Customs, Excise and Gold Tribunal - Tamil Nadu
Tvs Suzuki Ltd. vs Commissioner Of Central Excise on 12 December, 2003
Equivalent citations: 2004(93)ECC711, 2004(165)ELT192(TRI-CHENNAI)
JUDGMENT
Jeet Ram Kait, Member (T),
1. These three appeals arise out of a Common Order-in-Appeal Nos. 530 to 532/97 (CBE), dated 11-12-97 passed by the Commissioner of Central Excise (Appeals), Trichy, whereby the Commissioner has held that the appellants herein have not proved that incidence of duty has not been passed on to their customers. He has, however, further held that the lower authority should have sanctioned the claim but should have ordered crediting the same to the Consumer Welfare Fund and to that extent he has modified the order of the Assistant Commissioner. The Assistant Commissioner had rejected the refund claim of the appellants. All these appeals involve identical issue for consideration and hence they were heard together and are taken up for disposal by this common order.
2. The brief facts of the case are that the appellants are engaged in the manufacture of vehicles such as Mopeds, Motorcycles and Scooty falling under Chapter Heading Nos. 8711.10 and 8711.20. They have a separate "duty paid spares godown". The spares required for its "duty paid spares godown" are met by placing separate purchase orders. The inputs (parts/components) required for the manufacture of final products (vehicles) are met by placing separate purchase orders on the manufacture of these items. The appellants are also said to be engaged in trading activity of buying and selling spares for these vehicles. Appellants also manufacture a few spares. In such cases, the, spares are removed from the manufacturing premises to the duty paid spares godown on payment of applicable Central Excise duty. According to the appellants, at times, availability of certain spares in the duty paid spares godown becomes critical to meet the needs of the customers. To meet the requirement of spares for the dealers to whom the vehicles are sold, if the spares are available in the input stock, on which they have availed Modvat credit, under Rule 57A, they divert the spares to the Duty paid spares Godown on payment of duty applicable under Rule 57F(1)(ii). The spares are mainly parts and components which go into the manufacture of these vehicles. They availed Modvat credit on input components/parts and divert the credit availed input, to the market in case of necessity on payment of duty in terms of Rule 57F(1) of Central Excise Rules. Whenever they diverted the Modvat inputs to their spare parts duty paid godown, they have paid duty under Rule 57-I(ii) as if such inputs are manufactured by them. After issue of Notification No. 28/95-C.E., dated 29-6-95 by which the words "as if manufactured in the said factory" was removed, the credit was required to be reversed only to the extent of credit availed. Though the notification was issued on 29-6-95, for the period from 30-6-95 to 31-7-95. They continued to pay duty as per the unamended provisions. The refund therefore, arose consequent to amendment to Rule 57F(1)(ii) being the duty paid by them on the Modvat inputs diverted to the "spare parts duty paid godown" for the period 1-7-95 to 31-7-95. They have cleared the goods by adopting their spare parts price and rate of duty as applicable to them. Since the quantum of Modvat credit reversed for the disputed period viz. 1-7-95 to 31-7-95 was higher than the Modvat required to be reversed after the amendment, they have preferred a refund claim to the extent of excess payment of duty before the lower original authority and this was rejected both on limitation and on the ground that incidence of duty has been passed on to their buyers. Aggrieved by the said order, they preferred appeal before the lower appellate authority who by the impugned order modified the order of the original authority as noted above. It is against the order of the lower appellate authority, the appellants have come in appeal. In the grounds of appeal, they have inter alia stated that:
(1) The only submission of the appellants is that that the evidence that is required, is available on record and the claim cannot be rejected on alleged non-submission of evidence to rule out unjust enrichment.
(2) The issue in the present case is whether in case of cum-duty price, where the prices have remained constant irrespective of the variation in the rate or quantum of excise duty, the question of passing on of duty incidence arises. The other issue is whether there is any unjust enrichment in the facts and circumstances of the case where the pricing of spare parts has nothing to do with the quantum of duty paid on unpredictable, occasional diversion of inputs under Rule 57F(1)(ii).
3. Shri C. Saravanan, learned Counsel, appearing for the appellants reiterated the grounds of appeal. He has invited our attention to Notification No. 28/95-C.E. (N.T.), dated 29-6-1995 and submitted that in terms of this amending Notification, where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty shall be the amount of credit that has been availed in respect of such inputs under Rule 57A. He submitted that the appellants continued to pay duty before clearance of the goods as per the un-amended provisions of Rule 57F(ii) even after amendment took place to the said provisions and since they have paid duty in excess of what was required to have been paid in terms of the amended provision, they have claimed the refund, which is due to them and he prayed for allowing the appeal. He has also cited the following case laws in support of his plea for allowing the appeal.
(1) Arunoday Mills Ltd. v. CCE, reported in 2003 (156) E.L.T. 790 (Tribunal) = 2003 (58) RLT 584. This was a case where refund claim originally submitted on 26-6-95 was returned being incomplete and resubmitted on 25-8-95. Tribunal held that claim to be treated has having been filed on the original date.
(2) Poulose & Mathew v. CCE, reported in 1989 (43) E.L.T. 424. This was a case where the refund claim was originally filed before an authority not having jurisdiction. The Tribunal held that application treatable as refund claim, if otherwise valid in terms of Rule 11.
(3) KLRF Textiles Unit v. CCE, reported in 1999 (33) RLT 544. This was a case where the refund was initially claimed within the limitation period though formal refund claim in the prescribed proforma was filed later. The Tribunal held that the claim was not barred by time.
(4) A. Tosh & Sons Pvt. Ltd., reported in 1992 (60) E.L.T. 220 (Cal). This was a case where the party sent the rebate claim under Certificate of posting. The High Court held that the presumption was that it reached the addressee unless duly rebutted by evidence.
(5) Wood Working Centre v. CCE, Indore, reported in 1996 (85) E.L.T. 201. This was a case where a letter dated 10-1-86 claiming exemption and request for refund of duty paid was made and the refund application was made later on 17-2-87. It was held that initial letter of 10-1-86 to be treated as refund claim.
(6) UP State Sugar Corporation Ltd. v. CCE, reported in 1998 (100) E.L.T. 541. This was a case where the letter addressed to the Supdt. of Central Excise was ordered to be treated as refund claim.
(7) CCE v. Brooke Bond Liptons (P) Ltd., reported in 1999 (107) E.L.T. 228. This was a case where the assessee had sought for permission to avail of the benefit of Notification No. 201/79 and such permission was not granted, the appellants paid the entire duty through PLA. It was held in that circumstances that duty paid by the assessee was not doubted.
(8) CCE v. Orient Paper Mills, reported in 1994 (73) E.L.T. 648. This was a case where availment of credit was thwarted by the action of the authorities and the appellants were forced to pay the duty through their PLA instead of RG-23 Part II Account.
(9) CCE v. Indian Aluminium Co. Ltd., reported in 2002 (139) E.L.T. 125. This was a case where the duty was paid through PLA as the assessee was restrained by the authorities from availing the credit. Apart from that, the final goods sold was at the price fixed by the Government.
(10) CCE v. Raghuvar (India) Ltd., reported in 2000 (118) E.L.T. 311 (S.C.). This was a case where the Hon'ble Apex Court was interpreting the provisions of Section 11 of the Central Excise Act vis-a-vis Rule 57-I of the Central Excise Rules. The Apex Court was thus dealing with entirely a different situation when it was held that Section 11A of the Act on its own terms will have no application or operation to cases covered under Rule 57-I of the Rules.
(11) Vidyut Engineering Co. v. U.O.I. reported in 1999 (34) RLT 598 (Kar.). This was a case where the Tribunal set aside the duty demand and the petitioner filed refund claim. The department was directed to pay interest @12% p.a., with instructions to the Deptt. that the interest can be recovered from the officers responsible for delay.
(13) Modi Rubber Ltd. v. CCE, Meerut, reported in 1994 (73) E.L.T. 129, para 9 regarding filing of D-3 intimation and it was held that subsequent filing of the refund claim cannot be held to be barred by time.
(14) CCE v. Nisha Chemicals, Bombay, reported in 1986 (26) E.L.T. 809, regarding format used for filing appeal.
(15) IDL Industries Ltd. v. CCE, reported in 2000 (124) E.L.T. 645, regarding procedure under Rule 173L relating to repaired goods.
(16) CCE v. Kopran Chemicals, reported in 1996 (88) E.L.T. 487, regarding procedure under Rule 173L.
(17) Electronica Machine Tools Ltd. v. CCE, Bangalore, reported in 1998 (103) E.L.T. 378, regarding procedure under Rule 173L.
(18) United Phosphorous Ltd. v. CCE, reported in 1991 (56) E.L.T. 542, relating to date of entry in regard to goods returned for repair.
(19) CCE v. Metro Tyres Ltd., reported in 1995 (80) E.L.T. 410, regarding sale price of the goods on re-classification and revaluation, etc. (20) CCE v. Metro Tyres, reported in 2002 (143) E.L.T. A75 (S.C.), whereby the Hon'ble Supreme Court has dismissed the appeal of the Department against the order of the Tribunal. The Tribunal vide order reported in 1995 (80) E.L.T. 410, has concurred with the finding of the Collector (Appeals) on appreciation of evidence that the assessee has not passed on the credit to the customers. The Hon'ble Apex Court dismissed appeal against the said decision of the Tribunal.
(21) ITC Bhadrachalam v. CCE, reported in 2002 (146) E.L.T. 582, wherein it was held that burden to prove that incidence of duty not passed on to customers discharged by the assessee as sale price remained the same even when the assessee availed exemption and also when duty was paid by assessee after withdrawal of exemption.
(22) ACC Ltd. v. CCE, Jamshedpur, reported in 2001 (130) E.L.T. 277, wherein it was held that burden of discharging incidence of duty, having not been passed on stands discharged when there was no change in sale price of the final product on excess payment of rate of SED because the total quantum of duty paid by assessee during the relevant period continued to be the same irrespective of the shortage of one and excess of another.
(23) CCE v. Pawan Tyres, reported in 2000 (126) E.L.T. 1061, wherein it was held that refund not to be denied on grounds of unjust enrichment when invoice during the material period showed a composite price and duty not indicated separately.
(24) CCE v. Corona Cosmetics & Chemicals Ltd., reported in 2000 (118) E.L.T. 356, wherein also similar view was taken as in the case of CCE v. Pawan Tyres (supra).
4. Heard Smt. Bhagyadevi, learned SDR. She defended the impugned order and submitted that it was obligatory on the part of the assessee to prove that incidence of duty has not been passed on and inasmuch as in the present case they have not done so, they are not entitled to any refund. She therefore, prayed for rejection of their appeal and upholding the impugned order.
5. We have carefully considered the rival submissions and gone through the case records, In the instant case, as seen from the sequence of events, prior to 29-6-1995, the assessee was resorting to removal of inputs for home consumption under Rule 57F(1)(ii) and were required to pay duty as if the inputs (spares) have been manufactured in their factory. With the issue of Notification No. 28/95 on and effective from 29-6-95, they were required to reverse only a lesser amount of Modvat amount to the extent of Modvat credit availed in respect of such inputs under Rule 57A.
6. We observe that the question posed before us is whether the assessee has complied with the requirement of Section 11B in support of the claim for refund in respect of the amount which has been paid by them in excess of what was required to have been paid in terms of the amended law, for the removals effected in terms of Rule 57A(1)(ii). The lower original authority had rejected the refund claim on the ground that although the refund application was submitted on 31-10-95 for the period involved from 1-7-95 to 31-7-95, no evidence to the effect that the incidence of duty has not been passed on to the buyers, has been submitted along with the claim as required under Section 11B(1) which stipulate that the refund application shall be accompanied by such documentary or other evidence including documents referred to in Section 12A to prove that incidence of duty has not been passed on to their customers, and as such the claim is hit by limitation. The other reason on which the claim been rejected was that no documentary evidence has been submitted to prove that duty burden has not been passed on to their customers. On the other hand the appellants contended that the required evidence is available on record and the claim cannot be rejected on alleged non-submission of evidence to rule out unjust enrichment. They argued that where the pricing has nothing to do with the quantum of duty paid on unpredictable occasional diversion of inputs under Rule 57F(1)(ii), the question of unjust enrichment does not arise. They also contended that there was no rigid yardstick for submission of documentary evidence as regards passing of burden of duty and it varies from case to case and that the price of spare parts remained the same whether it was produced directly or obtained through diversion and that itself is sufficient evidence to meet the requirement of Section 11B. The lower appellate authority has also concurred with the finding of the original authority on the grounds adopted by him. He has however, modified the order to the extent that the amount of refund rejected should have been ordered to have been credited into the Consumer Welfare Fund.
7. In this case we are also called upon to answer a question whether the refund claim is hit by time-bar or not. As noted in Para 6 above, the original authority has rejected the refund claim on account of time-bar as well as for the reason that documentary evidence as required under Section 11B has not been submitted along with the refund claim. The lower appellate authority while agreeing with the view taken by the original authority has however, held that the claim should have been sanctioned and the amount credited into the Consumer Welfare Fund. This is a contradictory finding. When a claim is hit by time-bar the question of sanctioning the claim does not arise. A claim is sanctioned for being credited into the Consumer Welfare Fund, when it is found that there was excess payment of duty by the assessee, but the assessee is not able to show that he has not passed on the incidence of duty to any other person. In the instant case, as noted in Para 6 above, the claim for the period from 1-7-95 to 31-7-95 was submitted on 31-10-95 i.e. clearly within a period of six months from the relevant date as stipulated under Section 11B though the claim was not accompanied by documentary evidence to show that incidence of duty has not been passed on to any other person. The Tribunal in the case of KLRF Textile Unit v. CCE, reported in 1999 (33) RLT 544 has held that where a refund was initially claimed within the limitation period, though formal refund claim in the prescribed proforma was filed later, the claim was not barred by limitation. In the case of Wood Working Centre v. CCE, Indore, reported in 1996 (85) E.L.T. 201, the assessee sent a letter dated 10-1-86 claiming exemption and requesting for refund of duty and the refund application was made later on 17-2-87 and it was held that initial letter of 10-1-86 has to be treated as a refund claim. Therefore, following the ratio of these rulings, we hold that though in the present case the refund claim filed, was not hit by time-bar, even though it was not accompanied by documents evidencing that incidence of duty has not been passed on to any other person in term of Section 11B.
8. Now we have to examine whether the appellants are eligible for refund. We observe that in terms of Section 11B(1) the refund claim shall be accompanied by documentary or other evidence (including the documents referred to in Section 12A) to establish that incidence of duty has not been passed on by the claimant to any other person. Section 12A stipulate 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 documents relating to assessment sales, invoice and other like documents, the amount of such duty which will form part of the price at which such goods are to be sold. In this case admittedly no evidence has been submitted by the assessee along with the refund claim to prove that they have not passed on the incidence of duty to any other person. Their assertion is that the duty paid on occasional and unpredictable under Rule 57F(1)(ii) removals made to supplement the stock in case of shortages can hardly determine the price and that the required evidence is available on record. We do not find any force in the plea of the appellants. We note that the Hon'ble Supreme Court in their land mark judgment in the case of Mafatlal Industries v. U.O.I. reported in 1997 (89) E.L.T. 247 (S.C.) has laid down the law regarding refund of duty. Para 91 of the said judgment is extracted herein below for convenience of reference:
"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 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 there from 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 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."
9. In the instant case, the inputs were stated to have been removed to their "Duty paid Godown" from the input stock on which they have availed Modvat credit under Rule 57A. These removals have been effected to meet the requirement of they- Customers. We observe that for the purpose of claiming refund it has to be shown by the claimant that incidence of duty has not been passed on to their customers. As rightly held by the authorities below, no evidence has been placed on record that the burden of duty has not been passed on to the customers, on their removal in terms of Rule 57A(1)(ii). Inasmuch as in terms of Rule 57A (1)(ii) in respect of which credit has been availed has to be removed from the factory for home consumption or for export on payment of duty, by no stretch of imagination it can be held that while removing the goods they have not passed on the duty burden to their customers, more particularly when they have paid duty on the inputs and availed credit on them and the rules require them to do so. Further, it has to be noted that the amendment to the Notification has brought about changes to the rate of duty and not the manner of utilisation of input credit. Appellants are a large organisation and it cannot be said that they were not aware of the procedure to be followed. Merely stating that there was unpredictable situation and that the quantum of removals were not uniform and hence they could not pass on the incidence of duty to their customers, will not help them. The appellants have cited certain case laws in support of their plea which we have noted above. None of the case laws cited by them helps them as they are either not relevant to the issue so far as their eligibility to refund where the required evidence has not been provided or deal with different situations as noted by us along with each citation.
10. In view of our discussion and finding as noted above, we uphold the finding of the lower appellate authority that the amount should have been sanctioned and paid to the Consumer Welfare Fund. We, therefore, find no merits in the appeals and the appeals fail and are accordingly dismissed.