Customs, Excise and Gold Tribunal - Delhi
Sangam Processors (Bhilwara) Ltd. vs Collector Of C. Excise on 23 February, 1993
Equivalent citations: 1994(71)ELT989(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. Since the issue to be determined in all these appeals is common, these were all taken up together for disposal. The origin of the dispute is the filing of the following refund claims by the appellants:
Appellant Date of Amount Period
refund claim claimed
(Rs-)
Rajasthan Spg.; 8-9-1986 8,51,173.00 23-3-1986
Wvg. Mills to 23-4-1986
Rajasthan Proc- 15-10-1986 1,30,200.00 17-4-1986 to
essors 23-
4-1986
Sangam Processors 15-10-1986 1,39,452.00 12-4-1986 to 23-4-1986
2. The claims were made on the ground that man-made fabrics containing polyester viscose cleared by them during the period in question, were correctly assessable to duty under Heading 55.12 CETA, 85 but that through Finance Bill, 1986 higher rate of duty was levied by classifying them under Heading 55.08 CETA. However, through amendment to the Bill introduced on 24-4-1986, which received President's assent on 13-5-1986, the rate of duty on man-made fabrics was brought down to pre-1-3-1986 level. Subsequently, reliance was also placed on Notification 35/88 (N.T.), dt. 21-12-1988 under Section 11C of Central Excises & Salt Act waiving the requirement of paying higher duty during the period from 1-3-1986 to 12-5-1986 because of the fact that as a general practice, lower duty had been collected during that period. The Assistant Collector of Central Excise, Ajmer, by his separate orders dt. 31-1-1989, rejected the claims on the ground that Notification 35/88 issued under Section 11C of the Act only waived requirement of payment of higher duty during the relevant period and that duty already paid at the time of clearance could not be refunded in view of Sub-section (2) of Section 11C. Aggrieved by these orders, the appellants preferred appeals and the Collector of Central Excise (Appeals), New Delhi, by her order dated 27-6-1989, remanded the cases to the Assistant Collector to consider the claims after ascertaining whether the incidence of duty had been passed on to any other person as required in Sub-section (2) to Section 11C. In the de novo proceedings, the Assistant Collector, in his separate orders, sanctioned the refund claims on the ground that the assessee had produced before him credit notes issued to various customers and the ledger account of the customers and that on an examination of those with statutory records, showed that credits had been allowed by the assessee to the consigners and the Assistant Collector, accordingly, held that duty incidence in these circumstances had not been passed on to any other person. These orders of the Assistant Collector were sought to be reviewed by the Collector of Central Excise, Jaipur, who filed application under Section 35E for review of the Assistant Collector's order before Collector (Appeals). The Collector of Central Excise (Appeals), New Delhi, by his impugned common order dated 31-7-1990, held that the appellants cannot be said to have complied with provisions of Sub-section (2) of Section 11C because they had in fact collected the duty from customers at the time of clearance and also held that the issue of credit notes will not also bring them within the ambit of that Sub-section. The Collector (Appeals) also observed that the Tribunal order in the case of Collector of C. Excise, Chandigarh v. Mahavir Spg. Mills - 1988 (33) E.L.T. 115 cited before him by the appellants was of no avail to them as it was decision rendered prior to the introduction of Sub-section (2) in Section 11C. The Asstt. Collector's orders were set aside leading to the present appeals.
3. The Ld. Counsel, Sh. K.G. Sooji, appearing for all the appellants, herein, submitted that they had fulfilled the condition for exemption under Section 11C(2) of Central Excises and Salt Act, 1944 because the duty incidence has been borne by the appellants themselves by issuing credit notes to the customers covering duty amount which has been verified and found satisfactorily proved by the Assistant Collector in his order. The ld. Counsel also submitted that at the time of filing of refund claim, there was no requirement to show that duty incidence had not been passed on to the customer and hence urged that their case was covered by CEGAT decision in the case of CCE, Chandigarh v. Mahavir Spg. Mills -1988 (33) E.L.T. 115. The appellants had filed refund claim as a consequence of amendment to Finance Bill, 1986 introduced on 24-4-1986 amending Heading 55.12 CETA as a result of which man-made fabrics containing viscose staple fibre and polyester fibre as cleared by them fell for classification under that heading, and not under Heading 55.08 as assessed by the Department. The Ld. SDR, Smt. Shanti Sundaram, contended that in all these cases, duty incidence had admittedly been passed on to the customers and in these cases the 11C Notification had been issued only on 21-12-1988 when Sub-section (2) of Section 11C was already on the statute which stipulated that the person claiming refund should satisfy the Assistant Collector with proof to show that the incidence of duty had not been passed on. The credit notes had been issued by the appellants after the amendment to Section 11C in July, 1988. Further, the terms 'any other person' occurring in Section 11C(2) has a wider ambit and would include the ultimate consumer and not merely wholesale dealers.
4. The submissions made by both the parties, herein, have been carefully, considered. In all these appeals, the question to be determined is whether the appellants can be said to be eligible for refund of the duty claimed by them in terms of Section 11C of Central Excises & Salt Act, 1944, which reads as under :
* * * * * * * Sub-section 2 of Section 11C provides for refund of duty that has been paid on the goods in respect of which Notification under Section 11C has been issued. Therefore, the refund claim under Sub-section (2) should flow from the 11C Notification, and as a consequence thereof, which is, further, indicated by the requirement therein that the application should be made to the Assistant Collector within six months from the issue of the Notification. The provisions of Section 11C and Sub-section (2), thereof cannot come into play in the case of any other refund application made under Section 11B for reasons other than the issue of 11C Notification. In the present appeals, appellants had filed refund claims in the year 1986 whereas the 11C Notification 35/88 was issued much later on 21-12-1988 when Sub-section (2) was already on the statute. Moreover, Sub-section (2) was inserted and came into effect on 1-7-1988 and was in force when the refund claim was disposed of by the Assistant Collector for the first time in his orders in these cases issued in January, 1989 rejecting their claims for non-fulfilment of condition in Sub-section (2) that the duty should not have been passed on to any other person. The appellants do not deny the fact that during the relevant period they had passed on the duty incidence to the customers and their claim is that the incidence of duty so passed on had since been made good by the appellants granting credit notes to the customers as verified by the Assistant Collector in his second order during de novo proceedings and that thereby they have fulfilled the condition in Section 11C(2). It is not possible to accept the contention because a plain reading of Section 11C(2) would show what is required thereunder is that the person claiming refund should apply within six months of the issue of 11C Notification with satisfactory proof to show that duty incidence has not been passed on to 'any other person'. Such is not the case here because in these cases the appellants have admittedly passed on the incidence at the time of clearance of the goods on payment of duty and had filed the refund claims under Section 11B in 1986 and at much later stage, apparently, after the insertion and coming into force of Sub-section (2) to Section 11C from 1-7-1988, and even before the issue of notification under Section 11C on 21-12-1988 in respect of their goods, the appellants have sought to show that the duty incidence passed on had been remedied by issue of credit notes to customers. It is not possible to interpret Sub-section (2) of Section 11C to accommodate such situations and to say that even when duty has been passed on to the customers at the time of clearance the assessee can still claim refund under Section 11C(2) of Central Excises and Salt Act by issuing credit notes. The Tribunal decision in the case of Collector of Central Excise v. Mahavir Spg. Mills (supra) does not also advance the case of the appellants as it was a decision relating to a demand of duty and not a refund claim rendered in the context of Section 11C prior to introduction of Sub-section (2) thereto. In the result, there is no reason to interfere with the order passed by the Collector (Appeals) and the appeals are rejected.