Custom, Excise & Service Tax Tribunal
M/S. Toyota Kirloskar Motor Ltd vs Commissioner Of Central Excise on 8 August, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE COURT - I Appeal No: E/716/2002 (Arising out of Order-in-Appeal No:SDK (1474) 137/AUR/2002 dated 28.2.2002 passed by the Commissioner of Central Excise (Appeals), Mumbai.) Date of Hearing: 8.8.2012 Date of decision: 8.8.2012 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes M/s. Toyota Kirloskar Motor Ltd. Appellant Vs. Commissioner of Central Excise Aurangabad. Respondent
Appearance For the appellants : Shri N. Anand, Advocate For the respondents : Shri R. K. Singla, Commissioner (AR) CORAM SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL) SHRI M. VEERAIYAN, HONBLE MEMBER (TECHNICAL) FINAL ORDER No._______________________2012 [Order per: P. G. Chacko]. This appeal filed by M/s. Toyota Kirloskar Motor Ltd. (assessee) is directed against rejection of their claim for refund of Special Excise Duty (SED) paid on tyres and tubes for the period from 1.3.2000 to 31.1.2001 amounting to Rs.60,77,117/-. The assessee was engaged in the manufacture of multi-utility passenger vehicles (MUVs) and parts and accessories thereof during the material period. The tyres and tubes (falling under Chapter 40 of the First Schedule to the Central Excise Tariff Act) required for the manufacture of these MUVs were purchased from M/s. South Asia Tyres Ltd. (SATL for short), Aurangabad. The assessee used to take MODVAT credit of the duty paid on such tyres and tubes by SATL as these tyres and tubes were inputs in the manufacture of the motor vehicles. Prior to 1.3.2000, tyres and tubes were chargeable to Basic Excise Duty (BED) at the rate of 24% under the First Schedule to the Central Excise Tariff Act and also chargeable to SED at the rate of 8% under the Second Schedule to the Act. With effect from 1.3.2000, the rate of BED on tyres and tubes came to be reduced to 16% while the rate of SED was increased to 16%. In respect of SED, Notification No.6/2000-CE was issued by the Central Government prescribing nil rate of duty for tyres and tubes when used in the manufacture of motor vehicles in a place other than the factory of production. This exemption was subject to the further condition that the procedure set out in Chapter X of the Central Excise Rules, 1944 be followed by the manufacturer of the motor vehicles. In order to avail the benefit of this exemption, the assessee on 1.3.2000 itself applied to the proper officer of Central Excise for issue of CT-2 certificates for procurement of tyres and tubes from SATL and also for issue of registration certificate under Rule 192. The said officer took a long time to register the assessee under Rule 192 and issue CT-2 certificates. The CT-2 certificates were issued on 8.1.2001 and 5.3.2001 only. Meanwhile, the appellant was receiving from SATL tyres and tubes with BED and SED paid thereon at the rate of 16% each. They were unable to enjoy the benefit of exemption under Notification No.6/2000-CE ibid in the absence of CT-2 certificates. After obtaining these certificates, the assessee filed a refund claim with the Deputy Commissioner of Central Excise having jurisdiction over the factory of SATL, claiming refund of the SED paid by SATL and collected from the assessee during the period from March 2000 to January 2001, totaling to Rs.60,77,117/-.
2. The Deputy Commissioner issued show-cause notice dated 8.5.2001 to the assessee proposing to reject the refund claim on the ground of non-production of end-use certificate and on the further ground of absence of evidence of the incidence of duty having not been passed on to any other person. The proposal was contested by the assessee. In adjudication of the dispute, the Deputy Commissioner rejected the refund claim on two grounds viz. (a) the benefit of Notification No.6/2000 was not available to the tyres and tubes cleared by SATL to the assessee as Chapter X procedure was not followed by the latter, (b) the assessee had not established that they had not passed on the incidence of duty to any other person. The assessee preferred an appeal to the Commissioner (Appeals). The appellate authority held in favour of the assessee on merits but upheld the decision of the lower authority on the question of unjust enrichment. The present appeal of the assessee is directed against the adverse part of the appellate Commissioners order.
3. This is the second round of litigation before this Tribunal on the same subject matter. In the earlier round, the appellant (assessee) produced a Cost Accountants certificate dated 17.6.2002 and relied on the same to show that the incidence of SED paid on tyres and tubes procured from SATL during the period of dispute had not been passed on to any other person. Their argument was that the selling price of the motor vehicles in which the tyres and tubes had been used remained the same prior to 1.3.2000 and after that date and therefore the element of excise duty paid on tyres and tubes had not been taken into account in determination of the cost of production of the motor vehicles. Per contra, it was argued on behalf of the Revenue that the price of the finished goods having remained the same before and after the date of payment of duty was not conclusive evidence of the incidence of such duty having not been passed on to any other person. In this connection, reliance was placed on Commissioner vs. Allied Photographics India Ltd.: 2004 (166) E.L.T. 3 (S.C.). After considering the submissions of both sides, this Bench allowed the assessees appeal by accepting the Cost Accountants certificate vide final order No.308/2005 dated 28.2.2005 reported in 2005 (187) E.L.T. 499 (Tri.-Bang.). The final order was challenged by the department before the Honble High Court under Section 35G of the Central Excise Act on the following two substantial questions of law.
(a) In the facts and circumstances of the case, whether the CESTAT is legally justified in coming to the conclusion that the respondent has not passed on the burden of duty in question to the buyers, in spite of Section 12B of the Central Excise Act, 1944, and in the absence of sufficient evidence by the Respondent to rebut the presumption under the said section?
(b) Whether it is permissible for the CESTAT to totally ignore the effect of Section 12B of the Central Excise Act, 1944?
The Honble High Court answered both the questions of law in the negative and in favour of the Revenue and remanded the case to the original authority for taking fresh decision on the assessees refund claim after considering the Cost Accountants certificate dated 17.6.2002 and such other materials that might be produced by the assessee to demonstrate that the incidence of duty had not been passed on to the buyers of motor vehicles vide judgment dated 7.12.2009 reported in 2010 (256) E.L.T. 216 (Kar.). Aggrieved by the High Courts decision, the assessee filed Civil Appeal No.2911 of 2010 under Section 35L of the Central Excise Act. After hearing both sides, the Honble Supreme Court disposed of the Civil Appeal in the following terms:
4. We have carefully considered the submissions of the counsels appearing for the parties. In our considered opinion, fresh evidence was taken notice of by the Tribunal in the manner of production of the certificate dated 17.6.2002 issued by the Chartered Accountant. The effect and implication of the contents thereof are required to be examined in the light of any other evidence that may be available on record or could be made available. The parties are also required to be given opportunity to adduce such other materials which may be produced by either of the parties in respect of the disputes between them so as to enable the Tribunal to come to an appropriate finding on all the issues and in respect of all the models. In that view of the matter, we see no reason to interfere with the findings recorded by the High Court but instead of remitting back the matter to the adjudicating authority, we direct and partly allow this appeal by directing that the matter shall now be remitted to the Tribunal for fresh and de novo adjudication of the entire disputes between the parties relating to all the models manufactured by the appellant. While doing so, we set aside the earlier order of the Tribunal and request the Tribunal to consider the entire evidence on record, which is already available and which may be produced by any of the parties, for which an opportunity shall be granted to both the partied to produce additional evidence, if any.
5. In terms of the aforesaid order, we party allow this appeal to the extent indicated above and remit back the matter to the Tribunal for fresh adjudication in accordance with law and in terms of the order by the High Court. We also request the Tribunal to dispose of the appeal as expeditiously as possible, preferably within a period of six months from the date of receipt of the records.
4. The assessees appeal accordingly arises for our consideration.
5. Heard both sides. The submissions made by the learned counsel for the appellant are summarized below:
(i) The duty-paid tyres and tubes procured by the assessee from SATL during the period from March 2000 to January 2001 were used in the manufacture of four models of motor vehicles viz. Fleet, Family Saloon (FS), Grand Saloon (GS) and Grand Saloon Touring (GST). Parts like tyres, tubes, engine and chassis were common in all the four models. The cost of production varied from model to model depending on the special features of the different models. However, in respect of each model, the selling price remained the same prior to 1.3.2000 and after 1.3.2000 as certified by the Cost Accountant. The Cost Accountants certificate in respect of only one model FS could be produced before this Tribunal in the earlier round of litigation. The Honble Supreme Court has enabled the assessee to produce similar certificates in respect of other models also. Accordingly the appellant has produced Cost Accountants certificates dated 18.11.2011 in respect of GS, GST and Fleet models.
(ii) The department has never questioned the veracity of the Cost Accountants certificate dated 17.6.2002 pertaining to FS model of motor vehicle. They have also not challenged the veracity of other three certificates pertaining to other models of motor vehicles. Therefore these certificates are liable to be accepted as conclusive evidence of the selling price of the motor vehicles having remained the same prior to 1.3.2000 and after that date. Accordingly, the appellant should be held to have proved that the incidence of duty was not passed on to any other person.
(iii) The above certificates are based on due verification of the assessees records and are authentic and hence cannot be rejected inasmuch as the department did not contest the evidentiary value of the first certificate before the apex court and the assessee was enabled by the apex court to produce the certificates of Cost Accountant as evidence against the bar of unjust enrichment. Similar certificates were accepted by this Tribunal in the case of Shakun Overseas Ltd. vs. Commissioner: 2002 (140) E.L.T. 444 (Tri-Chennai) and by the Honble Madras High Court in the case of CCE, Coimbatore vs. Flow Tech Power: 2006 (202) E.L.T. 404 (Mad.).
6. The submissions of the learned Commissioner (AR) are summarized below:
(i) The burden was on the assessee under Section 12B of the Central Excise Act to prove that the incidence of SED paid on the tyres and tubes had not been passed on to the buyers of the motor vehicles, in the manufacture of which the tyres and tubes had been used as inputs. The only ground raised by the assessee against the bar of unjust enrichment is that the selling price of the motor vehicles remained the same prior to 1.3.2000 and after that date. But this alone cannot constitute conclusive proof of the incidence of duty having not been passed on to the buyers of the motor vehicles. Reliance placed on the apex courts judgment in the case of Allied Photographics Ltd. (supra).
(ii) The original invoices alone can show whether the incidence of duty was passed on to the buyers of motor vehicles or not. Admittedly, their records were not available with the assessee right from the date of filing of the refund claim. Therefore the certificates issued by the Cost Accountant without verifying the invoices will not be reliable.
(iii) Even the books of accounts which are claimed to have been verified by the Cost Accountant have not been produced by the appellant. In the absence of books of accounts, invoices, etc., it may not be possible for this Tribunal to assess the evidentiary value of the Cost Accountants certificates.
(iv) The Cost Accountants certificates are, at best, only corroborative evidence. They cannot be sole or conclusive evidence. Any primary evidence to show that the incidence of duty paid on tyres and tubes had not been passed by the assessee to the buyers of motor vehicles has not been brought on record.
(v) For the aforesaid reasons, the refund claim is only liable to be rejected on the ground of unjust enrichment.
7. We have given careful consideration to the submissions. It is not in dispute that the assessee is eligible for the refund on merits. The only surviving issue is whether their claim for refund is barred by unjust enrichment or not. As per Section 12B of the Central Excise Act (Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods.), the incidence of duty paid on the tyres and tubes (inputs) received by the assessee from SATL during the period of dispute shall be deemed to have been passed on to the buyers of the motor vehicles (final products) unless the contrary is proved by the assessee. The Honble Supreme Court has remanded the matter to this Tribunal to examine the evidence adduced by the assessee and to ascertain whether such evidence is adequate to establish that the incidence of SED paid on the inputs had not been passed on to the buyers of the final products.
8. As a matter of fact, the Honble High Court had remanded the case to the original authority but the Honble Supreme Court found it appropriate to remand the case to this Tribunal. The apex court accordingly remanded the case to us without disturbing the view taken by the High Court on the substantial questions of law. That is why we have to assess the evidence on record having regard to Sections 12A and 12B of the Central Excise Act in view of the findings rendered by the Honble High Court on the substantial questions of law.
9. The evidence adduced by the assessee consists of the following documents:-
(i) Cost Accountants certificate dated 17.6.2002 in relation to FS model of motor vehicles.
(ii) Cost Accountants certificate dated 18.11.2011 in relation to GS model of motor vehicles.
(iii) Cost Accountants certificate dated 18.11.2011 in relation to GST model of motor vehicles.
(iv) Cost Accountants certificate dated 18.11.2011 in relation to Fleet model of motor vehicles.
We have perused these documents. The certificate issued in respect of Fleet model of motor vehicles manufactured and sold by the assessee says that this model of vehicle was manufactured only in the month of December 2000 and hence the question of cost comparison pre-1.3.2000 and post-1.3.2000 does not arise. If that be so, the Cost Accountants certificate pertaining to Fleet model of motor vehicles cannot be of any support to the appellant whose contention is that as the selling price of the motor vehicles remained the same prior to 1.3.2000 and after that date as certified by their Cost Accountant, it should be held that the incidence of duty was not passed on to the buyers of the motor vehicles. Each of the other three certificates has certified that the selling price remained the same and hence the elements which constituted the selling price also remained the same from 1.3.2000 vis-`-vis the pre-1.3.2000 price. All the certificates also say that they were issued on the basis of verification of records maintained by the assessee. But, in answer to queries from the Bench, the learned counsel for the appellant has admitted that no records are available for verification. Therefore any independent scrutiny of the primary records necessary for the assessee to discharge the burden of proof against the bar of unjust enrichment is not possible. In terms of the Supreme Courts remand order, we have stepped into the shoes of adjudicating authority and hence can call upon the assessee to adduce primary evidence to support their claim that the incidence of duty paid on tyres and tubes had not been passed on to the buyers of motor vehicles.
10. Section 12B ibid (Presumption that incidence of duty has been passed on to the buyer) cannot be read in isolation and has to be read with Section 12A (Price of goods to indicate the amount of duty paid thereon), which reads as under:
12A. Price of goods to indicate the amount of duty paid thereon. Notwithstanding anything contained in this Act or any other law for the time being in force, every person who is laible to pay duty of excise on any goods shall, at the time of clearance of the goods, prominently indicate in all the documents relating to assessment, sales invoice, and other like documents, the amount of such duty which will form part of the price at which such goods are to be sold.
The above provision obligated the assessee to prominently indicate the amount of duty in all the documents relating to assessment, sales invoice etc. pertaining to sale of the motor vehicles. Such documents would have clearly shown whether the incidence of duty forming part of the sale price of the motor vehicles had been passed on to the buyers of the vehicles. These invoices are admittedly not available with the appellant. We note that the assessee had admitted before the Honble High Court that they did not have the relevant invoices. Before us also, it is not in dispute that the invoices covering sale of motor vehicles by the assessee, which are the primary documents as per Section 12A required to disprove unjust enrichment, are not available.
11. It is pertinent to note that the Cost Accountants certificates do not specify any records or books of accounts which were claimed to have been verified at his end. Even the certificate issued on 17.6.2002 is silent about specific records or other books of accounts. No records or books of accounts, nor any invoices, were produced by the assessee before the Honble High Court or the Honble Supreme Court. Apparently, before both the courts, they claimed to be able to furnish additional evidentiary materials apart from Cost Accountants certificates. Nevertheless, the assessee has not been able to produce any such materials before us. Even there is no answer to our query as to how, in the total absence of invoices and other records and books of accounts, the Cost Accountant was able to issue the three certificates dated 18.11.2011.
12. As rightly contended by the learned Commissioner (AR), the burden of proof is on the appellant to establish that they had not passed on the incidence of duty paid on tyres and tubes to the buyers of motor vehicles. This onerous burden should have been discharged by adducing primary evidence in the form of invoices in terms of Section 12A of the Central Excise Act. A certificate of Chartered Accountant / Cost Accountant is just a corroborative evidence only as held by the Honble High Court vide 2010 (256) E.L.T. 216 (Kar.). The Honble High Courts view was not disturbed by the Honble Supreme Court vide 2011 (274) E.L.T. 321 (S.C.). Therefore, in the total absence of invoices and other records to proof the veracity of the certificate, the certificate will have no evidentiary value. All the four certificates produced by the appellant are of this category. Even assuming that the Cost Accountant of the assessee correctly certified uniformity of price of motor vehicles pre-1.3.2000 and post-1.3.2000, we are unable to accept the same as conclusive evidence of incidence of duty having not been passed on to the buyer of the vehicles because the certificates can only be considered to be in the nature of corroborative evidence and cannot be considered to be in the nature of primary evidence.
13. We have also perused the judgments cited by the learned counsel. In the case of Shakun Overseas (supra), the assessee was able to produce all the books of accounts, invoices and ledgers apart from Chartered Accountants certificate. In the case of Flow Tech Power (supra), there were two factors which weighed with the High Court viz. (i) the goods were sold at a composite price fixed by the Ministry of Agriculture and (ii) the assessees profit and loss account coupled with Chartered Accountants certificate indicated that the duty had been absorbed by the assessee. In neither of the cases was the issue of unjust enrichment held in favour of the assessee on the sole basis of Chartered Accountants certificate.
14. The appellant failed to rebut the presumption created in favour of the Revenue under Section 12B of the Act. Consequently, we hold that the incidence of SED paid on tyres and tubes which were used in the manufacture of motor vehicles by the assessee was passed on to the buyers of the motor vehicles. Consequently, the refund claim is barred by unjust enrichment. The impugned order is sustained and this appeal is dismissed.
(Operative portion of this Order was pronounced in open court on conclusion of hearing on 8.8.2012.) (M. VEERAIYAN) Member (Technical) (P. G. CHACKO) Member (Judicial) rv ??
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