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2013 Supreme(Kar) 527
High Court of Karnataka
DILIP B. BHOSALE & B. MANOHAR, JJ.
M/s. Toyota Kirloskar Motor Ltd. Bangalore, Rep. by Swapnesh Maru, GM (Finance & Accounts)
Versus
The Commercial of Central Excise, Aurangabad
C.E.A. No. 6 of 2013
Decided On : 26-08-2013
For the Appellant:Rajesh Chandrakumar, Ravi Shankar, Chander Kumar, Advocates.
For the Respondent:C. Shashikantha, Advocate.
The main legal point established in the judgment is the requirement for the assessee to prove that the incidence of duty had not been passed on to the customers in order to claim a refund under Section 11B of the Central Excise Act, 1944.
Headnote:
Central Excise - Refund Claim - Section 12-B of the Central Excise Act, 1944 - 11B, 12A, 12B - Summary of Acts and Sections: The court discussed the provisions of Section 11B, 12A, and 12B of the Central Excise Act, 1944. It emphasized the requirement for the assessee to establish that the incidence of duty had not been passed on to the customers in order to claim a refund under Section 11B. The court also highlighted the deeming fiction in Section 12B, which presumes that the incidence of duty has been passed on to the buyer unless proven otherwise.
Fact of the Case:
The assessee sought a refund of the excise duty paid on tyres and tubes, claiming that the incidence of duty had not been passed on to the customers. The claim was rejected by the Adjudicating Authority and partly allowed by the Appellate Authority. The Tribunal initially allowed the appeal, but after remand by the Supreme Court, held that the assessee failed to establish that the incidence of duty had not been passed on to the customers.
Finding of the Court:
The court found that the assessee did not produce sufficient evidence to demonstrate that the incidence of duty had not been passed on to the customers, despite multiple opportunities provided by the court and the Supreme Court. It emphasized the requirement for the assessee to satisfy the conditions of entitlement for refund under Section 11B and to prove that the incidence of duty had not been passed on to the customers.
Issues: The issues revolved around the assessee's failure to provide adequate evidence to demonstrate that the incidence of duty had not been passed on to the customers, as required for claiming a refund under Section 11B of the Central Excise Act, 1944.
Ratio Decidendi: The court emphasized the deeming fiction in Section 12B, which presumes that the incidence of duty has been passed on to the buyer unless proven otherwise. It held that the assessee's claim for refund hinged on establishing that the incidence of duty had not been passed on to the customers, and the burden of proof rested on the assessee.
Final Decision: The court disposed of the appeal in favor of the revenue and against the assessee, as the assessee failed to provide sufficient evidence to demonstrate that the incidence of duty had not been passed on to the customers. No costs were awarded.
Dilip b. Bhosale, J.
1. We have heard learned counsel for the parties. We Admit the appeal to consider the following question of law:
“Whether the assessee passed on the incidence of duty paid by them on tubes and tyres to their customers as provided for under Section 12-B of the Central Excise Act, 1944 (for short, the Act’)?”
By consent we have heard learned counsel for the parties for final disposal of the appeal.
2. This Central Excise Appeal is directed against the order dated 8.8.2012 passed by the Customs, Excise and Service Tax Appellate Tribunal (for short ‘the Tribunal’) in appeal No.E/716/2002. By the impugned order a refund claim of the assessee stands rejected.
3. The appellant – assessee (for short “the assessee”) is engaged in manufacture of passenger utility vehicles and parts thereof, which, admittedly are excisable under Chapter 87 of the Central Excise Tariff Act, 1985 (for short ‘the Act of 1985’). At the relevant time, the assessee used to purchase tyres and tubes from M/s. South Asia Tyres Limited, at Aurangabad in the State of Maharashtra and avail modvat credit of the duty paid on these goods. Prior to 1-3-2000, entire duty i.e. the basic duty specified under the first schedule as well as special duty specified under the second schedule of the Act of 1985, paid on such tyres and tubes, was available as modvat credit to the respondent. Consequent to the amendment of Central Excise Rules, with effect from 1-3-2000, credit of special duty paid on the inputs under the second schedule of the Act of 1985 was not admissible. With effect from 1-3-2000, the rate of duty payable on tyres and tubes was 16% basic duty specified under the First Schedule and 16% special duty specified under the Second Schedule of the Act of 1985. As per notification No.6/2000-CE, the duty payable under Second Schedule of the Act of 1985 on tyres and tubes was exempted, if used within the factory of production and the procedure under Chapter-X was prescribed, when, such use was in a place other than the factory of manufacture.
3.1. On 1-3-2000, the assesee had filed an application with the central excise, Aurangabad-II Division, for issue of CT-2 certificate for procurement of tyres and tubes and for issue of registration certificate under Rule 192 of Central Excise Rules, 1944. Since there was delay in issue of CT-2 certificate, SATL cleared the tyres and tubes by paying duty as prescribed in the schedules. The CT-2 certificate was, however, issued on 8.1.2001 and 5.3.2001.
4. In view of the said notification (No.6/2000-CE), an application was made by the assessee seeking refund of the duty paid by them on these items to the manufacturer thereof at Aurangabad.
5. The application under Section 11B of the Act seeking such refund, filed by the assessee, was however rejected by the Adjudicating Authority under Section 35 of the Act and was partly allowed by the Appellate Authority. Insofar as refund of the excise duty paid by the assessee on tubes and tyres is concerned, it was rejected by the Appellate Authority though it held that the assessee was entitled to seek refund. In other words, the claim of the assessee was rejected by the Appellate Authority on the ground that the assessee could not and did not place convincing material on record to demonstrate that the incidence of duty had not been passed on to the customers. The appeal was accordingly disposed of by the First Appellate Authority vide order dated 28.2.2002.
6. Feeling aggrieved and dissatisfied by the order of the first Appellate Authority, the assessee filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal, South Zone Bench, Bangalore being Appeal No.E/716/2002. The appeal was allowed by the Tribunal vide order dated 28.2.2005. The order of the Tribunal was carried in appeal before this Court under Section 35G of the Act by the Revenue bearing CEA No.28/2005.
7. This Court in the appeal framed the following two questions of law:
a) In
