TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 550
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....ment in terms of Rule 7 of the Central Excise Rules, 2002 on the impugned abatements such as freight, free service charges and discounts such as institutional sales, Money Spinner Scheme, ASC Redistribution Incentive scheme, Growth Incentive, Dealer Incentive, Retail Incentive Scheme, Billing Incentive Scheme, BS-III discount, free insurance scheme discount, CSD claim etc. since the quantum of which could not been ascertained at the time of clearance from their factory. After receipt of the exact quantum of discounts etc. on which duty was paid, the appellant filed the documents for finalization of assessment. On finalization of assessment, the amount of duty excess paid and short-paid during the relevant period have been determined and the adjudicating authority accordingly quantified the amount of refund due to excess payment of duty admissible to the appellant. In some of the orders, the Department allowed 'netting off' i.e. the duty excess paid to the duty short-paid during the particular period and quantified the amount of admissible or duty payable by the appellant. The Revenue has mostly challenged such action of the Department as contrary to the provisions of law in the app....
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....aid order has attained finality. He has submitted the Department has filed four appeals bearing No. E/3234/2012, E/3233/2012, E/20683/2019 and E/20294/2019 challenging the respective Orders-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mysore that 'netting off' of excess and short-paid duty cannot be permitted under law. He has submitted that the issue is no more res integra and considered by the Tribunal in the following cases:- i. Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE, LTU, Bangalore [2012(276) ELT 332 (Kar.)] ii. Hindustan Zinc Ltd. Vs. CCE, Jaipur [2016(336) ELT 328 (Tri. Del.)] iii. Jonas Woodhead & Sons (I) Ltd. Vs. CCE, Chennai- IV [2015(329) ELT 577 (Tri. Chennai)] iv. JK Tyres & Industries Ltd. Vs. CCE, Mysore [2023(12) TMI 899 - CESTAT BANGALORE] 3.3. He has further submitted that adjustment of excess duty arising out of provisional assessment is permissible notwithstanding the bar of unjust enrichment and once it is established that excess duty has been paid, the same shall rightly be set off against the duty short paid to arrive at the net liability i.e. refund / duty payable. It is only the amount remaining after such netting off ....
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....rred to the judgment in the case of Johnsons Matthey (India) Ltd. Vs. CCE [2017 (3) TMI 1449 CESTAT CHANDIGARH] and Sudhir Papers Ltd. Vs. CCE, Bangalore-I [2012(276) ELT 304 (Kar.)] 3.6. He has submitted that in Addison's case, it is held that if it is not possible to identify the person / persons who have borne the duty, the amount of excise duty so collected in excess will remain in the fund which will be utilized for the benefit of the consumers as provided in Section 12D of the Central Excise Act, 1944. In the present case, since it is identified that the appellant is the person who has borne the duty and no duty has been passed on to the dealers, then the amount of excess excise duty is to be refund to the appellant. The question of unjust enrichment stands satisfied at this stage itself and further verification whether the dealer has passed on duty incident to the consumers is irrelevant and uncalled for. 3.7. On various abatements / discounts passed on, the learned advocate has submitted as follows:- ➢ The dealer provides free service to the buyer of the vehicle on production of the free service coupon by incurring expenditure from the dealer margin. ➢ T....
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....ltimate customers are not charged for the free services, it cannot be said that the burden of duty on such FSC was passed on to the ultimate customers by the dealers. ➢ Therefore, it is clear that the benefit of the abatement pertaining to FSC reimbursements has percolated to the end customer by way of provision of free service. Such being the case, there is no unjust enrichment at the hands of the Appellant and the excess duty paid is rightly eligible as refund. ➢ Similar to FSC, the Appellant also extends trade discounts to the ultimate customer through their dealers. The trade discounts are of different types. Some of them are: i. Discounts on purchase during the festival season; ii. Free insurance, viz., the premium for insurance is borne by the Appellant and paid directly to the insurance company; iii. Arranging interest free financing or finance at reduced rate. ➢ The end customer approaches the dealer with the knowledge of such discounts/abatements. Even in cases where the benefits are extended to the dealers as per their discretion, the reimbursement of the discount is made by the Appellant only in those cases where the proof of such extensi....
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....incidence to the customer is irrelevant. 4. Learned AR for the Revenue has reiterated the findings of the learned Commissioner(Appeals) in rejecting the refund claims. Also, he has reiterated the grounds of appeal wherever Revenue has filed appeal against the orders of the Commissioner(Appeals) allowing netting off of the duty. 5. Heard both sides and perused the records. 6. The issues involved in the present appeals filed by both Revenue and assessee are (i) after finalization of provisional assessment, whether netting off of duty is permissible and (ii) amount claimed as refund during the relevant period is hit by bar of unjust enrichment. 7. On the issue relating to netting off of duty, this Tribunal in the case of JK Tyres & Industries Ltd. Vs. CCE, Mysore (supra), following the judgment of the jurisdictional High Court in the case of Principal Commissioner of Central Tax, Mysore Vs. Vikrant Tyres Ltd. (supra), held as follows:- 8. The short question involved in these present appeals for determination is, whether the principles of unjust enrichment be applicable to the amount excess paid before adjusting the same with the amount short-paid while finalising provisional ass....
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.... TVS Electronics Ltd. case (supra) which followed the judgment in Addison & Co. Ltd. passed by the Hon'ble Supreme Court in directing that the refund amount arising due to provisional assessment be subjected to unjust enrichment. 12. The appellant's contention on the other hand is that the very purpose of provisional assessment is for adjustment of excess duty-paid to short-paid during a particular period and determining the net effect of the duty, that is, either by way of payment or seeking refund of the amount paid. In support they referred to the judgment of jurisdictional High Court in the case of Vikrant Tyres Ltd's case and in Toyota Kirloskar Auto Parts Pvt. Ltd's case(supra). 13. The Revenue's argument may seem attractive in view of the judgment of Hon'ble Madras High Court in TVS Electronics's case(supra), but we find that the jurisdictional Hon'ble Karnataka High Court in the appellant's own case taking note of the judgment of the Hon'ble Supreme Court in Addison & Co. Ltd. case and in the context of finalisation of provisional assessment for different period of the same assessee held as follows: "14. In Addison & Co. Ltd., supra, the Hon'ble Apex Court has held th....
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.... of provisional assessment. The authorities have admitted that the credit notes were issued by the assessee to their dealer representing various discounts which have been actually passed on, in accordance with marketing circulars/policies. It is also observed that on verification of sample depot invoices at the time of completion of provisional assessment, that the assessee has not issued any cenvatable invoice from the depot which are prescribed document for availment of cenvat credit under Cenvat Credit Rules, 2004. Thus, it cannot be held that the assessee has not subjected to the test of unjust enrichment." 14. It has been brought to our notice that the said judgment of the Hon'ble Karnataka High Court has been accepted by the Revenue as communicated through their letter dated 17.11.2023. Needless to mention, the principle laid down by the jurisdictional High Court is binding on the Tribunal in view of the judgment of the Larger Bench of the Tribunal in the case of Collector of Central Excise, Chandigarh vs. Kashmir Conductors: 1997 (96) E.L.T. 257 (Tri.-LB). 8. On the issue of unjust enrichment, the Revenue heavily relied upon the judgment of the Hon'ble Supreme Court in Ad....
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....d (f) of the proviso to Section 11B(2) shows that refund to be made to an applicant should be relatable only to the duty of excise paid by the three categories of persons mentioned therein i.e. the manufacturer, the buyer and a class of applicants notified by the Central Government. Clause (e) refers to the buyer which is not restricted to the first buyer from the manufacturer. The buyer mentioned in the above Clause can be a buyer downstream as well. While dealing with the absence of a provision for refund to the consumer in the rules this Court in Mafatlal Industries v. Union of India (supra) held as follows :- "98. A major attack is mounted by the learned counsel for petitioners-appellants on Section 11B and its allied provisions on the ground that real purpose behind them was not to benefit the consumers by refusing refund to manufacturers (on the ground of passing on the burden) but only to enable the Government to retain the illegally collected taxes. It is suggested that the creation of the Consumer Welfare Fund is a mere pretence and not an honest exercise. By reading the Rules framed under Section 12D, it is pointed out, even a consumer, who has really borne the burden o....
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....e money credited to the Fund shall be utilised cannot be faulted on any ground. Now, coming to the Rules, it is true that these Rules by themselves do not contemplate refund of any amount credited to the Fund to the consumers who may have borne the burden; the Rules only provide for "grants" being made in favour of consumer organisations for being spent on welfare of consumers. But, this is perhaps for the reason that clause (e) of the proviso to sub-section (2) of Section 11B does provide for the purchaser of goods applying for and obtaining the refund where he can satisfy that the burden of the duty has been borne by him alone. Such a person can apply within six months of his purchase as provided in clause (e) of Explanation B appended to Section 11B. It is, therefore, not correct to contend that the impugned provisions do not provide for refunding the tax collected contrary to law to the person really entitled thereto. A practical difficulty is pointed out in this behalf by the learned counsel for appellants-petitioners: It is pointed out that the manufacturer would have paid the duty at the place of "removal" or "clearance" of the said goods but the sale may have taken place el....
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....harges, abatement on discounts, freight charges has been ultimately borne by them and not passed on to dealers or 'any other person'. With regards to Free Service Charges, it is claimed that the same is offered to the ultimate customers at the time of purchasing of new vehicles from the dealer. After the dealers render free services to the customers against the free service coupons, they claim the amount from the Appellant on the basis free service coupons collected from the customers as proof of having rendered free service to the customers which are reimbursed by the appellant by issuance of credit notes. It is their claim that they have placed on record point-to-point correlation between the credit notes issued and the free service coupons collected from the customers against which dealers are reimbursed by the appellant. It is submitted that the detailed statement enclosed with appeal paper book providing engine-wise trail of free service coupon with corresponding credit note and original sale invoice would make it clear that the appellant has reimbursed the dealers by way of credit notes against free service coupons that is forwarded by the dealers after collecting it from the....