Customs, Excise and Gold Tribunal - Mumbai
Bombay Chemicals Ltd. vs Commissioner Of Central Excise on 9 November, 2005
ORDER
Jyoti Balasundaram, Vice-President
1. The issue in this case relates to rejection of claims for refund of Rs. 13,17,34,703.65 (Rupees Thirteen crores seventeen lakhs thirty four thousand seven hundred three and paise sixty five only) filed by the appellants for period from 27-9-1979 to 28-2-1994 of duty paid on Tortoise brand Mosquito Coils. The refund claims arise as a result of classification dispute - the assessee claimed the product as insecticides classifiable under Tariff Item 68 of the schedule to Central Excise Tariff Act and eligible for exemption from duty under Notification No. 55/75 dated 1st March 1975 as amended and that from 1st March 1986 the product was classifiable under Chapter sub-heading 3808.10 and chargeable to NIL rate of duty. The classification dispute was settled by the Tribunal by its order No. 260/90-C dated 19th March 1990 accepting the contention of the assessee. The Tribunal's order was upheld by the Supreme Court on 28-2-94. Although the assessee had been filing the claims right from October 1980 to March 1994 as seen from the details set out below, one consolidated claim comprising 15 different claims was filed after the judgment of the Supreme Court :
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S. No. Period of Refund Claim Date of Filing R/Claim Amount claimed Rs
------------------------------------------------------------------------------------- 1 27-9-79 to 30-9-80 21-10-1980 11,5,584.80
------------------------------------------------------------------------------------- 2 1-10-80 to 30-9-81 20-11-1981 10,94,856.12
------------------------------------------------------------------------------------- 3 1-10-81 to 30-9-82 7-2-1983 15,32,386.74
------------------------------------------------------------------------------------- 4 1-10-82 to 30-9-83 14-5-1984 24,25,068.74
------------------------------------------------------------------------------------- 5 1-10/83 to 30-9-84 11-3-1985 27,28,728.05
------------------------------------------------------------------------------------- 6 1-10-84 to 31-7-85 6-11-1985 29,55,483.08
------------------------------------------------------------------------------------- 7 1-8-85 to 28-2-86 11-6-1986 23,74,832.04
------------------------------------------------------------------------------------- 8 1-3-86 to 28-2-87 30-3-1987 90,02,632.42
------------------------------------------------------------------------------------- 9 1-3-87 to 29-2-88 21-3-1988 1,00,44,308.90
------------------------------------------------------------------------------------- 10 1-3-88 to 28-2-89 26-3-1989 1,03,78,644.38
------------------------------------------------------------------------------------- 11 1-3-89 to 31-3-90 12-4-1990 1,46,07,979.87
------------------------------------------------------------------------------------- 12 1-4-90 to 31-3-91 13-5-1991 1,46,26,083.51
------------------------------------------------------------------------------------- 13 1-4-91 to 31-3-92 11-5-1992 1,87,57,763.00
------------------------------------------------------------------------------------- 14 1-4-92 to 31-3-93 17-5-1993 2,14,25,473.00
------------------------------------------------------------------------------------- 15 1-4-93 to 28-2-94 21-3-1994 1,86,26,882.00
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TOTAL 13,17,34,703.65
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2. On scrutiny of the refund claim, it was noticed that the assessee had paid duty under protest and that they have specifically mentioned in the refund application that whatever duty had been paid, it had been charged and recovered from their customers. It was presumed that the incidence of duty had been passed on by the assessee to their customers and therefore show cause notice dated 12th July 1994 was issued to them proposing credit of the amount claimed as refund to the Consumer Welfare Fund as incidence of duty of excise in relation to which the refund was claimed had been passed on by them to their customers. By order dated 12th October 1995, the Assistant Commissioner held that an amount of Rs. 4,50,00,604.31 (Rupees Four cores fifty lakhs six hundred four and paise thirty one only) was barred by limitation and that an amount of Rs. 58,41,439.95 (Rupees Fifty eight lakhs forty one thousand four hundred thirty nine and paise ninety five only) was inadmissible on merits, as this amount had been availed by the assessee as Modvat credit. Regarding the amount of Rs. 8,06,92,659.39 (Rupees Eight crores six lakhs ninety two thousand six hundred fifty nine and paise thirty nine only), he held that it was admissible on merits but directed it to be credited to the Consumer Welfare Fund under Section 12C of Central Excise Act on the ground that the assessee had not discharged the burden of showing that they had not passed on duty burden to their Customers. The Commissioner (Appeals) upheld the order of adjudication; hence this appeal before the Tribunal.
3. None appears for the appellants inspire of notice; hence we heard the ld. SDR and perused the records. We find no substance in the plea raised in the appeal that the order has been passed in violation of principle of natural justice for the reason that the appellants have not substantiated their plea that during the course of hearing, the Commissioner (Appeals) directed the lower appellate authority to produce the Department's file before him and informed the appellants that on receipt of the file, they would be called for personal hearing, which opportunity was not extended to them afresh. We also note that there is no substance in the plea of the assessee that an amount of Rs. 67,79,284.95 (Rupees Sixty seven lakhs seventy nine thousand two hundred eighty four and paise ninety five only) is admissible to them on the basis of so called order dated March 1995 passed by the Assistant Collector, Thane-II Dn., who sanctioned the above mentioned amount, as we find that this to be a Note Sheet order, which is unsigned and also for the reason that such order does not appear to have been issued to the appellants.
4. On examining the claim of the appellants to refund, it is noticed that the assessee had raised a plea that they had paid the duty under protest during the entire period in dispute. Even if it is accepted that for a certain period the duty was paid under protest, it will not protect the assessee against the bar of unjust enrichment in the light of the Apex Court decision in the case of Commissioner of Central Excise, Mumbai-III v. Allied Photographics India Limited . This aspect has been considered in detail by the Assistant Commissioner who has held that on 29th July 1982, the Assistant Commissioner had passed an order in the matter of classification dispute by deciding in favour of the assessee that their product was exempted from payment of duty and as per Sub-rule (6) & (7) of Rule 233B, the question of paying duty under protest therefore does not arise and as they continued paying duty under protest, even after the Tribunal decided in their favour in March 1990, it is to be treated as normal payment i.e. payment without protest. He has therefore held that the payment of duty from 30-7-85 to 3-5-87 and from 20-3-90 to 28-2-94 are subject to time limit set out in Section 11B of CETA Act. On this basis he has given detailed break up of the amounts, for which claims were filed, which are hit by time bar. The de-tails of the claims, which are barred by limitation, are as under :
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Period Amount Refund Period hit by Amount hit
(Rs.) claim filed time bar by time bar
on
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1-8-85 to 28-2-86 23,74,832.04 11-6-86 1-8-85 to 11-12-85 9,35,022.38
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1-3-87 to 28-2-87 90,02,632.42 30-3-87 1-3-86 to 30-9-86 40,95,975.97
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1-3-87 to 29-2-88 1,00,44,308.90 21-3-88 1-3-87 to 3-5-87 23,74,932.45
------------------------------------------------------------------------------------- 1-4-90 to 31-3-91 1,46,26,083.51 13-5-91 1-4-90 to 13-11-90 85,69,697.51
------------------------------------------------------------------------------------- 1-4-91 to 31-2-92 1,87,57,763.00 11-5-92 1-4-91 to 11-11-91 99,82,523.00
------------------------------------------------------------------------------------- 1-4-92 to 31-3-93 2,14,25,473.00 17-5-93 1-4-92 to 17-2-92 1,01,36,921.00
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1-4-93 to 28-2-94 1,86,26,882.00 21-3-94 1-4-93 to 21-9-93 91,05,532.00
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4,52,00,604.31
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He has therefore correctly held that the refund claim of Rs. 13,17,34,703.65 (Rupees Thirteen crores seventeen lakhs thirty four thousand seven hundred three and paise sixty five only) gets reduced by the above mentioned figures of little over Rs. 4.50 Crores (Rupees Four crores fifty lakhs only). He also held that this amount is hit by bar of unjust enrichment for the reason that assessees' records show that they had collected this duty from their customers.
5. As regards the period from 27-9-79 to 31-12-83, it was found that the assessee had increased the price of the product from Rs. 150/- to Rs. 150/-. The reason given for the price increase is that the pricing was done by the Managing Director himself in consultation with the Sales Manager and this has no fixed basis and is not dependent only on costs and profits but is more dependent on other factors like acceptance by customers of the price, competition with similar products available in the market etc. The assessee had collected the entire amount from the buyers as seen from their reply to show cause notice dealing with GPIs of December 1983 in which they have shown the assessable value of the products as Rs. 157.50 and excise duty payable at rate of 10% as Rs. 15.75 and the amount collected from buyer as Rs. 173.25, which is Rs. 157.50 assessable value + Rs. 15.75 duty payable. The increase in price has been held to be done with a view to absorb impact of excise duty. The assessees were also unable to produce the agreement entered into with their dealers for the period prior to 1986. Therefore the claim for refund of Rs. 67,79,284.95 (Rupees Sixty seven lakhs seventy nine thousand two hundred eighty four and paise ninety five only) for the period from 27-9-79 to 21-9-83 is hit by bar of unjust enrichment in the light of the above discussion.
6. As regards the period from 1-1-84 to 31-3-91, the assessee has admitted in their reply that they reduced the price by Rs. 15/- per case and as against this reduction they started to charge the Central Excise duty to their buyers. They had admitted that excise duty paid by the buyer was more than offset by the reduction in price. This is a clear indication that the duty burden was being passed on by them to their buyers.
7. As regards remaining period namely from 1-4-1991 to 28-2-1994 in the R Form which is prescribed application form for refund, the assessee have clearly shown that the incidence of duty was charged to the buyers. Therefore, throughout the entire period in dispute, it is seen that the assessee had been passing on duty burden to their customers and therefore, the claims for refund are hit by bar of unjust enrichment. Even for the period when the Doctrine of unjust enrichment had not been introduced statutorily, it is not open to the assessee to contend that bar cannot be used against them in the light of the recent judgment of the Apex Court in the case of Sahakahri Khand Udyog Mandal Limited v. Commissioner of Central Excise & Customs wherein the Court has held that irrespective of applicability of Section 11B of the Central Excise Act, doctrine can be invoked to deny the benefit to which a person is not otherwise entitled, and that Section 11B of the Central Excise Act or similar provision merely gives legislative recognition to this doctrine and that it however, does not mean that in absence of statutory provision, any person can claim or retain undue benefit. The Court has also held that before claiming 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 the burden to the consumers and if such relief is not granted, he would suffer loss.
8. As regards rejection of claim for refund of Rs. 58,41,439.95 (Rupees Fifty eight lakhs forty one thousand four hundred thirty nine and paise ninety five only) on the ground that this amount was availed by way of Modvat credit, since duty was paid throughout the period, refund of the above mentioned amount is also required to be hold to be admissible on merits; however, the bar of unjust enrichment also operates as far as this amount is concerned, therefore, we direct credit of this amount along with the amount of Rs. 8,06,92,659.39 (Rupees Eight crores six lakhs ninety two thousand six hundred fifty nine and paise thirty nine only) to the Consumer Welfare Fund established under Section 12C of Central Excise Act, 1944.
9. For the reasons set out above, we hold that the appellants are not entitled to refund of any part of the amount claimed and accordingly reject the appeal.