Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Kanpur Plastipack Ltd. on 25 October, 2000
Equivalent citations: 2001(127)ELT826(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The Revenue has preferred the above appeal against the order of the Commissioner of Central Excise (Appeals), Allahabad holding that the appellants are entitled to refund of credit of Rs. 1,16,28,268.60 P.
2. The brief facts of the case are that the respondents are engaged in the manufacture of HDPE/PP Tapes, Fabrics and Sacks - both laminated and unlaminated, for the manufacture of which, they were using High Density Poly Ethylene (HDPE) or low density Poly Ethylene (LDPE) granules falling under Chapter 39 of the Schedule to the CETA 1985. Upon the introduction of new Excise Tariff effective from 28-2-1986, they wrote to the jurisdictional Assistant Collector on 23-7-86 seeking permission to clear tapes, bags and fabrics as classifiable under Chapter 39 of the Tariff. They were advised to classify tapes and fabrics under Chapter 54 and woven sacks under Chapter 63. The respondents filed a classification list under protest effective from 31-3-86, classifying HDPE tapes of width not exceeding 5 mm under CET sub-heading 5406.00, HDPE woven fabrics under CET sub-heading 5408.00/5903.21, sacks, laminated jute bags under Chapter heading 6301 and HDPE tapes under CET sub-heading 5401.90. This classification list was subsequently approved by the Department. The respondents filed a revised classification list No. 2/89 w.e.f. 11-7-89 classifying their product under different sub-headings of Chapter 39, on the basis of the judgment of the Tribunal in the case of Radhey Industries and M/s. Shelya Industries. Vide order in original No. 2/Val/90 dated 19-1-90, the Assistant Collector ordered classification of the products under CET subheadings 5406.90, 3920.32, 5402.95, 5903.21, 6301.20, 5408.00 and 39.01/39.02 respectively. As products in dispute did not fall under Chapter 39 of the Tariff, there was no question of allowing modvat credit on these inputs. The Collector (Appeals) vide order-in-original dated 19-11-99 confirmed the order passed by the Assistant Collector. The respondents filed appeals to the Tribunal which, vide Final Order Nos. E/407-409/92-D dated 21-9-92, set aside the classification determined by the Department, holding that the HDPE strips or tapes fall under CET sub-heading 3920.32 and that HDPE sacks fall under CET subheading 3923.90. The Tribunal allowed the appeals of the assessees with consequential relief. Accordingly, the respondents filed an appeal on 15-3-93 for refund of Rs. 1,85,84,873.12 P on the ground that since HDPE has been held to be classifiable under Chapter 39 and since tape has been captively consumed, they had to pay Central Excise duty on tapes at interim stage as HDPE fabrics was exempt from Central Excise duty from 1-3-86 to 11-2-90 and as a result of wrong classification under Chapter 54/59, they had paid total duty of the above amount to which they were entitled as refund. The Assistant Commissioner's order and remanded claim vide order dated 13-10-95 on the ground that it was barred by limitation. The Commissioner (Appeals) set aside the Assistant Commissioner's order and remanded the case for fresh adjudication also observing that since duty was paid at interim stage, the question of passing on the incidence of duty to final consumer does not arise and also time-bar would not apply since duty was paid under protest. In the present adjudication order, leading to the impugned order, the Assistant Commissioner rejected the refund claim holding that the price of the fabrics sold by the respondents during the relevant period would be inclusive of the raw material and the duty paid on tape shall be deemed to have been passed on to the buyer. The Commissioner (Appeals) allowed the appeal of the assessees vide the impugned, order; hence this appeal by the Revenue.
3. We have heard both the sides and perused the records. The Commissioner (Appeals) has worked out consequential relief of refund according to the following calculations :
(i) Total credit available on veri-
fied modvat documents Rs. 3,02,00,441.60
(ii) Amount of duty paid
(through PLA) on HDPE Rs. 1,85,84,873.00
tapes
--------------------
Rs. 4,87,85,314.00
(iii) Duty to be debited against
sale of fabrics Rs. 3,71,57,046.00
(iv) Total amount refundable Rs. 4,87,85,314.60
(-) Rs. 3,71,57,046.00
--------------------
Rs. 1,16,28,268.60
The issue raised before us by the learned DR is that grant of refund results in unjust enrichment to the respondents. We do not agree. Proviso (c) to Sub-section (2) of Section 11B of the Central Excise Act makes an exception in respect of cases involving credit of duty. This provision refers to payment of refund of duty to the applicants of credit of duty paid on inputs in accordance with Rules or Notification. Thus, refund of credit of duty to the applicants is permitted. Our finding is supported by the decisions of the Tribunal in the cases of C.C.E., Bhubaneshwar v. Orient Paper Mills, 1994 (73) E.L.T. 648 and C.C.E., Kanpur v. Brooke Bond Lipton, 1999 (107) E.L.T. 228.
4. In the light of the above decisions, the finding of the lower Appellate Authority that requirement of cost data on HDPB tapes is irrelevant since duty on tape was paid at specific rate and that verification of modvatable documents showed the total credit available, amount of duty paid, amount of duty to be debited against sale of fabrics and the total amount refundable and that, therefore, the respondents were entitled to refund of Rs. 1,16,28,268.60 P, does not suffer from any legal infirmity. Following the ratio of the decisions cited supra, we accept the contention of the respondents that credit of the above mentioned amount is admissible to them, uphold the impugned order and reject the appeal of Revenue.