M/S Paramount Communication Ltd vs Commissioner, Central Excise, Goods & Service Tax

P.V. Subba Rao, Member (T)

M/s. Paramount Communication Ltd.[ Appellant] filed this appeal to assail the order-in-appeal dated 15.06.2021 [Impugned order] passed by the Commissioner (Appeals) whereby he rejected the appellant’s appeal and upheld the order-in-original[OIO] dated 22.04.2020 passed by the Assistant Commissioner, Alwar.

The appellant manufactured, paid excise duty and supplied goods to its customer M/s Bharat Broadband Network Ltd. (Government of India entity). A show cause notice [SCN] was issued to the appellant which culminated in the issue of OIO dated 29.06.2017 demanding differential excise duty of Rs. 40,31,920/-along with interest and penalty. The appellant debited Rs. 37,92,744/- in its account and paid interest and penalty vide TR-6 challan. Aggrieved by the OIO dated 29.06.2017, the appellant filed an appeal before Commissioner (Appeals) after making a pre-deposit of Rs. 3,02,395/-. The Commissioner (Appeals), by order dated 01.08.2018, rejected the appellant’s appeal. The appellant appealed before this Tribunal and by final order dated 03.09.2019 this Tribunal allowed the appellant’s appeal.

Consequent upon the final order of this Tribunal, the appellant filed refund claim of Rs. 43,25,984/- on 14.11.2019. An SCN dated 12.02.2020 was issued to the appellant proposing to reject the refund claim on the grounds of limitation as well as unjust enrichment. After considering the submissions of the appellant, the Adjudicating Authority passed the OIO dated 22.04.2020 sanctioning the refund, but directing an amount of Rs. 37,92,744/- to be credited to the Consumer welfare Fund.

However, he ordered the amount of pre-deposit, interest and penalty to be credited to the bank account of the appellant. Aggrieved, the appellant filed an appeal before Commissioner (Appeals) who, by the impugned order, rejected it. Hence this appeal.

Learned Consultant for the appellant submits that appellant’s only grievance is that the refund amount has been ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant. He submits that this amount was not paid at the time of clearance of goods, but was paid subsequently when an SCN was issued to the appellant. The appellant had also issued a supplementary invoice to its customers M/s Bharat Broadband Network Ltd. for this differential duty which the appellant had paid but the customer refused to pay it to the appellant by its letter dated 19.12.2018 on the ground that it had already paid excise duty @ 10.3% as applicable and as per the price schedule of the purchase order. The relevant portion of this letter is as follows :-

“With reference to your letter addressed to CMD, BBNL, referred above, it is intimated that payment due against the Invoices mentioned in the list enclosed by you has already been released as per terms and conditions/price schedule of PO and no payment is outstanding against tender No. BBN/MM/2013/001 dated 03/04/2014, & PO No. MM/PO-012/2013-14 dated 25.10.2014, Excise Duty was applicable @ 10.3% but you had paid and claimed Excise Duty @ 12.36% & other higher rates. But payment has been released by BBNL as per terms and conditions/ price schedule of PO.

it is apparent from above, that no payment is outstanding against PO No. MM/PO/008/2013-14 dated 25.03.2014 & PO No. MM/PO-012/2013-14 dated 25.10.2014, as per terms and conditions of PO.

This is issued with the approval of the Director (Plg.)”.

Thereafter, the appellant had written off this amount in its books of accounts. A certificate from the Chartered Accountant to this effect is placed at page 46 of the appeal book. Learned Consultant, therefore, submitted that by no stretch of imagination can it be said that the appellant had passed on the burden of the differential duty to its customers. Therefore, the amount has been wrongly credited to the Consumer Welfare Fund and instead of being paid to the appellant.

Learned authorized representative for the department reiterated the impugned order and asserted that it is correct and proper and calls for no interference.

We have considered the submissions on both sides and perused the records.

The facts of the case are not in dispute. The appellant paid the disputed amount as differential duty after the SCN was issued and it was not paid at the time of clearance of the goods nor was an invoice raised for this amount at that time. It is also an admitted fact that the appellant had attempted to recover the differential duty from its customers M/s Bharat Broadband Network Ltd. by issuing a supplementary invoice, but the customer refused to pay it on the ground that central excise duty @ 10.3% was already paid as per the purchase order and the differential duty paid after calculating excise duty at the higher rate of 12.36% was not required to be paid by it. On merits, this Tribunal has already decided in favour of the appellant. After the differential duty was paid and after the customer declined to pay the differential duty, the appellant had written it off in its books of accounts as certified by the Chartered Accountant. Thus, we have no manner of doubt and that the appellant had borne the burden of the differential duty and had not passed it on to its customer or to anyone. Thus, the appellant’s case falls squarely under Clause (e) of the third proviso to section 11B of the Central Excise Act, 1944[the Excise Act] , i.e., the duty of excise and interest paid on such duty were borne by the appellant manufacturer and it had not passed on the incidence of such duty and interest to any other person.

The appellant is entitled to the refund of the amount sanctioned which should be paid to it instead of it being credited to the Consumer Welfare Fund. Needless to say the consequential interest must also be paid as per section 11BB.

The appeal is allowed and the impugned order is set aside. The refund amount along with interest under section 11BB should be paid to the appellant instead of being credited to the Consumer Welfare Fund.