1985 (11) TMI 138 - AT - Central Excise

Corporation lacks standing to claim duty refund under Notification No. 195/76. Only ultimate consumers eligible.

The Tribunal dismissed the appeal, holding that the appellants, a corporation, lacked locus standi to claim a refund of duty paid by the manufacturer ... Locus standi to claim refund of excise duty - entitlement to refund confined to person who paid the duty - incidence of excise duty on ultimate consumer - unjust enrichment in excise refund cases - Chapter X procedure and transfer of duty liabilityLocus standi to claim refund of excise duty - entitlement to refund confined to person who paid the duty - incidence of excise duty on ultimate consumer - unjust enrichment in excise refund cases - Chapter X procedure and transfer of duty liability - Whether the purchasers of furnace oil (appellants), who did not pay excise duty to the authorities, had locus standi to claim refund of duty paid by the manufacturer - HELD THAT: - The Tribunal upheld the preliminary objection that only the person who has paid duty to the Central Excise authorities is ordinarily entitled to claim a refund; a purchaser who has not made payment to the department lacks locus standi to seek refund. The court reviewed authorities holding that excise is an indirect tax whose ultimate incidence lies on the consumer and that refund relief, to avoid unjust enrichment, normally accrues to the person who bore the incidence (the ultimate consumer) or to the person who actually paid the duty. Division Bench decisions relied on by the appellants were examined and distinguished as addressing unjust enrichment and entitlement of ultimate consumers (or situations where incidence and restitution principles operated), not the present factual position where duty was paid unconditionally by the manufacturer at clearance. The Tribunal observed that where liability to pay duty is contractually or statutorily transferred to a person other than the manufacturer (for example under Chapter X procedures or Rule 196 consequences), both liability and the right to claim refund may pass; but those considerations do not assist the appellants since Chapter X procedure was not followed and I.O.C. paid duty at clearance. Having regard to the authorities and principles against unjust enrichment and as to who is the proper claimant, the appellants, being intermediaries and not having paid duty to the department, had no standing to claim refund or to pursue the appeals. [Paras 21, 22, 23, 24, 25]Preliminary objection upheld; appellants had no locus standi to claim refund or to file the appeal; appeal dismissed as not maintainable.Final Conclusion: The appeal is dismissed as not maintainable because the purchasers, who did not pay excise duty to the department, have no locus standi to claim refund of the duty paid by the manufacturer; the substantive merits were not decided. Issues Involved:1. Rejection of refund claims by the Assistant Collector of Central Excise.2. Applicability of exemption Notification No. 195/76-C.E.3. Compliance with Chapter X procedure of Central Excise Rules, 1944.4. Locus standi of the appellants to claim refund of duty paid by the manufacturer (I.O.C.).Detailed Analysis:1. Rejection of Refund Claims by the Assistant Collector of Central Excise:The appellants filed two refund claims totaling Rs. 14,68,257, which were rejected by the Assistant Collector of Central Excise, Burdwan. The appellants' subsequent appeal to the Appellate Collector of Central Excise, Calcutta, was also rejected, leading to the current appeal before the Tribunal. The Assistant Collector's order dated 30-7-1981 noted that the appellants did not follow the Chapter X procedure and did not produce documents evidencing payment of duty, deeming the claims time-barred.2. Applicability of Exemption Notification No. 195/76-C.E.:The refund claims pertained to the exemption Notification No. 195/76-C.E. dated 10-6-1976, which exempted furnace oil from duty in excess of forty rupees per kilolitre, provided it was used otherwise than as feedstock in the manufacture of fertilizers and the Chapter X procedure was followed. The appellants argued that the exemption was intended for the benefit of the buyers of the furnace oil and that the failure to follow Chapter X procedure should not bar their refund claims.3. Compliance with Chapter X Procedure of Central Excise Rules, 1944:The appellants purchased furnace oil from I.O.C. during the period 10-6-1976 to 9-10-1979, with excise duty paid at the normal rate by I.O.C. The procedure in Chapter X of the Central Excise Rules was not followed, as the CT-2 certificate required under the Chapter X procedure was not obtained until 2-5-1979. The Assistant Collector observed that furnace oil was received in violation of Notification No. 195/76, and even after obtaining the CT-2 certificate, other requirements of Chapter X procedure were not met.4. Locus Standi of the Appellants to Claim Refund of Duty Paid by the Manufacturer (I.O.C.):The Department raised a preliminary objection regarding the appellants' locus standi to claim a refund of the duty paid by I.O.C. The Department argued that only the person who paid the duty (I.O.C.) could claim the refund, citing several judicial decisions, including Union of India v. Silchar Electric Supply Company Ltd., Akhil Bandhav Chemical Industries v. Union of India, and Mahindra and Mahindra Ltd. v. Collector of Central Excise, Bombay. The Tribunal noted that these decisions supported the view that only the person who paid the duty could claim a refund.The appellants contended that Notification No. 195/76 linked the exemption to the end-use of the furnace oil, implying that the exemption was intended for the buyers. They argued that Rule 11, relating to claims for refund of duty, applied to 'any person' and not only to a manufacturer. However, the Tribunal found that the judgments cited by the appellants related to the question of unjust enrichment and were not directly relevant to the present case.The Tribunal concluded that the appellants, being a corporation functioning on commercial lines and not the ultimate consumers of the furnace oil, could not claim the refund. The ultimate consumers, such as farmers, who bore the burden of the duty, would be entitled to any remission or refund. The Tribunal held that the appellants had no locus standi to make the refund claim or to file further appeals, and accordingly dismissed the appeal as not maintainable.