By TIOL News Service

HYDERABAD, APR 09, 2014: THE appellant is engaged in manufacture of paper and dispatches the paper from time to time by raising composite invoices setting out the price amount payable, which is inclusive of excise duty. The appellant had sold goods to various dealers and collected the invoice amount, which is inclusive of excise duty as applicable at the relevant point of time. Later on, on account of market conditions, the dealers were offered quantitative discounts and other discounts and the invoices were revised accordingly. At the time of clearing the goods from the factory premises, the appellant had paid the excise duty on the invoices amount. Later, when the invoices were revised, the excise duty component, which was collected from the dealers initially, was revised in terms of the revised invoice price, which was lower than the invoice amount, which was initially issued. The difference of amount in excise duty, which was collected, was given credit to the dealers, thereby the actual amount of excise duty collected from the dealers was corresponding to the revised invoices subsequently issued.

The appellant clamed refund of excess duty paid and the refund was allowed by the original authority. However, on appeal by the department, the Commissioner (Appeals) reversed the order. The Tribunal also refused to allow the refunds. The subsequent claims filed by the appellant were rejected by the original authority and upheld by the Tribunal. The claims were rejected on the ground that the appellant had failed to produce evidence to the effect that the burden of duty was not passed on to any other person (to the ultimate customer by the dealer). The assessee is before the High Court against the orders of CESTAT.

After hearing both sides, the High Court held:

++ It is well settled that while dealing with the matters arising under Section 35-G of the Act, the High Court being the creature of the statute, is bound to accept the findings of fact recorded by the Tribunal. In this case, the orders of the primary and first appellate authorities have merged with the orders of the Tribunal and the Tribunal by itself did not disturb any of the findings of fact as recorded by the authorities below. In that view of the matter, both the authorities, primary as well as the appellate, had categorically recorded that the appellant - company had in fact, had made over the excise duty component, which was collected originally on revision of the invoice price, in the process of allowing discounts.

++ The case of Sangam Processor's - (2002-TIOL-59-CESTAT-DEL-SB), has no application to the facts of the cases on hand, inasmuch as, that case was dealing with the case of Section 11-C of the Act, whereas the appropriate provision applicable to the present cases are the proviso (d) to sub section (2) of Section 11-B of the Act.

++ In the case of Grasim Industries V. Commissioner Of Central Excise, Bhopal - (2011-TIOL-82-SC-CX), no ratio was laid down by the Supreme Court and the observations made were in the context of the facts of that case and as such the same is also not applicable to the case on hand.

++ In so far as the order of the Larger Bench in Grasim Ind. (Chemical Divn .) v. Commissioner of C.Ex., Bhopal, the judgment of the Madras High Court was sought to be ignored merely stating that Sangam Processors ( Bhilwara ) Ltd. v. CCE -(2002-TIOL-59-CESTAT-DEL-SB), was affirmed by the Supreme Court, as SLP against the said order of the Tribunal was dismissed. Except making such statement, what were the distinctions and how the ratio laid down by the Madras High Court in Addison & Co. v. Commissioner - (2003-TIOL-396-HC-MAD-CX), was inapplicable, was not set out.

++ The issue is squarely covered by the judgment of the Madras High Court in the case of Addision & Co. v. Commissioner - (2003-TIOL-396-HC-MAD-CX).

(See 2014-TIOL-448-HC-AP-CX)