Custom, Excise & Service Tax Tribunal
Meghdoot Gram Udyog vs Ce & Cgst Lucknow on 16 April, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Excise Appeal No.2442 of 2007
(Arising out of Order-in-Appeal No.02-CE/2007 dated 30/01/2007 passed by
Commissioner (Appeals) Customs, Central Excise & Service Tax, Lucknow)
M/s Meghdoot Gram Udyog Seva Sansthan, .....Appellant
(303, Chandralok Colony, Aligang, Lucknow)
VERSUS
Commissioner of Central Excise, Lucknow ....Respondent
(Commissionerate, Lucknow) APPEARANCE:
Shri Atul Gupta, Advocate for the Appellant Shri Sarweshwar T. Khairnar, Authorised Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70179/2024 DATE OF HEARING : 03 January, 2024 DATE OF PRONOUNCEMENT : 16 April, 2024 SANJIV SRIVASTAVA:
This appeal is directed against order in appeal No 02- CE/07 dated 30.01.2007 of the Commissioner (Appeal) Customs Excise & Service Tax Lucknow. By the impugned order appeal filed by the appellant against order in original holding as follows have been dismissed:
"ORDER In consideration to my discussion and findings above, I reject the refund claim of Rs 5,51,739/- (Rs. Five Lac Fifty One Thousand Seven Hundred Thirty Nine Only) on the grounds of unjust enrichment and order the amount otherwise liable for refund to be credited to Consumer 2 Excise Appeal No.2442 of 2007 Welfare Fund constituted under Section 12C of Central Excise Act 1944."
2.1 The Appellant is engaged in the manufacture of Ayurvedic Medicaments, namely. Sat Reetha, Herbal Sat, Neem Sat, Meghdoot Herbal Powder, Hring Raj Tail, and Triphla Brahmi Tail. On 16.04.1994, the Appellant declared the abovementioned products under Chapter sub-heading 3003.03 of the Central Excise Tariff Act 1985.
2.2 As the revenue was of the view that the products would be appropriately be classifiable under Chapter Heading 3305 instead of 3003. Accordingly, a show cause notice was issued and Commissioner, Central Excise, Lucknow adjudicated the case under Order-in-Original No. 9/99 dated 29.10.1999, holding the goods to be classifiable under heading 3305. 2.3 Tribunal vide Final Order No. 44-46/CE dated 28.01.2003 allowed the appeal filed by the appellant on limitation, leaving the issue of classification unsettled. An appeal was filed by the Appellant before the Hon'ble Supreme Court. Hon'ble Apex Court vide its Order dated 08.10.2004 in Civil Appeal No. 7445 of 2003 held that the products are classifiable under Chapter Heading 3003.30 2.4 During the pendency of this appeal before the Hon'ble Supreme Court, upon the insistence of the Department, the Appellant deposited an amount of Rs. 5,51,739/- under protest for different periods.
2.5 Subsequent to the decision of Hon'ble Apex Court, Appellant filed a refund claim of the above referred amount deposited on 10.02.2005. A Show Cause Notice dated 18.10.2006 was issued to them asking them to show cause as to why their refund application claiming Rs 5,51,739/- (Rupees Five Lakhs Fifty One Thousand Seven Hundred and Thirty Nine only) should not be rejected on the ground of unjust enrichment and the amount otherwise liable for refund should not be credited to Consumer Welfare Fund.
2.6 The Assistant Commissioner, adjudicated the show cause notice as per order referred in para 1, thereby rejecting the 3 Excise Appeal No.2442 of 2007 claim of refund on grounds that the invoices raised by the Appellant between 11.09.2003 to 30.01.2004 clearly show that the Central Excise Duty @ 16% separately was charged from the customers/buyers.
2.7 Aggrieved, the Appellant filed an appeal before the Appellate Authority/Commissioner (Appeals) which was dismissed as per the impugned order.
2.8 Aggrieved Appellant filed an Appeal before the Tribunal, which was dismissed vide Final Order No 1528/2009 SM (Br) dated 10.12.2009 2.9 Aggrieved, Appellant filed as Appeal before the Hon'ble High Court of Allahabad, Lucknow Bench. Hon'ble High Court has vide its order dated 16.12.2019 remanded the matter back to tribunal for reconsideration after taking into account the invoices and letters written by the appellant to its customer.
3.1 We have heard Shri Atul Gupta, Advocate for the appellant and Shri Sarweshwar T Khairnar, Authorized Representative for the revenue.
3.2 Arguing for the appellant learned counsel submits that:
The appellate authority has not considered submissions made on grounds of appeal o In respect of invoices issued during 01.07.2003 to 10.09.2003 and 01.02.2004 to 30.04.2004, the Appellant has not charged any duty or shown the same on their invoices. Appellant had intimated the department.
o In respect of invoices issued during 11.09.2003 to 31.01.2004, though the duty was shown on the invoices, however, the Appellant raised discount/concession/rebate from 40% to 52% to set off such duty amount shown in the invoices.
o Explanation of this is given based on the invoice dated 18.09.2003 (included in the paper-book) issued to Meghdoot Village Products during 11.09.2003 to 3 1.01.2004 reference is drawn to the following table:
4 Excise Appeal No.2442 of 2007S.No. Original Discount Discounted Amount Price after Price Percentage Price of CED 16% Central Excise Duty and 9.25% State Sales Tax
1. 56,600 40% 33,960
2. 56,600 52.1% 27,111.4 4,337.80 33957 or 33960 As per Section 12(B) of the Act, it is the duty of the Appellant to prove that he has not passed the excise duty to the buyer.
They placed certain documents by way of supplementary affidavit and on the basis of the same it is submitted that the same was on record of the Revenue and from the same it is crystal clear that the Appellant has not passed on the excise duty to the buyers.
Thus they absorbed the duty, and the incidence of tax was not passed to the customers thereby making them eligible for refund.
Despite above the letters informing the dealers, the Appellate authority in para 12 gave a finding that the Appellant neither informed their buyers regarding duty absorption nor they have shown conclusively that the duty burden was effectively absorbed by them.
Even the fact that the Appellant increased the discount as was shown on the invoices and the fact that the letters were written by the Appellant to the customers was never disputed by the department by producing any contrary evidence at any stage. Such fact has also been supported by a sworn in affidavit before the Hon'ble High Court and the same was not disputed by the department It has been observed by the Tribunal dated 10.12.2009 that the Appellants are eligible for the refund claim.
"6. I have carefully considered the submissions from both sides and pursued the records. There is no dispute that on merits, the appellants are eligible for the refund claimed by them. In fact, the refund has been sanctioned and credited to the Consumer Welfare Fund."5 Excise Appeal No.2442 of 2007
The amount otherwise eligible for refund under Section 11B of the Act should not be transferred to the Consumer Welfare Fund under Section 12C of the Act as there is no unjust enrichment and the incidence has been absorbed by the Appellant.
This is against the principles of natural justice and the impugned order should be set aside.
The findings of the Commissioner (Appeal) are not proper, reasonable and correct.
The decision in the matter of Allied Photographics India Ltd. [(2004) 4 SCC 34] is not applicable as the same has been explained by the Hon'ble Supreme Court in the matter of CCE, Calcutta vs. Panihati Rubber Limited [(2006) 10 SCC 129] that such case was decided in the facts of that case where the claim was made by the distributor about the price consistency without disclosing the complete facts.
Hon'ble High Court in its order dated 16.12.2019 observed that judgement means a decision adjudicating upon the legal rights and liabilities of parties after appreciating the evidence on record in a particular fact-situation, and that has to be duly supported by reasons. Reliance has been placed on the following for the same:
a. Surendra Singh v. State of Uttar Pradesh, AIR 1954 SC 194 b. Arjan Dass Ram Lal v. Jagan Lal Sardari Lal, AIR 1966 Pun 227 Reliance was also placed on the Apex Court judgment passed in Civil Appeal Nos. 3448-3449 of 2019 (Kushuma Devi v. Sheopati Devi (D) & Ors.) Appellate Authority in its Order dated 06.03.2007 has erred in concluding that the burden of duty has not been properly discharged by the Appellant and the duty was passed onto the buyers. Itis an established fact that the Appellant is eligible for a refund and not granting the same 6 Excise Appeal No.2442 of 2007 would be illegal and against the principles of natural justice 3.3 Arguing for the revenue learned authorized representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 Hon'ble High Court has while remanding the matter back to tribunal for reconsideration has observed as follows:
"It appears from the record that during the pendency of the appeal, the application for amendment (C.M. Application No. 60609 of 2019) was preferred and the same was allowed by this Court vide order dated 14.05.2019 and pursuant to the same, the amendment was incorporated by adding sixth substantial question of law. The questions of law mentioned in the memo of appeal, after amendment, read as under:- "1. Whether or not the bar of unjust enrichment will be attracted in a case where duty was paid under protest and specific letters were written to the dealers explaining the reasons of deduction/discounts?
2. Whether the learned Tribunal was justified in relying upon the case of C.C.E. v. Allied Photographics India Ltd., (2004) 4 SCC, 34 and ignoring the principles of law laid down in C.C.E. v. Panhihati Rubber Ltd. (2006) 10 SCC 129 and Auro Lab v. C.C.E. Madurai, 2005 (185) E.L.T. 88 (Tri.-Chennai)?
3. Whether the learned Tribunal was justified in non- considering the letters addressed to the dealers/distributors which proved that duty was not passed over to them?
4. Whether the learned Tribunal was justified basing its judgment on presumption rather the facts of the case?
5. Whether the principle of law would be same in case of duty element as well-as-refund, in other words whether 7 Excise Appeal No.2442 of 2007 the strict interpretation as applicable in case of duty be also applicable in case of refund?
6. "3. Whether the Learned Commissioner (Appeals) as- well-as Learned CESAT, New Delhi were justified in non- considering the letters addressed to dealers/distributors which were part of record and which proved that the duty was not passed over to them?"
Further, the appeal was admitted by this Court vide order dated 16.07.2010 on two questions of law. The order dated 16.07.2010 is quoted below:-
"The appeal is admitted on the following substantial questions of law:
(1) Whether it shall be unjust enrichment even if the duty is paid under protest informing the dealers explaining the reasons of deduction?
(2) Whether the Tribunal has committed substantial illegality by not considering the principles of law reported in 2006 (10) SCC, 129- C.C.E. Vs. Panhihati Rubber Ltd.
Sri Rajesh Chauhan has filed memo of appearance on behalf of respondent No. 1, hence it is not necessary to issue notice."
However, in view of the facts and grounds, as stated before us, we feel that for the purposes of adjudicating this appeal, the following question is required to be considered:-
"Whether the Tribunal was under obligation to consider all the material evidence available before it and while discarding the same, it was incumbent upon the Tribunal to record reasons."
From the bare perusal of Section 12 (B) of the Act, 1944, quoted hereinabove, the intention of the legislature is crystal clear that it is the duty of the concerned to prove that he has not passed on the excise duty to the buyer. For the purposes of decision on the question framed by us, we feel it appropriate to quote the relevant portion of the 8 Excise Appeal No.2442 of 2007 order of the Tribunal dated 10.12.2009, under appeal, which on reproduction reads as under:-
"6. I have carefully considered the submissions from both sides and perused the records. There is no dispute that on merits, the appellants are eligible for the refund claimed by them. In fact, the refund has been sanctioned and credited to the Consumer Welfare Fund. The letters addressed to the dealers (according to the learned Consultant they are representative in nature) show that as if consequent to payment of duty the appellants were absorbing the burden of duty and the prices remained the same as it was prior to the period when the duty was not being paid. Provocation for issue of such letters is not furnished. There is no reference in the said letters of any resistance of the buyers to buy the goods with the element of duty. After all, the central excise duty is an indirect tax and the role of the manufacturer and the dealer down the chain of sale is to pass on the burden to the ultimate consumer. No evidence whatsoever has been produced that there was any such stiff resistance from the consumers and the dealers which resulted in increasing the discount to upset the duty element and that the same resulted in absorption of the duty burden by the appellant themselves. Mere submission that in view of stiff competition in the market they were forced to absorb the duty burden is not sufficient proof that the appellant did not pass on the duty burden to the consumers. It is settled that the prices remaining the same prior to or after introduction of duty does not imply that the burden of duty is not passed on to the consumers as held by the Hon'ble Supreme Court in the case of C.C.E. v. Allied Photographics Ltd. as reported in 2004 (166) ELT 3 (SC) which judgment has been relied upon by the Commissioner (Appeals). The decision in the case of C.C.E., Calcutta v. Panihati Rubber Ltd. reported in 2006 (76) RLT 541 (SC) relied upon by the appellant is not applicable to the facts of the present case."9 Excise Appeal No.2442 of 2007
From the material placed before us particularly two sets of invoices and letters written by the appellant to the buyers and the relevant portion of the order dated 10.12.2009, quoted above, the position which emerges out is to the effect that the Tribunal has not considered the invoices placed by the appellant before it along with the letters of appellant written to the buyers and after considering both the material evidence viz. invoices and letters written by the appellant to the buyers, the Tribunal has not recorded reasons for coming to the conclusion that the appellant is not entitled for refund of the amount in issue. The expression 'Judgment' has been defined in section 2(9) of C.P.C., as "judgment means the statement given by the Judge on the grounds of a decree or order." Thus the essential element in any 'judgment' is the statement of grounds of decision, meaning thereby the Court has to state the ground on which it bases its decision. It must be intelligible and must have a meaning. It is distinct from an order as the letter may not contain reasons. Unless the judgment is based on reason, it would not be possible for an Appellate/Revisional Court to decide as to whether the judgment is in accordance with law. (Vide: Surendra Singh v. State of Uttar Pradesh, AIR 1954 SC 194: 1954 SCJ 12 :
1954 SCR 330; and Arjan Dass Ram Lal v. Jagan Nath Sardari Lal, AIR 1966 Pun 227).
A judgment is the expression of the opinion of the Court arrived at after due consideration of the evidence and the arguments, it means a judicial determination, (vide: U.J.S. Chopra v. State of Bombay, AIR 1955 SC 633: 1955 SCJ 603: (1955) 2 SCR 94; and State of Bihar v. Ram Naresh Pandey, AIR 1957 SC 389: (1957) SCC 282: 1957 Cr LJ
567).
Thus, in view of the above, the law can by summarised that the 'judgment' means a decision adjudicating upon the legal rights and liabilities of the parties after 10 Excise Appeal No.2442 of 2007 appreciating the evidence on record in a particular fact- situation, and that has to be duly supported by reasons. The Apex Court in the judgment passed in Civil Appeal Nos.3448- 3449 of 2019 (Kushuma Devi v. Sheopati Devi (D) & Ors.) observed as under:-
"9. This Court has consistently laid down that every judicial or/and quasi-judicial order passed by the Court/Tribunal/Authority concerned, which decides the lis between the parties, must be supported with the reasons in support of its conclusion. The parties to the lis and so also the appellate/revisionary Court while examining the correctness of the order are entitled to know as to on which basis, a particular conclusion is arrived at in the order. In the absence of any discussion, the reasons and the findings on the submissions urged, it is not possible to know as to what led the Court/Tribunal/Authority for reaching to such conclusion. (See State of Maharashtra vs. Vithal Rao Pritirao Chawan, (1981) 4 SCC 129, Jawahar Lal Singh vs. Naresh Singh & Ors., (1987) 2 SCC 222, State of U.P. vs. Battan & Ors., (2001) 10 SCC 607, Raj Kishore Jha vs. State of Bihar & Ors., (2003) 11 SCC 519 and State of Orissa vs. Dhaniram Luhar, (2004) 5 SCC 568)."
Keeping in view the aforesaid legal preposition and the observations made by us, in this judgment in regard to the order, under appeal dated 10.12.2009, we are of the view the Tribunal was under obligation to consider all the material evidence available before it and while discarding the same, it was incumbent upon the Tribunal to record reasons and in not doing so, the Tribunal erred in law and fact both.
Considering the aforesaid as well as the undisputed submissions made by the learned counsel for the appellant that certain documents were filed by the appellant before the Tribunal through supplementary affidavit and the Tribunal failed to consider the same, we are of the view 11 Excise Appeal No.2442 of 2007 that the matter may be remanded back to the Tribunal to decide the same afresh."
4.3 From the order of Hon'ble High Court, it is evident that matter has been remanded back for de-novo consideration only on the ground that tribunal has in its order failed to take note of the of certain letters written by the appellant to its customers and the invoices while concluding the matter against the appellant vide its order dated 4.4 Impugned order records as follows for upholding the order of Assistant Commissioner:
9. I have gone through the records, submissions made at the time of personal hearing and written brief submitted by the Ld. Consultant at the time of personal hearing. The main issue to be decided is that whether the subject refund claim can be rejected on the ground of unjust enrichment when the duty has not been charged/ shown or not shown on the invoices but the duty was deposited under protest due to the pressure of the Department.
10. I note that in this case the refund claim of the appellants has been rejected on the ground of unjust enrichment. The appellants have placed reliance upon the Hon'ble CESTAT's order in the case of Tecil Chemicals and Hydropower Ltd.
Vs CCE, Cochin, as reported in 2003(151) ELT 136. The appellants also relied upon the judgment of Hon'ble Supreme Court in the case of CCE, Kolkata Vs Panihati Rubber Ltd., as reported in 2006(76) RLT 551(SC). In this connection, I note with interest that Hon'ble Supreme Court in the Panihati Rubber Ltd. case, supra, have held that question whether incidence of duty has been passed on to buyers or not, is a question of fact and findings of fact arrived at by CESTAT is ordinarily to be accepted by the Supreme Court. Thus, the important issue here is as to whether the appellants have properly justified their claim on the fact that the burden of duty has not been passed on to the buyers.
12 Excise Appeal No.2442 of 200711. I note that the Ld. adjudicating authority has observed in para 10 of the order that the set of invoices submitted with the refund claims are thoroughly scrutinized. The invoices issued between 11.09.2003 to 30.01.2004 clearly show the Central Excise duty @ 16% separately which is included in the price of the goods charged from the customers. This proves that the Central Excise duty has been collected from the customers, therefore, the incidence of duty has been passed on to others. Further, in para 11, the adjudicating authority has observed that "though the Central Excise duty is not shown in another set of invoices pertaining to the period from 01.07 2003 to 10.09.2003 and from 01.02.2004 to 30.04.2004, the chart enclosed indicates the Central Excise duty separately which is included in the net bill amount as shown in the invoices. Obviously, Central Excise duty shown separately was collected from the customers."
12. In this connection, party's contention is that despite duty element shown separately in invoices the incidence was absorbed by them as the prices of their product remain constant before and after payment of duty. The Ld. adjudicating authority in this connection has not accepted the party's aforesaid plea, basing upon the Hon'ble Apex Court's judgment in the case of CCE Vs Allied Photographic (India) Ltd, as reported in 2004(166) ELT 3(SC). He held that it is a settled law that uniformity in prices during the period of Excise duty and other Periods, does not lead to inevitable conclusion that the incidence of duty was not passed on to the buyers. In this connection, I find a considerable force in the adjudicating authority's contention in this regard, Moreover, the Ld. adjudicating authority has referred to the Hon'ble CESTAT's order in the case of Auro Lab Vs CCE, Madurai, wherein the Hon'ble CESTAT has found that the buyers were informed about the absorption of duty paid and prices reduced accordingly. It was held by the Hon'ble Tribunal that the burden was 13 Excise Appeal No.2442 of 2007 not passed on so others However, in the present case the appellants have neither-informed their buyers regarding duty absorption by them not they have shown conclusively that the duty burden was effectively absorbed by them."
4.5 Order in Original records following findings for holding that the appellant had passed on the burden of the duty paid by them on to their buyers:
9. "I have carefully gone through the case records, defence reply and submissions made at the time of personal hearing. The issue to be decided is whether the said refund claim is covered under the doctrine of unjust enrichment and thus inadmissible or otherwise.
As per Sec 11B Refund of Central Excise duty will not be granted to the claimant if incidence of such duty had been passed on by him to any other person and the amount otherwise refundable shall be credited to the Consumer Welfare Fund.
Sec 12 B specifies that-
Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods
10. I find that the set of invoices submitted with the refund claims are thoroughly scrutinized. The invoices issued between 11.09.03 to 30.01.04 clearly show the Central Excise duty @16 % separately which is included in the price of the goods charged from the customers. This proves that Central Excise duty has been collected from the customers therefore, the incidence of duty has been passed on to others.
11. Though Central Excise duty is not shown in another set of invoices pertaining to the period from 01.07.03 to 10.09.03 and from 01.02.04 to 30.04.04, the chart enclosed indicates the Central Excise duty separately which is included in the net bill amount as shown in the invoices.
14 Excise Appeal No.2442 of 2007Obviously, Central Excise duty shown separately were collected from the customers.
12. Party's contention, that despite the duty element shown separately in invoices, the incidence was absorbed by them as the prices of their products remain constant before and after the payment of duty, does not hold much ground. It is a settled law that uniformity in prices during the period of Excise duty and other periods, does not lead to inevitable conclusion that the incidence of duty was not passed on to buyers. (Apex Court's judgment in case of CCE Vs Allied Photographics India Limited-(2004 (166) ELT 3(SC)).
13. In case of Auro Lab Vs Commissioner of Central Excise, Madurai, Hon'ble CESTAT observed that buyers were informed about absorption of duty paid and price reduced accordingly, As price charged to consumers remained the same prior and after duty was paid and assessees were non-profit organization, it was held that duty burden was not passed on to others. This situation does not prevail in this case as neither M/s Meghdoot Gramodyog Sewa Sansthan informed their buyers regarding duty absorption by them to make their intention clear nor they have proved their status as non-profit organisation.
14. In this light, I arrive at a conclusion that the subject refund claim being covered under the doctrine of unjust enrichment, is fit to be rejected and the amount otherwise liable for refund should be credited to Consumer Welfare Fund as specified in Sec 11B of Central Excise Act, 1944."
4.6 The refund claim can be bifurcated into three periods as indicated in the table below depending on the manner in which the invoice have been prepared.
S. Period Involved Amount of duty Remarks
NO deposited
1. 01.07.2003 to 10.09.2003 Rs. 1,11,605/- duty not charged/shown on the invoice
2 11.09.2003 to 31.01.2004 Rs.2,97,200/- duty shown on the invoices
3 01.02.2004 to 30.04.2004 Rs.1,42,934/- duty not charged/shown on the invoice
Total Rs.5,51,739/- Refund claimed
15 Excise Appeal No.2442 of 2007
4.7 Appellant has produced copies of three identically worded
letters written by them to their customers namely M/s Kaushalya Agency, Patna, M/s Kumar Industrial, Patna and M/s Sanjivani Enterprises, Ranchi. As all the three letters are identically worded we reproduce the text of the letter below:
"सूचनाथथ सेवा में, महोदय, आपको यह सूचचत चकया जाता है चक हमारा सेंट्रल एक्साइज चवभाग से चववाद चल रहा है , चवभाग के अनुसार 3003.39 ट्ै ररफ के अंतगथत जो माल हम आपको भेजते है उसपर 16% ड्यूट्ी लगनी चाचहए जबचक हमारा कहना है , चक इस पर सेंट्रल एक्साइज ड्यूट्ी नहीं लगेगी।
इसलिए हम एक्साइज लिभाग के कहने के अनुसार आपको उपरोक्त टै ररफ के उत्पादोों पर 16% ड्यूटी चाजज करें गे परन्तु हम आपको पूवथ में चदए जा रहे 40% छूट् की जगह 52.10% छूट् दें गे चजससे आपसे चजतना हम एक्साइज चाजथ करें गे उतना इस छूट् के माध्यम से आपको दे दें गे। अतः आप एवं आपके ग्राहकों को कोई अतररक्त भर नहीं पड़े गा इस भर को स्वयं संस्था उठाएगी।
कृपया अपनी स्वीकृचत प्रदान करें ।
भवदीय, प्रबंधक 4.8 From the text of the letter as reproduced above it is quite evident that the appellant has categorically stated in the letter that they are charging the central excise duty from their customer, while maintaining the selling price at the same level by increasing the discount given from 40% to 52.10%. Undisputedly appellant himself admits that they are charging the central excise duty from their customers. That being so the burden of duty paid has been passed on the customer. The reason for giving additional discount to the customers can be many including the product competitiveness. However we are 16 Excise Appeal No.2442 of 2007 not concern with the appellant offering additional discounts to their customers, we restrict ourselves to the fact that appellant state in these letters that they are charging the duty from their customers.
4.9 Appellant had also written letter dated 05.08.2003 to the jurisdictional Assistant Commissioner as follows:
"सेवा में सहायक आयुक्त केंद्रीय उत्पाद शुल्क मण्डल - 2 लखनऊ महोदय, मेरे उत्पादों के सन्दभथ में एक चववाद 'सीगेट्' नई चदल्ली में कहल रहा था 'सीगेट्' नै उक्त वगीकरण के सन्दभथ में चनणथय चदया, की हमारा उत्पाद चैप्टर-33 में वगीकृत होगा। इस आदे श की प्रचत मुझे जून माह में प्राप्त हुई थी । इस सन्दभथ में एक अपील सवोच्च न्यायालय में स्वीकृत हो चुकी है , परन्तु स्थागन आदे श नहीं चमला है ऐसी स्थस्थचत में मेरा चनवेदन है चक हमारी फमथ मेघदू त ग्रामोद्योग सेवा संसथान में 2 प्रकार के उत्पाद बनाये जाते है , पहले वगथ के उत्पाद आयुवेचदक दवाएँ तैयार की जाती है , चजनका चक वगीकरण 3003.39 में आता है , तथा इस पर दे य उत्पाद शुल्क 16 प्रचतशत मूल्य अनुसार दे य है , चजस पर हम लघु उद्योग लाभ ले रहे थे, दू सरे वगथ के उत्पाद चजन्हे हम आयुवेचदक दवाएं मानते है , लेचकन चवभाग अनुसार वे कॉस्मेचट्क्स है , अतः चववाचदत है , और चजस पर 'सीगेट्' के आदे श सं 44 - 46 / 03 पी / चद 28.1.03 के चवरुद्ध सवोच्च न्यायालय में अपील स्वीकार की जा चुकी है , लेचकन कोई स्थगन आदे श हमें नहीं चमला है । इस सन्दभथ में यह कहना उचचत होगा, की केंद्रीय उत्पाद शुल्क चवभाग द्वारा, बजट् 2003-04 द्वारा पररवतथन आधार पर उत्पाद शुल्क दे ने हे तु कोई चनदे श हमें प्राप्त नहीं हुआ है । प्रथम बार चवभागीय अचधकाररयों द्वारा आज हमे बताया गया, की चाहे उत्पाद शुल्क मुक्त हो, या शुल्क दे य हो, के चवक्रय मूल्य को लघु उद्योग शुल्क मुस्थक्त हे तु जाता है । अतः यचद उत्पादों के मूल्य एम.आर.पी आधार पर जोड़ा जाये, तो अप्रैल से लेकर जुलाई के बीच में आयुवेचदक दवाओं के चनकासी मूल्य पर 16 प्रचतशत कर लागू होता है । यह अदा करने करने के चलए मैं तैयार हँ , साथ ही साथ यचद चववचदत उत्पादों पर स्थगन आदे शों के आभाव में शुल्क दे यता बनती है , तो वह भी दे ने के चलए तैयार हँ । चववाचदत उत्पादों पर हम कर की दे यता 17 Excise Appeal No.2442 of 2007 अंडर प्रोट्े स्ट जमा करना चाहते हैं , चजसके वापसी 'ररफंड' हे तु हम सवोच्च न्यायालय के आदे शानुसार कायथ करें गे।
उपरोक्त अनुसार हम समस्त कर की गणना करके चनधाथ ररत कर शीघ्र अंडर प्रोट्े स्ट जमा कर रहे हैं ।
उपरोक्त हे तु हमे उचचत चनदे श दे वें।
भवदीय प्रबन्धक"
From the above letter also it is evident that the said letter is totally silent in respect of passing the burden of duty on to the buyers. Further this letter is only in respect of payment of certain duties under protest for the period April to July 2003. We are not concerned with that period in the present proceedings. Hence we do not find any merits in the submissions made by the appellant on the basis of these two letters that they had informed the department and their customers about bearing the burden of the duty being paid by them.
4.10 Appellant have along with the supplementary affidavit filed by them before Hon'ble High Court filed the copies of following invoices issued by them during the period for which they were claiming the refund. The scanned copies of the invoices are reproduced below:
18 Excise Appeal No.2442 of 2007 19 Excise Appeal No.2442 of 2007 20 Excise Appeal No.2442 of 2007 21 Excise Appeal No.2442 of 2007 22 Excise Appeal No.2442 of 2007 23 Excise Appeal No.2442 of 2007 24 Excise Appeal No.2442 of 2007 25 Excise Appeal No.2442 of 2007 26 Excise Appeal No.2442 of 2007 27 Excise Appeal No.2442 of 2007 28 Excise Appeal No.2442 of 20074.11 We note that except for one invoice which is in name of M/s Kaushalya Enterprises, all other invoices have been made in the name M/s Meghdoot Village Products Pvt Ltd., B N Road Lucknow. In some of the invoices it is stated "For ....". However appellant has not produced any invoice issued by them in the name of the final customer by "M/s Meghdoot Village Products Pvt Ltd". To understand the invoicing pattern we take one of the product which appears in invoices, which were issued over the periods when the appellant was showing duty element separately and otherwise.
Name of Product Madhusudan Churn 250 gms
Invoices in which 78/10.07.2003, 82/19.07.2003, 95/02.08.2003,
the said product 99/04.08.2003, 131/14.09.2003, 137/18.09.2003,
figures: 157/15.10.2003, 227/13.12.2003, 276/24.01.2004
Total Total Details of Assessabl Total Tariff Rat
Invoic
Quantit Price deductio e Value/ assessabl Heading e of
e No
y of of ns made Tariff e value/ No/ dut
goods good to arrive Value per tariff Exemptio y
(net) s at the unit value n
value Notificatio
under n No
section 4
of the act
78 40 3240 40% 48.60 1944 3003.39 Nil
82 500 4050 40% 48.60 24300 3003.39 Nil
0
95 260 2106 40% 48.60 12636 3003.39 Nil
0
99 100 8100 40% 48.60 4860 3003.39 Nil
131 260 2106 52.10% 38.80 12636 3003.39 Nil
0
137 200 1620 52.10% 38.80 7760 3003.39 16
0 %
157 200 1620 52.10% 38.80 7760 3003.39 16
0 %
227 1480+4 3880 52.10% 38.80 18624 3003.39 16
0 0 %
276 240+20 1944 52.10% 38.80 9312 3003.39 16
0 %
29 Excise Appeal No.2442 of 2007
4.12 Section 12A & 12B of the Central Excise Act, 1944 read as follows:
SECTION 12A Notwithstanding anything contained in this Act or any other law for the time being in force, every person who is liable to pay duty of excise on any goods shall, at the time of clearance of the goods, prominently indicate in all the documents relating to assessment, sales invoice, and other like document, the amount of such duty which will form part of the price at which such goods are to be sold.
SECTION 12B Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods.
Interpreting the provisions of above two sections Hon'ble Supreme Court has in case of Mafatlal Industries [1997 (89) ELT 247 (SC)] observed as follows:
"91.It is next contended that in a competitive atmosphere or for other commercial reasons, it may happen that the manufacturer is obliged to sell his goods at less than its proper price. The suggestion is that the manufacturer may have to forego not only his profit but also part of excise duty and that in such a case levy and collection of full excise duty would cease to be a duty of excise; it will become a tax on income or on business. We are unable to appreciate this argument. Ordinarily, no manufacturer will sell his products at less than the cost- price plus duty. He cannot survive in business if he does so. Only in case of distress sales, such a thing is understandable but distress sales are not a normal feature and cannot, therefore, constitute a basis for judging the validity or reasonableness of a provision. Similarly, no one will ordinarily pass on less excise duty than what is exigible and payable. A manufacturer may dip into his profits but 30 Excise Appeal No.2442 of 2007 would not further dip into the excise duty component. He will do so only in the case of a distress sale again. Just because duty is not separately shown in the invoice price, it does not follow that the manufacturer is not passing on the duty. Nor does it follow therefrom that the manufacturer is absorbing the duty himself. The manner of preparing the invoice is not conclusive. While we cannot visualise all situations, the fact remains that, generally speaking, every manufacturer will sell his goods at something above the cost-price plus duty. There may be a loss-making concern but the loss occurs not because of the levy of the excise duty - which is uniformly levied on all manufacturers of similar goods - but for other reasons. No manufacturer can say with any reasonableness that he cannot survive in business unless he collects the duty from both ends. The requirements complained of (prescribed by Section 11B) is thus beyond reproach - and so are Sections 12A and 12B. All that Section 12A requires is that every person who is liable to pay duty of excise on any goods, shall, at the time of clearance of the goods, prominently indicate in all the relevant documents the amount of such duty which will form part of the price at which the goods are to be sold, while Section 12B raises a presumption of law that until the contrary is proved, every person who has paid the duty of excise on any goods shall be deemed to have passed on the full incidence of such duty to the buyer of such goods. Since the presumption created by Section 12B is a rebuttable presumption of law
- and not a conclusive presumption - there is no basis for impugning its validity on the ground of procedural unreasonableness or otherwise. This presumption is consistent with the general pattern of commercial life. It indeed gives effect to the very essence of an indirect tax like the excise duty/customs duty. In this connection, it is repeatedly pointed out by the learned Counsel for the petitioners-appellants that the levy of duty is upon the 31 Excise Appeal No.2442 of 2007 manufacturer/assessee and that he cannot disclaim his liability on the ground that he has not passed on the duty. This is undoubtedly true but this again does not affect the validity of Section 12A or 12B. A manufacturer who has not passed on the duty can always prove that fact and if it is found that duty was not leviable on the transaction, he will get back the duty paid. Ordinarily speaking, no manufacturer would take the risk of not passing on the burden of duty. It would not be an exaggeration to say that whenever a manufacturer entertains a doubt, he would pass on the duty rather than not passing it on. It must be remembered that manufacturer as a class are knowledgeable persons and more often than not have the benefit of legal advice. And until about 1992, at any rate, Indian market was by and large a sellers' market."
4.13 From the table in para 4.11, it is quite evident that appellant had on the invoices 131, 137, 157,227 and 276 paid the duty @ 16% on assessable value of Rs 38.80. Thus making the cum duty price of Rs 45.01. On the invoices 78,82,95 & 99 they have paid Nil duty on assessable value of Rs 48.60, so the cum duty price would be Rs 48.60. The fact that the cum duty price on the invoices 131, 137, 157, 227 and 276 is less than that on invoices 78, 82, 95 & 99 is clearly pointing to the fact that the appellant had been throughout collecting the excise duty which was paid from their customer. In case of invoices 78, 82, 95 & 99, since the duty payable has been indicated as nil, the determination of assessable value by the appellant on the invoice would not cause any material difference. Appellant have argued that they had increased the discount percentage on the goods so that the burden of duty is not passed on. However this argument though attractive is without any merits. From the table in para 4.11 it is evident that for determination of the assessable value they have claimed deduction of 40% or 52.10% whereas the price of the goods to the customer remained the same. What they have recovered from the customers is the price of the goods and not the cum duty price. Above analysis clearly 32 Excise Appeal No.2442 of 2007 establishes that the appellant has passed on the burden of the duty paid on to their customers. Adjudicating authority has concluded similarly in para 10 and 11 of the order in original after examination of the invoices and the first appellate authority has in para 11 & 12 of the impugned order.
4.14 In case of Allied Photographic India Ltd. [2004 (166) ELT 3 (SC)], Hon'ble Supreme Court has held as follows:
"18. Before concluding, we may state that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. Hence, even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact."
4.15 In case of CEAT Ltd [2004 (170) E.L.T. 442 (Tri. - Mumbai)] Mumbai bench held as follows:
"3.We find that the only ground on which the appellants state that they have not passed on the duty burden to their customers is that the throughout the price charged by them remained the same before and after the variation in the rate of duty from Rs. 265/- per tyre to Rs. 475/- per tyre. However, as rightly held by the Commissioner (Appeals) this is only a presumption and the appellants were required to produce evidence that they have not actually passed on the duty burden, which they have failed to do either before the adjudicating authority as well as the lower appellate authority. As there is no material on record produced by the appellant to establish that they have not passed on the duty burden to their customers, the refund claim has been rightly rejected. We therefore uphold the impugned order and dismiss the appeal."33 Excise Appeal No.2442 of 2007
4.16 In case of Sona Udyog [2005 (183) E.L.T. 396 (Tri. - Del.)] Delhi bench has observed as follows:
"5. In pursuance to the above order passed by the Hon'ble Supreme Court, the applicant filed these applications. The contention of the appellant is that the issue of unjust enrichment was specifically raised before the Tribunal and the finding that of such plea was raised, is a correct finding. The contention of the appellant is that specific issue was raised regarding unjust enrichment by saying that when no change has been taken place in the price structure, it cannot be said that the incidence of duty has been passed on to their customers. The contention is that in the invoices, the consolidated price has been mentioned during the period when the appellants are paying higher rate of duty and same price is mentioned the month where they were paying less duty. The applicants are also relied upon the decision of the Tribunal in the case of Cimmco Ltd. v. CCE, Jaipur reported in 1999 (107) E.L.T. 246 which was followed by the Tribunal in the case of Panihati Rubber Ltd. v. CCE, Calcutta-II reported in 2001 (127) E.L.T. 742. The contention is that when the price of the goods remains same during the period, the manufacturer paid higher duty and the period where they are paying no duty, the manufacturer was taking the burden and not passing on to their customers.
6. We find that Hon'ble Supreme Court in the order while dismissing the appeal observed that the appellants are at liberty to urge before the Tribunal that the recording that the appellant had not questioned the finding of the fact by the appellant authorities and evidence had been produced that the incidence of higher levy had not been passed on to the customers. We find that in the grounds of appeal that the appellants are making averment that in case there is no change in the price structure it cannot be said that the incidence of duty has been passed on to the customer. The appellant relied upon the invoices where consolidated 34 Excise Appeal No.2442 of 2007 price has been mentioned and there is no change in the price when the appellants were paying higher duty. We find that this issue is now settled by the Hon'ble Supreme Court in the case of CC v. Allied Photographies India Ltd. reported in 2004 (166) E.L.T. 3. Hon'ble Supreme Court held that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been on to the buyer as such uniformity may be due to various factors. Para 18 of the judgment is reproduced below :
"Before concluding, we may state that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. Hence, even no merits, the respondent has failed to take out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact".
7. In the present case the contentions are that the above decision of the Hon'ble Supreme Court is not applicable to the facts of the case on the ground that the Supreme Court was dealing a case where the invoices in question are not of manufacturers. We find that as the Supreme Court was dealing the issue regarding unjust enrichment and the law laid down by the Supreme Court is in respect of the specific plea that in case price remains same, the burden of payment of duty has not been passed on to the buyer and this issue is decided in favour of the Revenue by the Supreme Court, therefore, we find no merit in this argument of the applicant. As the issue raised by the appellant in specific answer by the Supreme Court, therefore, we find no merit in these applications, the same are dismissed."
35 Excise Appeal No.2442 of 20074.17 In case of Interach Building Products (P) Ltd [2005 (184) E.L.T. 154 (Tri. - Del.)] Delhi bench held as follows: (Maintained by Hon'ble Supreme Court as reported at [2006 (193) E.L.T. A143 (S.C.)] "7. This very principle of law has been followed and applied by the Tribunal in the case of JCT v. Commissioner [2004 (163) E.L.T. 467] wherein it has been observed that keeping of prices stable even after payment of duty by the assessee, would not lead to an irresistible conclusion that he himself had borne the duty burden and not passed on to the consumers. Therefore, simply because the appellants in the present case, did not bring any change in price, it is difficult to conclude that they had not passed on the duty to the consumers. It is hard to accept that they sold the goods at a lesser price or cost incurred by them in the manufacture of the same. Rather it can be reasonably inferred that they brought down their profit margin and kept the price stable in order to compete in the market for marketing their goods. No details as to what was the profit margin of the appellants before payment of duty by them and thereafter when duty was paid by them, had been furnished.
8. In the invoices as observed above, duty element has been separately shown while clearing the goods. We are unable to subscribe to the contention of the Counsel that it was done only with a view to meet this statutory requirement of showing the duty separately in the invoices. Rather, from this fact of showing the duty separately in the invoices, it can be safely inferred that appellants had passed on the incidence of duty to the customers/buyers. In none of these invoices, it was indicated that the duty element separately shown by them was only a formality and that it was not to be charged from the buyers. When they were paying the duty under protest, it is difficult to accept that they did not charge duty from their customers. They in fact indicated the duty 36 Excise Appeal No.2442 of 2007 separately in their invoices while clearing the goods only with an intention to make it known to their customers/buyers, the duty involved on the cleared goods and requiring them to pay the same. The affidavit of Shri K.C. Sharma, General Manager of M/s. Lloyds Industries, copy of which is at page 84 of the paper book, referred by the Counsel, does not in any manner prove that the incidence of duty was not passed on by the appellants at the time of sale of goods to that company. He has only deposed that his company placed the order with the appellants and the price agreed was inclusive of all taxes and duties and that the rate of duty was not relevant for placing the order. He had not disclosed as to what was the price agreed upon and how much was the duty element therein. When the duty element, as observed above, had been separately shown, besides the price, in the invoices, by the appellants, that itself is enough to make his affidavit meaningless."
4.18 Appellant have heavily relied upon the decision of Hon'ble Calcutta High Court reported at [2004 (172) ELT 310 (Cal)] to argue that in the present case principles of unjust enrichment would not apply. However Hon'ble Supreme Court as reported at [2006 (202) E.L.T. 41 (S.C.)] in the appeal filed against this order, held as follows:
"8. It is now well settled that despite levy of excise duty in a given situation being held to be illegal, in the event it is found that the assessee in fact passed on the burden of excise duty to its customers, applying the principle of unjust enrichment, the Court would not ordinarily direct refund thereof.
9. The question whether the excise duty had been passed on to the consumer, however, is essentially a question of fact. It is not in dispute that prior to 1993 goods were being classified under the Sub-Heading 37 Excise Appeal No.2442 of 2007 4009.92 of the Schedule appended to the Central Excise Tariff Act, 1985 attracting @ 30% ad valorem as basic excise duty and 15% as special basic duty. It is furthermore not in dispute that the Bombay High Court in the case of M/s. Rubber Products Ltd. v. Union of India, reported in 1992 (43) ECR 520 held :
"The duty was recovered from the Company on the basis that the product manufactured attracts sub-heading 4009.92 of the Tariff and that was the basis of order passed by the Assistant Collector. The order of the Assistant Collector was set aside by the Appellate Collector and it was ordered that the duty is payable under sub- heading 4009.99 of the Tariff. The order of the Appellate Collector has acquired finality and, therefore, excess duty recovered by the Department is liable to be refunded.""
Thus if on examination of facts and documents the conclusion is that burden of the duty has been passed on to the customers the refund could not have been directed to the appellants but would have to be credited to the consumer welfare fund.
4.19 In view of the discussions as above, we do not find any merits in this appeal.
5.1 Appeal is dismissed.
(Pronounced in open court on- 16 April, 2024) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp