Customs, Excise and Gold Tribunal - Mumbai
Thermon Heat Tracers Ltd. vs Commissioner Of Central Excise, Pune on 1 June, 2001
Equivalent citations: 2001(132)ELT455(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (Technical)
1. The appellant before us was engaged in the manufacture of heat tracing cables. These cables were initially classified under heading 8516.00 of the tariff on which duty was payable @ 25% ad valorem, disallowing the claim by the manufacturer to classify them under heading 85.40, which carries a lower rate of duty. Consequent upon an appeal filed against this order, the Collector (Appeals) remanded the matter to the Assistant Collector, who in de novo adjudication accepted the claim for classification under heading 85.40.
2. The manufacture filed a claim of refund of the duty paid b it in excess in the interviewing period. The Assistant Collector found that the refund was to be granted o merits but found that the incidence of duty had been passed on by the manufacture to the buyer of the goods. He therefore ordered the amount to be credited to the Consumer Welfare Fund. The manufacture appealed this order to the Collector (Appeals). The claim before the Collector (Appeals) was that although, initially, the incidence of duty was passed on to the buyer, on a protest by him, the appellant credited the amount of excess duty to his (the buyer's) account. Therefore, the incidence of duty rested with the manufacturer.
3. The Collector (Appeals) declined to consider this submission. He agreed that the credit had been given to the buyer of the goods. He however said that there was nothing to show that the buyer in turn had not passed on the incidence of the duty to any other person. Relying on the decision on the incidence of the duty to any other person. Relying on the decision of the Tribunal in Sangam Processors (Bhilwara) Ltd vs. CCE 1994 (71) ELT 989, he confirmed the order of the Assistant Collector. Hence this appeal.
4. The contention of the counsel for the appellant before us is that he is prepared to show that the buyer in turn has not passed on the incidence of duty for which he was not given sufficient opportunity, in which case the refund should be paid to the appellant. He cites the decision of this Tribunal in Salico Electronics vs. CC 2000 (41) RLT 511. The departmental representative reiterates the reasoning of the Commissioner (Appeals).
5. There is no doubt that the incidence of the duty was initially passed on when the goods were sold to the buyer at the price which included the duty. Subsequently on the protest of the buyer, this course of action was reversed. The consequence of crediting the buyer's account with the disputed amount of duty was to transfer the incidence of duty back to the appellant. The question of the buyer transferring the incidence of duty to any other person does not arise in these circumstances. The incidence or burden of the duty paid by the manufacturer was transferred to the buyer when the manufacture collected from the buyer the amount equal to the tax through the price paid by him for purchasing these goods. By the credit of the manufacturer subsequently to buyer, he took back upon himself that burden or incidence. If, in such a situation, the buyer included the duty element in the price that it charged to another person, in would not be correct to say that it has thereby passed on the incidence of duty to that person. The incidence of a tax cannot be borne by more than one person at the same time.
6. Sub section (2) of Section 11B provides that if the duty is refundable, the amount so refundable shall be credited to the Consumer welfare fund. The proviso under this sub section contains the exceptions to this sub section (2), citing situations in which the refund is payable to the claimant. Clauses (c) and (d) specify the amount relatable to duty in excess by the manufacturer and duty of excise borne by the buyer, "if he had not passed on the incidence of such to any other person." Constructed very strictly, the benefit of these clauses will no longer be available once the incidence of duty has been passed on. In that situation, the manufacturer or the buyer can no longer ask for refund to be granted to him. It is no doubt for this purpose that the law provides that a person other than the manufacturer or the buyer can claim the refund. This is the reasoning behind the Tribunal's decision i Sangam Processors (Bhilwara) Ltd vs. CCE and another decision of the Tribunal (not cited before us by either side) in CCE vs. Edison & Company 1997 () ELT.
7. We must consider here the observations of the Supreme Court in its judgement in Mafatlal Industries Ltd vs. Union of India 1997 (89) ELT 247. The majority held in paragraph 99 (3) as follows:
"Where a burden of duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by a person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that the amount is retained by the State i.e., by the people."
This was in fact the basis for the view that a person on whom the burden of duty no longer falls should not be enriched by being refunded the duty. It is only that person who has ultimately borne the burden that could claim the refund. The majority also, in paragraphs 64 and 65, expressed its broad agreement withe the judgment of the United States Supreme Court in United States v. Jefferson Electric Manufacturing Co, 78 L.Ed.859). In that judgment the Court refused to accept that the provisions of Section 424 of the Revenue Act, 1928. This Section provides:
"No refund shall be made of any amount paid by or collected for any manufacturer, producer, or importer in respect of the tax imposed by subdivision (3) of Section 600 of the revenue Act of 1924, or sub-division of section 900 of the Revenue Act of 1921, or the revenue Act of 1918, unless ... (2). It is established to the satisfaction of the Commissioner that such amount was in excess of the amount properly payable upon the sale or lease of an article subject to tax, or that such amount was not collected, directly or indirectly, from the purchaser or lessee, or that such amount although collected from the purchaser or lessee, was returned to him."
8. We must note here the significance of the clause in that section permitting refund in cases where, although the incidence of duty has bene passed on, it has been returned to the claimant. There is no such express provision in Sec. 11B of the Act with which we are concerned. However, the philosophy that infuses the amendment made to Sec. 11B is that it is the person who suffers the burden of duty who should get the refund of that duty. This, in fact, is what the Court has explicitly said in the words of the majority that we have reproduced in paragraph 8 above. The earlier decisions of the Tribunal would no longer be applicable in the light of this judgement.
9. We have already found that the person who bore the incidence of the tax when refund was claimed is the appellant. It would therefore be entitled to the refund.
10. The appeal is accordingly allowed. Impugned order set aside.