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TMI Blog2025 (3) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... are clearing their final products directly to the dealers situated in various states and also through their subsidiary company viz. M/s. Sundaram Auto Components Limited for further sale to ultimate Customers. It appears that the Appellant is extending discounts to dealers from the selling price and as they had encountered certain practical difficulties in quantifying the actual abatements at the time of removal of excisable goods from their factory gate, requested for Provisional Assessment which was ordered by the jurisdictional Central Excise Authorities. 2.2 The Appellant was claiming abatements on the expenditure and discounts as detailed below: i. Cost of Transportation (Primary Transport) including Transit Insurance. ii. Free Service Coupon Charge (FSC) iii. Pre-delivery Inspection Charges (PDI) in respect of Three Wheelers. iv. Authorised Service Centre Incentives (ASC) v. Cash Discount and other Trade Discount in respect of Two Wheelers and Three Wheelers. 2.3 While finalising the provisional assessments for the period from 01.04.1999 to 31.03.2005, the abatements claimed by the Appellant were not allowed by the department. Being aggrieved, the Appellant filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he incidence of duty had been passed on to the ultimate buyers. (ii) Further, it was submitted that the abatement claimed on Free Service Charges (FSC) emanates from the Customers as against the assumption in the impugned order that abatements are passed on by the Appellant to the dealers first. In this regard, it was submitted that the actual FSC charges would be known to the Appellant from related documents like Free Service Coupons and services rendered to Customers, which were periodically submitted by dealers to their area offices. Only on verification of the free services rendered, the dealers are reimbursed. When the ultimate customers are not charged for the free services, it cannot be said that the burden of duty on such FSC was passed on to ultimate customers by the dealers. (iii) It was put forth that trade discounts extended for the benefit of the ultimate Customers are being reimbursed by the Appellant only where the proof of extension of benefit stands proved by the dealers. If the discounts are not extended to Customers through the invoice, a separate voucher is issued passing off the discount which is acknowledged by the Customer against which the Appellant reim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes which fact was not disputed by the department. Hence it was contended that the refund claim could not be rejected on the grounds of unjust enrichment. (viii) It was contended that the goods are cleared on payment of excise duty to dealers who do not avail any CENVAT credit and the credit notes issued returning the abatements/ discounts to the dealers proves that the incidence of duty was borne by the Appellant only. The Appellant places reliance on the decision of the CESTAT, Chandigarh in the case of Johnsons Mathey (India) Ltd. Vs. Commissioner of Central Excise [2017 (3) TMI 1449-CESTAT, Chandigarh] wherein it was held that when the buyer had not availed CENVAT Credit of excise duty paid, the debit note issued by the buyer is a substantial evidence to pass the bar of unjust enrichment in the light of the decision of the Hon'ble Apex Court in the case of Addison & Co. Hence the presumption of unjust enrichment under Section 12 B of Central Excise Act stands rebutted. (ix) It was vehemently contended that Paragraphs 35 and 36 of the judgement in the case of Hon'ble Supreme Court in the case of Commissioner of Central Excise, Madras Vs. Addison & Co. Ltd. [2016 (339) ELT 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2002, the appeal preferred by the Revenue is dismissed." (x) It was contended that the presumption of passing on the incidence of duty in terms of Section 12 B of the Central Excise Act is not applicable for duty provisionally paid, otherwise the concept of provisional assessment loses its significance. It was submitted that if the presumption under Section 12 B is applied for provisional duty payment also, no refund could accrue on account of finalisation of provisional assessment which is contrary to Rule 7(4) of Central Excise Rules, 2002 which allows refund of excess duty. It was submitted that the presumption for duty paid provisionally is applicable only in cases where the buyer takes CENVAT Credit of Provisional duty paid or where the price is ex-duty. However, in the appellants case herein, the buyer-dealer including the ultimate customer does not avail CENVAT Credit and the price of the vehicles is not ex-duty but always cum duty. (xi) It was contended that the doctrine of unjust enrichment is applicable only in case of refund claim yet to be granted and not in case of refund already granted. In this regard reliance was placed on the decision of the Hon'ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 348) ELT 630 (Mad.)] is nothing but a reflection of the principle laid down in the Addison case. In the said decision, the Hon'ble High Court remanded the matter back to undertake the verification of who had borne the burden of duty to pass the test of unjust enrichment but he has submitted that it was not applicable to the facts of the present case and therefore the finding in Paragraph 10 of the impugned order is incorrect. 4.2 It was contended that the doctrine of "unjust enrichment" was made applicable to Provisional assessments by way of insertion of Rule 9B(5) of the Central Excise Rules, 1944 w.e.f. 26.05.1999 vide Notification No. 45/99-CE (NT) dated 25.06.1999 and till such date the said doctrine is not applicable. 5. The Ld. Authorised Representative Ms. Anandalakshmi Ganeshram representing the Department reiterated the findings of the lower Adjudicating Authority. She has argued that the Appellants are not eligible for refunds being hit by the bar of unjust enrichment. It was stressed that the Appellant failed to produce any evidence to prove that the duty incidence was not passed on to the ultimate customer. It was submitted forcefully that the judgement of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a rebuttable presumption. 10. It is evident from the records that the Original Authority in the denova Order-in-Original No. 08/2016 dated 05.08.2016 has arrived at the decision that the appellant has borne the excise duty burden and not passed on to the dealers after scrutinizing the credit notes, Chartered Accountant's certificate, extract of ledger for discounts, etc., and ordered for sanction of the refunds. Whereas in the impugned orders dated 14.09.2017, the Commissioner of GST and Central Excise (Appeals), Coimbatore has held that refund claims were hit by the bar of unjust enrichment as the appellant has not conclusively established that the burden of excise duty in relation to which such refunds are claimed has not been passed on by him to any other person (ultimate consumer) and the verification process done by the Original Adjudicating Authority was only confined to the first buyers i.e., Dealers. Whether the incidence of duty was passed on to any other downstream buyer was not verified by the Original Adjudicating Authority and also from the records, it was ascertained that the assessee has not submitted any such evidence. Relying on the Hon'ble Supreme Court's de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the incidence of duty to any other person. It was further held by the Tribunal that the event which gives rise to cause of action for refund is payment of duty made in respect of goods cleared from the factory and once the duty burden has been passed on to the buyer at the time of clearance, issuance of credit note at a later point of time would not entitle the Assessee to claim any refund. The Tribunal also held that burden of duty is normally passed by the manufacturer and the dealer to the ultimate consumer. 8. The Assessee filed an application for reference of questions arising out of the final order dated 7-12-1996. The Tribunal referred the following questions for consideration of the High Court by its order dated 28-8-1998, taking note of the fact of the existence of divergent views on the point. "1. Whether by passing on the duty element on the discount to its dealers the applicant had satisfied the requirements of proviso 'd' to Section 11B(2) of the Central Excise Act, 1944 and was therefore, entitled to be paid the amount claimed as refund? 2. Whether the Tribunal after finding that the burden of duty was passed on by the applicant to its various dealers by issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the ultimate buyer i.e. the consumer. He submitted that there can be no claim for refund on the basis of post clearance transactions. He further submitted that there is a presumption, though rebuttable, that the full incidence of the duty has passed on to the buyer of the goods. The learned Additional Solicitor General has strongly relied upon Mafatlal Industries Ltd. and Others v. Union of India And Ors., reported in (1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.) to support his contentions on unjust enrichment. ... .... .... 12. ...................... While referring to the relevant provisions of Section 11B, 12A and 12B of the Act, Mr. Venkatraman submitted that the buyer mentioned in the said provisions would be the buyer of the goods from the manufacturer Assessee. He stressed upon Clauses 'a' to 'f' of the Proviso to Section 11B(2) in support of his submission that the only persons eligible to make a claim for refund would be the manufacturer, his buyer and a class of persons as notified by the Central Government. On the basis of the above submission, he states that there is absolutely no necessity for any verification to be made as to who is the ultimate consumer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r protest. * * * * (2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund : Provided that the amount of duty of excise as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the [Commissioner of Central Excise]; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the duty of excise paid by the manufacturer, if he had not passed on the incidence of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as he would be unjustly enriched. It will be useful to refer to the relevant para of Mafatlal Industries v. Union of India (supra) in this connection. "108. (iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other person. Section 11B(2) provides that, in case it is found that a part of duty of excise paid is refundable, the amount shall be credited to the fund. Section 2(ee) defines Fund to mean the Consumer Welfare Fund established under Section 12C. There is a proviso to Section 11B(2) which postulates that the amount of excise duty which is refundable may be paid to the applicant instead of being credited to the fund, if such amount is relatable to the duty of excise paid by the manufacturer and he had not passed on the incidence of such duty to any other person. Clause (e) to proviso of Section 11B(2) also enables the buyer to receive the refund if he had borne the duty of excise, provided he did not pass on the incidence of such duty to any other person. There is a third category of a class of applicants who may be specified by the Central Government by a notification in the official gazette who are also entitled for refund of the duty of excise. A plain reading of Clauses (d), (e) and (f) of the proviso to Section 11B(2) shows that refund to be made to an applicant should be relatable only to the duty of excise paid by the three categories of persons mentioned therein i.e. the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assistant Commissioner of Central Excise, Rajahmundry Division. The Commissioner Customs, Central Excise (Appeals), Hyderabad confirmed the said orders in the appeals filed by the Assessee. The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Division, Bangalore dismissed the appeals filed by the Assessee. 26. The Assessee approached the High Court of Andhra Pradesh by filing Central Excise Appeals. By a judgment dated 19-2-2014, the High Court of Andhra Pradesh allowed the Central Excise Appeal Nos. 9, 10 and 51 of 2004 and 21 of 2005. The appeals were allowed, as being squarely covered by the judgment of the Madras High Court in Addison and Company Ltd., Madras v. Collector of Central Excise, Madras reported in (1997) 5 SCC 763 = 1997 (91) E.L.T. 532 (S.C.). 27. The Revenue has filed Special Leave Petitions against the said judgment dated 19-2-2014. Special Leave Petition (C) Nos. 12282, 16141 and 16142 of 2016 were filed by the Revenue against the judgment dated 1-7-2015 of the Division Bench of the Andhra Pradesh High Court which followed its earlier judgment dated 19-2-2014. The issues involved in the above Civil Appeals are similar to that of Civil Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty to his buyer, then the burden shifts to the Revenue. The submission that there is a presumption of the duty being passed on to the ultimate consumer was not accepted by the High Court. The High Court held that the claim for refund should be accepted once the Assessee shows that he has raised a credit note regarding the excess duty. The High Court had further held that passing on the burden of excise duty to the ultimate buyer cannot be left in the realm of presumption. 34. In Civil Appeal No. 7906 of 2002, we have already held that in the claim for refund of excess duty paid can be allowed only in case where the burden of duty has not been passed on to any other person, which includes the ultimate consumer as well. The findings in the Order-in-Original and the Order-in-Appeal are that the excise duty paid originally at the rate of 8.8 per cent was passed on from the Assessee-processor to the owner of the fabric and later to the customers. The point in this Appeal is also identical to that of Civil Appeal No. 7906 of 2002. The above appeal of the Revenue is allowed." 11.2 An in-depth examination of the Hon'ble Supreme Court's judgment in the case of Addison & Co. Ltd. (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer downstream as well. 12. We find that the appellant who are the manufacturers of Motor Cycles and three wheelers are availing abatement in respect of (i) Cost of Transportation (Primary Transport) including Transit Insurance (ii) Free Service Coupon Charge (FSC) (iii) Pre-delivery Inspection Charges (PDI) (iv) Authorised Service Centre Incentives (ASC) and (v) Cash Discounts and Trade Discounts. The eligibility for these abatements was finally decided by the Tribunal Chennai vide Final Order Nos. 40166-40163 & 40178-40185 dated 04.02.2016. In denovo adjudication, the Original Adjudicating Authority has sanctioned the refunds after due examination of credit notes issued, the Chartered Accountant's Certificate, extract of ledgers for discount, etc. However, we find that Lower Appellate Authority had set aside these refund sanctioning orders on account of non-compliance to unjust enrichment principle relying on the Hon'ble Apex Court's judgment in the case of Addison & Co. Ltd. 13. The appellant had submitted that abatement claimed towards freight charges was borne by them and not passed on to the dealers and so, it could not be presumed that the expenses along with excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Vs. Union of India [1997(89) ELT 247(SC)]. The doctrine of unjust enrichment was made applicable to the provisional assessment by way of insertion of Rule 9B(5) of Central Excise Rules, 1944 w.e.f. 26.05.1999 and as such the doctrine of unjust enrichment is not applicable to their appeals. We find all these submissions of the appellant were considered by the Lower Appellate Authority in Paragraph Nos. 13 to 18 and adequately countered. 15. Per Contra, the Ld. Authorised Representative has submitted that the appellant has not produced any evidence to prove that the duty incidence has not been passed on to the ultimate customer. The ratio decidendi in the cases of Addison's & Co. Ltd., by the Hon'ble Supreme Court and M/s. TVS Electronics Ltd., by the Hon'ble Madras High Court is clearly applicable to these appeals on the fact of unjust enrichment. It was emphatically submitted that the refund of excise duty paid could be allowed only in case where the burden of duty has not been passed on to any other persons including ultimate customers. 16. In view of above discussion, we have to affirm the decision of the Lower Appellate Authority regarding applicability of the above Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise, Chennai [2017 (348) ELT 630 (Mad.)] following the judgement in the case of Addison's case cited supra. The relevant extracts of the said judgement have been reproduced below for the sake of convenience:- "9. With respect to the aspect of unjust enrichment, the Bench at Para 19 of the judgment notes that the sine qua non for a claim of refund in terms of Section 11B of the Central Excise Act is the establishment by the claimant that such duty in relation to which the refund is claimed was, in fact, paid by him and has not been passed on to any other person. The Bench thereafter, at Para 21 of the judgment, extracted below, interprets the word 'buyer' in Clause (e) to proviso to Section 11B (2) of the Act to mean any buyer not restricted to the first buyer. In such an event, the burden is on the manufacturer to establish that the incidence of duty borne by him has not been passed on to at any stage in the transaction till the goods reach the hands of the end-user. 10. This is thus, a mandatory exercise that is to be undertaken by a manufacturer in order to establish nil unjust enrichment. While this may be easier achieved in cases where the transaction is direct as betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit note is of little avail as the incidence for the excise duty is deemed to have been passed on by the assessee to its buyer and therefore not entitled for filing an application for refund under Section 11B of the Act merely because they subsequently came to know that the rate of duty was NIL and credit notes are said to have been issued to the buyer. Thus, we find that the Tribunal was right in affirming the order passed by the First Appellate Authority who confirmed the order passed by the adjudicating authority." 20. The facts in these appeals are similar. So, it is necessary to ascertain who has actually borne the incidence of duty till the stage of ultimate customer. The appellant has argued that the decision of Hon'ble Madras High Court in the case of M/s. TVS Electronics Ltd., is not applicable to these appeals. We find that Hon'ble High Court has remanded the issue for undertaking verification as to who had ultimately borne the burden of duty to pass the test of unjust enrichment following the Hon'ble Apex Court's judgment in the case of M/s. Addison & Co. Ltd. We do not approve of the appellant's contention in this regard as the Original Adjudicating Authority has do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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