Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Cus. And C. Ex. vs Raymond Ltd. on 10 November, 2004
Equivalent citations: 2005(181)ELT271(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. The stay application arose out of the order of Commissioner (A). The Revenue is the applicant.
2. In the impugned order the Commissioner allowed claim for refund of duty paid on yarn which is used the production of Shoddy Blankets which were exempted from payment of duty on the ground that the assessee has reversed the proportionate credit involved in input used in the manufacture of exempted final product in compliance with Notification No. 31/2001, dated 1-6-2001. The Commissioner held that since no duty is payable on the yarn in terms of the said Notification as so whatever duty was paid on the yarn is refundable. On the issue of unjust enrichment she relied the Balance Sheet which showed heavy losses and the Chartered Accountant's certificate which to the effect that the final products were sold at loss. She held that the question of passing on the incidence of duty to the buyer did not arise.
3. The ld. DR Shri Hitesh Shah argued that the Commissioner (Appeals) reliance on the balance sheet and Chartered Accountant Certificate is misplaced; that these documents had no opportunity to defend its case as the evidence considered by the Commissioner (A) were not available to the Department; that the company was making losses on the blankets were does not establish that the incidence of duty was not passed on; that the price remaining constant before and after the incident of paying is immaterial; that Commissioner (Appeals) erred in holding that there is a substantial compliance with the Notification No. 31/2001; that Notification has to be strictly interpreted and even the procedural requirements will have to be satisfied; that in the present case the respondents reversed the proportionate credit taken on the inputs used in the exempted product only after the goods were cleared in violation of the condition of Notification No. 31/2001 and that the refund should not have been allowed as the appeal before CESTAT is pending in respect of the matter pertaining to eligibility of Notification No. 67/95, dated 16-3-1995 on shoddy blankets manufactured by the respondent. He cited case law in support.
4. The ld. Advocate for the respondents objected to the DR raising issue which are not covered in the appeal memorandum (additional evidence etc.); that the respondents demonstrated that the incidence of duty has not been passed on; that the presumption of unjust enrichment is a rebuttable presumption; that on merits duty is not payable on the yarn and so whatever duty that was paid is refundable; that there is a substantial compliance with Notification No. 31/2001 and that the order of the Commissioner is just and proper,
5. We are concerned with the refund of duty paid on the inputs (yarn) that have gone into the production of goods (blankets). Since the blankets themselves are exempt from payment of duty condition laid down Section 12A cannot be satisfied. The Commissioner relied on the balance sheet and Chartered Accountant Certificate to arrive at the conclusion that incidence of duty has not been passed on. In our opinion that the company is making losses, and price remaining constant etc. are not enough to conclude that the incidence of duty has not been passed on. The issue requires deeper examination. We hold that prima facie the Revenue has made out a case for stay of operation of the order of Commissioner (Appeals).
6. The order of the Commissioner is stayed. The Revenue's application is allowed during the pendency of this appeal.