Apple Ltd. cleared certain goods to Peaches Ltd. paying higher rate of excise duty in the month of March, although the rate of duty on the said goods had been reduced in the budget of the same financial year. Peaches Ltd
CS Professional · Advanced Tax Laws and Practice · PYQS · June 2016
Apple Ltd. cleared certain goods to Peaches Ltd. paying higher rate of excise duty in the month of March, although the rate of duty on the said goods had been reduced in the budget of the same financial year. Peaches Ltd. refused to pay the higher duty which Apple Ltd. had paid by mistake. Peaches Ltd. raised a debit note in the month of June of the same year and Apple Ltd. applied for refund of the excess duty paid in August. The Department rejected the claim on the ground that the incidence of duty has been passed by Apple Ltd. to Peaches Ltd. While claiming refund, Apple Ltd. relied on the debit note raised by Peaches Ltd. in the month of June to demonstrate that its customer Peaches Ltd. had not paid the excess duty to Apple Ltd. The Department contended that since the debit note was issued in the month of June and not in March, it could not be the basis for refund. Examine with the help of decided case law, whether the contention of the Department is valid in law.
Answer & Explanation:
The facts of the case are similar to the case of CCE vs. Techno Rubber Industries (P) Ltd. 2011 (272) ELT 191 (KAR.) wherein, the High Court observed that when the customer has raised a debit note and refuses to pay excess duty claimed, the only inference to be drawn is that the assessee has not received the excess duty paid by him to the department. The High Court thus held that the department is bound to refund the excess amount of duty received by it to the person who has paid the excess duty. In the given case, Peaches Ltd. (buyer) had refused to pay the higher duty and has raised a debit note on Apple Ltd. (Assessee). Thus, it can be inferred that Apple Ltd. has paid higher duty to the department and has not passed on the incidence to Peaches Ltd. Thus, Apple Ltd. is entitled to the refund of such excess duty paid by them and the contention of the department is not valid in law.
Topics: Indirect Tax
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