Custom, Excise & Service Tax Tribunal
M/S.Janak Steel Tubes Ltd vs Cce, Delhi-V, Rohtak on 28 September, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Central Excise Appeal No.6166 of 2004
(Arising out of Order-in-Appeal No.419/AKG/RTK/2004 dated 11.11.04 passed by the CCE(A), Delhi-III, Gurgaon)
For approval and signature:
Honble Mr. Justice R.M.S.Khandeparkar, President
1
Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.Janak Steel Tubes Ltd. Appellants
Vs.
CCE, Delhi-V, Rohtak Respondent
Present for the Appellant: Shri V.Swaminathan, Advocate
Present for the Respondent: Shri R.K.Gupta, SDR
Coram: Honble Mr. Justice R.M.S.Khandeparkar, President
Date of Hearing/Decision: 28.09.2010
ORAL ORDER NO._______________
PER: JUSTICE R.M.S.KHANDEPARKAR Heard learned Advocate for the appellants and DR for the respondent.
2. This appeal has been heard pursuant to the remand order passed by Honble Punjab and Haryana High Court on 4.3.2010 in Central Excise Appeal No.139 of 2008. The said appeal was filed by the appellants against the order passed by the Tribunal on 15.2.2007. While setting aside the said order of the Tribunal, Honble High Court has held that there was no formal expression of an adjudication of the real controversy between the parties in the letter dated 5.3.1997 by the Assistant Commissioner, Rohtak to the Superintendent, Central Excise Range, Hisar or the letter date 5.5.1997 by the Superintendent, Central Excise Range, Hisar to the appellants and that the inter-departmental letters dated 5.3.1997 and 5.5.1997 written in the absence of the parties cannot possibly be termed as legal order, against which, the assessee was required to file appeal and therefore the Tribunal fell in legal error in dismissing the appeal of the assessee by order dated 15.2.2007 on the ground of its non maintainability and that the Tribunal ought to have decided the real controversy between the parties on merits instead of dismissing the appeal on technical ground. Having so observed, Honble High Court has remanded the matter to the Tribunal for its afresh decision on merits in accordance with law.
3. The direction of Honble High Court to decide the appeal afresh on merits in accordance with law would obviously require the Tribunal to decide the appeal taking into consideration the controversy relating to the claim of refund which is sought to be raised in the matter.
4. The provisional assessment in relation to the goods to be cleared during the period from April, 1996 to September, 1996 was made under order dated 7.9.1994 as there was dispute as to what was the exact normal price of the goods cleared by the appellants. Since according to the department, there was differential duty required to be paid by the appellants, a letter dated 5.3.1997 came to be issued by the Assistant Commissioner, Rohtak to the Superintendent, Central Excise Range, Hisar whereby latter was directed to finalise the assessment subject to the production of sales details of depots in respect of balance stock lying unsold at depots and deposit of differential duty as may be quantified on the basis of such sales details to be furnished by the appellants.
5. Consequently on 5.5.1997, the Superintendent, Central Excise Range, Hisar informed the appellants that the provisional assessment for the period from April, 1997 to September, 1997 was thereby finalized subject to the production of sales details of depots in respect of balance stock lying unsold at depots and deposit of differential duty as may be quantified on the basis of such sales details. Meanwhile, the appellants paid the amount of duty on the difference in the value at the factory gate and sale price of consignment agent in relation to the said period and such payment was totalling to Rs.3,35,992/-. Thereafter the appellants under their application dated 10.10.1997 filed a refund claim for the said amount of Rs.3,35,992/-. The same was rejected by the department on 28.11.1997. Being aggrieved the appellants preferred an appeal against the same before the Commissioner (Appeals) which came to be allowed by the order dated 22.7.1999. While setting aside the order of rejection of refund, the matter was remanded for afresh decision after hearing the appellants. Accordingly, the appellants were heard in the matter and the Assistant Commissioner, Rohtak by order dated 12.4.2000, while observing that in a separate claim, the appellants had already been refunded the amount of Rs.43,826/- and therefore directed a refund of Rs.2,92,166/- out of total amount of Rs.3,35,992/-. The decision on refund amount was arrived at on the basis that actual depot price was irrelevant for the purpose of determination of assessable value, where ex-factory price for the goods was available and on that ground the refund was ordered. Being aggrieved by the said order, the department carried the matter in appeal before the Commissioner (Appeals) and by order dated 11.11.2004, the Commissioner (Appeals) while holding that the appellants had not challenged the final assessment order dated 5.5.1997 passed by the competent authority, they were not entitled to raise the dispute about liability to pay duty in terms of finalization of assessment unless such order is subjected to challenge in appeal in that regard. Reliance was placed in the decision in the matter of CCE, Kanpur vs. Flock India (P) Ltd. reported in 2000 (120) ELT 285 (SC). Accordingly, the appeal filed by Revenue was allowed and the order of refund was set aside. Being aggrieved, the appellants filed the present appeal which came to be dismissed by the Tribunal by order dated 9.2.2007 holding that the decision of the Commissioner(Appeals) was in consonance of the Supreme Court in Flock India (P) Ltd. case. The said order as already stated above, was challenged in Central Excise Appeal No.139 of 2008 before Honble Punjab and Haryana High Court and the same was allowed under order dated 4.3.2010. While setting aside the order of the Tribunal, the matter has been remanded for afresh decision on merits in accordance with law and not merely on the basis of maintainability of appeal.
6. Learned Advocate for the appellants taking me through order passed by Honble Punjab and Haryana High Court and the records submitted that the Commissioner(Appeals) merely referring to the decision of the Apex Court in the Flock India (P) Ltd. Case could not have interfered with the order of refund passed by the competent authority. He further submitted that the refund order was passed after taking into consideration the merits of the claim of the appellants and after holding that for the purpose of determination of assessable value where ex-factory price for the goods was available, the actual depot price could not have been considered and this aspect was considered by the authorities to justify the refund claim. It was not open to the Commissioner (Appeals) to set aside the said order on assumption that the appellants had not challenged the final assessment. He further submitted that the order dated 12.4.2000 was in fact assessment cum refund order apart from the said order there was no other assessment order. Being so and the fact that the appellants had sought to challenge the said order solely on the basis of Flock India (P) Ltd. case which related to maintainability of the appeal or the claim, there was no scope for interference in the order passed by the competent authority and hence the order dated 11.11.2004 passed by the Commissioner (Appeals) needs to be set aside, while restoring the order of the competent authority.
7. On the other hand, Departmental Representative submitted that the authorities dealing with the refund claim had no jurisdiction/ power to go into the merits relating to finalization of the assessment. Since the appellants had not challenged the finalization of the assessment in the manner known to the law, it was not permissible for the appellants to dispute the duty liability in the proceeding relating to the refund claim.
8. As already pointed out above, Honble Punjab and Haryana High Court has set aside the order dated 9.2.2007 passed by the Tribunal on the ground that the Tribunal erred in dismissing the appeal merely on account of its maintainability. Indeed plain reading of the order dated 9.2.2007 discloses that the appeal was dismissed by holding the claim of the appellants relating to the excess payment of duty on consignment sale was not accepted in the finalisation of the provisional assessment. The appellants did not file any appeal against the finalisation of the provisional assessment. Therefore, in my view, the ratio of the Honble Supreme Court in the case of Flock India (P) Ltd. is applicable herein.
9. Having set aside the said order of the Tribunal, Honble Punjab and Haryana High Court has directed the Tribunal to decide the matter afresh on merits in accordance with the provisions of law.
10. It is necessary to note that when the matter came up before the Commissioner (Appeals) and it was disposed of on 11.11.2004, the Commissioner(Appeals) was not only dealing with the appeal filed by the department but was also dealing with the cross objection filed by the appellants.
11. The controversy in the matter which is sought to be raised by the assessee in the background of above quoted facts is whether the order dated 12.4.2000 is finalization of assessment cum refund order. In fact perusal of the order passed by the Honble High Court discloses that the argument which is sought to be advanced in this regard is no more available to the appellants. It was the case of the appellants before the Honble High Court that there was no order of final assessment passed in the matter and by no stretch of imagination, the communication dated 5.5.1997 could be said to be the order of the finalization of assessment. Undisputedly the order dated 12.4.2000 was passed in relation to the application for refund claim. It is settled law and well clarified by the Apex Court in the Flock India (P) Ltd. Case, the question of refund cannot arise unless there is finalization of the assessment. The very fact that the order was in relation to the refund claim itself would disclose that such an order cannot relate to finalization of the assessment. Besides the records, even the order dated 12.4.2000 itself, do not disclose that the issue of finalization of the assessment was before the said authority while dealing with the issue regarding refund claim. Added to this, there is clear finding by the Honble High Court that there was no formal expression of an adjudication of real controversy between the parties in the aforesaid letters 5.3.1997 and 5.5.1997. To a specific query by me to the learned Advocate for the appellants to point out whether any order was passed in relation to the finalization of assessment pursuant to which Rs.3,35,992/- was stated to have been paid by the appellants, learned Advocate admitted that no such order was passed.
12. The records as they stand today do not disclose any order of finalization of assessment. The question of refund of any amount paid in excess of duty could arise only after the competent authority finalises the quantum of duty liability for the relevant period in the relation to the assessee. Once there is clear admission borne out from the records that there has been no finalization of assessment, the question of refund does not arise.
13. It is however the contention on behalf of the appellants that the order dated 12.04.2000 is the order of final assessment cum refund. As already stated above, and considering the law laid down by the Apex Court in the case of Flock India (P) Ltd., the issue of finalization of assessment cannot be decided by the authority dealing with the refund claim. The refund claim can arise only after the order of finalization of assessment. The claim for refund has necessarily to be preceded by the finalisation of assessment. This being mandate of the decision of the Apex Court in the case of Flock India (P) Ltd., the contention of the appellants that the order dated 11.11.2004, being composite order including the finalisation of assessment, cannot be accepted and therefore refund cannot be granted. The scope of order for refund claim is restricted to the claim made and cannot extend to the adjudication relating to the duty liability of the assesse. The duty liability has necessarily to be decided in the assessment proceeding. Having so finalized, if it is found that the assessee had paid over and above amount payable in terms of finalization of the assessment, then the authority can order refund of such excess amount. In the absence of such order of refund made by the authorities at the same time finalization of assessment, the claim in that regard can be made by the assessee only after finalization of assessment. The proceeding in the refund claim would be in the nature of execution of proceedings. Obviously, therefore, the scope of inquiry in such proceedings would be limited to refund of the amount in terms of assessment order.
14. Once it is found that there has been no order of finalization of assessment passed by the competent authority in a proper proceeding in that regard, the question of refunding any amount by the authority dealing with the refund claim cannot arise. Being so, the order dated 12.04.2000 could not be the order of the finalization of assessment as claimed by the appellants.
15. The decision in Flock India case does not merely apply to the extent where the assesse has not challenged the assessment order. The ratio of the decision also applies to a case where there is absence of finalization of assessment order. The ratio of the said decision is in fact to the effect that the refund claim cannot be made without following the procedure known to the law. The procedure known to the law is as explained above. In case of absence of challenge to the finalization of assessment, there stands an order against the assesse. Being so, it cannot be stated that the Commissioner (Appeals) erred in dismissing the claim for refund.
16. There is yet another point which needs to be addressed to though it has not been argued in the matter. The records disclose that a claim relating to the sum of Rs.43,826/- out of total amount of Rs.3,35,992/- was already sanctioned. However, it is nowhere clarified from the records placed before me, nor the record reveals that any order by which such refund was granted. However, the fact remains that even assuming such refund was granted under an order without finalization of assessment, that by itself would not accrue any right in favour of the assesse for the refund of balance amount in the absence of finalization of assessment. Being so, merely because of even in the absence of finalization of assessment, certain amount was ordered to be refunded that itself cannot be the basis to claim the balance amount in the absence of finalization of assessment.
17. For the reasons stated above, therefore I find that there is no case to refund of any amount at this stage and for the same reasons there is no case to interfere with the impugned order and hence the appeal is dismissed.
(pronounced in the open court) (JUSTICE R.M.S.KHANDEPARKAR) PRESIDENT mk 1 9