By TIOL News Service

MUMBAI, OCT 12, 2016: THE respondent assessee is engaged in the manufacture of motor vehicles and clears the same to their dealers at a fixed price and allows quantity discount on the basis of actual number of vehicles sold by them over last year's performance.

Since the final discount is known only at the end of the calendar year, the assesseeopted for provisional assessment.

They made a payment of Rs.18,62,346/- towards the differential duty in respect of debit notes raised on the dealers to whom excess quantity discount was passed on and on the other hand, requested for refund of an amount of Rs.40,59,180/- towards credit notes raised on various dealers to whom short quantity discount was passed on.

The AC finalised the provisional assessment and while confirming the payment made by the assessee, the refund amount claimed was sanctioned but credited to the Consumer Welfare Fund on the ground that incidence of duty was passed on to the buyers.

The matter was carried by the assessee to the CESTAT and their appeal was allowed by relying on the Madras High Court decision in Addison & Co. 2003-TIOL-396-HC-MAD-CX. See 2014-TIOL-825-CESTAT-MUM .

Revenue is, therefore, before the Bombay High Court and their appeal was admitted.

The counsel for the Revenue submitted that Revenue has preferred an appeal to the Supreme Court against the cited Madras High Court decision; that since the assessee has passed on the incentive and the consequent duty relating to the dealers by way of credit notes issued subsequent to the clearance of goods, it meant that the incidence of duty was passed on to the dealers at the time of clearance of the goods;that the subsequent credit notes will not take the refund claim out of the mischief of unjust enrichment.

The respondent submitted that the Madras High Court's ruling in Addison (supra) has been recently reversed by the apex Court 2016-TIOL-146-SC-CX-LB.

The High Court inter alia observed –

++ In para 16 of the Judgment delivered by the Hon'ble Supreme Court we find that presumption was raised from the facts that the duty which was originally paid by the assessee was passed on. The refund claimed by the assessee is for an amount which is part of the excise duty paid earlier and passed on. The assessee who did not bear the burden of the duty, though entitled to claim deduction, is not entitled for a refund as he was unjustly enriched.

++ We are of the opinion that if the present assessee relies on the credit notes raised on the dealer, then, an opportunity should be given to it to establish and prove that in pursuance thereof the duty burden which was passed on to the buyer has not eventually fallen on the said buyer on account of this arrangement. Thus, if the dealer has been found to be recovering the amounts or having given credit to the buyer, then, whether the raising of the credit notes would negate the presumption raised in Section 12B of the Act or not is an issue or matter required to be examined by the Tribunal.

In fine, the impugned order was quashed and set aside and the appeal was restored to the file of the Tribunal for examining the aforementioned issue.

In passing : Also see DDT 2919 & 2925.

(See 2016-TIOL-2442-HC-MUM-CX)