Entity Not Recognized as Manufacturer or Buyer Cannot Claim Excise Duty Refund Regardless of Who Paid: CESTAT [Read Order]

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that an entity not designated as the manufacturer or the buyer of excisable goods cannot claim a duty refund, even if it physically paid the amount on behalf of the government.

GVK Emergency Management and Research Institute (Appellant) had entered into a Memorandum of Understanding (MOU) with the Government of Karnataka to run an ambulance service called "Arogya Kavacha."

Under the arrangement, the appellant acted as the state-level nodal agency, ordering vehicles from various manufacturers and subsequently sending them to a fabricator, M/s Bafna Healthcare Private Limited (BHPL), for conversion into ambulances.

The Revenue authorities held that the fabrication of the vehicles by BHPL amounted to 'manufacture,' attracting Central Excise duty. The BHPL was required to pay a differential duty of Rs. 1,64,91,905 on 105 ambulances.

The appellant paid this duty under protest to secure the urgent release of the vehicles. The appellant filed a refund claim and argued that the ambulances were eligible for a concessional rate of duty under Notification No. 6/2006-CE and that since they bore the incidence of duty on behalf of the Government of Karnataka, the appellant was entitled to the refund.

The bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), rejected the appeal and upheld the rejection of the refund claim.

The Tribunal observed that the fundamental requirement for claiming a refund is eligibility under the Central Excise Act and the specific conditions of the exemption notification. The tribunal observed that the appellant was neither the manufacturer nor the buyer where the vehicles were registered in the name of the District Health & Family Welfare Officers, Govt. of Karnataka, making the Government the true owner/buyer.

The tribunal observed that the MOU merely designated GVK EMRI as an operational and management partner. It further observed that the refund procedure laid down in the relevant Notification No. 6/2006-CE was explicitly geared towards the manufacturer who had to follow a specific process involving taking credit in the Account Current and filing the claim.

The bench observed that the appellant failed to produce any invoice or document recognised under the Central Excise Act to prove they were the buyers or consumers who bore the duty incidence without passing it on, thereby failing the test of unjust enrichment.

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Citing Supreme Court precedents including UOI Vs Mahendra Singh and State of Jharkhand & others Vs Ambey Cements, the Tribunal observed that if a statute provides for a thing to be done in a particular manner, it must be done in that manner only.

The tribunal held that since the appellant did not satisfy the mandatory and substantive conditions of the law being either the manufacturer or the buyer, the claim was legally unsustainable. The appeal was dismissed.

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