issue in light of the CA Certificate. Whether the Appellant could have filed the refund claim without the self assessment made by the appellant on the invoice determining the duty payable on the goods cleared by the appellant being modified by the appellate authority? - HELD THAT:- A larger bench of tribunal has in the case of COMMR. OF CUS. (IMP.) , NHAVA SHEVA VERSUS EUROTEX INDUS. & EXPORTS LTD. [2007 (8) TMI 364 - CESTAT, NEW DELHI] has observed A refund claim is not maintainable unless the assessment order in pursuance of which the duty paid is challenged and modified/set aside. In the present cases nothing has been produced before us to hold that the assessment orders made by the appellants have ever been modified by any authority in appellate proceedings - thus, specific averments on the merits of the refund have been made in the show cause notice including the averment that refund claimed is not on account of the decision rendered in the favour of appellant assessee. Thus there are no merits in the submissions made by the appellant assessee on this account. Maintainability of appeals filed by the revenue on the ground that they are contrary to the litigation policy of the Government of India in terms of the amounts involved in the dispute - HELD THAT:- At the time when the said appeals were filed they were not barred as per the litigation policy. With the passage of the time the monetary limit, for filing the appeals have been enhanced. Revenue authorities were also directed to examine in respect of withdrawal of the appeals that are below the thresh hold level specified - In the present case revenue has not filed any application seeking withdrawal of these two appeals - thus in absence of any such application seeking withdrawal of the appeal the appeal will have to be considered and decided on the merits. Time Limitation - HELD THAT:- Appellants have in their submissions admitted that certain refund claims filed by them are time barred as they were filed beyond the period of limitation as per Section 11B of the Central Excise Act, 1944 and they do not dispute the rejection of these refund claims on ground of limitation. Where so ever the refund is held admissible, but cannot be paid to them for the reason of unjust enrichment, the amount to be refunded needs to be credited to the Consumer Welfare Fund. Appeal of revenue allowed. Issues Involved:1. Refund Claims2. Unjust Enrichment3. Provisional AssessmentSummary:Refund Claims:The appeals listed involve refund claims for various periods and amounts. Appeals at S No 1 & 2 were filed by the revenue against the Commissioner (Appeal) allowing the refund claims of the assessee. Appeals at S No 3 to 7 involve remand by the Commissioner (Appeal) to the original authority for reassessment. Appeals at S No 8 to 20 were dismissed by the Commissioner (Appeal), rejecting the refund claims of the assessee. Appeals at S No 21 to 24 were dismissed by the tribunal but remanded back by the Bombay High Court for reconsideration based on Chartered Accountant certificates. Appeal at S No 25 involves rejection of the request for provisional assessment for the financial year 2011-12.Unjust Enrichment:The primary issue was whether the refund claims were barred by unjust enrichment. The tribunal referred to the Supreme Court's judgment in Commissioner of Central Excise, Madras Vs. Addison & Co. Ltd., which held that the burden of duty must not be passed on to the customers to avoid unjust enrichment. The tribunal found that the Chartered Accountant certificates provided by the appellant did not sufficiently prove that the duty burden was not passed on to the customers, as they lacked detailed references to credit notes and cheques issued. Thus, the tribunal concluded that the refund claims were not admissible due to unjust enrichment.Provisional Assessment:Appeal No. E/64/12 was dismissed as infructuous because the request for provisional assessment for the financial year 2011-12 was no longer relevant.Final Orders:- Appeals at S No 1 & 2 filed by the revenue were allowed on merits.- Appeals at S No 3 to 24 filed by the appellant assessee were dismissed.- Appeal at S No 25 was dismissed as infructuous.