Refund claim cannot be denied when excess duty has been returned through debit/credit notes

Refund claim cannot be denied when excess duty has been returned through debit/credit Notes, and, the said amount is accounted as ‘receivable’ in the Balance Sheet - sufficient evidence that incidence of duty has not been passed on

Shree Krishna Nylon Pvt. Ltd. Vs. Commissioner of Central Excise, Mumbai-III [2015 (11) TMI 1470 - CESTAT MUMBAI]

Facts:

Shree Krishna Nylon Pvt. Ltd. (“the Appellant”), on having a confusion regarding applicability of the duty rate on the products, chose to pay duty at higher rate under protest and sought clarification from the Department. Consequent to the clarification, the Appellant issued Credit Notes to the buyers of goods and filed refund claim for excess duty paid under protest. However, the Department rejected the refund claim on the ground of unjust enrichment alleging that the Appellant has not been able to prove that the burden of Excise duty had not been passed on to the buyers.

Held:

The Hon’ble CESTAT, Mumbai, relying upon following legal pronouncements:

CCE, Bangalore-I Vs. Om Pharmaceuticals Ltd. [2011 (268) ELT 79 (Kar.)];

Sudhir Papers Ltd. Vs. CCE, Bangalore-I [2012 (276) ELT 304 (Kar.)];

CCE, Chandigarh Vs. Vardhman Industries Ltd. [2006 (205) ELT 241 (Tri.-Del.)]. This was upheld by the Hon’ble Punjab & Haryana High Court in CEA No. 97 of 2006, which was subsequently upheld by the Hon’ble Supreme Court as reported in 2011 (267) ELT A25 (SC).

held that on clarification, the Appellant has issued Credit Notes & against the said Credit Notes, the buyer of the goods has returned the excess charged Excise duty. Further, the Appellant has shown that amount in Balance Sheet as receivable under the head ‘loan and advances’. Hence, it is a sufficient evidence to hold that incidence of duty has not been passed on and accordingly, allowed the refund claim.