Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Central Excise vs Gopi Synthetics Ltd., Alok Synthetics ... on 18 November, 2003
Equivalent citations: 2004(164)ELT172(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. These appeals are filed by the Revenue against the order of the Commissioner (Appeals) who in the impugned order disposed of three appeals before him, viz. appeal No. 213/Ahd-I/2002 (Gopi Synthetics Ltd.), appeal No. 214/Ahd-V2002 (Alok Synthetics Ltd.) and appeal No. 215/Ahd-I/2002 (Omkar Textile Mills Ltd.), arising out of the same issue. The Commissioner (Appeals) set aside the Deputy Commissioner's orders and allowed consequential relief. The Revenue is aggrieved by this order and have filed the subject appeals.
2. Briefly the facts are that the respondents arc engaged in the manufacture of excisable goods falling under Chapters 52, 54 & 55 of the schedule to the Central Excise Tariff Act, 1985. They were discharging duty liability under compounded levy scheme under Section 3A of the Central Excise Act, 1944. They filed refund claims for the duty paid by them on galleries of stenter machine installed in their factory during the period from 16.12.1998 to 28.2.2000. The respondents filed refund applications for the excess duty paid. On receipt of the refund applications, show cause notices were issued to the respondents asking them to show cause why their applications should not be rejected on the ground that they are time barred; the duties were not paid under protest; why it should not be construed that the presumption against the respondents stipulated in Section 12B has not been discharged; and why the applications for refund should not be rejected on the ground that the order of the Commissioner determining the annual capacity of production has not been either challenged or upset by a judicial forum. The show cause notice was made answerable to the Deputy Commissioner. No reply was filed by the applicants. They appeared before the Deputy Commissioner for personal hearing. During the course of personal hearing, the applicants submitted that their case be decided on the basis of the Tribunal's larger bench decision in the case of Sangam Processors Bhilwara Ltd. v. CCE, Jaipur 2001 (42) RLT 429 as they have filed the refund applications only on the basis of this decision. The Deputy Commissioner rejected the refund claims on several grounds. The first ground for rejection is that the duties were paid between 16.12.1998 and 28.2.2000, but the applications were made on 1.4.2002 and therefore the claim is time barred. The applicants also did not dispute this fact before him. He held that the claims for refund were made on the ground that the galleries were not to be included in the dimensions of the hot air stenter. The annual production capacity is determined on the APC Rules, 1998. Rule 3(4) of these Rules empowers the Commissioner to pass an order determining the APC of an independent processor based on the parameters declared by the manufacturer and verified by the Central Excise officers. In the case of the claimants, it is a fact that the proper officer, i.e. the Commissioner, has adopted certain parameters to arrive at the APC. If the claimants were aggrieved by such determination of APC, they should have filed an appeal against that order of determination, succeeded in such an appeal and then only should have come up for a refund. The claimants have not succeeded in upsetting the order of the Commissioner who determined the APC. The Deputy Commissioner relied upon the judgment in the case of Mafatlal Industries Ltd. v. UOI 1997 (89) ELT 247 (SC) wherein the Apex-Court ruled that it is not open to any person to make a refund claim on the basis of a decision of a court or a tribunal rendered in the case of another person. Each one must fight his own battle and must succeed or fail in such proceedings. It so happened that the claimants were relying on the Tribunal's decision in Sangam Processors Bhilwara Ltd. where they were not the litigants. The Deputy Commissioner further rejected the claim on the ground that the applicants failed to prove that incidence of duty has not been passed on to the buyers. Since nothing like that has been brought on record, presumption under Section 12B comes into force. In other words, it should be presumed that the duty has been passed on to their buyers. On the above stated grounds, the refund applications have been rejected by the Deputy Commissioner.
3. Three significant facts come out of the proceedings before the Deputy Commissioner. The first is that the claimants have never pretended that they paid the duty under protest nor have they produced any evidence to that effect. Secondly, they have not produced any evidence to show that the incidence has not been passed on. Thirdly, they solely based their claim on the decision of the Tribunal Sangam Processors Bhilwara Ltd.
4. Aggrieved by this order, the assessees approached the Commissioner (Appeals). At that time they contended that duty was paid under protest and so the time limit under Section 11B does not apply and that their invoices show that incidence of duty has not been passed on to their buyers. In support of these claims, they have produced some T.R.6 challans on which a notation is made "duty is paid under protest", filed copies of PLA where a similar notation seems to have been made and invoices raised by them on their buyers to show that the incidence of duty has not been passed on. The Commissioner (Appeals), however, did not examine the veracity of this evidence but proceeded to decide the case in their favour stating that the inclusion of galleries in the dimension of the chamber is unconstitutional and therefore the levy of duties is unconstitutional. He relied on the judgments of the Supreme Court in CCE, Jaipur-II v. Sangam Processors Bhilwara Ltd. 2002 (146) ELT 254 and Mafatlal Industries Ltd. v. UO1 1997 (89) ELT 247 to say that unconstitutional levies are not governed by the provisions of Sections 11B and 12B of the Central Excise Act. He accordingly ruled that the appellants before him are entitled to consequential relief.
5. Aggrieved by this order, the Revenue filed the appeals. The grounds of appeal of the Revenue are that the Commissioner (Appeals) is not competent to decide the constitutionality of a levy as such powers are solely within the purview of the High Courts and Supreme Court. In any case, neither the decision of the Tribunal nor of the Apex Court in the cases cited above have held the levy unconstitutional. At best, the Tribunal in Sangam Processors Bhilwara Ltd. case has held that inclusion of galleries and the consequent determination of the APC is erroneous. An erroneous levy does not become an unconstitutional levy by any standards. The Commissioner (Appeals) proceeded on a wrong presumption that an erroneous levy has to be refunded irrespective of the provisions of Section 11B & 12B of the Act. The Revenue quoted chapter and verse from the Apex Court's order in Mafatlal Industries Ltd's case. In particular, the Revenue pointed out paragraphs 70, 82 and 83 of the Apex Court's decision to say that an assessee is not permitted to file a refund claim on the basis of decision rendered in someone else's case; that an order passed by a competent authority becomes final unless it is upset by a superior judicial forum; that all refund claims should be made in accordance with the provisions of Section 11B of the Central Excise Act except in those cases where the levy itself is held to be unconstitutional by a competent court and that the Commissioner (Appeals)'s decision is contrary to the law laid down in Mafatlal Industries Ltd.'s case.
6. During the course of arguments, the learned Jt. CDR dwelt on the provisions of Rule 233B of the Central Excise Rules wherein the procedure to be followed by an assessee when he wishes to pay duty under protest is laid down. He averred that the respondents did not follow the procedure laid down and therefore their claim that duty was paid under protest has to be rejected. He further contended that the respondents have failed to file any cross objections against the department's appeal and therefore should not be allowed to put forth any submissions which were not dealt with by the lower authority.
7. The learned Jt. CDR strongly relied on the ratio of the Mafatlal Industries Ltd's case to say that no refund claim can be entertained so long as the orders determining their APC by the Commissioner (Appeals) were not challenged or set aside by a competent forum. He pleaded that the order of the Commissioner (Appeals) should be set aside and the Deputy Commissioner's order upheld.
8. The respondents represented by learned advocate, Shri V. Sridharan, strongly pleaded that the order of the Commissioner fixing the APC of the respondents is bad in law, as that order was passed behind the back of the respondents. The Commissioner failed to follow the principles of natural justice while fixing the APC. He took us through the declarations filed by the respondents in terms of Sub-rule (1) of Rule 3 of the Hot Air Stenter Independent Processors Annual Capacity Determination Rules, 1998. The Commissioner while fixing their APC altered the sizes of the chambers without giving any opportunity to the respondents to defend themselves. Such an order is bad in law and therefore can be questioned in any collateral proceedings. He relied upon the decision of the Madras High Court in the case of Gemini Metal Works v. UOI 1985 ECR 2457. His contention is that the refund itself arose out of an order illegally passed by the Commissioner. One can challenge that order in a collateral proceeding such as a claim for refund of duty arising out of that order. The Department cannot argue that the refund claim is not maintainable as the APC fixation order has not been set aside. He distinguished the decisions of the Supreme Court in Mafatlal Industries Ltd. v. UOI 1997 (89) ELT 247 as well as CCE, Kanpur v. Flock (India) Pvt. Ltd. 2000 (120) ELT 285, stating that in those cases the court was concerned with orders passed in accordance with law. In his case, the order fixing the APC itself is illegal and so it can be challenged in collateral proceedings. He averred that the case be remanded back to the Deputy Commissioner to consider these averments before taking a decision on the refund claims.
9. We have carefully gone through the rival contentions raised during the course of hearing. We observe that the Commissioner (Appeals)'s order holding the levy unconstitutional is patently wrong. This much has been conceded even by the learned advocate for the respondents. The only plea he has is that the case should be remanded back to the Deputy Commissioner to consider the evidence putforth before the Commissioner (Appeals) by the respondents irrespective of the fact that APC as fixed by the Commissioner of Central Excise has not been set aside. We are unable to agree with this proposition for several reasons. It is true that whatever evidence that has been tendered before the Commissioner (Appeals) was non-existent before the Deputy Commissioner. The respondents categorically averred before the Deputy Commissioner that their claim is solely based on the Tribunal's decision in the case of Sangam Processors Bhilwara Ltd. The two documents (T.R.6 challans and copies of PLA) were always in the possession of the respondents. There was no reason why these were not produced before the Deputy Commissioner when their refund claim was being considered. The procedure laid down under Rule 233B is a carefully thought out one to prevent any manipulation by an assessee to claim extended period of time for the purpose of claiming a refund. This procedure has not been followed by the respondents. We observe that such a procedure need not be followed in a case where an assessee goes in appeal against an order or decision involving payment of duty. But in this case, the respondents never appealed against the order of the Commissioner of Central Excise fixing the APC and still hold that they have paid duty under protest Any assessee who pays duty under protest does so when he wishes to file an appeal against the order OK a decision. Viewed in this light, the respondents' claim that duty was paid under protest as evidenced by T.R.6 challans looks highly suspicious. Granting without conceding that duty is paid under protest, the bar of unjust enrichment still applies as per laws laid down by Mafatlal Industries. (CCE, Meerut v. Citurgia Biochemicals Ltd. 1998 (101) ELT 568). The respondents have not crossed this bridge as brought out in para 11 of this order.
10. The respondents' reliance on the decision of the Madras High Court would not advance their case. There is no way how this Tribunal can direct the Commissioner of Central Excise to pass another order determining the APC after following principles of natural justice as the subject matter of appeal before is entirely different. A high court or the Supreme Court in their writ jurisdiction can direct such proceedings and not the tribunal acting under a special enactment such as the Central Excise Act.
11. We also observe that the invoices produced before the Commissioner (Appeals) to say mat the incidence of duty has not been passed on do not support the contention of the respondents. The Tribunal in Christine Hoden v. CCE 2003 (155) ELT 271 held that the invoices which show the same price before and after the excess duty is paid do not indicate that the incidence of duty has not been passed on. The Tribunal held that it may be a case of passing on a part of their profit to the buyer and not the incidence of duty itself. This decision is based on the Apex Court's ruling in Mafatlal Industries case para 91, Keeping the ratio of this decision in mind, we observe that the respondents' plea that the invoices tendered before the Commissioner (Appeals) do indicate that the incidence of duty has not been passed on, does not stand. It therefore does not serve any purpose to remand the case back to the Deputy Commissioner. It would serve some purpose if the respondents succeeded in showing that they have not passed on the incidence of duty to their buyers. Such is not the case here.
12. Nothing survives in the order of the Commissioner (Appeals). It is set aside. We uphold the order of the Deputy Commissioner and allow the Revenue's appeals.
13. Appeals allowed.