N.P. Gupta, J. - (1.) This appeal has been filed by the revenue, seeking to challenge the order of the Tribunal, dated 20.4.2005 The appeal was admitted on 2l.5.2007, by framing following substantial question of law: Whether in the facts and circumstances of the case, the Tribunal is right in law in allowing the refund where the incidence of duty had been passed onto the customers initially and subsequently the debit notes were issued by the suppliers of raw material but not credited in the accounts of the customers by the assessee?
(2.) The necessary facts, giving rise to the controversy are that the assessee processes man -made fabrics. For that they receive grey unprocessed fabric, from the suppliers, and in terms of notfn dated 1.3.2001, they got deemed CENVAT Credit in respect of declared inputs, used in the manufacture of processed fabrics. The prevalent rate of deemed credit was 45% of the duty, paid on the processed fabric.
(3.) It was the date 11.6.2001, on which the said notfn was amended vide notification No. 25/2001 CE, whereby the deemed credit was increased to 50%. In the order of the Tribunal, there is confusion, as to whether the amendment was effective from 1.6.2001 or 11.6.2001. It is however, not in dispute, that the notfn was issued on 11.6.2001, and since the controversy in the present case, relates only to the period 11.6.2001 to 13.6.2001, we need not go into the question, as to whether the notfn was effective from 1.6.2001 or 11.6.2,001. The assessee continued to make clearance of the processed fabric, on payment of 55% duty, instead of 50%, up to 13.6.2001, with deemed credit benefit @45% to their customers. However, the customers were aware of the change in the rates, and protested against the charge of duty, @55%, and thereupon, the customers immediately issued debit notes to the assessee, with a view to take credit of the differential amount of duty. Accordingly, the assessee filed a claim for refund of duty in the sum of Rs. 6 1,1 46/ - Contending, that this amount has neither been realized from their customers, nor the duty has been passed on to the customers. The application for refund was rejected on the ground, that the duty liability was passed on to the customers, and subsequent credit notes issued to the customers, does not make the bar of unjust enrichment inapplicable. Against the rejection, appeal was filed before the Commissioner (Appeals), which too was disposed, relying upon the judgment of the Tribunal in CCE Madras v/s. Addision & Co. : (1997) 9 3 ELT 429, wherein it was held, that if after the date of payment of duty, any payments are made, same cannot be taken cognizance of for the purpose of Sec. 11B. The assessee carried the matter, by further appeal, before the Tribunal, relying upon larger bench judgment of the Tribunal, in S. Kumar Ltd. v/s. CCE, Indore : (2003) 153 ELT 217, wherein it was noticed, that since there is no dispute on the fact, that this amount of duty has not been collected by the appellants, it is not hit by the principle of unjust enrichment. The learned Tribunal found, that there is substantial force in submission of the learned Counsel for the assessee, incidence of duty has not been passed on by them to their customers, who had immediately objected to charging of duty @55 % instead of 50%, with effect from 11.6.2001, and once the customers protested, the assessee immediately issued credit notes, which have not been disputed by the revenue, it cannot be claimed that incidence of duty, of which refund is now being sought, by the appellant, has been passed on to the customers. It was held, that question of passing the incidence of duty, to the Customers, which has not been paid by them, to their customers, does not arise, thus, the appeal was allowed.;