TaxTMI 
TaxTMI 
2025 (3) TMI 1397
X X X X Extracts X X X X
X X X X Extracts X X X X
....lers at Hosur, Mysore and Himachal Pradesh are clearing their final products directly to the dealers situated in various states and also through their subsidiary company viz. M/s. Sundaram Auto Components Limited for further sale to ultimate Customers. It appears that the Appellant is extending discounts to dealers from the selling price and as they had encountered certain practical difficulties in quantifying the actual abatements at the time of removal of excisable goods from their factory gate, requested for Provisional Assessment which was ordered by the jurisdictional Central Excise Authorities. 2.2 The Appellant was claiming abatements on the expenditure and discounts as detailed below: i. Cost of Transportation (Primary Transport) including Transit Insurance. ii. Free Service Coupon Charge (FSC) iii. Pre-delivery Inspection Charges (PDI) in respect of Three Wheelers. iv. Authorised Service Centre Incentives (ASC) v. Cash Discount and other Trade Discount in respect of Two Wheelers and Three Wheelers. 2.3 While finalising the provisional assessments for the period from 01.04.1999 to 31.03.2005, the abatements claimed by the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r sanction of refund. However, the impugned order denied the refund claim on the ground that the incidence of duty had been passed on to the ultimate buyers. (ii) Further, it was submitted that the abatement claimed on Free Service Charges (FSC) emanates from the Customers as against the assumption in the impugned order that abatements are passed on by the Appellant to the dealers first. In this regard, it was submitted that the actual FSC charges would be known to the Appellant from related documents like Free Service Coupons and services rendered to Customers, which were periodically submitted by dealers to their area offices. Only on verification of the free services rendered, the dealers are reimbursed. When the ultimate customers are not charged for the free services, it cannot be said that the burden of duty on such FSC was passed on to ultimate customers by the dealers. (iii) It was put forth that trade discounts extended for the benefit of the ultimate Customers are being reimbursed by the Appellant only where the proof of extension of benefit stands proved by the dealers. If the discounts are not extended to Customers through the invoice, a separate vouch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ultimate Customers by dealers. The reimbursement of PDI including the excise duty component was made by the Appellant by way of credit notes which fact was not disputed by the department. Hence it was contended that the refund claim could not be rejected on the grounds of unjust enrichment. (viii) It was contended that the goods are cleared on payment of excise duty to dealers who do not avail any CENVAT credit and the credit notes issued returning the abatements/ discounts to the dealers proves that the incidence of duty was borne by the Appellant only. The Appellant places reliance on the decision of the CESTAT, Chandigarh in the case of Johnsons Mathey (India) Ltd. Vs. Commissioner of Central Excise [2017 (3) TMI 1449-CESTAT, Chandigarh] wherein it was held that when the buyer had not availed CENVAT Credit of excise duty paid, the debit note issued by the buyer is a substantial evidence to pass the bar of unjust enrichment in the light of the decision of the Hon'ble Apex Court in the case of Addison & Co. Hence the presumption of unjust enrichment under Section 12 B of Central Excise Act stands rebutted. (ix) It was vehemently contended that Paragraphs 35 and 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duty, it cannot be said that it is not entitled for the refund of the excess duty paid. In view of the facts of this case being different from Civil Appeal No. 7906 of 2002, the appeal preferred by the Revenue is dismissed." (x) It was contended that the presumption of passing on the incidence of duty in terms of Section 12 B of the Central Excise Act is not applicable for duty provisionally paid, otherwise the concept of provisional assessment loses its significance. It was submitted that if the presumption under Section 12 B is applied for provisional duty payment also, no refund could accrue on account of finalisation of provisional assessment which is contrary to Rule 7(4) of Central Excise Rules, 2002 which allows refund of excess duty. It was submitted that the presumption for duty paid provisionally is applicable only in cases where the buyer takes CENVAT Credit of Provisional duty paid or where the price is ex-duty. However, in the appellants case herein, the buyer-dealer including the ultimate customer does not avail CENVAT Credit and the price of the vehicles is not ex-duty but always cum duty. (xi) It was contended that the doctrine of unjust enrichment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i] wherein the above discussed precedents of Addison Case, have been followed. It was further submitted that the decision of the Hon'ble Madras High Court in TVS Electronics Ltd. Vs. Asst. Commissioner of Central Excise, Chennai [2017 (348) ELT 630 (Mad.)] is nothing but a reflection of the principle laid down in the Addison case. In the said decision, the Hon'ble High Court remanded the matter back to undertake the verification of who had borne the burden of duty to pass the test of unjust enrichment but he has submitted that it was not applicable to the facts of the present case and therefore the finding in Paragraph 10 of the impugned order is incorrect. 4.2 It was contended that the doctrine of "unjust enrichment" was made applicable to Provisional assessments by way of insertion of Rule 9B(5) of the Central Excise Rules, 1944 w.e.f. 26.05.1999 vide Notification No. 45/99-CE (NT) dated 25.06.1999 and till such date the said doctrine is not applicable. 5. The Ld. Authorised Representative Ms. Anandalakshmi Ganeshram representing the Department reiterated the findings of the lower Adjudicating Authority. She has argued that the Appellants are not eligible for refunds being ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll, unless the contrary is proved by him, be deemed to have passsed on the full incidence of such duty to the buyer of such goods." The provisions of Section 12B of the Central Excise Act, 1944, presume that excise duty burden is borne by the ultimate customer though the same is a rebuttable presumption. 10. It is evident from the records that the Original Authority in the denova Order-in-Original No. 08/2016 dated 05.08.2016 has arrived at the decision that the appellant has borne the excise duty burden and not passed on to the dealers after scrutinizing the credit notes, Chartered Accountant's certificate, extract of ledger for discounts, etc., and ordered for sanction of the refunds. Whereas in the impugned orders dated 14.09.2017, the Commissioner of GST and Central Excise (Appeals), Coimbatore has held that refund claims were hit by the bar of unjust enrichment as the appellant has not conclusively established that the burden of excise duty in relation to which such refunds are claimed has not been passed on by him to any other person (ultimate consumer) and the verification process done by the Original Adjudicating Authority was only confined to the first buyers i.e., D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Revenue against the order dated 20-10-1993 of the Collector of Central Excise. The Tribunal held that the Assessee would be entitled to grant of refund only if he had not passed on the duty burden to his buyers. It was also held that the buyer in turn, would be entitled to claim refund only if he has not passed on the incidence of duty to any other person. It was further held by the Tribunal that the event which gives rise to cause of action for refund is payment of duty made in respect of goods cleared from the factory and once the duty burden has been passed on to the buyer at the time of clearance, issuance of credit note at a later point of time would not entitle the Assessee to claim any refund. The Tribunal also held that burden of duty is normally passed by the manufacturer and the dealer to the ultimate consumer. 8. The Assessee filed an application for reference of questions arising out of the final order dated 7-12-1996. The Tribunal referred the following questions for consideration of the High Court by its order dated 28-8-1998, taking note of the fact of the existence of divergent views on the point. "1. Whether by passing on the duty element on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....whereby the refund of any duty was proposed to be made only to the person who ultimately bears the incidence of such duty. He submitted that it would be necessary for a verification to be done to find out as to who actually bore the burden of duty. According to him such verification would not stop with the manufacturer and his buyer but would extend to the ultimate buyer i.e. the consumer. He submitted that there can be no claim for refund on the basis of post clearance transactions. He further submitted that there is a presumption, though rebuttable, that the full incidence of the duty has passed on to the buyer of the goods. The learned Additional Solicitor General has strongly relied upon Mafatlal Industries Ltd. and Others v. Union of India And Ors., reported in (1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.) to support his contentions on unjust enrichment. ... .... .... 12. ...................... While referring to the relevant provisions of Section 11B, 12A and 12B of the Act, Mr. Venkatraman submitted that the buyer mentioned in the said provisions would be the buyer of the goods from the manufacturer Assessee. He stressed upon Clauses 'a' ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, (40 of 1991), such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act :] [Provided further that] the limitation of [one year] shall not apply where any duty has been paid under protest. * * * * (2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund : Provided that the amount of duty of excise as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) rebate of duty of excise on excisable goods exported out of India or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dence of duty was passed on by the Assessee did not pass it on to any other person. There is a statutory presumption under Section 12B of the Act that the duty has been passed on to the ultimate consumer. It is clear from the facts of the instant case that the duty which was originally paid by the Assessee was passed on. The refund claimed by the Assessee is for an amount which is part of the excise duty paid earlier and passed on. The Assessee who did not bear the burden of the duty, though entitled to claim deduction, is not entitled for a refund as he would be unjustly enriched. It will be useful to refer to the relevant para of Mafatlal Industries v. Union of India (supra) in this connection. "108. (iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be restricted only to the manufacturer and his buyer. The ultimate buyer/consumer will not figure in the scheme of Sections 11B, 12A, 12B and 12C of the Act. This submission was accepted by the High Court in the impugned judgment. We do not approve the findings of the High Court in this regard. 19. The sine qua non for a claim for refund as contemplated in Section 11B of the Act is that the claimant has to establish that the amount of duty of excise in relation to which such refund is claimed was paid by him and that the incidence of such duty has not been passed on by him to any other person. Section 11B(2) provides that, in case it is found that a part of duty of excise paid is refundable, the amount shall be credited to the fund. Section 2(ee) defines Fund to mean the Consumer Welfare Fund established under Section 12C. There is a proviso to Section 11B(2) which postulates that the amount of excise duty which is refundable may be paid to the applicant instead of being credited to the fund, if such amount is relatable to the duty of excise paid by the manufacturer and he had not passed on the incidence of such duty to any other person. Clause (e) to proviso of Section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is set aside. .... .... .... 25. The Assessee i.e. Andhra Pradesh Paper Mills Ltd. manufactures Paper and Paper boards. There is no dispute that excise duty is paid by the Assessee and the same is passed on to its buyers. Applications were filed by the Assessee for refund of amounts towards trade discounts that were given to its buyers. The refund claim is on the basis of credit notes raised by the Assessee subsequent to the sale/removal of goods. The credit notes that were raised by the Assessee were towards trade discounts which included the component of excise duty. The refund claims of the Assessees were rejected by the Assistant Commissioner of Central Excise, Rajahmundry Division. The Commissioner Customs, Central Excise (Appeals), Hyderabad confirmed the said orders in the appeals filed by the Assessee. The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Division, Bangalore dismissed the appeals filed by the Assessee. 26. The Assessee approached the High Court of Andhra Pradesh by filing Central Excise Appeals. By a judgment dated 19-2-2014, the High Court of Andhra Pradesh allowed the Central Excise Appeal Nos. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....02. The Appeal filed by the Revenue is allowed in terms of the judgment in Civil Appeal No. 7906 of 2002. .... .... .... 33. In Central Excise Appeal No. 34 of 2005 filed by the Union of India through Commissioner of Central Excise, Jaipur, the High Court of Judicature for Rajasthan at Jodhpur confirmed the order of the Central Excise and Service Tax Appellate Tribunal. Challenging the said judgment of the High Court dated 26-11-2008, the Union of India has filed the above Appeal. The contention raised by the Revenue before the High Court regarding the presumption under Section 12-B of the Act was rejected by the High Court by holding that once the Assessee shows that he has not passed on the duty to his buyer, then the burden shifts to the Revenue. The submission that there is a presumption of the duty being passed on to the ultimate consumer was not accepted by the High Court. The High Court held that the claim for refund should be accepted once the Assessee shows that he has raised a credit note regarding the excess duty. The High Court had further held that passing on the burden of excise duty to the ultimate buyer cannot be left in the realm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....manufacturer or his buyer and any enquiry pertaining to unjust enrichment should be restricted only to the manufacturer and his buyer and the ultimate buyer or customer will not figure in the Scheme of Sections 11B, 12A, 12B and 12C of the Act. The Court has held that sine-qua-non for a claim for refund as contemplated in Section 11B of the Act is that the claimant has to establish that the amount of duty of excise in relation to which such refund is claimed was paid by him and that the incidence of duty has not been passed on by him to any other person. The 'buyer' referred to Clause (e) to Section 11B(2) of the Act ibid is not restricted only to the first buyer from the manufacturer and the buyer mentioned in the above Clause can be a buyer downstream as well. 12. We find that the appellant who are the manufacturers of Motor Cycles and three wheelers are availing abatement in respect of (i) Cost of Transportation (Primary Transport) including Transit Insurance (ii) Free Service Coupon Charge (FSC) (iii) Pre-delivery Inspection Charges (PDI) (iv) Authorised Service Centre Incentives (ASC) and (v) Cash Discounts and Trade Discounts. The eligibility for these abatements was final....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ne of unjust enrichment is applicable only in case of refund claim to be sanctioned but not to the cases where the refunds have been already sanctioned relying on Hon'ble High Court of Madras in the case of Madras Rubber factory Vs. Assistant Collector of central Excise, Madras [1981 (8) ELT 565 (Mad.)]. The appellant has also mentioned about pre-audit of the refund claim before sanction and as such Department could not take a different stand after grant of refund. The appellant has not passed on the burden of duty to its buyer as such they are bound to be given refund of excess duty paid on the basis of doctrine of restitution relying on the decision of the constitutional bench of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India [1997(89) ELT 247(SC)]. The doctrine of unjust enrichment was made applicable to the provisional assessment by way of insertion of Rule 9B(5) of Central Excise Rules, 1944 w.e.f. 26.05.1999 and as such the doctrine of unjust enrichment is not applicable to their appeals. We find all these submissions of the appellant were considered by the Lower Appellate Authority in Paragraph Nos. 13 to 18 and adequately countered. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these appeals have to be considered. It is not known as to how much and what kind of abatements were considered at the time of sale of Motor Cycles to their dealers for provisional payment of excise duty. It is on record that certain abatements were taken into consideration to ascertain the transaction value for clearance of Motor Cycles by the appellant though it is not clear as to whether all abatements as discussed in Paragraph 2.2 as above have been considered or not and also quantum of such abatements as the transaction value and excise duty payment arrived would be dependent upon such quantification arrived at. 18. At this juncture, we refer to the ratio of the decision in the case of TVS Electronics Ltd. Vs. Assistant Commissioner of Central Excise, Chennai [2017 (348) ELT 630 (Mad.)] following the judgement in the case of Addison's case cited supra. The relevant extracts of the said judgement have been reproduced below for the sake of convenience:- "9. With respect to the aspect of unjust enrichment, the Bench at Para 19 of the judgment notes that the sine qua non for a claim of refund in terms of Section 11B of the Central Excise Act is the establishment by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Department, to enquire about the ultimate buyer who has actually paid the duty is not a futile exercise as refund can be granted only to a person who has paid the duty and not to anyone else and if the ultimate consumer cannot be identified, the amount would be retained in the fund. This is more so because the word "buyer" in clause (e) to proviso to Section 11B(2) of the Act cannot be restricted to the first buyer from the manufacturer. The basis for the claim of refund was on account of the fact that on or after 31-5-1990 the rate of duty was NIL. For the period between 31-5-1990 and 6-7-1990 the assessee paid additional duty of excise and had passed on the incidence of duty to its customers at the time of issue invoices/gate passes. Therefore, the subsequent issuance of credit note is of little avail as the incidence for the excise duty is deemed to have been passed on by the assessee to its buyer and therefore not entitled for filing an application for refund under Section 11B of the Act merely because they subsequently came to know that the rate of duty was NIL and credit notes are said to have been issued to the buyer. Thus, we find that the Tribunal was right in affi....