Custom, Excise & Service Tax Tribunal
Philips Electronics India Ltd vs Commissioner Of Central Excise, Pune I on 18 March, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/713/08 (Arising out of Order-in-Appeal No. P-1/344/2005 dated 14.09.2005 passed by Commissioner of Central Excise (Appeals), Pune.) For approval and signature: Honble Mr P.G. Chacko, Member (Judicial) Honble Mr. S.K.Gaule, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Philips Electronics India Ltd Appellant (Represented by: Shri Prakash Shah, Advocate) Vs Commissioner of Central Excise, Pune I Respondent (Represented by: Shri P.K. Agarwal, JCDR) CORAM:
Honble Mr P.G. Chacko, Member (Judicial) Honble Mr. S.K.Gaule, Member (Technical) Date of Hearing : 18.03.2010 Date of Decision: 20.04.2010 ORDER NO..
Per: P.G. Chacko
1. The appellants are engaged in the manufacture of consumer electronic products like Radio-sets. They claimed the benefit of concessional rate of duty in terms of Notification 57/93-CE dated 28.2.1993 in their classification list effective from 1.3.1993 and accordingly started clearance of their products on payment of duty at the concessional rate of duty, @10% ad valorem. The jurisdictional Assistant Commissioner denied the benefit of the Notification to the appellants and directed them to pay duty @20% ad valorem. Accordingly, the appellants deposited a sum of Rs 1,25,95,393/- being the differential duty for the period from 1.3.1993 to 12.5.1993 and started paying duty on subsequent clearances @ 20% ad valorem under protest. They also challenged the Assistant Commissioners order before the Commissioner of Central Excise (Appeals) but unsuccessfully. Ultimately, they succeeded before this Tribunal in their appeal filed against the order of the Commissioner (Appeals). This Tribunal, by order dated 9.11.1995, held the assessee to be eligible for the benefit of the above Notification. Subsequently, the party filed six refund claims for an aggregate amount of Rs 20,08,64,189/- being the differential duty paid by them for the period from 28.2.1993 to 31.12.1995. The following are the essential particulars of these refund claims:
S.No Amount Filed on Period
1. 1,75,95,393.00 17.1.96 1.8.93-12.5.93
2. 17,45,42,335.00 08.4.96 13.5.93-31.12.95
3. 21,98,104.00 26.4.96 28.2.93-31.8.93
4. 18,47,079.00 30.4.96 28.2.93-25.8.93
5. 23,88,558.00 30.4.96 1.9.93-1.6.94
6. 72,98,720.00 30.4.96 26.8.93-18.8.95
2. In a show-cause notice dated 4.3.1996, the department proposed to reject the refund claim dated 17.1.1996 as time-barred. In a subsequent show-cause notice dated 23.8.1996, all the six refund claims were proposed to be rejected on the ground that the Tribunals decision dated 9.11.1995 had not been accepted by the department and their appeals against the same were pending before the Supreme Court and on the further ground that the incidence of differential duty paid by the noticee appeared to have been passed on to their customers. The party contested both the show-cause notices. In adjudication of the dispute, refund was sanctioned to the extent of Rs 1,66,34,576/- and the party was allowed to take credit thereof in their RG23A Part II account. The claim for refund of the remaining amounts totalling to Rs 18,42,29,613/- was also sanctioned but this amount was ordered to be credited to the Consumer Welfare Fund on the ground of unjust enrichment. The appeal filed by the assessee against the order of adjudication was rejected by the Commissioner (Appeals). Hence the present appeal of the assessee.
3. This appeal has arisen before this Bench pursuant to the remand order dated 30.7.2008 passed by the Honble High Court in Central Excise Appeal No. 147 of 2007 filed by the party.
4. After hearing both sides, we have found that one ground raised in the show-cause notice dated 23.8.1996 is no longer tenable inasmuch as the Civil Appeal filed by the department against the Tribunals final order dated 9.11.1995 was dismissed by the Supreme Court with the result that the assessee became entitled to claim refund of the differential duty paid by them. The surviving question is whether the following refund claims are hit by the bar of unjust enrichment:
(i) claim for Rs 17,45,42,335/- filed on 8.4.1996 for the period 13.5.93 to 31.12.95;
(ii) claim for Rs 23,88,558/- filed on 30.4.1996 for the period 1.9.93 to 1.6.94;
(iii) claim for Rs 72,98,720/- filed on 30.4.1996 for the period 26.8.93 to 18.8.95.
The appellants claim of interest on the amount of Rs 1,66,34,576/- already refunded by the original authority appears to have been settled in their favour, a fact noted in the Honble High Courts order.
5. Heard both sides. Reiterating the grounds of the appeal, the learned Counsel submitted that, even after increase in the rate of duty from 10% to 20%, there was no change in price of the goods and, therefore, it should be held that the burden of differential duty was not passed on to their customers. The amounts of duty were shown as expenses in the Profit & Loss Account. The Chartered Accountant of the appellants also certified that the differential duty amounts had not been recovered from the customers by raising debit notes. The differential duty was paid after clearance of the goods. In these circumstances, according to the learned Counsel, the appellant had successfully rebutted the statutory presumption (under Section 12B of the Central Excise Act) that the incidence of duty had been passed on to the buyers of the goods. In support of the reliance placed on the Chartered Accountants certificate, the learned Counsel relied on Commissioner vs Flow Tech Power 2006 (202) ELT 404 (Mad) and also on order dated 17.7.2008 of the Bombay High Court in Civil Appeal No. 183 of 2007. Reliance was also placed on Transformers & Electricals Kerala Ltd vs Commissioner 2005 (188) ELT 60 (Tri-Bang). The learned Counsel submitted that the invoices issued by the appellants showed a composite price without separately indicating duty amount and that the price remained the same irrespective of the rate of duty. On these facts, the appellants should be held to have discharged their burden of proof that the incidence of duty had not been passed on to their customers. In this connection, the learned Counsel has relied on ITC Bhadrachalam Paper Boards Ltd vs Commissioner 2002 (146) ELT 582 (Tri-Bang) and Collector vs Metro Tyres Ltd 1995 (80) ELT 410 (Tri). It was also pointed out that the Civil Appeal filed by the department against the Tribunals decision in Metro Tyres case was dismissed by the apex court vide 2002 (143) ELT A 785 (SC). The learned Counsel also referred to an affidavit of one of the dealers of the assessee, wherein the deponent stated that they had purchased the goods from the assessee at a composite price and that the price was fixed after taking into consideration the excise duty payable on the goods. The deponent further stated that, during the period 1.3.93 to 31.12.96, the cum-duty price had not been revised upward and had remained below or equal to the price charged on 1.3.93 when the excise duty rate was 10%. It was further stated that excise duty @ 10% only had been recovered from them by the appellants.
The learned Counsel also referred to para 11.2 of the Order-in-Original, wherein it was held that, as the differential duty of Rs 1,66,34,576/- had been paid through TR6 Challans/PLA after the clearance of the goods on payment of duty @ 10%, the amount was subsequently not passed on to any other person as no correlation was possible as the demand arose much after the clearances and the list prices were not increased. It was argued that this reasoning of the original authority was equally applicable to the subject refund claims.
6. The learned Jt CDR, representing the Revenue, invited our attention to the refund claims in question and submitted that the amounts claimed as refund were shown as having been debited to PLA/RG23A Part II against GP1s/invoices issued during the relevant periods. In respect of the claim for refund of Rs 23,88,558/-, the JCDR referred to the appellants letter dated 30.4.1996 addressed to the Assistant Commissioner of Central Excise, which indicated that they were claiming refund of the said amount as customers of the goods manufactured/supplied by M/s AS Electronics Corporation. The refund claim for Rs 72,98,720/- was also said to be of similar nature. The learned JCDR further submitted that what was recovered by the appellants from their customers was cum-duty price, which included duty at the higher rate (20%) and, therefore, the entire amount of duty should be deemed to have been recovered from the customers. Admittedly the price at which the goods were sold by the appellants at all material times was an all-inclusive price. In other words, the selling price of the goods, admittedly, was cum-duty price. As this fact was admitted by the assessee, according to the JCDR, there could be no rebuttal of the presumption under Section 12B of the Central Excise Act. He also referred to Section 12A of the Act and submitted that it was obligatory for the appellants to show the amounts of duty separately in their GP1s/invoices. Their failure to do so was fatal to their refund claims.
Copies of certain specimen invoices were also produced by the learned JCDR, which were issued to the appellants by M/s AS Electronic Corporation in the month of April 1994 and indicated the duty amount separately at the rate of 20%. Copies of returns filed by the appellants for the month of September, 1994 were also produced by the JCDR, which indicated payment of duty @ 20%. Referring to the contention of the learned Counsel that, as the price of the goods had remained the same at all material times irrespective of the rate of duty, the burden of duty should be held to have been absorbed by the appellants, the learned JCDR submitted that similar contentions had been rejected by this Tribunal, High Courts and the Supreme Court. In this connection, he relies on Interach Building Products (P) Ltd vs Commissioner 2005 (184) ELT 154 (Tri-Del), which was affirmed by the apex court vide 2006 (193) ELT 143 (SC) by dismissing the Civil Appeal filed by the party. The learned JCDR also referred to SRF Ltd vs Commissioner 2006 (13) ELT 186 (Tri-LB) and Commissioner vs Allied Photographics India Ltd 2004 (166) ELT 3 (SC). The learned JCDR argued that, where it could be shown that the incidence of duty had been passed on atleast indirectly to a customer by the person claiming refund of the duty, the claim would be hit by the bar of unjust enrichment. In support of this proposition, reliance was placed on Union of India vs Solar Pesticides Pvt Ltd 2000 (116) ELT 401 (SC) and DCW Ltd and another vs Union of India and others 2006 (72) RLT 103 (Guj). It was also argued that, where the cum-duty price was reflected in the GP1s/invoices, there was no need of looking into the Balance-Sheet to find out as to whether the duty amount was considered as receivable or not. In this connection, the learned JCDR referred to Hindustan Lever Ltd vs Commissioner 2009 233) ELT 511 (Tri-Mum). It was also pointed out that any certificate from Chartered Accountant had not been produced by the appellants before the original authority. Such a certificate was produced only before the appellate authority and, that too, without the supporting documents. According to the learned JDCR, the C.As certificate would not be conclusive evidence of the burden of duty having been retained by the refund-claimant.
7. We are concerned with the three refund claims mentioned in para 4 hereinabove totalling to Rs 18,42,29,613/-. The assessee paid duty (under protest) @20% ad valorem for the relevant periods. Their claim for the benefit of concessional rate of duty (10% ad valorem) under the relevant Notification came to be allowed by this Tribunal and ultimately by the apex court and, consequently, they were entitled to claim refund of the excess duty paid by them. The three refund claims in question were accordingly filed by the assessee. The lower authorities have sanctioned the claims but ordered the amounts to be credited to the Consumer Welfare Fund on the ground that the incidence of duty had been passed on by the assessee to their customers. Therefore, the issue before us is whether the three refund claims in question are barred by unjust enrichment.
8. The learned Counsel has argued that the reasoning behind the grant of refund of Rs 1,66,34,576/- is equally applicable to the refund claims in question. The assessees claim for refund of duty of Rs 1,25,95,393/- for the period 1.8.93-12.5.93, Rs 21,98,104/- for the period 28.2.93-31.8.93 and Rs 18,42,079/- for the period 28.2.93-25.8.93 totalling to Rs 1,66,34,576/- was held to be not hit by the bar of unjust enrichment inasmuch as the relevant GP1s/invoices were found to have been raised by the claimant charging duty @10% and the differential duty @20 10 = 10% was found to have been paid subsequently (i.e., after clearance of the goods) through TR6 Challans/PLA debits. In this connection, the adjudicating authority observed that the incidence of the differential duty paid by the assessee had not been passed on to any other person and, further, that the List Price of the goods remained the same through. We note that the last observation of the learned adjudicating authority that the list price of the goods remained the same (through the material period) may hold good in respect of the subject refund claims also, but the same by itself cannot be a ground for holding that the differential amounts of duty covered by these refund claims had not been passed on to any other person as rightly pointed out by the learned JCDR. The case law is consistently in support of this proposition. In the case of Allied Photographics India Ltd (supra), the Honble Supreme Court held that any uniformity in price before and after the assessment did not lead to the inevitable conclusion that the incidence of duty had not been passed on to the buyer as such uniformity might be due to various factors. This ruling of the apex court was followed by this Tribunal in several cases including SRFs case (supra), Interact Building Products case (supra) and the case of Commissioner vs Milton Plastic Ltd 2008 (232) ELT 653 (Tri-Mum). The Civil Appeal filed by M/s Interach Building Products Pvt Ltd against the Tribunals decision was dismissed by the Supreme Court. Thus, today, it is settled law that the bar of unjust enrichment cannot be got over by a refund-claimant on the sole ground of uniformity of price of the goods before and after the relevant assessment/clearance. In any case, uniformity of price of the goods was not the only ground for avoiding the bar of unjust enrichment in respect of the aforesaid refund claims for a total amount of over Rs 1.66 crores. The main ground taken was that the differential amount of duty, which was claimed as refund, had been paid through TR6 challans/PLA debits after clearance of the goods. The question now to be considered is whether this ground taken by the adjudicating authority to get rid of unjust enrichment in respect of the aforesaid refund claims will be available to the assessee in the context of claiming refund of Rs 18,42,29,613/-.
9. In dealing with the above question, we have conducted a scrutiny of the refund claims in FORM R by the assessee. The first of these claims reads as under:
I/we claim refund of Rs 17,45,42,335/- (. Only) on the grounds mentioned hereunder. Grounds for Refund enclosed on separate sheet. The amount claimed was originally paid through GP1s/invoices issued during the period from 13.5.93 to 31.12.95. In the separate sheet enclosed with the above refund claim, the assessee has averred, inter alia, as under:
the duty liability was determined @20% adv as per Sr. No. 10(b) of the above said notification. Thereafter we started paying duty on these products @20% adv under protest vide our letter no. ILB-14/400 dated 14.5.93.. Since we have paid duty @20% adv under protest on the clearance of these products during the period 13.5.93 to 31.12.95, we are now filing the refund claim amounting to Rs 17,45,42,335/- for the excess duty paid by us. In the second claim for Rs 23,88,558.95 in FORM R, the assessee made a similar statement as under: The amount claimed was originally paid through GP1s/invoices issued during the period 1.9.93 to 1.6.94.. The amount claimed was debited to account current No PLA 1378/85/92 & RG23AP II against GP1 No./ Invoices issued during 1.9.93 to 1.6.94. In the remaining claim for Rs 72,98,720/- in FORM R, the assessee again made similar statement as under: The amount claimed was originally paid through GPs/Invoices issued during the period from 26.8.93 to 31.1.96. The amount claimed was debited account current No. PA 99/85/87 & RG23 APII against GP1s/Invoices issued during 26.8.93 to 31.1.96. (emphasis supplied) Thus, it is crystal clear that the differential duty amounts claimed as refund were paid at the time of clearance of the goods under GP1s/Invoices during the relevant periods a fact which is materially different from the fact that the differential duty amounts covered by other refund claims granted by the original authority were paid subsequent to clearance of the goods. Therefore, we find no merit in the learned Counsels argument that the refund claims in question are liable to be allowed in the same way as the claim for refund of duty of Rs 1.66 crores already granted by the original authority. The three refund claims under consideration stand on a different footing with regard to unjust enrichment.
10. The question now arises as to whether the assessee has succeeded in getting over the bar of unjust enrichment by proving that the incidence of the differential duty paid by them had not been passed on to their customers. We have already found that the differential duty claimed as refund had been debited to PLA and RG23A P II against GPs/Invoices issued during the relevant period. Those GPs/invoices, obviously, indicated the duty element separately. The covering letters (copies available on record) issued by the assessee to the Assistant Commissioner alongwith their refund claims for Rs 23,88,558/- and Rs 72,98,720/- indicate that they claimed these refunds as customers for the goods manufactured by M/s A.S. Electronics Corporation and M/s Poonitronics (India) Pvt Ltd respectively. The assessee obtained no objection certificates from M/s AS Electronics Corporation and M/s Poonitronics (India) Pvt Ltd to claim refund of the excess duty paid by them. Though, in the above covering letters, the assessee also stated that the additional duty burden had not been passed on to any of their customers, they categorically stated in their reply to the show-cause notice that their clients had cleared the goods on payment of higher duty @20% adv from 13.5.1993 as is clear from the following excerpt from the assessees reply to the relevant show-cause notice.
It is further submitted that with effect from1.3.1993 our clients started clearing the goods at the rate of 10% adv. Accordingly, our clients reduced the selling prices of the goods to the stockists for the period post-1.3.1993. These selling prices continued to remain the same even after 13.5.1993 when our clients cleared the goods on payment of higher duty at the rate of 20% ad valorem. This position also holds good for M/s A.S. Electronics Corporation and M/s Poonitronics from whom our clients purchased the goods. Their customers, to whom the goods manufactured by M/s AS Electronics Corporation and M/s Poonitronics (India) Pvt Ltd were supplied, cleared the goods on payment of higher duty @ 20% adv post-13.5.1993. The assessee also clearly stated in their reply to the show-cause notice that the selling price of their clients was also cum-duty price or all-inclusive price. It is thus abundantly clear that the incidence of the differential duty claimed as refund for the material period had been passed on to the assessees customers.
11. Another ground raised by the appellant to get over the bar of unjust enrichment is that the price of the goods remained the same. We have already held, with reference to binding judicial authorities, that the uniformity of price before and after assessment is by itself not a ground for holding that the duty burden has not been passed on by the refund claimant to any other person. The uniformity of price may be due to various factors as observed by the Supreme Court in Allied Photographics case. As it is contended that the price at which the goods were sold by the assessees customers at all material times were all-inclusive price or cum-duty price and that such price remained the same, there is no warrant for the inference that the assessee was absorbing the duty burden. In such a scenario, it has inevitably to be inferred that the assessee was only altering their profit margin so as to maintain consistency of price inasmuch as every manufacturer would sell his goods at something above the cost-price + duty as observed by the Honble Supreme Court in the case of Mafatlal Industries Ltd vs Union of India 1997 (89)ELT 247 (SC) and by this Tribunal in the case of JCT Ltd vs Commissioner 2004 (163) ELT 467 (Tri) and in the case of Interach Building Products (supra). Therefore, the appellant is not bound to succeed on the ground of uniformity of prices in so far as the refund claims in question are concerned.
12. As there is no estoppel in taxation matters, we are also not inclined to accept their plea that, as the original authority considered the uniformity of prices as one of the grounds for sanctioning refund of duty of Rs 1.66 crores and the department accepted that decision of the original authority, the present refund claims also should be allowed on the same ground without the bar of unjust enrichment. In the present case, we have found preponderant evidence of the incidence of duty having been passed on to the assessees customers/clients. The assessee has consistently maintained that the prices at which their customers/clients sold the goods at all material times were cum-duty prices. This fact is reflected in their reply to the show-cause notice also. In these circumstances, the assessees plea of uniformity of prices as a ground against the bar of unjust enrichment is not acceptable. We have already noted the reason for the uniformity of prices in this case vide supra.
13. The appellant produced a certificate dated 10.2.2004 of their Chartered Accountant in support of their claim for refund of duty of Rs 17,45,42,335/-. The C.A. certified that the assessee had paid the said amount of duty @10% (20 10%) by raising excise invoices for the period from 13.5.93 and that the amount had not been recovered from their customers. It was further certified that the amount had been shown as expenses in the Profit & Loss account for the aforesaid period whereas it is contended by the assessee that they collected cum-duty prices from their customers and that the prices at which the customers sold the goods were also cum-duty prices. The C.A.s certificate of non-recovery of duty by the assessee from their customers loses its probative value (if any) in the face of the above contention of the assessee. The above refund claim was filed by the appellant as manufacturer of the goods. Therefore, if the amount was shown as expenses in their Profit & Loss account for the relevant period, as certified by the C.A., it must have been factored into the price of the goods manufactured by them which situation would fit well in the contention that the goods were sold at cum-duty prices by the assessee and their customers and consequently the burden of duty would be deemed to have been passed on to the buyers of the goods. As already found, the appellant has failed to rebut this presumption.
14. In the result, we hold that appellants claims for refund of duty of Rs 17,45,42,335/-, Rs 23,88,558/- and Rs 72,98,720/- are hit by the bar of unjust enrichment.
15. The appeal is dismissed.
(Pronounced in the Court on 20.4.2010) (S.K.Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) rk 14