Custom, Excise & Service Tax Tribunal
Cce, Ghaziabad vs M/S.Bhushan Steel Ltd on 21 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr. R.K.Singh, Member (Technical)
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Excise Appeal No. 55371/2013-EX[DB]
[Arising out of Order-in-Appeal No.172-CE/GZB/2012 dated 28.09.2012 passed by the Commissioner (Appeals),Central Excise, Ghaziabad].
CCE, Ghaziabad Appellant
Vs.
M/s.Bhushan Steel Ltd. Respondent
Present for the Appellant : Shri M.S. Negi, DR Present for the Respondent: Shri Rajesh Chhibber, Shri M.K. Kaushik, G.M. (Excise) Excise Appeal No. 56109/2013-EX[DB]
[Arising out of Order-in-Appeal No.198-CE/GZB/2012 dated 20.11.2012 passed by the Commissioner (Appeals),Central Excise, Ghaziabad].
CCE, Ghaziabad Appellant
Vs.
M/s.Bhushan Steel Ltd. Respondent
Present for the Appellant : Shri M.S. Negi, DR
Present for the Respondent: Shri Rajesh Chhibber,
Shri M.K. Kaushik, G.M. (Excise)
Excise Appeal No. 57280/2013-EX[DB] in
[Arising out of Order-in-Appeal No.215-CE/GZB/2012 dated 28.12.2012 passed by the Commissioner (Appeals),Central Excise, Ghaziabad].
CCE, Ghaziabad Appellant
Vs.
M/s.Bhushan Steel Ltd. Respondent
Present for the Appellant : Shri M.S. Negi, DR
Present for the Respondent: Shri Rajesh Chhibber,
Shri M.K. Kaushik, G.M. (Excise)
Coram:Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. R.K.Singh, Member (Technical)
Date of Hearing/Decision: 21.08.2014
FINAL ORDER NO. 53453-53455/2014 DATED: 21.08.2014
PER: ARCHANA WADHWA
Being aggrieved with the order passed by Commissioner (Appeals), Revenue has challenged the present 3 appeals, which are being disposed of by a common order as the issue involved is identical.
2. After hearing both the sides duly represented by Shri.M.S. Negi, DR and Shri Rajesh Chhibber, Advocate, we find that the respondents are engaged in the manufacture of cold rolled Steel Strips/Sheets and Galvanized Plain and corrugated sheets. A dispute about the deduction of various types of discounts being given by the respondent to their customers arose, which was settled against them by the order of the Original Authority. The Commissioner (Appeals) allowed the respondents appeal, which order was challenged by the Revenue before Tribunal. The Tribunal disposed of the Revenues appeals by observing as under:-
5. We have carefully considered the rival submissions and perused the records. The basic point of dispute in this case is as to whether this is a case of retrospective downward revision of prices by giving discounts not known at the time of removal or this is a case where the trade discounts, in question, were known before removal and the same were given to the customers later only for the reason that the same could be quantified only subsequently and at the time of removal, the same could not be quantified. If former is the case, the Apex Courts judgment in case of MRF vs CCE, Madras reported in 1997 (92) ELT 309 (SC) would apply and if the latter is the case, the judgment of Apex Court in case of Union of India Vs. MRF reported in 1995 (77) ELT 433 (SC) would apply.
6. We find that the factual position is as to whether the cash discounts, quantity discounts, and other trade discounts, whose deduction is sought from the assessable value, and on the basis of which the refund of duty has been claimed, were known at the time of removal or not, has not been discussed either by Commissioner (Appeals) in the impugned order or by the Original Adjudicating Authority. If the discounts in question were known and understood at the time of removal in form of price circulars, price lists, discount policy, circulated among the dealers their deduction from the assessable value would have to be allowed in view the Apex Courts judgment in the Apex Court in the case of Union of India Vs. M/s. Madras Rubber Factory (supra) even if the same were quantified, subsequently, subject to the conditions that the same had actually been passed on to the buyers. If the discounts, in question, are deductible from the assessable value, the respondent would be eligible for refund subject to the provisions of Section 11B of the Central Excise Act, 1944 i.e. the refund claim having been filed within the prescribed limitation period and being not hit by the principle of unjust enrichment. For examining this aspect the matter has to be remanded to the Original Adjudicating Authority.
3. The Original Adjudicating authority, in remand proceedings, again held that the assessees is not entitled to the discount deductions and accordingly, rejected the refund claims filed by the assessee. On appeal, Commissioner appeals examined the entire issue alongwith the document etc. and held that the respondent is entitled to the discounts, as the discount policy were known to the customers at the time of clearance of the goods. He also held that wherever such excess duties paid by the appellant stand recovered by them from their customers, the provisions of unjust enrichment would not apply. However, he remanded the matter to the original authority for verification of the said fact and for consequent confirmation of the refund amount.
The said order of Commissioner (Appeals) stands challenged before us by the Revenue.
4. For better appreciation, we deem it fit to reproduce the relevant paragraph from the order of Commissioner (Appeals) as follows:-
5.4. Now coming to the issue whether the discount policies announced by the appellant were known to the customers at the time of the removal of goods from the factory, I find that the appellant, along with their application for the refund of duty amounting to Rs. 24,84,372/- has enclosed a bill-wise detail of quantity sold, duty paid, Quantity/Trade discounts allowed/duty payable and duty claimed as refund in respect of various buyers pertaining to the period 1.04.2010 to 30.11.2010. During the present appeal proceedings, the appellant has also produced the copies of the invoices, relevant credit notes, transfer vouchers and customer ledger on sample basis to substantiate their contention that the discount policies were known to the customers at the time of removal of the goods and only quantum was ascertained at a later date which was time to time extended through credit notes. To examine their contention, I observe that the appellant has issued credit Note No. GP-09-10-15 dated 8.10.2010 to M/s. Cannic Steel Ind., Srinagar passing on a total quantity discount of Rs. 16,691/- in respect of total sale of 41.427 MT of goods during the month of September, 2010. The appellant has also enclosed invoice-wise detail of quantity cleared to Cannic Steel Industries during the month of September, 2010. On a perusal of the above said credit note, discount policy relevant to the period, the ledger account and relevant transfer voucher passed on 20.10.10, I find that the quantity discount @ Rs. 400/- per MT given by the appellant is in accordance with the discount policy circular issued by them for the month of September 2010. Similarly, I find that the appellant has issued another credit note No. GP-10-10-13 dated 10.11.2010 for Rs. 14,109/- to M/s. Cannic Steel Ltd., Srinagar for passing discount @ Rs. 400/- per MT on the quantity of 35.273 MT purchased by them during the month of October, 2010. I find that the said discount passed on by the appellant is also in accordance with the discount policy circular dated 30.09.2010 issued by the appellant for the month of October, 2010 and the said credit voucher is duly posted in the customers ledger account on 15.11.2010. I observe that during these appeal proceedings, the appellant has also produced sample invoices, credit notes, transfer voucher and ledger account in respect of goods sold by them to M/s. Adhunik Steel Ltd., Jaunpur (U.P.) on which the quantity discount @ Rs. 150/- per MT has been passed on by the appellant for the month of September, 2010 which I find is in accordance with the same policy circular as made applicable for passing discount in the case of M/s. Cannic Steel Ltd., Srinagar. Moreover, I observe that copies of ledger accounts produced by the appellant on sample basis in respect of the above two buyers also reveal that the quantity discounts have been passed on to these buyers from time to time on a monthly basis by way of issuing the credit notes. In view of such a continuous practice as reflected in the accounts of the appellant, I do not see any reason to disagree with the contention of the appellant that they were having a known trade discount policy for their customers and the discounts were regularly being quantified and passed to the customers on monthly basis in accordance with the said policy to the customers as per the quantity of goods purchased by them. As such, I hold that the excess amount of duty involved on the said trade discounts which were known to the dealers/traders at the time of removal of goods as per pre-declared discount policy of the appellant but were quantified subsequently on the basis of quantum of goods purchased by such dealers/traders and passed on uniformly to all the customers at regular intervals, is liable to be refunded in the case subject to the fact that these discounts have actually been passed on to the buyers.
5.5. Further, I observe that the refund sanctioning authority has also rejected the refund of duty on the ground of unjust enrichment holding that the burden of duty has been passed on at the time of sale to the dealers and further to ultimate buyers by the dealers because there is no material placed on record by the appellant to know as to how the dealers accounted for the cost of purchase in their books. It has been held that it is highly improbable for a dealer to incur the cost of purchase which included the element of duty in addition to the purchase price without passing on its burden to its buyers. I do not agree with the findings of the adjudicating authority as it is evident from the documents like invoices, credit notes and party-wise ledgers produced by the appellant during these proceedings on sample basis that although the appellant initially charged the duty from their buyers on the invoices raised at factory gate at a price without claiming the benefit of admissible discounts, but subsequently they refunded the excess duty charged on the such admissible trade/quantity discounts to the customers by way of issuing credit notes. I observe that Pavan K. Garg & Co., Chartered Accountants in the Certificate dated 16.01.2010 have also certified that the appellant had not passed on the excise duty corresponding to the credit notes issued by them lateron to their customers on account of various discounts, since that had not been received from the customers. Similarly, I also observe that in the letters dated 16.06.2012, as also mentioned in the impugned order, a few customers of the appellant have also confirmed about the receipt of these credit notes. Further, I find force in the reliance placed upon Honble Karnataka High Courts decision in the case of CCE Vs. OM Pharmaceutical Ltd., reported in 2011(268) ELT 79, wherein it was held that even in case duty was collected but was repaid, the same is sufficient to hold that the incidence of duty was not passed on, though initially it was passed on but thereafter returned the same to the customer. I observe that the Honble High Court of Karnataka in the case of Sudhir papers Ltd. vs CCE, Bangalore-I, as reported in 2012(276) ELT. 304(Kar.), has held that ..if the credit notes are raised and the benefit is passed on to the customer, thus not passing on the burden of excise duty the assessee is entitled to the refund of the same. Further, this decision has been relied upon by the Honble Karnataka High Court in the case of CCE, Belgaum vs Jineshwar Malleable & Alloys, as reported in 2012(281)ELT.43(Kar.), and it has been held that there was no unjust enrichment and the assessee was entitled to the refund of excise duty since for the excess duty debit notes were issued by the consignee and the amount was credited to their accounts. A similar view has been taken by the Honble Tribunal in the case of CCE, Chandigarh Vs. Vardhman Industries Ltd., as reported in 2006(205) ELT.41(Tri.Del.), which has been affirmed by the Honble Supreme Court, as reported in 2011(267) ELT. A25(SC). Moreover, I observe that the appellant has also produced the copies of self declarations by some of their buyers like M/s. Cannic Steel Industries who have declared that their firm is not registered with the Excise Department of J&K State or outside (understandably meaning the Central Excise department) and they are not getting any modvat from any excise department which could have been easily got verified by the adjudicating authority through the jurisdictional Central Excise Authorities before giving his findings on the issue in the impugned order. Thus, in view of the facts available on record and following the ratio of the aforementioned court rulings, I hold that provisions of unjust enrichment are not applicable to the present case since the duty of excise claimed to be excess paid in the instant appeal has been credited back to the buyers account by the appellant by way of issuing the credit notes. However, the adjudicating authority shall allow the refund of duty, as admissible, after due verification of all the credit notes and relevant accounting ledgers to ascertain that burden of duty has not been passed on by the appellant to their customers.
5. Revenue in their memo of appeal have referred to certain instances where the discounts have been given even though cases where the quantity sold was less than the quantity mentioned in discount policy. Ld. Advocate for the respondent explains that the discounts are given on the TOTAL quantity sold, which may be split to various quantities in different invoices raised at different times. He also explains that sometimes the orders are placed by one person and the invoices are issued to two different parties, but the total quantity for the purpose of discounts is attributed to that one person.
In any case we find that the Revenue is not disputing the factum of giving of discounts to the customers. The discount policy also was available and was known to the customers at the time of clearance of their final product. The discounts stand actually given when a particular customer attains that goal of quantum of purchase. In such a scenario the Revenue cannot question the assessee, as to why, the discounts stand given to a particular customer. It may not be out of place to mention here that Revenue is not disputing the factum of grant of discount.
6. As is seen, Commissioner (Appeals) has gone by the certificates given by the customers that the discount policy floated in the past years was known to them and the discount stand given to them in accordance with those policies. The Revenues contention is that such certificates stand given subsequently by the customers for the past period and as such, should not be accepted inasmuch as the assessees discount policy was not on the website.
We find no merit in the above contention of the Revenue. Even though, the certificates were given subsequently, they related to the relevant period. It is also not being disputed that discount policy was floated by the assessee amongst their customers. As such, non-uploading of the same at the website would not make a difference. Otherwise also, we find that the Tribunal in the remand proceedings has held such discounts to be admissible and does not open to the Revenue to challenge the same in the remand proceedings. Further, Commissioner (Appeals) has observed that the provisions of unjust enrichment would not be applicable, as long as, the assessee is in a position to show that he has not recovered excess duty from their customers. He has accepted the assessees contention that the excess duty stands paid to the customers by way of credit notes. However, he has only remanded the matter for verification of the documentary evidence in this respect and to arrive at a correct quantum of refund.
Though the ld. Advocate informs us that the Asstt. Commissioner in remand proceedings has again rejected the refund claim on the ground of unjust enrichment but inasmuch as, there is a declaration of law by Commissioner (Appeals), which stands challenged by Revenue in their memo of appeal, we deem it fit to deal with the same.
Revenue in their memo of appeal have submitted that as the appellant had originally recovered the duty amount from their customers, who might have taken the credit, the provisions of unjust enrichment would apply. They have further pleaded that inasmuch as the discount is always relatable to the value and not to the duty, the recovery of the entire duty from the customers and the grant of refund to the assessee would amount to unjust enrichment of the assessee.
7. We find that the assessees customers have taken a categorical stand and have also produced certificates before Commissioner (Appeals) that they are not registered with the Central Excise Department and as such, the question of availing the credit does not arise. In any case, he has remanded the matter to the Asstt. Commissioner for verification of the above factual position.
We agree with the Commissioner (Appeals) on the legal issue that wherever the credit notes stand given to the customers, the refund would not be hit by provisions of unjust enrichment. For the said proposition, we rely upon the Honble Karnataka High Courts decisions in the cases of CCE, Bangalore-I vs. Om Pharmaceuticals Ltd. reported in 2011 (268) E.L.T. 79 (Kar.), Sudhir Papers Ltd. vs. CCE, Bangalore-I reported in 2012 (276) E.L.T. 304 (Kar.) and CCE, Belgaum vs. Jineshwar Malleable & Alloys reported in 2012 (281) E.L.T. 43 (Kar.) As regards the Revenues contention that the discounts are always relatable to value and not to duty, we find no merits. Admittedly, the discounts would be relatable to value only but would be having effect on the quantum of duty. If the discounts are given, the value would be lowered resulting in assessees liability to pay reduced duty in which case, if assessee has paid back the excess duty to the customers, he would be entitled to the refund of the same.
8. We make it clear that we are only clarifying the legal issues, on the point of unjust enrichment, which are subject to verification by the lower authority, as the matter has already been remanded.
9. The Revenues appeals are disposed of in above manner.
[Dictated & Pronounced in the open Court].
(R.K.SINGH) (ARCHANA WADHWA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Anita ?? ?? ?? ?? 0 2