Customs, Excise and Gold Tribunal - Mumbai
National Organic Chemical Industries ... vs Cce on 3 July, 2003
Equivalent citations: 2003(157)ELT494(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The question for consideration in this appeal, whether the provisions of Section 11D of the Act would apply with regard to amounts mentioned in the invoices issued by the appellant, has already been considered by this Tribunal in appeal E/695/94. In that decision, the Tribunal noted that the issue arose because of the fact that in the annexure to the price list that the appellant filed before the department had claimed as deduction some amount described as "duty on PMA". It noted that the appellant explained that this was the description to show that this was in fact not duty which was specified in the invoices issued to the buyer of its goods and that this amount was not represented as duty on such invoices and was not collected from the buyers and allowed the assessee's appeal.
2. The Commissioner's order impugned in this appeal, relates to demand made on an identical issue for a later period. The Commissioner's order for an earlier period was set aside on appeal by the Tribunal, in its decision reported in S.T.S. Chemical Ltd. v. Commissioner - 1999 (111) E.L.T. 870. The Commissioner before whom this order was cited has ignored it. He has gone on to say that, while dealing with the contention that if the amount was not represented to be duty, Section 11D of the Act "It does not require that the representation should be made to the buyer of the goods, as wrongly presumed and sought to be argued by the assessee. In fact, the law does not envisage making representation to any one. It is enough if the assessee is aware that he is recovering certain excess amount as representing duty of excise. Than what is assessed or determined and paid to the State."
3. The Tribunal, in its order, in fact, expressly considered this contention which was raised by the departmental representative, who contended that if this contention regarding the representation to be accepted, the provision of Section 11D would become redundant. The Tribunal dealing with this contention noted as follows:
"6. Section 11D of the Act was introduced on the statute book in September 1991 along with other provisions of the Act, including the amended Section 11D relating to refund, so as to incorporate the concept of unjust enrichment. The concept, as we understand, is for a manufacturer not to retain with himself any benefit by way of refund of duty paid in excess which accrues to him in respect of duty, the incidence of which he has passed on to the buyers of the goods. It is well known that incidence of an indirect tax falls ultimately on the buyers of the goods or services on which the tax is based although it is initially borne by the manufacturer or seller of the goods, or the provider of the service. The corollary of this is where a manufacturer collected any amount as duty he should not retain it but pass it on to the Government. To put it in simple word, the object is to say that no manufacturer ought to enrich himself by collecting amount from customer as duty and not passing on such amounts to the Government. For this doctrine to apply, it would first have to happen that the customer pays the amount representing the duty, which the manufacturer does not pass onto the Government.
7. The incidence of an indirect tax ultimately falls not upon the person who pays it, but upon the person who ultimately buys the product or service. The manufacturer or service provider passes on the duty burden to the buyer of the goods or services. The amendment to the Act and the provision introduced in September 1991 reflect this position. Sub-section (2) of Section 11B provides that duty, the incidence of which has been passed on by the manufacturer, shall not be refunded to the manufacturer, shall be credited to the Consumer Welfare Fund. The section also authorised buyer of the goods in cases where the incidence of duty has been passed on, to apply and receive refund of such duty. Chapter VII was introduced in order to give effect fully to the doctrine as incorporated. Section 12A provides that notwithstanding anything contained in any law every person who is liable to pay duty prominently indicated in the 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. Section 12B creates a presumption that any person who has paid duty has passed on the duty to the buyer of the goods. Sections 12C and 12D refer to Consumer Welfare Fund to which refund payable but not due to the manufacturer on account of unjust enrichment shall be credited and utilisation of the money in the fund.
8. The provision of Section 11D have to be read keeping in view these other provisions. The provisions of this section seem very clear that it is only where any amount is collected as representing any duty of excise that has to be credited to the Government. In other words, it means that any person collecting money in the form of duty must pass it on to the Government."
4. The Commissioner therefore was quite wrong when he says that it is not necessary that for Section 11D to apply the sum need not be represented to the duty of excise. There is no question of a personal representing. We fail to understand how, if the assessee is aware, as the Commissioner says, that the amount represents duty of excise not the buyer of the goods will not be so aware. The buyer in fact will not be aware that the amount represents the duty of excise. He may be aware that this amount is in fact excise. Only where the manufacturer represents the buyer i.e. holds out to whom that the amount being collected as excise duty when the provision of Section 11D will apply. In point of fact, if this view is not to be accepted, when a person buys goods in retail, the seller of the goods such as shops or store, does not ordinarily give to him bill in the elements of tax or excise separately shown. It cannot be in such a situation the price that the buyer pays to the seller of the goods represents as including excise duty although in fact it has included the duty. A clear distinction has to be kept in mind between the price which include the duty and the price in which a part is represented as duty.
5. It was therefore improper on the part of the Commissioner not to follow the Tribunal's order.
6. Therefore, while observing the above, we allow the appeal and set aside the impugned order.