Customs, Excise and Gold Tribunal - Delhi
Srf Ltd. vs Commissioner Of Customs on 24 May, 2005
Equivalent citations: 2006(193)ELT186(TRI-DEL)
ORDER
S.S. Kang, Vice-President
1. After noticing the decision of the Tribunal in the case of Grasim Industries v. CCE and the decision of Hon'ble Madras High Court in the case of Indo-Swiss Synthetic Gem Manufacturing Co. and Anr. reported in 1996 (13) RLT 379 and the decision of the Hon'ble Supreme Court in Union of India v. Solar Pesticides P. Ltd. . The issue whether the doctrine of unjust enrichment under Section 27 of Customs Act is applicable to imported capital goods used captively for manufacture of excisable goods is applicable, is referred to the Larger Bench.
2. When the case was called none appeared on behalf of the appellant in spite of notice. Heard ld. SDR.
3. In this case, the appellant filed a refund claim in pursuance to the Final Order No. C/403/93-D, dated 18-11-1993 passed by the Tribunal. The refund claim was rejected by the adjudicating authority on the ground that the appellant failed to show that burden of the duty has not been passed on to the customers. The appeal filed by the appellant was also rejected by the Commissioner (Appeals) for the same reasons. During arguments the issue, under consideration was raised by appellant before the Tribunal.
4. The appellant filed appeal before the Tribunal taking only one ground i.e. they had proved the fact that burden of duty has not been passed on to their customers as the price of the final product remains the same prior to payment of duty and thereafter.
5. The issue before us is whether the doctrine of unjust enrichment is applicable to the imported capital goods used captively for the manufacture of excisable goods. The Hon'ble Madras High Court in the case of Indo Swiss Synthetic Gem Manufacturing Co. (supra) after relying upon the decision of Bombay High Court in the case of Solar Pesticides Pvt. Ltd. v. Union of India held that imported goods are captively consumed for the manufacture of products inasmuch it did not become part and parcel, whether separable or not of manufactured product and it was captively used only as refractory goods. In such circumstances the question of passing on incidence of duty paid on such goods did not at all arise. The Tribunal in the case of Grasim Industries followed the decision of Madras High Court in the case of Indo-Swiss Synthetic Gem Manufacturing Co. (supra). While deciding the issue the decision of Hon'ble Supreme Court in the case of Union of India v. Solar Pesticide Pvt. Ltd. was distinguished on the ground that the decision of Hon'ble Supreme Court was in respect of inputs and not in respect of capital goods.
6. We find that the decision of Bombay High Court in the case of Solar Pesticides Pvt. Ltd. v. Union of India (supra) is set aside by the Hon'ble Supreme Court reported as Union of India v. Solar Pesticide Pvt. Ltd. . The Hon'ble Supreme Court after considering the decision of Constitutional Bench in the case of Mafatlal Industries v. Union of India held that Section 27 of the Act is, in a sense, complete code by itself, dealing with the claim for refund of duty. The procedure provided by Section 27(1) is applicable in case of application for refund being filed after the said section was amended. Sub-section (1) itself requires a person making an application for refund to furnish documents and evidence (including the documents referred to in Section 28C) to establish that the amount of duty, in respect of which refund is claimed was collected or paid by him and incidence of such duty has not been passed on by him to any other person. The Hon'ble Supreme Court held that principle of unjust enrichment is applicable in case of captively consumed goods. Further, we find that the Hon'ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. v. CCE held that doctrine of unjust enrichment based on equity, has been accepted and applied in several cases. The Hon'ble Supreme Court held that irrespective of applicability of Section 11B of Central Excise Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act was similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss. In view of the above decisions of the Hon'ble Supreme Court we answer the question of law referred of the Larger Bench in favour of the Revenue by holding that the doctrine of unjust enrichment is applicable to the imported capital goods used captively consumed for the manufacture of excisable goods. A contrary view taken by the Tribunal in the case of Grasim Industries (supra) is not good law hence overruled.
7. Now, we take up the appeal as no other issue is involved in this appeal.
8. The contention of the appellant in the appeal memo is only that the burden of duty has not been passed on to their customers as the price of the excisable goods remains same after payment of duty and thereafter.
9. The contention of the Revenue is that as per Council of the Institute of Cost and Works Accountants guidelines the cost of production includes all direct costs and all indirect costs related to the production and the duty paid on plant and machinery is a part of the cost of plant which also relates for cost and production of goods.
10. The revenue also relied upon the decision of Hon'ble Supreme Court in the case of CCE v. Allied Photographies India Ltd. .
11. The appellant in the grounds of appeal challenged the impugned order on the ground that they are provided documentary evidence i.e. sales invoices prior and after import to show that sale price of goods remains same, and this clearly indicates the incidence of excise duty has not been passed on to the buyers. The similar argument have raised before the Supreme Court in the case of Allied Photographies India Ltd. (supra) and the Hon'ble Supreme Court rejected the arguments on the ground that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. No other evidence is produced in the appeal in support of the claim by the appellant. In these circumstances and in view of the above decisions of Hon'ble Supreme Court we find no infirmity in the impugned order the appeal is dismissed.
(Dictated and pronounced in open Court on 24-5-2005)