The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that the respondent passed the Unjust Enrichment in relation to the refunds claimed pursuant to finalization of the Provisional Assessments. Hence the bench upheld the order of Commissioner (Appeals).
The Respondent J.K. Tyre and Industries Limited are engaged in the manufacture of Tyres, Tubes and flaps falling under Chapter 40 of Central Excise Tariff Act, 1985. The discounts on the sale price of the goods are passed on to the customers on its sale price from the depots, accordingly, the assessable value of the goods could not be determined at the time of its transfer/clearance from the factory to the depots, hence the respondent requested for provisional assessment of their goods and paid duty accordingly.
After receiving the data on the quantum of discounts passed on to the buyers, on their application, the assessments were made final resulting in short/excess payment of duty. For excess payment of duty, they have filed refund claims.
Subsequently the adjudicating authority, sanctioned the said refund claims but transferred the same to consumer welfare fund observing that the respondent could not establish that the burden of duty has not been passed on to any other person.
Aggrieved by the said orders, the respondent filed appeals with the Commissioner (Appeals), who in turn, set aside the Orders-in-Original and allowed their appeals. Hence the revenue filed the appeal before the tribunal .
Dattatray D Bhat, Counsel for respondent submitted that instructions by the CBEC on refunds in Chapter 9 of the Manual specifically states that the refunds pursuant to the adjustment after finalization of provisional assessment are not governed by Section 11A and Section 11B of the Central Excise Act, 1944, as the case may be
Rajiv Kumar Agrawal, Counsel for the Appellant /revenue submitted that “the excess duty claimed as refund has been transferred to the customers at the time of clearance of the goods, notwithstanding the fact that subsequently credit note has been issued to the dealers allowing the discounts; thus, the duty burden has already been passed on to the ultimate consumer at the time of clearance of goods and the credit note beneficiary was only the dealers, hence they could not satisfy the test of unjust enrichment”.
Further the counsel for revenue argued that In the instant case, incidence of duty has been passed on to the final customer who is the buyer of the finished goods and the benefit of credit notes is limited to the stage of the dealer.
It was observed by the tribunal that in the respondent’s own case, J.K. Tyre & Industries Ltd.’s case the High Court Karnataka considering more or less similar arguments and scrutiny of the claims from the angle of applicability of unjust enrichment and the refund sanctioned by the Revenue to the respondent from time to time,
A Two-Member Bench comprising Dr. D.M. Misra (Judicial) and R Bhagya Devi (Technical Member) upheld the order of Commissioner (Appeals).
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