CHAPTER 9
REFUND1. Introduction1.1 Refund of any duty of excise is governed by Section 11B of the Central ExciseAct, 1944. By definition, refund includes rebate of duty paid on goods exported out ofIndia or on materials used in the manufacture of goods exported out of India. The refundclaim can be filed within one year from the relevant date in the specified Form [for thetime being the format R-1 specified under rule 173S of the erstwhile Central Excise Rules,1944] by an assessee or even a person who has borne the duty incidence, to theDeputy/Assistant Commissioner of Central Excise having jurisdiction over the factory ofmanufacture.
1.2 The “relevant date” has been defined in the said section and refund of duty paidcan be sought provided the manufacturer has not passed on the burden of duty. Incase the burden of duty has been passed on, the refund can be claimed by the personwho has actually paid the duty or, in the alternative, the amount can be deposited inthe Consumer Welfare Fund created by the statute.
1.3 The Central Excise Act also provided for payment of interest on delayed paymentof refund. As per Section 11BB, if any duty ordered to be refunded under Section 11B hasnot been refunded within three months from the date of receipt of the refundapplication in the prescribed manner and form along with the supporting documentaryevidence as laid down in the relevant rules, interest at the rate notified by theGovernment shall have to be paid on such duty from the date immediately after theexpiry of three months from the date of receipt of application till the date of refund ofsuch duty.
2. Presentation of refund claim
2.1 Any person, who deems himself entitled to a refund of any duties of excise orother dues, or has been informed by the department that a refund is due to him shallpresent a claim in proper Form, along with all the relevant documents supporting hisclaim and also the copies of documents/records supporting his declaration that he hasnot passed on the duty incidence.
2.2 The claim will be filed with the Deputy/Assistant Commissioner of Central Excisewith a copy to the Range Officer.
2.3 The claim shall be presented in duplicate and shall be duly signed by theclaimant or by a duly authorised person on his behalf and shall be pre-receipted (withrevenue stamp on original copy, where necessary).
2.4 It may not be possible to scrutinise the claim without the accompanyingdocuments and decide about its admissibility. If the claim is filed without requisitedocuments, it may lead to delay in sanction of the refund. Moreover, the claimant ofrefund is entitled for interest in case refund is not given within three months of the filing ofclaim. Incomplete claim will not be in the interest of the Department. Consequently,submission of refund claim without supporting documents will not be allowed. Even if postor similar mode files the same, the claim should be rejected or returned with QueryMemo (depending upon the nature/importance of document not filed). The claim shallbe taken as filed only when all relevant documents are available. In case of non-availabilityof any document due to reasons for which the Central Excise or CustomsDepartment is solely accountable, the claim may be admitted that the claimant in not indisadvantageous position with respect to limitation period.
3. Scrutiny of refund claim and sanction
3.1 The Range Officer will complete the scrutiny of the papers within 2 weeks fromthe date of receipt of the claim in the Range Office and send a report to their scrutiny tothe Divisional Deputy/Assistant Commissioner of Central Excise.
2.2 The Divisional Office will scrutinise the claim, in consultation with Range, andcheck that the refund application is complete and is covered by all the requisitedocuments. This should be done, as far as possible, the moment refund claim is receivedand in case of any deficiency, the same should be pointed out to the applicant with acopy to the Range Officer within 15 days of receipt.
2.3 In the Divisional Offices, final processing of refund claims after the receipt ofRange Officer’s report should be completed including the verification of the factwhether the assessee has passed on the duty incidence to their buyer (in cases wherethe refund claim is filed by a manufacturer or owner of warehoused goods). The types ofcases to which this provision will not be attracted are already specified in section 11Bitself. Where the duty incidence has been passes on, the duty refund, if otherwiseadmissible, will be ordered in file, but will also be ordered to be credited to the ConsumerWelfare Fund. The burden of proving that the duty incidence has not been passes on, ison the claimant and the latter may be required to submit sufficient documentary prooffor this purpose. It is clarified that the question of unjust enrichment has to be looked intocase by case. There cannot be a general instruction indicating the documents and /orrecord, which the claimant should produce as a proof that he has not, passes on theduty incidence to any other person.
2.4 Claim for refund of less than Rs. 100 shall not entertained in respect of allexcisable commodities.
3. Payment of refund
3.1 Where the claim has been admitted whether in part or in full, and claimant iseligible for refund, the Deputy/Assistant Commissioner of Central Excise should ensurethat payment is made to the party within 3 days of the order passed after due audit, ifany.
3.2 All claims shall be paid to the applicant by a cheque on the authorised bank withwhich the sanctioning authority maintains account.
3.3 On receipt of sanctioning claims from the dealing hands, the cheque shall bewritten out by the cashier (or his assistant) and simultaneously an entry made in the cashbook. The Assistant Commissioner shall sign the cheque as well as the entry in thecashbook simultaneously. A receipt of the cheque should be obtained from the payeeand placed on file.
3.4 After the cheque has been signed, it shall either be delivered to the claimant orhis authorised representative personally when the next calls for it or sent to him byRegistered Post ‘Acknowledgement Due’ at Government cost.
4. Post Audit4.1 All refund claim papers should be sent by the Divisional Deputy/AssistantCommissioner to the Commissionerate Headquarters (to the Additional/JointCommissioner–Audit) within a week after the payment thereof irrespective of the amountinvolved. At the Commissionerate Headquarters, a special cell comprisingDeputy/Assistant Commissioner (Audit) – for immediate supervision – one superintendent,one Inspector and two Deputy Office Superintendents may be created out of thesanctioned strength of the audit staff in the Commissionerate for post -audit of theseclaims.
4.2 This cell may undertake examination on merits of each such claim where theamount of refund granted is Rs. 5 lakh or more. In regard to the remaining refund claimsinvolving amounts below Rs. 5 lakh, post audit may be undertaken on the basis ofrandom selection by the Deputy/Assistant Commissioner (Audit). This post audit may becompleted before the expiry of three months from the date of payment and where everthe grant of refund is not found to be correct, action should be taken in terms ofprovisions contained in Section 35E of the Central Excises Act, 1944, this special Cell maywork directly under the charge of Additional/Joint Commissioner (Audit).
5. Monitoring and control for timely disposal of refunds5.1 The Commissioner of Central Excise should devise appropriate control to ensurethat the refund/rebate claims are expeditiously sanctioned within the time limit stipulatedabove.
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