Custom, Excise & Service Tax Tribunal
M/S. Ti Diamond Chain Ltd vs Commissioner Of Central Excise, ... on 26 March, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos. E/1158 & 1159/2001
(Arising out of Order-in-Appeal Nos.146 & 148/2001 (M-II) dated 10.7.2001 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Smt. Jyoti Balasundaram, Vice President
Honble Shri P. Karthikeyan, Member (T)
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. TI Diamond Chain Ltd. Appellants
Vs.
Commissioner of Central Excise, Chennai Respondent
Appearance
Shri M.R. Diwakar, Authorized Rep. for the Appellants
Shri M.K.A.K. Mohiddin, JDR, for the Respondent
CORAM
Honble Smt. Jyoti Balasundaram, Vice-President
Honble Shri P. Karthikeyan, Member (T)
Date of Hearing: 26.03.2009
Date of Decision: 26.03.2009
Final Order Nos. ____________
Per P. Karthikeyan
M/s. TI Diamond Chain Ltd., Ambattur (TIDC) packed duty paid chain, connecting links and bought out sprocket in a special packing and sold each as kit (diamond kits) . During the period 26.9.98 to 30.8.99, TIDC paid central excise duty of Rs.1,37,13,435/- on these diamond kits under protest. Following the order of the Tribunal in August 1999 holding that such packing of chain and connecting links with bought out sprocket did not involve an exigible process of manufacture, TIDC claimed refund of the excise duty paid by them on the kits. Before the original authority, the assessee produced documentary evidence substantiating payment of impugned amount of duty and that the same had not been recovered from the buyers of the kits. A certificate from Chartered Accountants to the effect that the refund amount claimed had not been collected from the customers of TIDC and that the amount of Rs.1,37,13,435/- had been shown under the heading Loans and Advances under the classification Current Assets as on 31.8.1999 was produced. After scrutiny of the claim, the original authority sanctioned and paid to TIDC an amount of Rs.1,21,28,530/-. An amount of Rs.12,29,105/- was sanctioned and deposited in the Consumer Welfare Fund (CWF). Claim for an amount of Rs.3,55,800/- was disallowed. In the appeal TIDC also had claimed interest on these amounts. Vide the impugned Orders-in-Appeal No.146 & 148/2001 (M-II), the Commissioner (Appeals) sustained the order of the original authority and rejected the appeal for interest of Rs.1620451/- u/s 11BB of the Central Excise Act 44.
Appeal No.E/1158/2001
2. In appeal No.E/1158/2001, TIDC has assailed the impugned order and challenges sanctioning and crediting of Rs.12,07,776/- and Rs.21,329/- to Consumer Welfare Fund and rejecting the claim for refund of Rs.3,55,800/-. They pray for refund of these amounts along wit h applicable interest u/s 11BB of the Central Excise Act 44. The following grounds are raised :
(i) Rs.12,07,776/-
The impugned order accepted the decision that the wholesale prices of kits of various models of two wheelers before and after the appellants had registered as an assessee manufacturing diamond kits had remained the same. The authorities failed to appreciate that the amount in question accounted for items of admissible expenditure in the wholesale price adopted for payment of duty when the diamond kits were stock-transferred to the appellants various depots. The Commissioner (Appeals) had not given a reasoned finding as to how the above amount represented duty collected.
(ii) Refund of Rs.3,55,800/-
With relevant documents the appellants had established that the entire excise duty on diamond kits was kept as a deposit in their books of accounts. The certificate of the Chartered Accountant showed that this amount had not been recovered by TIDC. The claim for refund of this amount had been disallowed on a wrong ground that the same related to unsold stock.
(iii) Refund of Rs.21,329/-
The above amount pertained to 18 invoices. The invoices had carried endorsement of duty paid by TIDC on chains (input of kit) at the time of their clearance to kit unit.
3. During hearing the authorized representative of the appellants submitted that the appellants were not pressing their claim for refund as regards Rs.3,55,800/-. He also submitted a certificate dated 26.6.2000 of the Chartered Accountant to the effect that TIDC had paid during the material period an amount of Rs.1,37,13,435/- from PLA; that the same had not been collected from their customers and that the said amount was shown under the head of account loans and advances under the classification current assets as on 31.5.2000. The certificate was issued on the basis of the assessees books of accounts verified by them. The authorized representative submitted a certificate dated 21.10.2008 of Venkat & Rangaa, Chartered Accountants certifying that TIDC had paid an amount of Rs.12,29,105/- towards central excise duty under protest for clearance of diamond kits during 26.9.1998 and 30.8.99; had not charged or realized the same from any other person and that the same was kept in Excise Duty Recoverable Account with Account Code No. 702.99.999.241022.599999.999.999. We have also heard the learned JDR for the Revenue.
4. We have carefully considered the case records and the submissions by both sides. We find that the original authority noted that the price of diamond kits before and after introduction of central excise duty remained the same and it was incorrect to hold that duty paid had been passed on. The impugned goods had been transferred to their various depots on stock-transfer basis. The stock transferred goods carried the endorsement excise duty paid under protest not collectable / recoverable from customers. He found on verification of the assessees sale invoices that it had not realized an amount of Rs.1,25,05,659/- paid to the Department under protest. He also relied on the certificate produced by the Chartered Accountant to the above effect as well as the certification that the said amount was accounted as loans and advances under the head current assets as on 31.8.1999 in the assessees records. Accordingly he allowed refund of Rs.1,25,05,659/- by cheque. An amount of Rs.3,55,800/- pertained to unsold stock. So claim for this amount was denied. Rs.21,329/- being total of the amounts shown as excise duty in eighteen invoices raised during the period immediately after TIDC had been registered as manufacturer of kits under excise law had been explained to represent the excise duty the appellants had paid on the chains. TIDC had manufactured chains and cleared on payment of excise duty. Chain was a part along with bought out sprocket which was packed as diamond kit and sold. The refund claim was for the duty paid on the kits which was accepted to have not been realized from buyers. This position was certified by Chartered Accountants and supported by financial records of TIDC. In the circumstances we find the authorities wrongly held that TIDC had collected the impugned amount as excise duty from its buyers. In view of the evidence advanced by the appellants, we hold that the original authority erred in holding that any part of the amount claimed attracted the vice of unjust enrichment.
5. A total amount of Rs.12,07,776/- was found to have been collected in excess of the value on which TIDC had paid duty on sale of the kits involved. The impugned order does not give any finding on the submissions of the appellants before him. We also find that the Chartered Accountants certificate furnished before us certified that the impugned claim for Rs.12,29,105/- relates to excise duty paid by the appellants without recovering the same from its customers and accounted in its financial records as excise duty recoverable account. We do not find any reason to suspect the genuineness of the appellants claim. As regards Rs.12,07,776/, we find that TIDC had explained with their pricelist and stock transfer notes, that the sale price represented the value on which they had paid the excise duty under protest and the items of expenditure such as freight and discount. This freight was for transport from depots to dealers and discount allowed; both were not includible in the value for assessment of duty. The Assistant Commissioner observed that TIDC paid excise duty at the applicable rate of 16% adv and did not recover the same from their buyers. In reply to the Show Cause Notice proposing to deny refund on the ground of unjust enrichment of the appellants, the appellants had explained its sale price citing particulars relating to Model No. K10941638F as follows:-
List Price for Model No. K10941638F 692.21
Less: Trade Discount @ 25% 173.05
--------
Wholesale price to dealers 519.16 Less: Eligible Abatements: Cash Discount @ 2.5% -12.98 Post Manufacturing expenses @ 0.37% - 1.92 ------ 14.90 -------- Wholesale price net of PME and cash discount 504.26 -------- Duty@ 15% on Rs.504.26 75.64
6 In the above example examined by Assistant Commissioner, the assessable value of one kit was Rs.504.26 and excise duty Rs.75.64. In some invoices for sale of such goods, they had collected an additional Rs.14.90 which comprised the freight of Rs 1.98 when incurred on transport after clearance from the depots and Rs 12.98 being additional discount both not included in the assessable value . Even if this part of the value is held liable to duty, the entire amount cannot be treated as excise duty realized in such cases. We note that the Assistant Commissioner had not found that the sale price in such cases constituted the normal price of diamond kits. Moreover, the impugned order does not deal with the arguments of TIDC in this regard but upholds the decision of the Assistant Commissioner without any independent finding. The invoices showed the impugned amount as part of the price and the finding of the authorities that the same was excise duty, we find, is not substantiated. As regards claim for refund of Rs.21,329/-, we find that the endorsement on the 18 invoices, of duty paid on the inputs of kits, does not disentitle appellants to refund of the amount of duty admittedly paid by TIDC and not collected from customers.
7. We find that the appellant withdrew claim for refund of Rs.3,55,800/- on the ground that major part of it was released by the department since. The appeal as modified does not cover this amount.
8. The appeal for grant of refund of Rs.12,07,776/- and Rs.21,329/ deposited in the CWF as per the impugned order along with admissible interest u/s 11BB of the Act is allowed.
Appeal No.E/1159/2001
9. In this appeal TIDC has claimed interest of an amount of 1620451/- for the delay in sanctioning refund of Rs.1,21,28,530/- beyond the period of three months from 4.10.1999 when they had filed claim for refund of above Rs.1.37 crores including the amount sanctioned. After hearing both sides we find that on 4.10.1999 the appellants had filed a refund claim with the following documents:-
(i) Copy of Final Order No. 2036/99 dated 10.8.1999 passed by the Central Excise Appellate Tribunal.
(ii) Certificate of Chartered Accountants evidencing payment of duty Rs.1,37,13,435/- in their PLA along with statement showing invoice-wise clearance during 26.9.98 to 30.8.99.
(iii) Letter dated 20.5.1998 communicating protest under Rule 233B of Central Excise Rules.
(iv) Copy of letter dated 5.11.1998. This letter intimated the jurisdictional Assistant Commissioner that the appellants were in possession of invoices issued under Rule 52A during the relevant period, sale invoices issued from the depots and the PLA/RG23A Part II.
9.1 We find that under various correspondences entered into with the appellants the jurisdictional Range Superintendent and the Divisional Officer sought information in installments over a period of about a year, before finalization and sanction of the claim for Rs.1,25,05,659/- . We find that on receipt of the refund claim in October 1999 the authorities should have examined the records furnished and intimated the further documents and records required to examine the admissibility of the claim instead of seeking information piecemeal over a period of a year. The authorities are allowed a period of three months to scrutinize and settle the claim. We find that this period is adequate for a proper scrutiny of the records to decide the eligibility to refund of the amount claimed. The Revenue has no case that the appellants had withheld any information sought from them and delayed settlement of the claim. In the circumstances we are satisfied that the appellants are eligible for interest for the period of delay in sanction of refund in terms of Section 11BB of the Central Excise Act, 1944.
9.2. The Section 11BB provides for grant of interest when the refund claim is allowed with delay beyond three months of filing the claim. We find that the JDR wrongly argued that for the purpose of allowing interest, a different date when the claim complete with all records/documents necessary for examining its eligibility is filed is relevant. The appeal is allowed.
(Operative portion of the order was pronounced
in open court on 26.3.2009.)
(P. KARTHIKEYAN) (JYOTI BALASUNDARAM)
Member (T) Vice President
Rex
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