2025 (11) TMI 1336 - AT - Central Excise

Refund of duty on ambulances rejected as appellant lacked locus standi under N/N. 6/2006-CE, unjust enrichment unproved

M/s GVK Emergency Management and Research Institute Versus Commissioner of Central Excise, Delhi-IV

Appeal before CESTAT against rejection of refund of duty paid under protest on ambulances was dismissed. The Tribunal held that the appellant was neither ... Refund of amount paid under protest - rejection on the ground that the N/N.6/2006-CE dated 01.03.2006 envisages refund to the manufacturer and the appellant not being the manufacturer was not entitled to the refund claim - entitlement for concessional rate in terms of Sl. No. 41A and Sl. No. 34 of N/N. 6/2006 -CE dated 1.3.2006, as amended - applicability of doctrine of unjust enrichment - HELD THAT:- The appellant is not a manufacturer or a buyer of the impugned goods, the differential duty paid on which the appellant seeks to claim as refund. The vehicles are not registered in their names. They are not the owners of the vehicles. No invoice or any document that can be recognized or correlated with the scheme of Refund under the Central Excise Act, is produced by the appellant. The appellant has signed a memorandum of understanding (MOU) with the Government of Karnataka to run the ambulances under the Arogya kavacha scheme. The appellants claim that the duty that was required to be paid by the fabricator M/s BHPL was in fact paid by them. The MOU also doesn’t appear to recognize the appellants as owners of the Vehicles. As per the MOU they are to maintain, upkeep and ply the ambulances as and when required. Government of Karnataka has sanctioned Certain amount for the running of the scheme. There is no mention of the reimbursement of taxes if any paid by the appellant. If the appellant has undertaken the activity as per MOU or as part of Corporate Social Responsibility, they cannot enrich themselves at the cost of the Government. It is found that not only the appellant but also M/s BHPL, the manufacturer fabricator of the impugned goods, have not fulfilled any of the conditions and have not followed any procedure laid down as above. Under the Circumstances, it would be impossible for the Revenue authorities to process the Refund claim and grant refund. If the appellant wished to obtain the refund of duty paid in terms of the above notification, it was incumbent upon them to satisfy the authorities that they satisfy the conditions and are eligible for the refund and that they have followed the prescribed procedures. A perusal of the above notification indicates that the fabricator, M/s BHPL as manufacturers were only eligible to apply for the refund provided, they satisfied the conditions - It has been held by the Hon’ble Supreme Court in a number of cases that the burden to prove the eligibility is on the person who claims the exemption or benefit. If the statute prescribed that the refunds under the said notification shall be operationalized and granted as per the procedure laid down, the same must be followed. In the instant case, the appellant doesn’t even fulfil the eligibility criteria even if one could argue that the procedures can be relaxed. When even the mandatory and substantive conditions are not fulfilled, the appellant has no locus standi to claim the refund. Thus, the appellant could not establish their eligibility for the refund in question. We hold that they are neither a manufacturer nor buyer nor the owners of vehicles and thus have not fulfilled the substantive conditions for refund - there are no reasons whatsoever to interfere with the impugned order - appeal dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Entitlement of the impugned ambulances to concessional rate / refund under Notification No. 6/2006-CE. 1.2 Eligibility and locus standi of the appellant to seek refund under Section 11B of the Central Excise Act, 1944 read with Notification No. 6/2006-CE. 1.3 Compliance with the mandatory conditions and procedure prescribed in condition No. 8 of Notification No. 6/2006-CE by the manufacturer/fabricator and the appellant. 1.4 Applicability of the doctrine of unjust enrichment and burden of proof as to incidence of duty. 2. ISSUE-WISE DETAILED ANALYSIS 2.1 Entitlement of the impugned ambulances to concessional rate / refund under Notification No. 6/2006-CE Interpretation and reasoning 2.1.1 The Tribunal proceeded on the basis that the fabrication of vehicles by the fabricator amounted to 'manufacture' and that Central Excise duty was correctly leviable and paid on the ambulances cleared to the State Government. 2.1.2 The appellant's claim was not examined as a dispute on classification or rate of duty but as a claim to refund of duty already paid, governed by the conditions and mechanism of Notification No. 6/2006-CE read with Section 11B. 2.1.3 The Tribunal held that even assuming concessional benefit was otherwise available, refund could be granted only if the person claiming it fell within the category recognized by the statute/notification and complied with all substantive and procedural conditions. Conclusions 2.1.4 The ambulances, if eligible for concessional rate, could attract refund only through the statutory mechanism prescribed in Notification No. 6/2006-CE, which is available to the 'manufacturer' subject to strict compliance. The appellant's claim could not be sustained independently of this framework. 2.2 Eligibility and locus standi of the appellant to seek refund under Section 11B and Notification No. 6/2006-CE Legal framework 2.2.1 Section 11B(2)(e) of the Central Excise Act, 1944 provides for refund to the 'buyer' if the amount is relatable to the duty of excise borne by such buyer and the incidence has not been passed on to any other person. 2.2.2 Condition No. 8 of Notification No. 6/2006-CE mandates that the 'manufacturer' (a) pays duty at the time of clearance; (b) takes credit of the excess duty in his Account Current; and (c) files a claim for refund within six months, along with specified documents, for the refund mechanism to operate. Interpretation and reasoning 2.2.3 The Tribunal found, as a matter of fact, that the appellant was not the manufacturer or fabricator of the ambulances. The manufacturer/fabricator was a separate entity which had paid the duty. 2.2.4 The vehicles were registered in the names of District Health and Family Welfare Officers and the ownership of capital assets vested in the State Government under the MOU. The appellant neither owned the vehicles nor was shown as buyer under any invoice or statutory document. 2.2.5 The MOU recognized the appellant only as a nodal agency to manage and operate the ambulance service; it did not treat the appellant as owner or purchaser of the vehicles, nor did it provide for reimbursement/refund of taxes to the appellant in a manner recognized by excise law. 2.2.6 Correspondence and 'no objection' letters from the State Government and the manufacturer, authorizing the appellant to pay duty or to claim refund, were treated as internal arrangements inter se the parties and not as a legal basis for entitlement under the Central Excise Act and the notification. 2.2.7 The Tribunal emphasized that Central Excise law recognizes only the manufacturer for payment of duty and the manufacturer/buyer for the purpose of refund. The appellant did not establish itself as either manufacturer, buyer, or even consumer of the ambulances who had borne the incidence of duty. 2.2.8 The Tribunal relied on the principle, reiterated in decisions such as UOI v. Mahendra Singh and State of Jharkhand v. Ambey Cements, that where a statute prescribes that an act is to be done in a particular manner, it must be done in that manner and in no other, particularly in the context of exemption/refund provisions which must be strictly construed. Conclusions 2.2.9 The appellant had no locus standi under Section 11B or Notification No. 6/2006-CE to claim refund of the duty paid on the ambulances, as it failed to establish that it was the manufacturer, buyer, owner, or legally recognized bearer of the duty incidence. 2.2.10 Any entitlement to refund, if otherwise available, would lie with the manufacturer/fabricator, subject to fulfilment of the notification conditions, and not with the appellant. 2.3 Compliance with mandatory conditions and procedure under condition No. 8 of Notification No. 6/2006-CE Legal framework 2.3.1 Condition No. 8 of Notification No. 6/2006-CE specifies that: (a) The manufacturer must pay duty at the applicable rate at the time of clearance; (b) The manufacturer must take credit of the excess duty in his Account Current maintained in terms of the Excise Manual; (c) The manufacturer must file a refund claim within six months from the date of payment, accompanied by documents such as (i) intimation of credit taken; (ii) certificate from the State Transport Authority regarding registration for sole use as ambulance; (iii) document evidencing payment of duty; and (iv)/(v) evidence or declaration regarding collection/non-collection of excess duty from the buyer. Interpretation and reasoning 2.3.2 The Tribunal recorded that neither the appellant nor the manufacturer/fabricator had followed the mechanism prescribed in condition No. 8. There was no evidence that the manufacturer had taken credit of the excess duty in the Account Current, filed a refund claim within time, or submitted the required documents to the jurisdictional authority. 2.3.3 The statutory scheme and the notification contemplate the manufacturer as the only eligible claimant for the particular refund mechanism; the Tribunal noted that the appellant's attempt to claim the manufacturer's refund on the strength of internal authorisations was not supported by the statutory text. 2.3.4 Citing binding precedents on strict construction of exemption and refund provisions, the Tribunal held that both substantive eligibility criteria and procedural steps under the notification were mandatory. Non-compliance rendered the refund claim unprocessable. 2.3.5 The Tribunal rejected any notion of relaxing or reworking the statutory procedure, referring also to the Supreme Court's observations in Union of India v. VKC Footsteps India Pvt Ltd that courts cannot redraw statutory boundaries or expand refund provisions based on abstract doctrines or policy considerations. Conclusions 2.3.6 The mandatory and substantive conditions in condition No. 8 of Notification No. 6/2006-CE were not fulfilled by the manufacturer/fabricator or the appellant. 2.3.7 In the absence of compliance with the prescribed mechanism, the Revenue could not lawfully process or grant the refund, and the claim was liable to be rejected on this ground alone. 2.4 Applicability of doctrine of unjust enrichment and burden of proof regarding incidence of duty Legal framework 2.4.1 Section 11B embodies the doctrine of unjust enrichment by requiring proof that the incidence of duty has not been passed on to any other person for refund to be sanctioned. 2.4.2 The Tribunal relied on Supreme Court authority that the burden to prove that the incidence of duty was not passed on lies on the claimant and that, though a consumer may apply for refund, verification must establish who actually bore the duty. Interpretation and reasoning 2.4.3 The Tribunal noted that there was no invoice or bill evidencing that the appellant had purchased the vehicles or borne the excise duty as buyer; registration and MOU documents showed the State Government/District Health authorities as owners. 2.4.4 In the absence of such primary transactional documents, it was not possible to ascertain whether the duty incidence had been passed on to the State Government or any other entity. Mere letters, authorisations and a Chartered Accountant's certificate were not treated as adequate to discharge the statutory burden. 2.4.5 The Tribunal additionally recorded that the appellant was 'not even a consumer' of the vehicles within the meaning accepted in prior Supreme Court rulings, further weakening its position as a potential beneficiary under Section 11B(2)(e). Conclusions 2.4.6 The appellant failed to discharge the burden of proving that it had borne the incidence of duty and had not passed it on to any other person. 2.4.7 Independently of the locus and notification issues, the doctrine of unjust enrichment also operated against the appellant's refund claim. 2.5 Overall disposition 2.5.1 The Tribunal held that the appellant was neither a manufacturer, buyer, owner, nor consumer of the ambulances; had not satisfied the substantive eligibility criteria for refund; and had not complied with the mandatory conditions and procedure under Notification No. 6/2006-CE and Section 11B. 2.5.2 Finding no legal basis to interfere with the order rejecting the refund, the Tribunal dismissed the appeal.