The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed excise duty demand as the burden of differential duty not passed on to customer.
The appellant filed refund claim of Rs. 43,25,984/- on 14.11.2019. An SCN dated 12.02.2020 was issued to the appellant proposing to reject the refund claim on the grounds of limitation as well as unjust enrichment. After considering the submissions of the appellant, the Adjudicating Authority passed the order sanctioning the refund, but directing an amount of Rs. 37,92,744/- to be credited to the Consumer Welfare Fund.
The Consultant for the appellant submitted that appellant’s only grievance is that the refund amount has been ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant and that this amount was not paid at the time of clearance of goods, but was paid subsequently when an SCN was issued to the appellant.
The appellant had also issued a supplementary invoice to its customers M/s Bharat Broadband Network Ltd. for this differential duty which the appellant had paid but the customer refused to pay it to the appellant by its letter dated 19.12.2018 on the ground that it had already paid excise duty @ 10.3% as applicable and as per the price schedule of the purchase order.
A Two-Member Bench comprising Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “After the differential duty was paid and after the customer declined to pay the differential duty, the appellant had written it off in its books of accounts as certified by the Chartered Accountant. Thus, we have no manner of doubt and that the appellant had borne the burden of the differential duty and had not passed it on to its customer or to anyone. Thus, the appellant’s case falls squarely under Clause (e) of the third proviso to section 11B of the Central Excise Act, 1944, i.e., the duty of excise and interest paid on such duty were borne by the appellant manufacturer and it had not passed on the incidence of such duty and interest to any other person.”
“The appellant is entitled to the refund of the amount sanctioned which should be paid to it instead of it being credited to the Consumer Welfare Fund. Needless to say the consequential interest must also be paid as per section 11BB” the Tribunal noted.
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