2025 (11) TMI 1800 - AT - Central Excise

Excise refund allowed for World Bank road project; delay in certificate submission not fatal under Notification 108/95-CE

M/s. The Ramco Cements Ltd. Versus The Commissioner of GST & Central Excise, Tiruchirappalli

CESTAT Chennai allowed the appeal by the assessee-contractor, setting aside the order denying refund of excise duty paid on goods supplied for a World ... Refund of Excise duty paid - clearances were intended for implementation of projects under World Bank Loan Assistance eligible for Excise Duty exemption provided under Notification No.108/95--CE dated 28.08.1995 as amended - denial of refund on the ground of non-production of the certificate prescribed under proviso (C) to Notification No. 108/95-CE at or before the time of clearance - applicability of principles of unjust enrichment - HELD THAT:- The Appellant claimed to have filed supporting documents in support of availment of CENVAT credit for the duty value, non-payment of excise duty, debit entries in the ledger account of payments pertaining to buyer, credit entries in the ledger account of the buyer pertaining to the claimant against invoices in question, the closing balance of another claimant as reflected in the ledger in the books of the Appellant, supporting letter to this effect from the contractor declaring that no duty was reimbursed to the Appellant and that they had not taken any CENVAT credit for the duty paid by the Appellant for the supplies made during the period when the certificate was not produced. The Assessee is also not disputing the fact of delay in submission of the required certificate for clearance made during 05.01.2016, 20.03.2016 which, according to the Department, was required to be submitted at the commencement of or before affecting clearance of the goods. Moreover, there is no reason to suspect unjust enrichment since both the parties to the contract have agreed about the non-payment of excise duty and non-reimbursement of the same. Hence, the rejection of refund by the authorities is not in accordance with the provisions of Notification No.108/95-CE dated 28.08.1995 since the spirit of the above Notification is to exempt all excisable goods from payment of duty for implementation of road project which is approved under World Bank Loan Assistance Schemes. The impugned order is set aside - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether refund of excise duty paid on clearances of cement intended for World Bank funded road project could be denied for non-production of the certificate prescribed under proviso (C) to Notification No. 108/95-CE at or before the time of clearance. 1.2 Whether the refund claim was liable to be rejected on the ground of unjust enrichment for alleged failure to prove that the incidence of duty had not been passed on to the buyer. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Eligibility for refund under Notification No. 108/95-CE despite delayed submission of certificate Legal framework 2.1 The Court considered proviso (C) to Notification No. 108/95-CE dated 28.08.1995 (as amended), which requires the manufacturer to produce a specified certificate from the Project Implementing Authority before effecting clearance of goods for eligible World Bank funded projects in order to claim exemption. Interpretation and reasoning 2.2 It was undisputed that the cement in question was supplied for a project implemented under World Bank Loan Assistance and that such supplies were otherwise covered by the said Notification. 2.3 The manufacturer produced the prescribed certificate only on 09.03.2016, after clearances made between 05.01.2016 and 02.03.2016, and the Department relied on this delay to deny the exemption and consequent refund. 2.4 The Court noted that the refund claim related only to the duty actually paid and borne by the appellant on goods which were in fact supplied for a World Bank funded project, and that the authorities had not questioned the genuineness of the project or the intended use. 2.5 The Court held that the procedural requirement of producing the certificate before or at the time of clearance could not be construed so strictly as to defeat the substantive benefit of exemption and consequential refund, when the conditions of the Notification regarding the nature and use of the goods were otherwise satisfied. Conclusions 2.6 The denial of refund on the ground of delayed submission of the certificate under proviso (C) to Notification No. 108/95-CE was held to be incorrect in law, and the appellant was held eligible for refund of the duty paid on the subject clearances. Issue 2: Bar of unjust enrichment in the refund claim Interpretation and reasoning 2.7 The Department contended that ledger entries showed amounts inclusive of duty and that the closing balance in the buyer's ledger did not match the amount of duty claimed as refund, and that there was no invoice-wise correlation to prove that the incidence of duty had not been passed on. 2.8 The appellant produced letters from the buyer stating that (a) no CENVAT credit had been availed on the duty amount and (b) the excise duty amount had not been reimbursed or paid to the appellant. 2.9 The Court noted that both parties to the contract consistently affirmed non-payment and non-reimbursement of the excise duty and non-availment of CENVAT credit on such duty by the buyer. 2.10 In these circumstances, the Court found no reason to suspect unjust enrichment and held that the refund represented duty borne by the appellant alone. Conclusions 2.11 The objection of unjust enrichment was rejected, and it was held that the incidence of duty had not been passed on to the buyer; hence, the bar of unjust enrichment did not apply, and the refund was allowable. Overall disposition 2.12 The impugned appellate order and the original order rejecting the refund claim were set aside, and the appeal was allowed with consequential benefits as per law.