Customs, Excise and Gold Tribunal - Delhi
Gopi Krishna Processors Pvt. Ltd. vs Cce on 13 November, 2006
Equivalent citations: 2007(114)ECC330, 2007ECR330(TRI.-DELHI), 2007(210)ELT529(TRI-DEL)
ORDER M.V. Ravindran, Member (J)
1. These appeal are directed against the order-in-appeal dated 30.07.2004, which upheld the order-in-original that credited the amount of refund claim of the appellant to the consumer welfare fund.
2. The relevant fact that arise for consideration are that the appellants:
During the period June, July and August, 99 were working under compounded levy scheme under Rule 96ZQ of the erstwhile Central Excise Rules, 1944. They were paying duty on the annual capacity determined by the Commissioner, Central Excise.
The duty was paid on the basis of size of the chamber. A doubt arose whereby the duty was also demanded on the galleries which were a pollution control equipment. The size of the galleries were treated as liable to duty and they paid the duty for the said period amounting to Rs. 80,000 per month and the total amount for 3 months comes to Rs. 2,40,000.00. They submitted the refund claims to the department for the aforesaid 3 months as the Commissioner (Appeals). Customs and Central Excise, Chandigarh hold that the galleries were not liable to duty vide order-in-appeal No. 251-258/CE/CHD-II/2001 dated 8.8.2001. Show cause notices dated 19.12.2001 were issued to the appellant for rejection of refund claims on the grounds that the order of the Commissioner (Appeals) had not been accepted by the Department and an appeal against the same had been filed in CEGAT (now CESTAT) and the matter is subjudice. However, the matter remained pending with the department. Finally the galleries were held to be not liable to duty by the Supreme Court in the case of CCE Jaipur v. Messrs Sangam Processors (Bhilwara) Limited . The matter was set at rest. Subsequently on 30.10.2003, the Assistant Commissioner, Central Excise, Amritsar issued addendum to the show cause notices on the grounds that the duty so paid on the length of galleries appeared to have been recovered from the Customers by passing on the incidence of excise duty and the refund claim suffered from the doctrine of unjust enrichment.
3. The adjudicating authority sanctioned the refund claim but credited the same to the Consumer Welfare Fund. On an appeal the learned Commissioner (Appeals) concurred with the findings of the adjudicating authority and upheld the order-in-original.
4. Learned advocate appearing on behalf of the appellant submits that the appellant through paid the differential duty TR6 challans. It is his submission the CA's certificate produced by the appellant has not been considered in proper perspective by the lower authorities. It was also submitted that the Balance sheets of the appellant for the relevant period showed the amount as receivable. It was also submitted that the CA's certificate clearly shows that the amount paid by the appellant is not accounted in the Trading and Profit and loss account hence the cost of the fabrics would not include the amount of refund claimed.
5. The learned DR on the other hand submits that the non-charging of the amount in Trading and Profit and loss account would not indicate that the cost of fabrics is arrived at excluding the amount. It was also submitted that the appellant has not produced any evidence that the incidence of duty has not been passed by them. It was his submission that the Invoices of the appellant indicate that the value is inclusive of excise duty as the appellant is functioning under the compounded levy scheme. It is his submission that in the compounded levy scheme the appellant has only to show on the invoices that the duty is paid under the scheme and the purchaser would get the benefit of Cenvat.
6. Considered the submission made by the both sides at length and perused the records. The issue involved in this case is whether the appellant has proved that they have not passed on the incidence of duty to their purchasers in order to claim the refund of the duty. It is seen from records that the appellant has paid the differential duty demanded by the revenue through TR6 challans. It is a common knowledge in the accounting systems adopted all over the world that any expenses incurred by the assessee gets charged to the cost of the product. To arrive at the cost of the product the assessee takes in to consideration all the expenses those are debited by him to the trading and profit and loss account. The trading and profit and loss account indicates the operating expenses incurred by an assessee, which forms the basis for fixing of sale price of the finished product. It is also a common knowledge that any amount that is not debited to trading and profit and loss account is not considered as expenses and would never form a part of the cost. In the case before me the learned Commissioner (Appeals) has in his order held as under:
It is seen that the appellant could not produce any evidence that they have not passed the incidence of duty paid on the galleries to the customers. The adjudicating authority has applied the doctrine of unjust enrichment and passed the order directing crediting the amount to the Consumer Welfare Fund.
As regards, the contention of the Appellant that the amount of duty in respect of Galleries has not been debited to the Trading/profit and loss account and has been stood with balance sheet on the asset's side as "Advance recoverable in cash or kind". I observe that the findings of the adjudicating authority on this issue are very clear & reasonable. I agree with these findings Merely showing this duty as advance recoverable does not by itself establish that the amount has not been recovered from the appellants.
Further as regards to the certificate issued by the Chartered Accountant to the effect that the appellant did not debit the said amount to manufacturing/trading account & it never formed part of cost of production. I find that the Adjudicating authority has well explained the issue I agree with the observation of the Adjudicating Authority. The prices of the fabrics are not cost-data based but are factory gate sale. Therefore, I find that the certificate of the Chartered Accountant does not support the claim of the appellants that duty paid on galleries by them was not passed on to the customers.
7. It can be seen from the above reproduced portion that the learned Commissioner (Appeals) has not given any findings on the point made by the appellant, instead adopted the findings of the adjudicating authority. It would be relevant to read the findings of the adjudicating authority on this point which are:
Certificate of Chartered Accountant M/s Lochan Kundra & Associates, 26-A, Hukam Singh Road, Amritsar dated 04.06.2003 certifies that the amount of duty of Rs. 80,000/- + Rs. 80,000/- + Rs. 80,000/- paid by the noticee under TR-6 Challans dated 15.06.99, 15.07.99 and 15.08.99 (total Rs. 2,40,000/-) during the period 1999-2000 was debited under the heading "Excise recoverable" in the books of accounts. It is also certified by the Chartered Accountant that the noticee did not debit the said amount to manufacturing, trading and profit & loss account nor they recovered the same from the parties/buyers. It is observed that the prices of the fabrics were not cost data based. The overall price structure of the product contains both direct and indirect elements and that a particular expenditure has not been charged to the trading/profit & loss account does not indicate that it was not recognized or taken into consideration while determining the sale price. This is all the more relevant here because the element of excise duty paid on galleries was known in advance to the noticee. Therefore, the argument that it has not been recovered from the customer is not tenable.
The company is also not running in loss as the gross profit during 1999-2000 was Rs. 91,49,497.14. Thereby, the portion of the certificate that the amount was not recovered from the buyers/debtors, losses importance or justification. Further, the Chartered Accountant has mentioned that the certificate was compiled from the books of accounts, TR-6 Challans and PLA register maintained by the noticee. It is observed that the certificate of the Chartered accountant is silent about the balance of amount lying in PLA account of the noticee as on 31.03.2000 which is also a deposit with the department and is includible under head "Excise recoverable". Therefore, I find that the certificate of the Chartered Accountant does not support the claim of the noticee that duty paid on galleries by them was not passed on to the customers.
8. A plain reading of the findings of the lower authorities would indicate that they have directed their findings based on the misconceived notion of the accounting system. A chartered Accountant is an expert who has knowledge and training of the accounting system and his certificate could not be brushed aside summararily as is being sought to. The CA's certificate that was produced reads as under:
CERTIFICATE This is to certify that the following TR 6 challans amounting to Rs. 240000/- (Two Lacs & Forty Thousand only) pertaining to GOPI KRISHNA PROCESSORS PVT. LTD., Asr. For the year 1999-2000 were deposited and debited under the head Excise Recoverable in the books of account.
Date of Deposit Date of Debit Amount (Rs.) 14.06.1999 15.06.1999 80,000 13.07.1999 15.07.1999 80,000 14.08.1999 15.08.1999 80,000
Further certified that the company has neither debited the amount to Manufacturing, Trading and Profit & Loss Account nor recovered the above said amount from the Parties/Debtors.
The above information has been verified from the books of accounts, T.R. 6 challans and P.L.A. register maintained by the M/s Gopi Krishna Processors Pvt. Ltd., Asr.
For Lochan Kundra & Associates Chartered Accountants Sd/-
Place : Amritsar (Lochan Kundra)
Partner
Dated: 4/6/2003 Membership No. 86249
9. The reading of the above-reproduced certificate would indicate that the CA has gone in to the accounts of the appellant as an expert would do so and issued the certificate. It is also important to note that the balance sheets produced for the relevant period also indicate that the amount of refund claimed is shown as Excise Recoverable, which would indicate that the said amount is not debited to the trading and profit and loss account. As already indicated in paragraph hereinabove, if the amount is not debited in the trading and profit and loss account the same would not form a part of the cost of the finished products.
10. A division bench of the tribunal in the case of Hero Honda Motors Ltd. v. CC, New Delhi as reported at 2000 (126) ELT 1014 in an identical issue has held as under:
10. As regards the factual position also, we find that the details shown in the appellants balance sheet and annual report show the disputed refund amounts as receivable from Government. Further, entries in their journals extracted at pages 225-226 of the Appeal Papers and the Chartered Accountant's certificate at pages 231-235 thereof also indicate that the appellants have not passed on the incidence of provisional deposit to the customers.
11. Division Bench of the tribunal in the case of Brindavan Tex Processors Pvt. Ltd. v. CCE, Bangalore as reported at 2006 (196) ELT 61 has held as under:
3. On examining the audit balance sheets for the year ending 31-3-2004, 3-2-2001 and 2000, it is seen that the refund amount claimed by the assessee has been shown as excise duty refund receivable." The Chartered Accountant certificate dated 24-12-1999 also certifies that there is a debit balance of Rs. 10,13,895/- in the excise duty refund receivable as on 30th September 2000 as per the accounts of the company. The balance sheets and records of the appellant and M/s Madura Coats Ltd. as on 31-12-1997 and 31-12-1997 also reveals that this amount is borne by the appellant. This clearly indicate that they have not reimbursed the duty amount. The affidavit dated 1-3-2000 of Shri Hariharan Finance Manager of M/s Madura Coats clearly indicate that duty was paid under protest by the appellants and the same has not been reimbursed to them. In view of this evidence, they are eligible for the refund with consequential relief. The appeal is allowed with consequential relief and the refund shall be made within three months from the receipt of this order with interest.
12. Another division bench of the tribunal in the case of Commissioner of Central Excise Mumbai I v. Shethia Audio Video Pvt. Ltd. as reported at has held as under:
6. We agree with the findings that the material produced by the respondent before him in the form of Chartered Accountant's certificate was sufficient for satisfaction that the duty burden which was discharged on a subsequent date to the clearances, was not passed on to the respondent's buyers. No material has been produced before us to show anything to the contrary.
13. The issue in the present case before me is squarely covered by the decisions of the division bench as mentioned above.
14. In view of the facts and circumstances as mentioned above, I am satisfied that the appellants have been able to show that the they have not passed on the incidence of the duty to their purchasers, hence the appellant is eligible for the refund. The appeals are allowed with consequential relief.
(Pronounced in the open court on 13/11/06)