CX - Benefit of 'payment of duty under protest' made by manufacturer cannot be extended to buyer: CESTAT
By TIOL News Service
MUMBAI, DEC 28, 2016. THE appellants are manufacturers of medicaments. They got physician samples manufactured from M/s Atra Pharmaceuticals Ltd, Waluj, Aurangabad on loan-licence basis and which was cleared on payment of duty. Valuation of the goods was done by taking 115% of the cost of production of the manufactured goods and this resulted in excess payment of duty. The excise duty payment was made under protest by M/s Atra Pharmaceuticals Ltd and got it reimbursed from the appellant. M/s Atra Pharmaceuticals Ltd. filed their refund claim for excess duty paid but the same was rejected by the adjudicating authority on the ground of unjust enrichment as duty incidence hadalready been passed on to the appellant.
M/s Atra Pharmaceuticals Ltd challenged the order before the Commissioner(A) who held that the refund is admissible on merit but the amount was required to be credited to Consumer Welfare Fund.
Thereafter, the appellant filed refund claims on the ground that they had actually borne the duty incidence and had not passed on the burden to anybody else as physician samples were meant for free distribution.
This claim was rejected on the ground that since the refund claim filed by M/s Atra Pharmaceuticals Ltd was sanctioned and credited to Consumer Welfare Fund, the same cannot be considered for refund to another party i.e. M/s Merck Limited and even otherwise the claims are time-barred.
The Commissioner (A) while rejecting the appeal observed that the protest lodged by the manufacturer M/s Atra Pharmaceuticals Ltd is of no help to the appellant. Inasmuch as the refund claim is time barred.
The appellant is before the CESTAT. The appeal was filed in the year 2005.
None appeared on behalf of the appellant. No adjournment was sought.
The Bench observed –
6. …the Asstt. Commissioner in the order rejected the claim on two grounds i.e., firstly, once the refund claim was credited to Consumer Welfare Fund the same cannot be considered to be refunded to another party i.e. the appellant, and secondly, the claim is barred by limitation. Commissioner (Appeals) has already held that the first ground is not valid inasmuch as the claimant is not at fault if amount has been credited to the Consumer Welfare Fund. We also agree and hold that even though the amount was credited to the Consumer Welfare Fund, if the buyer of the goods comes forward and claim the refund and if he is eligible in terms of Section 11B, the refund should be granted to the buyer of the goods as a claimant . The only issue on which the Commissioner (Appeals) rejected the claim is limitation. It is the submission of the appellant that once the duty was paid under protest even though by the manufacturer, the same will continue to hold good for the refund claimed by the buyer i.e. the present appellant. In this regard, a three member bench of the Hon'ble Supreme Court in the case of Commissioner of Central Excise v. Allied Photographic India Limited 2004-TIOL-27-SC-CX has held as under: x x x
7. In view of the above observation of the Hon'ble Supreme Court, benefit of ‘payment of duty under protest' made by the manufacturer cannot be extended to the buyer. Therefore, considering the above view of the Hon'ble apex Court the present appellant cannot enjoy the benefit of payment of duty under protest by the manufacturer….”
Holding that the refund claim filed by the appellant is beyond one year and, therefore, the same is time-barred, the impugned order was upheld and the appeal was dismissed.
(See 2016-TIOL-3338-CESTAT-MUM)
