Refund of excess duty allowed as buyer made downward price adjustments and appellant bore burden

CESTAT Hyderabad allowed the appeal for refund of excess duty paid. The Adjudicating Authority found refund admissible on merits but rejected it on unjust enrichment grounds. The tribunal held that appellant satisfied the burden test as the buyer (South Central Railway) made downward price adjustments including excise duty at supply bill finalization, evidenced by communication dated 18.08.2010. Since appellant never received the excess duty amount of Rs. 5,26,244/-, they bore the burden. Refund of Rs. 4,77,292/- was granted as not time-barred. Impugned order set aside.

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Issues involved:
The appeal concerns the rejection of a refund claim totaling Rs. 5,26,244/- due to unjust enrichment.

Details of the Judgment:
1. The appellant sought a refund of excess excise duty payment of Rs. 5,26,244/- for Pre-Stressed Concrete (PSC) sleepers supplied to Railways. The price of sleepers was decreased post-clearance, resulting in the payment of excess duty. The Original Authority rejected a portion of the refund as time-barred and the rest on the grounds of unjust enrichment, stating that the burden of excess duty was passed on to the buyer.

2. The Commissioner (Appeals) upheld the rejection, emphasizing that the duty charged was mentioned in the invoices and the agreement with the Railways. The Commissioner noted that the appellant should have opted for provisional assessment and that there was no provision to adjust the transaction value post-removal based on price reduction. The refund was deemed unavailable on both merit and unjust enrichment grounds.

3. The appellant challenged the decision before the Tribunal, arguing that the Commissioner (Appeals) erred in ignoring evidence of downward price revision and unjust enrichment. The appellant contended that they did not receive the differential amount, including duty, due to the price revision.

4. The Tribunal observed that the refund application was made under Section 11B of the Act, which allows for refund of excise duty if not passed on to another person. The Tribunal found that the appellant had not received the full amount as per the invoices and that the buyer had made adjustments for the downward price revision, including the excise duty. Therefore, the Tribunal held that the appellant had borne the burden of duty and was entitled to a refund of Rs. 4,77,292/-, not barred by limitation.

5. The Tribunal set aside the impugned order, allowing the appeal and directing the Adjudicating Authority to grant the refund along with interest within 60 days. The decision was pronounced in open court on 14.12.2023.

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