Sangeetha Prathap

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that a refund of excess excise duty cannot be denied when the assessee establishes through a Chartered Accountant’s certificate and corresponding ledger entries that the duty was paid in excess and the incidence of such duty was never passed on to any third party. The decision was rendered by Judicial Member R. Muralidhar and Technical Member K. Anpazhakan while allowing the appeal filed by Mahanadi Coalfields Ltd., a public sector undertaking.

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The assessee had, in March 2014, deposited excise duty on the basis of its anticipated performance incentive for the year. As later events revealed, the actual incentive received was much lower than estimated, resulting in excess payment of duty. Recognising the discrepancy, the assessee filed a refund claim in September 2014, which was well within the statutory period. The claim, however, was rejected by the adjudicating authority on the ground that the assessee had not furnished adequate documents to establish that the incidence of duty had not been passed on, thereby attracting the doctrine of unjust enrichment.

The Commissioner (Appeals) upheld the rejection, observing that the Chartered Accountant’s certificate produced by the assessee did not conclusively prove that the duty burden had not been transferred to any other party or reflected as a receivable from the Government. The assessee challenged the decision before the Tribunal.

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Before the Tribunal, the assessee submitted that a detailed Chartered Accountant’s certificate dated 07.03.2018, read in conjunction with the general ledger for FY 2014–15, clearly established that the excess duty of ₹70,36,628 had always been carried forward as “receivable from the Government of India.” The Tribunal examined the certificate reproduced in the order, which explained the initial tentative assessable value, the final performance incentive, and the excise duty payable thereon. The ledger extract—also reproduced in the judgment—confirmed that the same amount had been recorded as a deposit with the Government.

The Tribunal noted that the harmonious reading of the CA certificate and ledger demonstrated that the excess duty amount had remained consistently reflected in the books as a receivable rather than being shifted onto any customer or third party. In view of this documentary evidence, the Bench found no basis to doubt that the assessee had paid the duty in excess and had not passed on its incidence.

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The Tribunal observed that refund claims necessarily require verification of unjust enrichment, but once the assessee produces reliable evidence showing that the duty burden was retained and not transferred, denial of refund cannot be justified. Since the amount shown in the books tallied with the refund claim and was supported by the CA certification, the unjust enrichment bar was held to be inapplicable. Allowing the appeal, the Tribunal set aside the order of the Commissioner (Appeals) and directed that the assessee be granted consequential relief as per law.

Appearance

Counsel for Appellant/ Assessee: Rajeev Kumar Agarwal

Counsel for Respondent/ Department: S. K. Dikshit

Cause Title: M/s. Mahanadi Coalfields Ltd. v. The Commissioner (Appeals), CGST, Central Excise & Customs

Case No: Excise Appeal No. 77195 of 2018

Coram: R. Muralidhar (Judicial Member), K. Anpazhakan (Technical Member)