Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Brooke Bond Liptons (P) Ltd. on 27 April, 1998
Equivalent citations: 1998ECR107(TRI.-DELHI), 1999(107)ELT228(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. This is an appeal filed by the Commissioner of Central Excise, Kanpur challenging the Order-in-Appeal No. 207-C.E./KNP/96, dated 27-9-1996 passed by the Commissioner of Central Excise (Appeals), Allahabad allowing the appeal before him by M/s. Brooke Bond Lipton India Ltd., Bareilly, respondents herein and holding them to be eligible for refund in cash of duty paid by them in cash during the period 1981 to 1986 when the department had not permitted them the benefit of Notification No. 201/79 in respect of duty paid on two items, namely 58 mm closer caps and coproco adhesives. Originally both the Assistant Collector and Collector (Appeals) had held that such a benefit was not available to them. Aggrieved with such a finding they had carried the matter in appeal to the Tribunal and the Tribunal, vide order Nos. E/441 and 442/91-D, dated 31-10-1991, held them to be eligible for the benefit of the aforesaid Notification. Since, at that stage the said Notification had been rescinded, they claimed refund of amount paid by them as duty through PLA with the alternative request that the amount may be credited to their RG 23A Part II account. The refund claim was disposed of by the Assistant Commissioner vide his order dated 21-11-1995. He rejected the refund claim on "three counts :-
(1) Respondent had not filed the necessary documents.
(2) Notification No. 201/79 did not permit refund in cash.
(3) Amended provisions of Section 11B(2) relating to unjust enrichment did not permit cash refund to be paid to them.
Aggrieved with this order respondent approached the Collector (Appeals) who allowed their appeal on all the three counts. It is this order which has been challenged in the present appeal by the department.
2. Arguing the appeal, Shri Y.R. Kilania, learned DR submitted that the order-in-original of the Assistant Collector was correct in law and the Collector (Appeals) erred in setting aside that order. The ground taken in that order by the Assistant Collector on the aspect of unjust enrichment gets fortified by the judgment of the Division Bench of the High Court of Madras in Collector of Customs v. Indo-Swiss Synthetic Gem Manufacturing Co. Ltd. reported in 1996 (13) RLT 379. That judgment related to a case where the refund rebate to goods not sold by the claimant but instead consumed by the claimant for manufacturing of other goods. In view of this position and the Supreme Court judgment in Mafatlal Industries Ltd. v. U.O.I. -1997 (89) E.L.T. 247, the refund claimed by the respondent would not be admissible to them as they had not discharged the burden of proving that the duty amount in question had not been passed on by them to their customers. He supported the grounds taken in the appeal memorandum wherein it has, inter alia, been urged that refund claims arising out of appellate order also are subject to the amended Section 11B of Central Excise Act, 1944. He pleaded in conclusion that the impugned order-in-appeal be set aside and the order-in-original passed by the Assistant Commissioner restored.
3. The arguments were resisted by Shri Kapil Vaish, learned Chartered Accountant appearing on behalf of the respondent. He supported the order-in-appeal which he submitted was based upon a correct appreciation of the facts and the legal position. On the first ground applied by the Assistant Commissioner for rejecting the refund claim, he stated that the observation that they had not supplied the documents stands clearly disproved by the admitted position in the order itself in the portion the "facts of the case". Actually they had submitted all the required documents including the original duty paying documents to the Assistant Commissioner along with the refund claim. In page 2 of the order-in-original there is an observation that the party vide their letter No. 75958, dated 24-5-1993, submitted the following documents :-
"(i) Original order of Assistant Collector, Central Excise Bareilley bearing No. V(30) Vail 382/81/2292, dated 2-6-1983 and No. V-1B(15) Demand/270/82/5275, dated 7-12-1983.
(ii) Collector (Appeals), Central Excise, New Delhi Order-in-Appeal No. 232-CE/KNP/85 and No. 390/CE/KNP/85 and
(iii) Certified copy of the order of Tribunal Nos. E/441-442/91-D, dated 31-10-1991.
(iv) Copies of RG 23 (160 Pages Triplicate copy)."
In view of the admitted position in the order itself, it was not a correct observation or finding that they had failed to submit the documents. This finding has been rightly overruled by the Commissioner (Appeals). As regards the next adverse finding by the Assistant Commissioner that Notification No. 201/79 did not permit cash refund it was pointed by Shri Vaish that the Commissioner (Appeals) had rightly followed a number of Tribunal decisions cited by them holding that where the assessee was prevented from availing of the credit available under either Proforma Credit Scheme under Rule 57A or the benefit of Notification No. 201/79 by the department under a mistaken belief that such benefit was not admissible and subsequently, as a result of decision by higher authorities like Tribunal, the benefit is held to be admissible, the assessee cannot be deprived of such a benefit on the ground that when such a decision is taken in their favour the scheme of such benefit is no longer available or that the final product for clearing which such credit has been sought to be availed of has become non-dutiable. Actually at the time when refund was filed, the benefit of Modvat credit was available to them in respect of the inputs in question vis-a-vis the final product which was dutiable. Thereafter, the final product became exempt from duty for some time till it was again brought under the Excise net. At present their final product is dutiable and it will serve their purpose very well if instead of the department paying them the amount of refund fallen due to them is permitted to be credited to their RG 23A Part n account. It was pointed out in this connection by Shri Vaish that this ground of Notification No. 201/79 not providing for refund was not raised in the show cause notice and was pressed into service only in the order passed by the Assistant Commissioner. They had not been given an opportunity to question that ground and they agitated this before the Collector (Appeals) who accepted their plea in this regard.
4. As regards the third ground regarding the application of the provisions relating to unjust enrichment, it was pointed out by Shri Vaish that as the refund pertains to refund of credit of duty paid on excisable goods used as inputs in accordance with Notification No. 201/79 it will be covered by Clause (c) in the proviso to Sub-section (2) of Section 11B of Central Excise Act and accordingly it will not be covered by the main provision viz. Sub-section (2) ibid. He relied upon the decision of the Tribunal in CCE, Bhubaneshwar v. Orient Paper Mills - 1994 (73) E.L.T. 648 which had taken note of a series of earlier Tribunal decisions as also the principle laid down by the Supreme Court in Mangalore Chemicals and Fertilizer Co. Ltd. v. Deputy Commissioner of Commercial Tax reported in 1991 (55) E.L.T. 437. He pleaded in conclusion that the impugned order be upheld and the department's appeal dismissed and consequent refund arising from the order-in-appeal paid to them or in the alternative credited to their current RG 23A Part II account.
5. I have taken note of the submissions of both the sides. I have perused the record. The ground of unjust enrichment has been wrongly invoked in the present case. In fact, considering that the Assistant Commissioner had rejected the refund claim on merits as also on the ground that necessary documents had not been submitted by the respondents there was no need to consider the application of unjust enrichment as contemplated in Section 11B(2) of the Act. That provision will come into play only when refund is held to be admissible on merits where instead of refunding the amount in cash to the claimant it is to be passed on to the consumer welfare fund in accordance with the procedure prescribed for the purpose. Since, the Commissioner (Appeals) has, however, held their claim to be admissible or all the counts agitated by the respondents, it will be necessary to consider all the issues including the aspect of unjust enrichment.
6. To begin with, the rejection of the refund claim on the ground that necessary documents had not been filed by the respondents, ignores the admitted position reflect in the order-in-original itself which has been referred to earlier. The plea in this regard raised by the respondents before the Commissioner (Appeals) was rightly accepted by that authority. It is too late in the day for the department to raise the ground that respondents had not submitted the documents. This ground is rejected as untenable.
7. Coming to the next question as to the non-admissibility of refund in cash since the relevant Notification No. 201/79 did not permit such a facility that should not pose any problem as respondent is prepared to accept as an alternative relief the crediting of the refund amount in the RG 23A Part II account. Obviously the claim has been rejected on this ground without really reaching a finding that refund is admissible on merits. It is hence necessary to deal with that aspect of the matter.
Respondents had staked a claim for availment of the benefit of exemption contemplated under Notification No. 201/79 claiming the two items "58 mm closer caps" and "coproco adhesive" as inputs in the manufacture of the final product. The department did not grant the facility claimed. Only at a much later stage, namely in 1991 did the Tribunal accept their plea that these are inputs vis-a-vis the final product manufactured by them. There have been such instances of the assessee succeeding only at a later stage after the authorities below had turned down the claim for such benefit, vide the decisions considered in 1994 (73) E.L.T. 648 referred to by Shri Vaish. In the two decisions relating to MRF Ltd. referred to therein the Tribunal had held that in the event of the current procedure not permitting credit adjustment the department should then pay the amount of- relief in cash or by cheque. To similar effect is the decision in National Organic Chemical Inds. Ltd. v. Collector of Central Excise, Bombay II reported in 1994 (70) E.L.T. 722. It was held by the Tribunal in the said decision that it is an admitted position that the appellants therein would have been entitled to set-off of duty paid on the input used by them in the manufacture of their product during the period June to September 1977 under the provisions of Notification 178/77. The Assistant Collector rejected their claim but Collector (Appeals) held that appellants were not so eligible for the benefit. In the meantime Notification 178/77 was rescinded and hence it was not possible for the appellants to claim set off. It was accordingly held by the Tribunal that they were entitled to claim refund in cash. The Tribunal placed reliance for this approach on the High Court of Bombay in Deccan Sales Corporation v. R. Parthasarthy -1982 (10) E.L.T. 885. The High Court had, inter alia, observed that although Rule 56A would have entitled the parties to avail of the benefit of paying duty by adjustment, yet there is nothing in clause (vi) to Rule 56A to warrant the conclusion that this is the only manner in which the benefit could be given. The Tribunal's decision in the National Organic Chemicals Industries Ltd. case was challenged by the department in the Supreme Court by a Civil Appeal. That appeal has been dismissed as reported in the Courtroom Highlights in 1986 (84) E.L.T. A106.
8. The next issue to be considered is the applicability of the provisions of Sub-section (2) of Section 11B of the Act. The main provision of this Section provides for any amount of duty of excise determined as refundable to the claimant to be credited to the consumer welfare fund but this provision is subject to the proviso that such amount of duty determined as admissible shall, instead of being credited to the fund, be paid to the appellants, if it is relatable, inter alia, to refund of credit of duty paid on excisable goods used as inputs in accordance with the Rules made or any Notification issued under the Act. Duty was paid as assessed. Had the necessary permission for availing the benefit of Notification No. 201/79 been granted at the appropriate time when the application was filed respondent would have availed the exemption to the extent of duty paid on the inputs. Having failed to get that permission appellant paid the entire duty through Personal Ledger Account. Once the admissibility of the exemption became settled when the Tribunal decided that issue in their favour they filed the refund claim. This only sought to place the respondent in the same position in which respondent would have been had the matter of exemption been decided correctly in their favour at the original stage. This is not a case involving reassessment and the total duty paid by respondent is not disturbed. What is allowed is the restoration of the benefit of exemption to the extent of duty paid on the inputs which could have been taken as credit in the RG 23 Part II Account as was permissible at that time. The implementation of the impugned order-in-appeal can be made either granting cash refund of the credit originally denied to the respondent or by allowing that amount to be credited to the RG 23A Part II account presently operated by the respondent under the Modvat system. The case does not attract the main provisions of Section 11B(2) of the Act as it falls under the proviso (c) thereof. Accordingly,, the spectre of unjust enrichment will not haunt this case and the respondents would be entitled to get the benefit of availment of the exemption which was admissible when the claim was made and which was denied by the wrong act of rejection by the departmental authorities. Since presently respondent is availing of the benefit of Modvat under Rule 57A which is a successor, inter alia, to Notification No. 201/79, the alternative request for permission to have the amount in question credited to their RG 23A Part II account also merits approval. It would make no difference whether the benefit is granted to them as cash refund or credit in their Modvat credit account since on both the counts the respondent would be able to utilise the credit which had been due to them originally but which they could not avail till now.
9. As the order is being dictated, Shri Vaish stated that they had originally claimed refund of Rs. 6,55,557.70. The Assistant Collector had worked out the amount as Rs. 3,29,432.28 though he had rejected the claim on other grounds. The submission is now made by the learned Consultant that as the claim has been set aside by the Collector (Appeals) and the department's appeal has now been dismissed by me now, it will be alright if the amount already worked out by the Assistant Collector is credited to their account implementing this order instead of another exercise for quantifying the amount in terms of the order of the Commissioner (Appeals). The statement is made at the bar that respondents are prepared to accept the lower amount quantified by the Assistant Collector and the amount disallowed by that authority is not being questioned by them. The plea is accepted.