Refund of duty paid mistakenly on supplies to 100% EOU when CA certificate establishing no unjust enrichment

PJ/Case Laws/2010-11/1101

Case: PMT Machines Ltd. Vs Commissioner of C.Ex., Pune-I

Citation: 2011 (264) E.L.T. 295 (Tri. Mumbai)

Issue:- Refund of duty paid on supplies to 100% EOU on receipt of CT-3 – to be allowed when CA certificate and other relevant records & documents clearly showing no unjust enrichment.

Brief Facts:- Appellants are manufacturer of machinery parts thereof. They supplied their finished product to two 100% EOUs. On receipt of CT-3 form from the buyers appellants dispatched the goods to these units as per Notification No. 1/95-CE as amended. The appellants were not required to pay Central Excise duty on the said clearance. However, the appellants issued duty paid invoices to their buyers.

On realizing that the appellants have not to issue duty paid invoices, the appellant issued credit note to their buyers and no payment was received by the appellants from their buyers against Central Excise duty mentioned in the invoice. Appellants filed refund claim of the duty paid as such.

The Dy. Commissioner allowed the refund claim holding that the duty has been paid by the appellant due to oversight and refund claim is admissible. The refund was allowed following the decision of the High Court in the case of M/s Adison & Co. v. Commissioner of Central Excise, Madras [2001 (129) ELT 44 (Mad)].

Revenue preferred an appeal before the Commissioner (Appeals). The Commissioner (Appeals) rejected the refund claim. Aggrieved by the same, appellant preferred an appeal before the Tribunal. The Tribunal remanded the matter back to the Commissioner (Appeals) with a direction to reconsider the issue of unjust enrichment in the light of Chartered Accountant’s Certificate.

On remand, the Commissioner (Appeals) again rejected the refund claim holding that the appellants have failed to produce the evidence to show that duty has not been passed on the buyers of the goods in terms of Section 11B of the Central Excise Act, 1944. Aggrieved from the said order, the appellants are before them.

Appellants Contention:- Appellant submitted that it is a case where duty was not to be paid by the appellant but inadvertently they issued duty paid invoice and accordingly debited the duty in their PLA Account. As soon as they realized that the duty is not payable, they issued credit note to their buyers and filed a refund claim. In fact, no payment has been received from the buyers against the duty part mentioned in the invoice. Moreover, this is the case where the payment has been received by the appellants in advance from their buyers and nothing was payable by the buyers when the invoices were issued. Accordingly, they have not passed any duty incidence on the buyers. Moreover, the appellants produced the CA Certificates, Balance sheet, Ledger Account showing that the amount is recoverable form the department.

Respondents Contention:- Revenue submitted that the appellant has failed to produce documentary evidence with regard to their claim hence, the impugned order is to be upheld.

Reasoning of Judgment:- The Tribunal found that in the earlier proceedings before this Tribunal, the matter was remanded back to the Commissioner (Appeals) to examine the issue of unjust enrichment as per the CA Certificate. It was held that the CA Certificate clearly showed that the duty incidence has not been passed on the buyer. Moreover, as per the financial records produced before the Commissioner (Appeals), it was clear that the appellant has shown in their financial records that the disputed amount is recoverable from the department.

It was held that the Commissioner (Appeals) sought to give the details alongwith treatment accorded to duty paid in the books accounts of the company along with extracts of relevant entries duly certified by the Auditors and the Commissioner (Appeals) has also recorded in his order that the appellants have furnished some information duly certificate by their auditors vide their reply. The information provided only gave the details of recoveries made as a results of credit notes issued in their sundry Debtors Ledger and also stated in this amount was subsequently transferred to Excise Deposits Account under Current Assets, Loan & Advances. But the Commissioner (Appeals) wants more evidence without giving any details which documents were required from the appellants.

It was held that on perusal of the record it is clear that the Chartered Accountant Certificate and the extract of the documents produced before the Commissioner (Appeals) clearly shows that the duty incidence has not been passed upon the buyer. Accordingly, the observation made by the Commissioner (Appeals) that evidence has not been produced is totally incorrect. The appellant has discharged their burden of unjust enrichment by showing the Chartered Accountant Certificate and ledger Accounts along with the entry made in their accounts saying that the amount is excise deposit which is sufficient to substantiate their claim. Accordingly, impugned order is set aside and refund claim is allowed.

Decision: - Appeal disposed of accordingly.

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PJ/Case Laws/2010-11/1101

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