Central Excise - Refunds - CBEC Circulates its Monumental Misunderstanding of Supreme Court Order
A protracted litigation that started sometime in 1988 resulted in a Supreme Court Judgment on 29.08.2016 - Commissioner of Central Excise, Madras Vs Addison & Co Ltd -
30 08 2016 covered the issue.
Now, the CBEC has communicated the Supreme Court Order along with its understanding to all the Chief Commissioners of Customs, Central Excise and Service Tax and DRI and DGCEI, for information and necessary action.
The Board states,
As a result of said decision the law relating to manner of discharging the burden cast by section 11 B of Central Excise Act, 1944 on the assessee while claiming the refund of duty has been crystallized. It has been held that issuance of debit note by the claimant of refund in favour of his customer shall not be enough to discharge the said burden.
The Board's conclusion is patently wrong and misleading. And it certainly can't be a debit note. A debit note cannot be "in favour"; it is to collect money, not to pay it.
The Supreme Court had in the above case decided two issues:
1. To claim refund, it has to be proved that the incidence of duty has not been passed on, not just to the immediate buyer, but to the ultimate consumer.
2. Assessee is entitled for filing a claim for refund on the basis of credit notes.
In fact, in the very same order, the Supreme Court dismissed the revenue appeal where the refund was allowed by the Commissioner (Appeals) based on the credit notes, which was confirmed by the Tribunal and the High Court and finally in this order by the Supreme Court.
And Board says - no debit notes!
As such, the Supreme Court judgment is a big blow to the refund mechanism and Board seems to be planning to take away the small mercy allowed by the Supreme Court.
Who asked the Board for a clarification? They could have simply communicated the Supreme Court Order instead of creating confusion, which they should have left to the field. Now litigation will start all over again and may be decided after twenty years. Maybe the Board has a secret agenda of perpetuating litigation - after all, they all need their jobs and Principal Chief Commissioners. You can't simply avoid confusion and create unemployment.
CBEC F. NO. 1080/38/DLA/Legal/2016/., Dated: September 02 2016