Custom, Excise & Service Tax Tribunal
M/S. Harinagar Sugar Mills Ltd vs Commissioner Of Central Excise, ... on 30 November, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.1
APPEAL NO.E/1977/10
(Arising out of Order-in- Appeal No. PKS/253/BEL/2010 dtd.16.8.2010 passed by the Commissioner of Central Excise (A), Mumbai..III )
For approval and signature:
Honble Mr S.S.Kang, Vice President
Honble Mr.Sahab Singh, 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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? : Yes
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?
=============================================================
M/s. Harinagar Sugar Mills Ltd.
:
Appellants
VS
Commissioner of Central Excise, Mumbai.III
Respondent
Appearance
Shri Bharat Raichandani, Advocate for Appellants
Shri Y.K.Agarwal, ACAR for Respondent
CORAM:
Mr. S. S. Kang, Vice President
Mr.Sahab Singh, Member(Technical)
Date of hearing: 21/11/2011
Date of decision :30/11/2011
ORDER NO.
Per : Sahab Singh
This is an appeal filed by M/s. Harinagar Sugar Mills Ltd. ( hereinafter referred to as the appellants) against the order passed by the Commissioner of Central Excise (Appeals), Mumbai.
2. The brief facts of the case are that the appellants are the manufacturers of Biscuits falling under Chapter 19 of the Central Excise Tariff Act. They have filed a refund claim on 21.4.2008 for an amount of Rs. 1,01,21,225/- on the basis of the CESTATs order No.A/205 to 211/08/WZB/C.1/EB dated 14.02.2008. The claim was not supported by the original TR-6 challan and copy of PLA and other supporting documents in support of proof showing that the amount claimed is not hit by clause of unjust enrichment. A letter was issued to them by the Supdt. on 8.5.2008 informing that the claim will be treated incomplete till the submission of all relevant documents. The appellants vide their letter dated 27.6.2008 have submitted the original documents as called for vide letter dated 8.5.2008. However, they failed to submit necessary documents to prove that the claim is not hit by the clause of unjust enrichment. Thereafter, a show-cause notice dated 26.9.2008 was issued to the appellants proposing rejection of the refund claim under Sec.11B of the Central Excise Act. The show-cause notice was contested by the appellants and the case was adjudicated by the Asstt.Commissioner vide order dated 29.4.2009 under which a refund of Rs. 1,01,21,225/- was sanctioned by the adjudicating authority but the same was credited to Consumer Welfare Fund as the appellants were not able to prove that the amount was not collected by them from their buyers. Against this Order-in-Original the appellants went in appeal before the Commissioner(Appeals), who vide the impugned order rejected their appeal holding that several opportunities were given to the appellants to prove with evidence and documents that duty/deposit burden has been retained by them and the same has not been passed on to their customers they failed to do so. Hence this appeal.
3. Ld.counsel appearing for the appellants submits that the deposit for which the refund claim was filed was a security amount and not a duty amount and the unjust enrichment clause applies to duty amount and not to the deposit made by the appellants. He submitted that the authorities below acted contrary to the law and applied the clause of unjust enrichment and applying the Honble Supreme Court decision in the case of Sahakari Khand Udyog Mandal Ltd. vs. Commissioner of C.Ex.& Customs 2005(181)ELT 328(S.C.), wherein it was held that doctrine of unjust enrichment would be attracted irrespective of applicability of Sec.11B of the Central Excise Act, rejected the refund claim. The appellants are entitled to the refund because the amount was paid as a security deposit and not as a duty and therefore, it is not a benefit. He submitted that the decision of the Honble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. has to be read with the provisions of unjust enrichment under Sec.11B which relates to claim of refund of duty. He contended that security deposit made during the investigation has nothing to do with traders who deal in goods manufactured by the appellants. Security deposit made cannot be claimed from the trader and no trader will accept such deposit being passed on to him as a liability. A benefit is an element of advantage pertaining to a particular transaction and when the appellants deposit the amount, it is not an amount calculated on any sale value. Such deposit cannot be equated with duty. Regarding the non-submission of the relevant documents, ld.counsel submitted that in view of the strike situation in the factory during the adjudication proceedings, the books of account could not be produced. But its statutory records relating to excise were produced and supplied by the appellants. He submitted various case laws in support of the contention that the provisions of unjust enrichment will not be applicable in case of refund of deposit. He specifically referred to the following case laws in support of his contention:-
1) CC vs Motorola India Pvt.Ltd. -2006(206)ELT370(T);
2) Commissioner vs Motorola India Pvt.Ltd. -2008(221)ELT 489(Kar.);
3) Suvidhe Ltd. vs UOI 1996(82)ELT 177(Bom);
4) Mahavir Aluminium Ltd. Vs CCE, Jaipur -1999(114) ELT 371(S.C.);
5) Jalan Dyeing & Bleaching Mills vs.CCE, Mumbai 2011(272)ELT 408(Tri-
Mum);
6) Jayant Glass Inds.(P)Ltd.vs CCE,Kolkata 2003(155)ELT 188(Tri-LB)
7. CCvs PSI Data Systems 2009(239)ELT 304 upheld by Karnataka High Court He finally submitted that the amount sought to be refunded in this case was a deposit and not a duty. Therefore, provisions of unjust enrichment are not applicable to this case. He, therefore, requested that the Order-in-Appeal passed by the Commissioner needs to be set aside.
4. Ld. Addl. Commissioner (A.R.) appearing for the Revenue reiterated the findings of the Commissioner(Appeals) and submitted that in view of the Honble Supreme Courts decision in the case of Sahakari Khand Udyog Mandal Ltd. the provisions of unjust enrichment are applicable to each case of refund and doctrine of unjust enrichment can be invoked to deny benefit to which a person otherwise is not entitled and before claiming of refund the appellant is required to show that he has paid that amount from his own fund and has not passed on the burden to the consumers and if such refund is not granted, the appellant would suffer loss. He contended that in spite of various opportunities given by the Asstt.Commissioner as well as the Commissioner(Appeals), the appellants were not able to submit any proof of documents to support their claim that the amount has not been passed on to their consumers. He also submitted that the appellants contention that unjust enrichment is not applicable to any deposit is not legally correct. Even after an adjudication order is passed by the lower authority the noticee deposits the amount in pursuance of the adjudication order, that deposit will also be subject to the unjust enrichment. He, therefore, defended the Order-in-Appeal and submitted that the Order-in-Appeal needs to be upheld and the partys appeal to be dismissed.
5. After hearing both sides, we find that the short question involved in the appeal is whether the provisions of unjust enrichment provided under Sec.11B of the Central Excise Act are applicable in the present case where the refund claim was filed by the appellants. The appellants have not been able to submit any document in support of their claim that the burden of the amount sought to be refunded was not passed on to their buyers. On the other hand, they are relying on the decisions passed by the Tribunal holding that the deposit made during the investigations will not attract the provisions of unjust enrichment.
6. The refund claim was submitted by the appellants on 18.4.2008. Along with the refund claim the appellants have submitted a copy of TR-6 Challan No. 099/98-99 dated 27.2.1999 for Rs. One crore and also submitted a copy of the PLA in which they have taken credit of Rs. One crore on 27.2.1999 and they have made Debit Entries vide Entry No.1611 and 1612 both dated 27.2.1999 and Debit Entry No.1731 dated 15.3.1999. On going through the TR-6 challan enclosed alongwith the refund claim it is mentioned Adhoc deposit towards A/C of the union Excise duties pending disputes and paid under protest and without prejudice which shows that the deposit is made towards account of the union excise duties. Similarly while going through the Debit Entry made in the PLA No.1611 the following entry is made :-
Adhoc deposit on A/C of the Union Excise Duty pending dispute & PD under protest without prejudice.(For BIL Valn.matters) Against Entry No.1612, the following entry is made:-
Diff.duty paid under protest as per Condition No.4 of letter O/M No.1057 of BIL goods seized on 11.2.99. Similarly, against Entry No. 1731 it is mentioned Differential duty paid under protest as per Condition No.4 of Letter No.1037 dated 15.3.99. From these entries it is clear that the amount was paid as excise duty and it is not a security deposit as claimed by the appellants. Since the amount was paid as excise duty the provisions of unjust enrichment as provided under Sec.11B of the Central Excise Act are applicable to refund of such claim. In the absence of any document submitted to prove , it cannot be held that the burden of duty was not passed on to the buyers/customers.
7. We have also gone through the decision of the Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd.(supra). In para 48 of which the Honble Supreme Court has given a clear finding that doctrine of unjust enrichment will be applicable if the burden has passed on the consumers. For the sake of convenience, para 48 of the judgment is reproduced below:
From the above discussion, it is clear that the doctrine of unjust enrichment is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act or similar provision merely gives legislative recognition to the doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss.
8. In view of the fact that the amount sought to be claimed by the appellants was paid towards union excise duty, the claim is clearly hit by the clause of unjust enrichment and was rejected by the lower authorities as the appellants failed to prove by way of documents that the burden was not passed on to the consumers. We find that case laws cited by the appellants relating to the issue of deposit whether made during the investigations or deposit made under Sec.35F of the Act do not support appellants case as discussed as under:-
In the case of Suvidhe Ltd vs. UOI and Mahavir Aluminium Ltd. Vs CCE, (supra) the issue relates to applicability of clause of unjust enrichment with regard to pre-deposit made under Sec.35F of the Central Excise Act, whereas in the present case refund does not pertain to deposit made under Sec.35F.
In the case of Jalan Dyeing & Bleaching Mills vs. CCE, Mumbai, the amount sought to be refunded was paid under protest vide TR-6 challan dated 17.8.2001. No further details are available what was shown in the TR-6 challan about the amount sought to be refunded. In the present case before us, TR-6 challan as well as the Debit Entry in the PLA clearly show that the amount was differential excise duty. Therefore, the cited case is not applicable to the present case.
In the case of Jayant Glass Inds(P)Ltd vs CCE, Kolkota, the Tribunal in its earlier order ordered refund of Rs. 9,19,286/- deposited by the appellants during investigations since the Revenue rejected the refund as time barred. This order was passed by the Tribunal on Misc.application filed by the appellants in that case for implementation of the Tribunals order. In the order nowhere it is mentioned that refund was rejected on the ground of unjust enrichment and the Tribunal has allowed refund stating that the ground of unjust enrichment not applicable to the amount paid during the investigations. This case is not applicable to the facts in the present case before us.
In the case of CC(Appeals) vs. PSI Data Systems, duty was deposited by the assessee, after adjudication order was passed. The Tribunal in this case has held that Revenue is not correct in raising the ground of unjust enrichment as the duty was deposited by the assessee after the adjudication order passed. The facts of this case are not applicable to the present case as in the appeal before us, the amount was paid as union excise duty before the adjudication order was passed.
In the case of CC vs Motorola India Pvt.Ltd. , it was held by the Tribunal that the amount was paid during the investigation and it is only a deposit and not a duty and bar of unjust enrichment will not apply under the Customs Act. We find that in view of the Supreme Courts decision in the case of Sahakari KhandnUdyog Mandal Ltd, for claiming a refund of any amount, it is necessary for the claimant to show that he has not passed on the burden on the consumers and the appellants in the present case are not able to prove with any documentary evidence that the burden has not been passed on by them to their consumers. Therefore, in view of the ratio of the Supreme Courts decision in the case of Sahakari Khand Udyog Mandal Ltd. (supra), the Tribunals decision is not applicable to the facts of the present case.
9. We have already held that the amount sought to be claimed as refund by the appellants was paid as union excise duty which is evident from the excise records. Therefore, the provisions of unjust enrichment under Sec.11B of the Central Excise Act are squarely applicable to the present case and since the appellants are not able to prove that the burden of the amount claimed by them as refund has not been passed on to their consumers, the refund has rightly been rejected by the lower authorities.
10. In view of the above, the appeal filed by the appellants is rejected.
(Pronounced in Court on 30.11.2011 ) S. S. Kang Vice President Sahab Singh Member(Technical) pv 11