2026 (2) TMI 663 - AT - Central Excise

Incidence of duty not presumed passed on where invoice comparison and CA certificate show absorption, enabling refund.

Whether an assessee is entitled to refund of central excise duty where Revenue alleges the duty was passed on depends on evidentiary proof of incidence. ... Entitlement to refund of Central Excise duty - Incidence of duty - Unjust enrichment - pre- and post-payment of duty - documentary evidence to corroborate - Chartered Accountant certificate - HELD THAT:- We find that Tribunal in the case of M/s Dhariwal Industries [2005 (7) TMI 160 - CESTAT, MUMBAI] held categorically that duty is required to be indicated in the invoices in terms of Rule 9 of CENVAT Credit Rules, 2004 and that mere mentioning of duty in the invoices is not in itself a conclusive evidence that the incidence of duty has been passed on; if the prices are kept constant by keeping the profit margin low, it can be said that the incidence of duty has been borne by the appellant and has not been passed on to the customers. We further find that the Commissioner (Appeals) relied upon the certificate issued by the Chartered Accountant. We find that Revenue in their appeal did not adduce any evidence to arraign the said certificate. Under these circumstances, we find that the certificate issued by a professional, after examining the records of the respondent cannot be brushed aside. We find that there is merit in the argument of the respondent that nothing in the grounds of appeal points at incorrectness of the certificate issued by the Chartered Accountant. In fact, appellant-revenue has not controverted the certificate. It is trite law that the Chartered Accountant Certificate is one of the sufficient conditions to substantiate that the incidence of duty has not been passed on to the customers; the onus to disprove the Chartered Accountant Certificate is on the Department and the same has not been discharged. The certificate was issued after going through the accounts of the appellants and after satisfying himself about the truthfulness of the same. A certificate given by a professional cannot be dis-regarded unless it is proved to be blatantly wrong and contrary to the facts and evidence available on the hand. Thus, the certificate given by the Chartered Accountant has an evidentiary value and cannot be rejected in an arbitrary manner. Thus, we find no merit in the appeal filed by the Revenue. Accordingly, the same stands dismissed. The Stay application filed by the Revenue is, accordingly, rejected. Issues: Whether the respondent (assessee) is entitled to refund of Central Excise duty paid where Revenue contends the incidence of duty was passed on to buyers, and whether the Commissioner (Appeals) correctly held that the incidence of duty was borne by the assessee and not passed on.Analysis: The Tribunal examined the comparative invoices pre- and post-payment of duty, the Chartered Accountant certificate and the respondent's price lists and commercial circumstances. The Appellate Authority compiled a chart showing that gross invoice prices remained substantially constant after the assessee began paying duty, indicating absorption of duty by the assessee rather than passing it on. The Tribunal analysed precedent holding that statutory rules require duty particulars in invoices (Rule 9 of the Cenvat Credit Rules, 2004) and that mere indication of duty in invoices is not conclusive proof of passing on the incidence of duty. The Tribunal considered authorities including Mafatlal Industries and Dhariwal Industries and applied the principle that, where additional evidence (invoice comparison, CA certificate, market/competition considerations, payment under protest and unchanged gross prices) supports non-passing of duty, the principle of unjust enrichment does not bar refund under Section 11B of the Central Excise Act, 1944. The Tribunal also noted that the Department did not controvert or displace the Chartered Accountant certificate and did not produce evidence rebutting the showing that prices were kept constant for commercial reasons.Conclusion: The Tribunal upheld the Commissioner (Appeals) finding that the incidence of duty was borne by the assessee and that the refund claim is not hit by unjust enrichment; the Revenue's appeal is dismissed (decision in favour of the assessee).