Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Metro Tyres Ltd. on 1 April, 1993
Equivalent citations: 1995(80)ELT410(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. These are two appeals filed by the Revenue against the two impugned orders-in-appeal of different dates passed by the Collector of Central Excise (Appeals), Chandigarh.
2. Shortly put the facts of the case are that the Respondents are engaged in the manufacture of A.D.V. tyres falling under sub-heading 1011.10 of sizes 16" x 4" which have been charged to duty by the Assistant Collector with effect from 1-3-1988 as per Serial No. (2) of the Notification No. 58/88, dated 1-3-1988 in spite of the protest by the Respondents. Accordingly the Respondents paid the duty under protest. Subsequently, they filed their different refund claims for refund of duty paid during the year from 1-3-1988 to 28-2-1989. When these refund claims were pending in appeals filed by the Respondents the Government issued a Notification No. 44/89, dated 21-9-1989 under Section 11C of the Central Excises and Salt Act, 1944. Hence the Collector (Appeals) by her common order remanded the case back to the Assistant Collector for re-examining the Respondent's claim afresh and to issue a speaking order keeping in view the provisions of Section 11C of the Central Excises and Salt Act, 1944. On remand the Assistant Collector after usual adjudicating proceedings held that incidence of duty had not been passed by the Respondents to the customers and allowed the partial refund directing that Rs. 43,25,564/- is payable in cash and Rs. 4,01,620/- is allowed to be credited in R.G. 23A Part II Account. A portion of the refund claim was disallowed by him for the reason that the respondents had not fulfilled the requirements of filing the refund within six months.
3. Against that order of the Assistant Collector, the Respondents as well as the Revenue filed their appeals before the Collector (Appeals). The Respondents filed their appeal against the partial rejection of the refund claim whereas the Revenue filed the appeal against the partial sanction of the refund. The Collector (Appeals) allowed the appeal filed by the Respondents except in respect of the two refund claims for Rs. 23,743,75 and Rs. 1,53,200/- as these were not pressed before her by the Respondents, by her Order-in-Appeal No. 1479/91, dated 9-9-1991, which is the subject matter of Appeal No. E/5088/91-C. However, the appeal filed by the Revenue was rejected by her vide impugned Order-in-Appeal No. 16315, dated 9-10-1991, which is the subject matter of Appeal No. E/5094/92-C before us.
4. Arguing on behalf of the Revenue in both the appeals Shri L.N. Murthy, learned JDR submitted that in both the appeals a common question as to whether the incidence of duty was passed on to any other person is involved and in Appeal No. E/5094/91-C a further question as to whether the authorities below were right in ordering that Rs. 4,01,620/- is refundable through credit in RG 23A Part II Account. After stating so he submitted that the burden to prove that the incidence of duty was not passed on to any other person was on the Respondents in terms of Proviso to Section 11C of the Central Excises and Salt Act, 1944 which they failed to discharge. Elaborating on his submissions he contended that in RT-3 Return the Respondents did not show the invoice value and even if it is assumed that it was shown, the Respondents had at no stage produced any evidence to show that any outstanding amount of excise duty is pending realisation from the customers which is claimed to have been borne by the Respondents themselves. As regards the other issue which is the subject matter of Appeal No. E/5094/92-C, he submitted that since the subject A.D.V. tyres became exempted during the period from 1-3-1988 to 28-2-1989 by virtue of Notification No. 44/89, dated 21-9-1989 issued under Section 11C of the Act, Respondents were not eligible to avail of the Modvat in respect of inputs used in the manufacture of A.D.V. tyres. Consequently, when the credit itself is inadmissible the question of allowing refund in RG 23A Part II, because the respondents had debited duty from the account, does not arise. Therefore, the findings of the authorities below with respect to the refund of Rs. 4,01,620 by way of credit in RG 23 A Part II is categorically illegal.
5. Countering the arguments on the question of not passing of the incidence of duty to any other person the learned counsel submitted that both the authorities below have recorded a concurrent findings of fact that the incidence of duty was not passed on to any other person by the Respondents and, therefore, this Tribunal should not disturb, sitting in the second appeal, the said concurrent findings of fact recorded by the authorities below. Elaborating further he submitted that prior to 1-3-1988 duty on the subject A.D.V. tyres was nil in the Central Excise Tariff. In the Budget of 1988-89, the ADV tyres were made subject to duty of excise and Notification No. 58/88 was issued giving relief to certain tyres. Since the tyres involved in the present cases are of 16" x 4" sizes these tyres were also fully exempted in terms of the said Notification No. 58/88 but the Central Excise Officers insisted and levied the excise duty @ Rs. 84/- per tyre which the Respondents paid under protest. Subsequently, the Government issued Notification No. 44/89, dated 21-9-1989 under Section 11C providing for exemption of duty on such tyres. And since the Respondent has satisfied the Assistant Collector under Proviso to Section 11C (which provides that the assessee should prove to the satisfaction of the Assistant Collector that the incidence of such duty has not been passed on to any other person) that in the instant case the incidence of duty was not passed on to any other person, the refund claims were rightly allowed by the authorities below. It was explained that though the tyres were charged to duty @ Rs. 84/- with effect from 1-3-1988, the respondents did not increase their prices during the period 18-1-1988 to 18-4-1988. He also referred to the invoices and to the Gate passes. He highlighted that whenever the respondents raised their prices, the increase related to tyre in question as well as to other tyres in which there was no increase in the rate of duty meaning thereby that it was due to increase in the cost of the raw-material and other incidental costs. He also pointed out that the increase in prices throughout the year made at intervals, was of Rs. 39/- and Rs. 24/- per tyre in the case of 16" x 4" nylon ADV tyres and 16" x 4" heavy duty tyres respectively. This would prove that the respondents did not pass on the incidence of excess duty to the customers. He also submitted that the tyres were first supplied to their own sales offices and prices charges are the same from the customers. To top his reply he submitted that since the other manufacturers were not passing on the incidence of excise duty on these tyres to the customers, the rates in the market did not increase and, therefore, it was impossible for the respondents to pass on the incidence of duty in the market that is to say to the customers and cited the case of Dollar Co., Madras v. Govt. of India, 1986 (24) E.L.T. 245.
6. As regards the other contention involved in Appeal No. F/503/92-C whereby the refund of Rs. 4,01,620/- was allowed to be refunded by credit in RG 23A Pt. II Account, the ld. Counsel for the Respondents conceded the point and submitted that they have already debited their said account on 22-6-1990 and 25-6-1990 for Rs. 3,54,189.16 and are ready to debit their said account further for the balance that is to say Rs. 47,430.84.
7. We have considered the submissions. Sub-section (2) of Section 11C under which the said Notification No. 44/89 has been issued provides that where any Notification under Sub-section (1) in respect of any goods has been issued, the whole of the duty of excise paid on such goods shall be refunded in accordance with the said notification. Provided that the person claiming the refund of such duty makes an application in this behalf to the Assistant Collector of Central Excise and proves to his satisfaction that the incidence of such duty had not been passed to any other person. From the Order-in-Original passed by the Assistant Collector, we find that the Assistant Collector after satisfying himself that the incidence of the excise duty paid by the respondents was not passed on to any other person, allowed the refund claim of the respondents. For ready reference Ms findings may be reproduced herein with advantage -
"...I have examined the evidence produced by the party including the comparative chart showing the rates of tyres from 8-1-1988 to 31-8-1989 and the representative invoices issued by the party and also those further issued by the branch officers corresponding to the gate passes produced by the party in respect of their contention that incidence of duty has not been passed on to any other person because they did not increase their prices consequent upon the imposition of duty from 1-3-1988 and charged the same prices which were being charged prior to 1-3-1988 i.e. prior to imposition of duty. That the increase in prices effected from 11-4-1988 and then again from 1-11-1988 in respect of Nylon ADV tyres of size 16x4 was to the tune of Rs. 39/- and in the case of (heavy duty tyres) Rs. 24/- respectively along with increase in the prices of other kind of tyres which was due to increase in the cost of raw material and other incidental and was not due to the imposition of duty as the increase was for less than the amount of duty of Rs. 84/- per tyre imposed from 1-3-1988 in terms of Notification No. 58/88, dated 1-3-1988.I have seen the chart showing the prices and the invoices issued by the party as well as those issued by the branch offices of the party located at different stations in the country. I observe that the duty has been paid by the party while effecting clearances from the factory as is evident from the gate passes. From the invoices produced, I observe that the prices shown in the chart relevant on 18-1-1988 have been charged from 1-3-1988 to 11-4-1988 as were being charged on 18-1-1988 to 29-2-1988 i.e. prior to the imposition of the duty. The invoices do not show that duty has been separately charged. These only show the sale price. I further find that there is overall increase of Rs. 39/- in the prices of the ADV tyre of size 16 x 4 (Nylon) and Rs. 24/- in the case of (Heavy duty tyre) during the period from 4-11-1988 to 31-8-1989 which is less than half of the amount of duty of Rs. 84/- imposed from 1-3-1988.
From the facts, as discussed above, I observe, that consequent upon the issuance of Notification No. 53/88, dated 1-3-1988 duty prescribed under serial No. 2 of the above Notification has been paid by the party. The party did not increase their prices on imposition of duty and has charged the prices which were prevailing in the market prior to the imposition of the duty as is apparent from the invoices issued by the party and further issued by the branch offices of the party located at different stations in the country which goes to show that invoices were not loaded with the incidence of duty which was Rs. 84/-. The invoices show the sale prices only and do not show the duty separately charged. I find further that the increase in the prices from 11-4-1988 and again on 1-11-1988 is less than half of the amount of the duty paid which has in fact no impact of increase of Central Excise duty on the prices. As such, the contention of the party is correct that incidence of duty has not been passed on any other person".
(Emphasis supplied) 8, Before the Collector (Appeals), the same contentions which are advanced before us, were also raised, and the same were rejected by her observing as follows:
"I have carefully gone through the records of the case, the point referred for determination, the grounds given in the appeal in support of the submissions made by the party during the course of personal hearing. Since the appellants have not represented during the course of personal hearing, I proceed to decide the appeal on the basis of case records, the grounds of appeal and the submissions made by the party during the course of personal hearing.
As regards, department's contention that the respondent has themselves bifurcated the assessable value of the tyres in question and the element of duty in their returns in form RT 3 for September 1988 and November 1988 and as such had passed an incidence of duty to the Customer is not convincing in as much as the manufacturer is not required to give assessable value of the product in RT 3 because the ADV tyres during the material period were not liable to Adv. rate of duty and there was no need for the manufacturer to arrive at the assessable value of ADV tyres. The party's contention that if they had given in their RT 3 returns, bifurcation of price into assessable value and duty of excise, it was merely hypothetical and was done at the directive of the deptt. and in no way can give the inference the incidence of duty was passed on to the customer. The said RT-3 returns for the months of Sep. 1988 and Nov. 1988 have not been placed on record by the Revenue. Moreover, this point regarding bifurcation has not been taken up by the adjudicating authority while issuing show cause notice.
The party have contended that it was not obligatory for them to mention the amount of duty in their invoices because they were paying the duty under protest with the hope of getting the same from the Govt. and that they were not required to make a mention of the same appears logical and sounds to reason. The comparison chart of price list placed before the adjudicating authority shows that the deptt. had started collecting duty of excise from the party w.e.f. 1-3-1988 but the party had not increased their prices during the material period. Even when the prices were increased, these did not correspond to the rate of levy and collection of duty of excise. @ Rs. 84/- per tyre. The total increase from 11-4-1988 and then from 1-11-1988 in case of Nylon Tyres and Rs. 24/- in the case of heavy tyre which increase was attributed to the increase in the cost of raw material, wages and other incidental expenses. Therefore, I concur with the adjudicating authority that the party had not passed on the incidence of duty to the customer which they had otherwise also established to the satisfaction of the adjudicating authority. The Revenue does not have a case of unjust enrichment. Assessee has amply proved that the burden of excise duty has not been passed on to the customers. Therefore, in view of discussion in the above paragraphs, I uphold the order passed by the Assistant Collector and conclude that he was right in holding that incidence of duty had not been passed on to the customer."
(Emphasis supplied)
9. After carefully considering the arguments advanced by both sides in the light of the evidence on record we are of the view that the concurrent findings recorded by authorities below cannot be assailed. The arguments advanced by the Ld. JDR are nothing but surmises. The argument that the respondent has not produced any evidence to show that any outstanding amount of excise duty is pending realisation from the customers is totally misconceived. When according to the appellants duty was paid under protest without passing its incidence to the customers where is the question of showing any outstanding amount of excise duty pending realisation from the customers. Except this surmise nothing was pointed out to upset the said concurrent findings recorded by the authorities below as aforesaid. It need not be stated that rightful claimant cannot be denied the refund of the excise duty paid by him on such inferences, conjuctures and surmises when one is called upon to decide as to whether the incidence of duty was passed on to the customers or not. More particularly, when the two authorities below have concurrently held that the incidence of duty was not passed on to the customers in the instant case. Besides, the findings recorded by the authorities below are in consonance with the judgment delivered by the Division Bench of the Madras High Court in the case of Dollar Co. v. Govt. of India, (supra). In that case also the question of applicability of Notification No. 161/66, dated 8-10-1966 issued under the Central Excise Rules, 1944 was in question and it was the contention of the manufacturer company of certain ointments therein that these products were subjected to excise duty only in 1961 and even after the excise duty came to be levied for the first time in 1961, the medicinal products were sold by the assessee company at the same old prices i.e. to say the company had not added any amount by way of excise duty to the price which it was charging. The contention of the Department, however, was that in the price list these prices were shown by the appellants as inclusive of the excise duty and, therefore, it has to be concluded that the company added the excise duty. Accepting the contention of the manufacturing company and rejecting the contention of the revenue the Court observed as follows -
6...On the admitted position that the company did not change the price which it was charging to its retail consumers prior to 1961, it was clear that there was no element of excise duty added to the price after the excise duty came to be levied in 1961. The fact that in the price list, the price was stated to be inclusive of the excise duty did not necessarily mean that any particular amount was added to the original price so as to make a provision for the additional burden of the excise duty. We must remember the fact that the Explanation will come into the picture only where 'the element of excise duty, if any' is added to the price of any of the medicines. The department has not been able to show and indeed it is impossible for them to show that any element of excise duty has been added to the price of any medicines. The very fact that the price of the medicines continues to be the same as it was before the excise duty was levied, clearly indicates that no element of excise duty is added to the price of the medicinal ointment.
7. In our view, the stand taken by the Department is wholly unsustainable.
(Emphasis supplied)
10. Here it may also be added that the contention of the respondents that since the other manufacturers were not passing excise duty to these buyers, the rates in the market did not increase and, therefore, it was impossible for the respondent to pass on the incidence of duty in the market, that is to say, to the customers, was not contested before us. This fact also proves the case of the appellants that they did not pass on the incidence of excise duty to the customers due to the prevalent market conditions and to boost the sales. In fact, no evidence was led by the Department to rebut the case of the respondent.
11. In the light of the discussions above, we reject the contention of the appellants and uphold the findings of the authorities below that the incidence of excise duty in the instant case was not passed on to any other person.
12. As regards the other issue the contention of the learned JDR that since ADV tyres became exempted during the period 1-3-1988 to 28-2-1989 by virtue of Notification No. 44/89, dated 29-9-1989 issued under Section 11C of the Central Excises and Salt Act, 1944, the respondents were not eligible to avail of the Modvat in respect of the inputs used in the manufacture of ADV tyres when the credit itself was inadmissible and, therefore, the question of allowing refund in RG 23A, Part II does not arise because the parties had debited duty from the account, has much force. In fact it was conceded to as aforesaid. This vital fact was not conceded by authorities below. Therefore, the Modvat credit inputs relating to the said tyres amounting to Rs. 4,01,620/- has to be reversed under Rule 57C of the Central Excises and Salt Act, 1944. However, it was pointed out by the respondents and not controverted by the learned JDR that out of the said amount of Rs. 3,54,189.16 has already been reversed by way of entry No. 283, dated 23-6-1990 and entry No. 413, dated 25-6-1990 in RG 23A Part II and the respondents are ready to reverse the balance amount of Rs. 47,430.84 by making suitable entries in the said RG 23A (Part II) Account. We order accordingly.
13. In the result, Appeal No. E/5088/91-C is rejected. Appeal No. E/5094/91-C is partly allowed so far as it relates to the refund of Rs. 4,01,620/- by way of credit in RG 23A Part II Account. As the appellants have already reversed the entries in the said account as aforesaid for Rs. 3,54,189.16, they are directed to reverse the entries for the balance amounts of Modvat credit of Rs. 47,430.84. Rest is rejected.
14. Both these appeals stand disposed of accordingly with consequential relief to the respondents.