Per Gowri Shankar:

The appellant before us was engaged in the manufacture of heat tracing cables. These cables were initially classified under Heading 8516.00 of the tariff on which duty was payable @25%ad valorem, disallowing the claim by the manufacturer to classify them under Heading 85.40, which carries a lower rate of duty. Consequent upon an appeal filed against this order, the Collector (Appeals) remanded the matter to the Assistant Collector, who in de novo adjudication accepted the claim for classification under Heading 85.40.

2. The manufacturer filed a claim of refund of the duty paid by it in excess in the intervening period. The Assistant Collector found that the refund was to be granted on merits but found that the incidence of duty had been passed on by the manufacturer to the buyer of the goods. He therefore ordered the amount to be credited to the Consumer Welfare Fund. The manufacturer appealed this order to the Collector (Appeals). The claim before the Collector (Appeals) was that although. initially, the incidence of duty was passed on to the buyer, on a protest by him. the appellant credited the amount of excess duty to his (the buyer's) account. Therefore. the incidence of duty rested with the manufacturer.

3. The Collector (Appeals) declined to consider this submission. He agreed that the credit had been given to the buyer of the goods. He however said that there was nothing to show that the buyer in turn had not passed on the incidence of the duty to any other person. Relying on the decision of the Tribunal in Sangam Processors (Bhilwara) Ltd. Vs. CCE 1994 (71) ELT 989, he confirmed the order of the Assistant Collector. Hence this appeal.

4. The contention of the counsel for the appellant before us is that he is prepared to show that the buyer in turn has not passed on the incidence of duty for which he was not given sufficient opportunity, in which case the refund should be paid to the appellant. He cites the decision of this Tribunal in Salico Electronics Vs. CC 2000 (41) RLT 511. The departmental representative reiterates the reasoning of the Commissioner (Appeals).

5. There is no doubt that the incidence of the duty was initially passed on when the goods were sold to the buyer at the price which included the duty. Subsequently on the protest of the buyer, this course of action was reversed. The consequence of crediting the buyer's account with the disputed amount of duty was to transfer the incidence of duty back to the appellant. The question of the buyer transferring the incidence of duty to any other person does not arise in these circumstances. The incidence or burden of the duty paid by the manufacturer was transferred to the buyer when the manufacturer collected from the buyer the amount equal to the tax through the price paid by him for purchasing these goods. By the credit of the manufacturer subsequently to buyer, he took back upon himself that burden or incidence. If, in such a situation, the buyer included the duty element in the price that it charged to another person, it would not be correct to say that it has thereby passed on the incidence of duty to that person. The incidence of a tax cannot be borne by more than one person at the same time.

6. Sub section (2) of Section 11B provides that if the duty is refundable, the amount so refundable shall be credited to the Consumer Welfare Fund. The proviso under this sub section contains the exceptions to this sub section (2), citing situations in which the refund is payable to the claimant. Clauses (c) and (d) specify the amount rclatable to duty in excess by the manufacturer and duty of excise borne by the buyer. "if he had not passed on the incidence of such duty to any other person." Construed very strictly, the benefit of this clauses will no longer be available once the incidence of duty has been passed on. In that situation, the manufacturer or the buyer can no longer ask for refund to be granted to him. It is no doubt for this purpose