2018 (9) TMI 1919 - AT - Central Excise

Refund of excess paid excise duty - duty paying documents - doctrine of unjust enrichment - refund application filed by the respondent was rejected by the original authority on the ground that credit note cannot be accepted as conclusive evidence for claiming that excess duty had in fact been paid and incidence of such duty has not been passed on to any other person - HELD THAT - The amount of refund in question was reflected under the Head Loans and Advances with narration Balance with statutory / government authorities . Upon verification of the particulars reflected in the balance sheet and accounting records maintained by the respondent the Chartered Accountant s firm by a certificate dated 31.08.2018 has given the breakup of the figure reflected in the balance sheet which include of the amount in dispute for which the respondent had filed the refund claim application. The records submitted by the respondent clearly demonstrate that the incidence of duty has all along been borne by it and the same has not been passed on to its buyer or to any other person. Since the excess duty initially paid was adjusted by issuance of credit note such practice adopted by the respondent is in conformity with the accounting principles. The decision of this Tribunal relied upon by Revenue in the case of Addision Co. 2002 (2) TMI 294 - CEGAT CHENNAI squarely covers the case of respondent inasmuch as it has been held that issuance of credit is also considered as the valid document for accounting adjustment. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Eligibility for refund of excess duty paid due to error in the system.
2. Doctrine of unjust enrichment and its applicability.
3. Acceptance of credit note as conclusive evidence for refund claim.
4. Verification of duty payment and passing on the incidence to customers.

Analysis:

Issue 1:
The respondent, engaged in manufacturing elevator parts, paid excess duty due to a system error and sought a refund. The original authority rejected the refund application, questioning the conclusive evidence of excess duty payment. The Commissioner (Appeals) allowed the appeal, ruling in favor of the respondent, emphasizing the eligibility for refund and disregarding the doctrine of unjust enrichment. The decision was based on a certificate from a Chartered Accountant confirming the excess duty payment.

Issue 2:
The doctrine of unjust enrichment was a key point of contention. The Revenue argued that the respondent failed to provide evidence that the excess duty burden was not passed on to customers. However, the respondent successfully demonstrated through financial records and the Chartered Accountant's certificate that the duty incidence was not transferred, justifying the refund claim.

Issue 3:
The Revenue contended that the credit note issued by the respondent was insufficient evidence for claiming a refund. They highlighted the lack of correlation between goods cleared and customer transactions. The Tribunal, however, upheld the validity of the credit note as an accounting adjustment document, citing a previous case precedent.

Issue 4:
Upon reviewing the balance sheet and accounting records, it was evident that the excess duty payment was reflected under "Loans and Advances," indicating non-passing of the duty burden. The Chartered Accountant's certificate further supported the respondent's claim, confirming the correct accounting treatment of the excess duty payment through credit notes.

In conclusion, the Tribunal dismissed the Revenue's appeal and upheld the Commissioner (Appeals)'s decision, affirming the respondent's eligibility for the refund of excess duty paid. The judgment emphasized the importance of proper documentation and accounting practices in supporting refund claims related to duty payments.