By TIOL News Service

MUMBAI, JUNE 16, 2016: THE appellant cleared Lubricating Oil through their depot and claimed discount from the basic selling price and excise duty was charged to the customers on the discounted price. However,since the goods were provisionally assessed, duty was paid on the price without deduction of discount.

Upon finalization of the assessment, the discount was allowed. In the assessment order it was mentioned that the appellant could file separate refund claim u/s 11B in respect of duty paid in excess.

Accordingly, the appellant filed refund claim of Rs.39,57,598/- and the original authority after sanctioning the same credited the refund amount into the Consumer Welfare Fund.

In his findings the adjudicating authority noted that the appellant at the time of payment of excise duty did not show the same as receivable in the balance sheet. Nonetheless, the said amount was shown under 'Loans and Advances' in the financial account for the year 2008-09. It was further observed that excise duty paid in excess was booked under the Profit & Loss account in the relevant balance sheet, therefore, it stands passed on to any other persons, therefore unjust enrichment become applicable.

The Commissioner (Appeals) upheld this order and, therefore, the appellant is before the CESTAT.

The appellant submitted that the whole basis of crediting the refund amount to the consumer welfare fund was that the appellant did not show the refund amount as 'receivable' in the balance sheet for the year 2007-08. However, in the balance sheet for the year 2008-09 they had shown the refund amount as 'receivable'. Inasmuch as the amount can be shown as receivable only when it is ascertained that the amount is refundable; that in the present case, only after finalization of the balance sheet it was ascertained as to how much amount is refundable and accordingly it was shown as receivable in the balance sheet of 2008-09. Furthermore, at the time of payment of excise duty, excess duty paid on discount amount was not charged to the customers which was clearly evident from the records and, therefore, it cannot be said that there is unjust enrichment. Case laws were also cited namely, A.K. Spintex Ltd - 2009-TIOL-12-HC-RAJ-CX, Advance Steel Tubes Ltd - 2013-TIOL-1164-CESTAT-DEL etc.

The AR while reiterating the findings of the lower authorities emphasized that since the appellant had not booked the amount as receivable in the book of account for the year 2007-08 and even though it is shown in the balance sheet of 2008-09 the incidence was already passed on in the year 2007-08, therefore, unjust enrichment is applicable.

The Bench observed -

++ The appellant even though shown the excess paid duty as receivable in the balance sheet for the year 2008-09 and not shown the same in the balance sheet for the year 2007-08 does not establish that incidence of duty was passed on to any other persons. Once the amount is shown as receivable, it becomes refundable.

++ Accounting treatment such as not showing the receivable in the 2007-08 and shown the same in 2008-09 is not permitted as per the wish of individual. It is acceptable norms under the Income Tax therefore the lower authority could not have questioned about accounting treatment given in the balance sheet which is audited and accepted by the statutory authority. I do not agree with the contention of the Revenue that if an amount was not shown as receivable in the particular year and it was subsequently shown as receivable the incidence of such amount stands passed on, for the simple reason that if the incidence of particular amount assumably passed on to any other persons then it cannot be permitted under Income Tax law to book the same amount as receivable in the subsequent financial year.

++ Therefore, in my view even in the year 2008-09 when the amount was shown as receivable, it can be clearly established that the incidence of duty has not been passed on. The lower authority have presumed that even though the excess paid duty was not directly passed on to these customers to whom the goods were sold but it might have been passed on to any other person.

++ I find that the evidence produced by the appellant such as booking of amount in the balance sheet as receivable and the fact that excess paid duty was not recovered from the concerned customer, if these evidences are not sufficient as per the lower authority, then it is onus on the department to bring the evidence to show that incidence of duty has actually been passed on. In the present case no such evidences was brought on record by the department that incidence of excess paid duty was indirectly passed on to any other persons.

Holding that the impugned order is not sustainable, the appeal was allowed with consequential relief.

(See 2016-TIOL-1444-CESTAT-MUM)