Appellate Tribunal and Supreme Court rule in favor of assessee for duty refund.

The Appellate Tribunal CEGAT, Mumbai and subsequently the Supreme Court ruled in favor of the assessee, determining that the duty demanded was not payable as the goods were not excisable. The Collector (Appeals) ordered the refund to be credited to the Consumer Welfare Fund, which was challenged by the department. However, the Tribunal upheld the decision, emphasizing the non-passing on of duty incidence and the unreasonable delay in refunding the amount, directing the refund to the assessee within a month.

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Issues:
1. Refund claim of duty paid by the assessee.
2. Verification of passing on the incidence of duty.
3. Applicability of Section 11B in the case.
4. Delay in refunding the amount.

Refund Claim of Duty Paid by the Assessee:
The appeal before the Appellate Tribunal CEGAT, Mumbai pertained to a deposit of approximately Rs. 80 lakhs made by the respondent in 1987 in response to a demand for duty short levied on sulphur trioxide. The Tribunal, subsequently upheld by the Supreme Court, ruled that the duty demanded was not payable as the goods were not marketable and thus not excisable. The assessee, following the Tribunal's order, requested a refund of the amount paid. Despite the rejection of the claim by the Assistant Collector, the Collector (Appeals) accepted that the duty paid had not been passed on to customers and ordered the refund to be credited to the Consumer Welfare Fund. The department appealed against this decision.

Verification of Passing on the Incidence of Duty:
The Collector (Appeals) found that the incidence of duty had not been passed on by the assessee, contrary to the Assistant Collector's conclusion. The matter was remanded for verification, and upon reevaluation, the Collector (Appeals) allowed the appeal and directed the refund to the assessee. The department challenged this decision, arguing that the duty had been passed on. However, the Tribunal found no merit in the department's appeal, emphasizing that there was no evidence to successfully challenge the conclusion that the duty incidence had not been passed on.

Applicability of Section 11B in the Case:
The Tribunal cited a judgment by the Bombay High Court in Suvidha Limited v. Union of India, which deemed the department's proposal to deny the refund as dishonest and baseless. The High Court clarified that a deposit under section 35F is not a payment of duty but a pre-deposit for appeal rights, mandating its refund upon appeal success. The Supreme Court had dismissed the department's appeal against this order. Additionally, the Tribunal highlighted that the pendency of the issue before the Supreme Court did not justify withholding the refund, further reinforcing the Collector (Appeals)'s decision.

Delay in Refunding the Amount:
The Tribunal noted that the amount was paid by the assessee 13 years prior, deeming the delay in refunding unreasonable. In response to the respondent's advocate's plea, the Tribunal directed the refund to be made to the assessee within a month from the receipt of the order, emphasizing the necessity for prompt action in settling the refund claim.

In conclusion, the Tribunal dismissed the department's appeal, upholding the Collector (Appeals)'s decision to refund the amount to the assessee due to the non-passing on of duty incidence and the unreasonable delay in processing the refund.

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