Custom, Excise & Service Tax Tribunal
M/S. Raymond Ltd vs Commissioner Of Central Excise, ... on 9 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/159/2011 (Arising out of Order-in-Appeal No. PKS/355/BEL/2010 dated 19th October, 2010 passed by the Commissioner of Central Excise (Appeals) Mumbai-III ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
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 : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
======================================================
M/s. Raymond Ltd.
:
Appellant
VS
Commissioner of Central Excise, Mumbai-III
:
Respondent
Appearance
Shri Sushant Murthy, Advocate for Appellant
Shri N.N. Prabhu Desai, Supdt. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 09/02/2016
Date of decision: 09/02/2016
ORDER NO.
This appeal is directed against the Order-in-Appeal No. PKS/355/BEL/2010 dated 19th October, 2010 passed by the Commissioner of Central Excise (Appeals) Mumbai-III.
2. The fact of the case is that the appellant supplied Polyester Tops to their own unit during the period from January 2009 to March 2009. Since the supplies are made to their own unit, the valuation of the goods is governed by Rule 8 and assessable value is arrived at cost construction method on the basis of CAS4. The appellant used to work out the final value only after final account, on the basis of CAS4 and if there is any short fall of the duty, they have paid the differential duty. During the period April 2009 to June 2009 the excise duty paid at the time of clearance of the goods was in excess to the actual duty payable as per CAS4. Hence the appellant applied for the refund of excess paid duty. The refund claim was rejected by the adjudicating authority on two counts. First on the ground that the appellant have not followed the procedure of a provisional assessment and second they have not proved the aspect on unjust enrichment. On the appeal filed by the appellant before the Commissioner (Appeal), the appeal was rejected upholding both the grounds. Therefore the appellant is before me.
3. Shri Sushant Murthy, Ld. Counsel for the appellant submits that as regards the ground of not following the provisional assessment for rejection of the refund claim, he submits that whether the provisional assessment was adopted or otherwise the fact remains that the valuation of the goods in transaction between two units of the same entity is governed by Rule 8 of Central Excise Valuation Rules, 2000. According to which, the final value can be arrived at only on the basis of CAS4 which normally cannot be ascertained at the time of clearance of the goods. If the procedure of provisional assessment is followed the only benefit to the assessee is that limitation provided under Section 11B does not come in the way for claiming the refund. In the present case, the refund claim was filed within one year. Therefore, even though the provisional assessment was not followed, the refund of duty paid in excess cannot be denied. In support of his submission he placed reliance on the following judgments:
(i) Commr. of Cus. & C. Ex., Hyderabad-III Vs. Premier Explosives Ltd.
2008 (226) E.L.T. 729 (Tri.Bang.)
(ii) K.J.V. Alloys Conductors P. Ltd. Vs. Commissioner of C. Ex., Hyderabad 2012 (275) E.L.T. 90 (Tri.Bang.)
(iii) Commissioner of C. Ex., Mangalore Vs. Keltech Energies Ltd.
2008 (232) E.L.T. 306 (Tri.-Chennai) He submits that in view of the above judgment whether or not provisional assessment procedure was followed the refund cannot be denied. As regard unjust enrichment he submits that the Ld. Commissioner (Appeals) decided the issue of unjust enrichment on the basis of Tribunal judgment in the case of Century Enka Ltd. Vs. Commissioner of C. Ex. Pune 2006 (206) E.L.T. 663 (Tri.-Mumbai) wherein it was held that merely because Cenvat Credit has not been taken by sister unit does not mean that incidence of duty has not been passed on. However, in the same judgment the matter was remanded to verify the said fact on the basis of document whether the incidence of duty was passed on or otherwise. In the present case also the lower authority gone into the records by which it can be ascertained whether the incidence of duty has been passed on or otherwise. The appellant under a bona fide belief taken a stand that their sister unit who received the goods have not taken the Cenvat Credit, therefore the unjust enrichment is not applicable. He requested that the appellant may be given one opportunity before the adjudicating authority for submitting the necessary documents and evidences to establish that the incidence of duty for which refund is sought for, has not been passed on to any other person.
4. On the other hand, Shri N.N. Prabhudesai, Learned Supdt. (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order and submits that it is a mandatory provision to follow the provisional assessment and if the provisional assessment is not followed the assessment attained finality and no refund can be claimed. Therefore in the absence of observance of provisional assessment the appellant cannot claim the refund. As regard unjust enrichment, he submits that the original authority has categorically given the finding that the appellant have not produced any evidence regarding unjust enrichment. The appellant have taken the stand that since the recipient unit have not taken the Cenvat Credit the incidence of duty does not stand passed on. However, this issue has been settled in the case of Century Enka Ltd. (supra). According to which, merely by not taking the Cenvat Credit by the recipient of the goods it cannot be established that the incidence of duty has not been passed on. He relied upon the following judgments:
(i) Century Enka Ltd. Vs. Commissioner of C. Ex., Pune 2006 (206) E.L.T. 663 (Tri.-Mumbai)
(ii) Maharashtra Cylinders Pvt. Ltd. Vs. CESTAT, Mumbai 2010 (259) E.L.T.369 (Bom.)
(iii) Commissioner of C.Ex. Chennai Vs. E.I.D. Parry India Ltd.
2006 (4) S.T.R. 585 (Tri.-Chennai)
(iv) KEC International Ltd. Vs. Commissioner of Central Excise, Jaipur 2006 (4) S.T.R. 473 (Tri. Del.)
(v) Commissioner of C.Ex. & Cus., Nashik Vs. Raymond Ltd.
2015 (316) 129 (Tri.-Mumbai)
(vi) Hindustan Petroleum Corporation Ltd. Vs. Commr. of C. Ex., Mumbai-II 2015 (317) E.L.T. 379 (Tri. Mumbai)
(vii) Commissioner of Central Excise, Bhopal Vs. Tesla Transformers Ltd.
2013 (293) E.L.T. 252 (Tri.-Del.)
(viii) Keihin Fie Pvt. Ltd. Vs. Commr. of Central Excise, Pune-I 2010 (259) E.L.T. 742 (Tri.-Mumbai)
(ix) Munjal Auto Industries Vs. Commissioner of C. Ex. & S.T. Vadodara 2014 (307) E.L.T. 577 (Tri.Ahmd.)
(x) Commissioner of Central Excise, Raipur Vs. Blastech (India) Pvt. Ltd.
2011 (274) E.L.T. 210 (Tri.Del.)
(xi) Sanat Products Ltd. Vs. Commissioner of Central Excise 2015 (323) E.L.T. 682 (All.)
(xii) Western Coalfields Ltd. Vs. CESTAT, New Delhi 2013 (288) E.L.T. 203 (Bom.)
(xiii) Harinagar Sugar Mills Ltd. Vs. Commissioner of C. Ex., Mumbai-III 2013 (295) E.L.T. 553 (Tri.-Mumbai).
5. I have carefully considered the submissions made by both the sides. It is fact on record that the appellant have not followed the procedure of provisional assessment. In my view, if the procedure of provisional assessment is followed the only relief to the assessee is that the limitation of one year as provided under Section 11B of the Central Excise Act for claiming the refund of any excess paid duty does not come in the way for refund. However, in the present case, the appellant admittedly filed the refund claim within one year. It is also not in dispute that the goods were supplied to the appellants own unit, therefore the valuation provision of Rule 8 of the Central Excise Valuation Rules, 2000 applies. According to which, the price at the time of clearance of the goods is always provisional price. The final price can be ascertained only on the basis of CAS4, which can be prepared only after completion of the financial year and on availability of the actual data of various overheads, till that time whatever price on which the clearances are made is on estimation basis. In this process, if there is any shortfall in the duty, the same is required to be paid on finalization of valuation on the basis of CAS4. Similarly, if there is an excess payment over and above the final price on the basis of CAS4, the same shall be refunded to the appellant. I am therefore of the view that merely because the appellant have not followed the procedure of provisional assessment, the price at which the duty was paid at the time of clearance cannot be treated as final assessment. Therefore, for this reason refund of excess paid duty cannot be denied. The judgments relied upon by the Ld. Counsel directly apply to the facts of the present case. In the case of Premier Explosives Ltd. it was held as under:
9.?On a very careful consideration of the issue, we find that in terms of the agreement between the respondents and the buyers, the price is subject to variation. In other words, the price was provisional and the goods were cleared on payment of duty. Later the price was revised and in fact it was lowered. In view of this fact the respondent was required to discharge only less duty liability. The refund claim was actually filed within the time limit. Therefore, whether the assessment is provisional or not is not at all relevant in this case, because when the refund claim has been filed within the time limit even if the assessment is final, one has to examine the refund claim. It is reiterated that the question of the assessment being final or provisional is not relevant to a case where the refund claim has been filed within the time limit. All the case laws cited by the learned Advocate are very relevant. When there is price variation clause in the agreement when the price increases the respondent normally discharges the differential duty due to the government. The same treatment has to be meted out to the respondent in terms of the various decisions of this Tribunal and the other Tribunal. The MRF decision of the Supreme Court has already been distinguished by the Tribunal in the case of Keltch Energies case and also in the case of Utkal Polyweave Indus. by the Calcutta Tribunal. We do not find any merit in the Revenues appeal. The impugned order is legal and proper. Therefore, we dismiss the appeal of Revenue.
In the case of Keltech Energies Ltd. it was held as under:
2.?After hearing both sides and considering their submissions, I note that the appellant objects to the refund on the ground of unjust enrichment. It is submitted that, once the goods were cleared on payment of appropriate duty, refund of such duty cannot be claimed after issuing credit notes to the buyer. The lower appellate authority has relied on the Tribunals decision in Indian Aluminium Cables Ltd. v. Collector - 1997 (95) E.L.T. 386 (Tribunal), wherein it had been held that, if price was revised upwards or downwards in terms of price escalation clause in the contract between the assessee, and his buyer, the Department or the assessee, as the case may be, was not precluded from demanding the differential duty or seeking its refund, as the case may be. The same view has been taken by the Tribunals South Zonal Bench (Bangalore) in F.No. 266/2005 dated 3-2-2006 in Appeal No. E/227/2003 [2006 (196) E.L.T. 282 (Tribunal) = 2007 (8) S.T.R. 434 (Tribunal)]. The view taken by the West Zonal Bench (Mumbai) of the Tribunal in the same partys case was also to the same effect. The appeal filed by the Department against the decision of West Zonal Bench was dismissed by the Bombay High Court as per judgment dated 31-8-2007 in Appeal Nos. 3, 14 and 21/2007. In the impugned order, the learned Commissioner (Appeals) has rendered correct decision on the issue.
I find from the above judgments, it is clear that merely because the provisional assessment procedure was not followed the refund of excess duty paid cannot be denied. As regard unjust enrichment, I find that the assessee was under bonafide belief that their stand that since the recipient unit has not availed the Cenvat Credit, the incidence of duty has not been passed on therefore they have not produced any other evidence on this fact. I accept the request of the Ld. Counsel that the factual aspect on non-passing of incidence of duty should be verified. I, therefore remand the matter to the adjudicating authority with a direction that the appellant may be given an opportunity to present their case along with documentary evidence to prove that incidence of excess duty paid has not been passed to any other person. The appeal is disposed of by way of remand in the above terms.
(Pronounced in court) (Ramesh Nair) Member (Judicial) SM.
9Appeal No. E/159/2011