Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Nagpur vs Solar Explosive Ltd on 17 January, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. III APPEAL Nos. E/965 & 966/07 E/CO-193 & 192/07 (Arising out of Order-in-Appeal No. SVS/165 to 167/NGP-II/2007 dated 29.3.2007 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur) For approval and signature: Hon'ble Ms. Jyoti Balasundaram (Vice President) ======================================================
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?
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?
====================================================== Commissioner of Central Excise, Nagpur Appellant Vs. Solar Explosive Ltd. Respondent Appearance: Shri C. Lama, Authorised Representative (JDR), for appellant Shri Mayur Shroff, Advocate, for respondent CORAM: Hon'ble Ms. Jyoti Balasundaram, Vice President Date of Hearing: 17.1.2008 Date of Decision: 17.1.2008 ORDER NO................................. Per: Ms. Jyoti Balasundaram, Vice President
The respondents herein who are manufacturers of explosives falling under Chapter 36 of the schedule to the Central Excise Tariff Act, 1985, had entered into a contract with M/s. Coal India Ltd. for supply of explosives to various collieries. As per the contract, the prices were provisional and were subsequently finalised on the lower side as compared to prices approved during the period 2000-2001. Since the clearances were made on the higher side upto the date of finalisation, the assessees filed claims for refund of Rs.9,40,305/- and Rs.3,64,465/- being the excess duty paid on excisable goods cleared to the collieries. Show cause notice proposing rejection of the refund claims was issued and adjudicated as under:-
(1) The claim for Rs.9,40,305/- was held to be admissible on merits but was ordered to be transferred to the Consumer Welfare Fund under Section 12C of the Central Excise Act, 1944, vide order-in-original dated 1/12.8.2003.
(2) The second claim is rejected vide order-in-original dated 30.11.2004 on the ground that at the time of clearance of the goods, the incidence of duty was passed on to customers and that subsequent issue of credit notes for differential duty is not relevant to the aspect of unjust enrichment.
Against order-in-original dated 1/12.8.2003, two appeals were filed, one by the assessee and the other by the Revenue; assessee's appeal No.E/196/03 against direction for transfer of the refund amount to the Consumer Welfare Fund, was rejected vide order-in-appeal dated 12.11.2003 and Revenue's appeal No. E/16/04 against sanction of the refund and transfer of the same to the Consumer Welfare Fund, was allowed vide order-in-appeal dated 30.3.2004.
Against order-in-original dated 30.11.2004, the assessee filed appeal No. E/27/05 which was rejected vide order-in-appeal dated 28.2.2005.
2. Aggrieved by the above mentioned orders-in-appeal, the assessees preferred appeals to the Tribunal which, vide its order No. A/138 to 140/C-IV/SMB/2007 dated 5.1.2007, remanded all three cases for de novo adjudication and for passing of a speaking order in the light of apex court's decision in Sahakari Khand Udyog Mandal Ltd. vs. CCE 2007 (181) ELT 328 (SC). Pursuant thereto, the Commissioner (Appeals) decided both cases of refund by holding that refund was admissible on merits, but upholding the direction contained in order-in-original dated 1/12.8.2003 for transfer of the sanctioned amount to the Consumer Welfare Fund and remanding the issue of refund of Rs.3,64,465 covered by order-in-original dated 30.11.2004, to the original authority for the purpose of examining the aspect of unjust enrichment. In the present appeals, the Revenue is challenging the sanction of the refund claim on merits.
3. I have heard both sides and find that on merits the issue stands decided against the Revenue and in favour of the assessees by Tribunal's earlier decision in the assessees' own case, as seen from order No. A/1085-1088/WZB/05 dated 21.7.2005, which has been upheld by the Hon'ble Bombay High Court in its order dated 31.8.2007 in Central Excise Appeal Nos.22, 29 and 43/2006 and Central Excise Appeal Nos. 3, 14, 20 and 21/2007. The relevant extracts from the judgment are reproduced herein below:-
"7. We have carefully considered the submissions made by learned counsel for the parties and perused the judgments relied upon by them.
8. In the case of Universal Cylinders Ltd. relied upon by Mr. Bangde, the Tribunal dismissed the appeals filed by the revenue. In the said case the respondents i.e. Universal Cylinders Ltd. who were manufacturers of LPG cylinders had supplied 24650 cylinders to Hindustan Petroleum Corporation at the provisional price in the purchase order and paid duties at 16%. The said price was reduced from Rs.637.17 per cylinder to Rs.476.62 by the HPC vide their letter dated 10.8.2001 and they adjusted the excess price including the duty from the subsequent supplies made by the respondents. In this fact situation, the Tribunal held that there was no question of unjust enrichment and upheld the order passed by the Commissioner granting refund thereby reversing the order passed by adjudicating authority. The Apex Court by order dated 4.4.2004 dismissed the Special Leave Petition upholding the order passed by the Tribunal. In the case of Telephone Cables Ltd. the High Court set aside the order passed by the Tribunal denying refund to the assessee on the ground that assessee had not sought provisional assessment. In the said case there was an agreement between the appellant and DOT in which there was stipulation for price variation on account of copper as per standard price variation table in terms of initial tender. The assessee had paid excise duty on higher amounts than what was received by them as price of cable from DOT. The department refused to refund excise duty on the ground that price was reduced after clearance of the goods and as such the assessee was not entitled for refund of duty for reduced price. In the said judgment it has been held that since clearance was not against fixed price and price was subject to fluctuation the assessee was entitled to refund.
9. In the case of MRF Ltd. (supra) the Apex Court has held that once the assessee clears the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices cannot be a matter of concern to the Central Excise Department. In the said case, the price of goods was approved on 14.5.1983 but subsequent thereto on account of consumer resistance Government directed to roll back the prices to pre 14.5.1983 level and it is on account of this roll back prices that there came about a differential in the price on the basis of which the assessee claimed refund of excise duty to that extent. The facts in this case are clearly distinguishable from the facts in the above appeals and, therefore, in our considered opinion the ratio laid down in the case of MRF Ltd. does not advance the case of the revenue.
10. In the case of Metal Forgings the Apex Court set aside the order of the Tribunal which had granted refund on the ground that the goods were cleared on provisional basis which was factually incorrect. The Apex Court held that there was no material to establish the fact that either there was a provisional classification or there was an order made under Rule 9B of the Rules. The ratio laid down in this case does not advance the case of the revenue.
11. In the case of Mauria Udyog Ltd. relied upon by revenue the Apex Court held that when clearance of goods are not on provisional basis, any reduction of price at a later date could not be made foundation for seeking refund. In the said case, the application for refund was made on the ground that price was reduced by Oil Company to whom cylinders were supplied by the assessee. In this factual background, the Apex Court relying upon the ratio laid down by the Apex Court in the case of MRF Ltd. held that subsequent reduction in price would not entitle the assessee to claim refund. It is thus clear that the facts in the said case are not similar to the facts in the above appeals. Therefore, the ratio laid down in this case also does not advance the case of the revenue.
12. Having carefully considered the submissions made by learned counsel and having perused the judgments relied upon by the revenue and assessee, we are of the considered opinion that the ratio laid down in two judgments relied upon by the assessee which have been referred to above is clearly attracted in the cases before us. It is not disputed by the revenue that at the time of payment of excise duty the assessees had made it clear to the Department that they were paying the excise duty on the basis of the provisional price applicable for the period 1.4.2000 to 31.3.2001 and the price was not fixed. Although the assessment was not provisional, that by itself, could not disentitle the assessees from claiming refund. Section 11-B of the Central Excise Act, 1944 also provides for refund of duty in any other case. Moreover, the fact that the price of the goods supplied by the assessees to M/s. Coal India Limited was fixed by valid agreement entered into between the assessees and M/s. Coal India Limited after 31.3.2001 has not been disputed by the revenue.
13. In this view of the matter, in our considered opinion, the impugned orders passed by all three authorities under Central Excise Act cannot be said to be illegal or contrary to law. In our opinion, the impugned orders have been passed following correct legal principles governing refund of duty. In our opinion, no substantial question of law is involved in all these appeals as required under Section 35-G(1) of the Central Excise Act, 1944.
14. For the reasons aforesaid, we find no merit in any of the appeals. Hence, the appeals are dismissed."
4. Following the ratio of the above decision, I accept the contention of the respondents that the claims for refund are admissible on merits. However, the question as to whether the assessees have passed on the incidence of duty to their customs is required to be examined afresh by the original adjudicating authority - reliance placed by the assessees on the Tribunal's decision in Universal Cylinders Ltd. vs. CCE, Jaipur-I 2004 (178) ELT 898, to support their contention that they have not passed on the duty burden to the customers and, therefore, remand is not called for, is misplaced as in that case the customer refused the price of goods and deducted the difference amount from payment made to Universal Cylinders Ltd., while in the present case there is nothing to show that the entire amount has not been paid to the assessee by its customers - to whom I remit the issue as to whether the assessee has passed on the burden of duty covered by both refund claims (one for Rs.9,40,305/- and the other for Rs.3,64,465/-). Fresh orders are to be passed after extending a reasonable opportunity to the assessees of being heard in their defence.
5. The appeals are thus disposed of in the above terms. The cross objections filed by the respondents are also disposed of accordingly.
(Pronounced in Court) (Jyoti Balasundaram) Vice President tvu 1 7