Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S S.G. Phyto Pharma Pvt. Ltd on 12 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/2560/05 (Arising out of Order-in-Appeal No. P-II/BKS/145/05 dated 18.3.2005 passed by the Commissioner of Central Excise (Appeals), Pune-II). For approval and signature: Honble Shri Anil Choudhary, 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 : Yes 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? ====================================================== Commissioner of Central Excise, Pune-II Appellant Vs. M/s S.G. Phyto Pharma Pvt. Ltd. Respondent Appearance: Shri Rakesh Goyal, Addl. Commissioner (AR) for Appellant Shri A.V. Naik, Advocate for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 12.08.2014 Date of Decision: 12.08.2014 ORDER NO. Per: Shri Anil Choudhary
The Revenue is in appeal against Order-in-Appeal No. P-II/BKS/145/05 dated 18.3.2005 passed by the Commissioner of Central Excise (Appeals), Pune-II.
2. The brief facts of the case are that the respondent M/s S.G. Phyto Pharma Pvt. Ltd. (hereinafter referred to as SGPP in short) is engaged in the manufacture of Generic and Patent and proprietary medicaments of Ayurvedic falling under CSH No. 3003.39. The respondents were clearing the goods to M/s Phyto Marketing Pvt. Ltd. Some of the Directors of the respondent company and of the said Phyto Marketing Pvt. Ltd. were relatives. The respondent paid duty on the value at which the goods were sold by Phyto Marketing Pvt. Ltd. in the market as per their own appreciation of law. Although the Directors of the two companies are not common but a few Directors are related, they discharged excise duty at the sale price of Phyto Marketing Pvt. Ltd. Accordingly, the respondent in their excise invoices have taken such value (assessable value) as the sale price of the said Phyto Marketing Pvt. Ltd. and computed the excise duty. In the commercial invoice of even date (which contains reference of the excise invoices). The goods have been valued at the actual sale price or transfer price under Rule 6 of the Valuation Rules, 2000 and have accordingly shown such total value in the commercial invoices and their upon have added Sales Tax. However, it is further case of the Revenue that although the respondent have valued the excise duty paid on higher assessable value, but in fact they have collected the lower amount of excise duty as per the value taken in the commercial invoices and have received payment as per the commercial invoices. The period during which this practice was continued is 16.12.2001 to 30.11.2002. Subsequently, the respondent on its understanding and so advised, that it has wrongly determined the assessable value at a higher amount and have paid excess excise duty, filed refund claim with the Revenue. The said refund claim was rejected vide Order-in-Original dated 28.6.2003 passed by the Dy. Commissioner of Central Excise. On appeal, the Commissioner (Appeals) vide its order dated 28.5.2004 allowed the appeal and held that the refund of an amount of Rs.16,49,694.84 was admissible. Pursuant to the appellate order, the respondent herein filed revised claim of refund. Vide show-cause notice dated 29.10.2004, it was proposed to reject the refund claim on the ground of unjust enrichment and accordingly, it was so rejected. The respondent preferred appeal before the Commissioner (Appeals) on the ground that the rejection of refund claim pursuant to appellate order on the ground of unjust enrichment is bad as the Revenue have not filed appeal against the order of the Commissioner (Appeals) dated 28.5.2004 and have now taken on entirely different ground of rejection, which was not a ground of rejection in the original show-cause notice or the Order-in-Original. It was further stated that the order rejecting refund is in the teeth of the ruling of the Tribunal in the case of Herdillia Chemicals Ltd. Vs. Commissioner of Central Excise, Belapur 2004 (176) ELT 324. It was further urged that the sale price charged by the respondent in respect of the goods sold to Phyto Marketing Pvt. Ltd. before the disputed period and during the disputed period is the same. In support, certificate of C.A. dated 10.3.2005 was also filed. The respondent have also brought on record sample copy of the excise invoice/commercial invoice in support of its contention that they have borne the differential duty and had not passed on the same to its buyer. Accordingly, it was further contended that the doctrine of unjust enrichment is not applicable in this case in the light of TECIL Chemicals Vs. Commissioner of Central Excise 2003 (151) ELT 136 and also the ruling in the case of Uniproducts (India) Ltd. Vs. Commissioner of Central Excise, Delhi 2004 (170) ELT 299. Further, an affidavit was also filed by the respondent before the Commissioner (Appeals) that they have not realized the differential duty from its customers.
3. The learned Commissioner (Appeals) took notice of the fact that in course of the goods sold to Phyto Marketing Pvt. Ltd. before and during the period of refund claim have remained the same and further relied upon the certificate produced from the C.A. in support of the contention and also relied on the sample copy of the commercial invoices/excise invoices. Further, the Commissioner (Appeals) found that rulings relied upon by the respondent are relevant wherein it was held that if the sale price before and after payment of duty has remained the same, then the incidence of duty could not have been passed on to the buyers. The learned Commissioner (Appeals) found that the sufficient evidence was on record which shows that the differential duty for which refund has been claimed has not been passed on to the buyer(s) of the respondent. Accordingly, it was held that the bar of unjust enrichment is not applicable in this case and appeal of the respondent assessee was allowed.
4. Being aggrieved, the Revenue has filed the present appeal before this Tribunal on the ground that Section 12B of Central Excise Act provides that every person who has paid the duty of excise on any goods under this Act, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyers of such goods. Thus, it is a presumption against the manufacturer i.e. respondent which needs to be discharged. Further, reliance is placed by learned AR on the provisions of Section 11B of the Central Excise Act, which provides any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest if any, paid on such duty, within a prescribed time and required to establish evidence that the duty of excise and/or interest paid in relation to such claim of refund, collected from or paid by him and the incidence of the duty had not been passed on by him to any other person. Thus, in view of the clear amendment made to the Act, no specific ground is to be taken in the show-cause notice and the appellant is required to meet the same. Further, reliance is placed on the ruling of the CEAT Ltd. Vs. Commissioner of Central Excise 2012 (281) ELT 126 (Tri-Mum), wherein the facts were that M/s South Asia Tyres Pvt. Ltd. (M/s SATPL) was a joint venture with the CEAT Ltd. and M/s Goodyear India Ltd., manufacturers of tyres and tubes etc., had sold the goods to CEAT Ltd. The price charged by the SATPL from CEAT was not considered as transaction price at arms length and accordingly for the period 17.4.1998 to 30.6.2006, the assessment of duty in respect of the goods manufactured and cleared by SATPL to CEAT were made on provisional basis under Rule 9B and the manufacturer was required to discharge duty provisionally on the assessable value derived only after deducting 15% tentative deduction from the sale price of CEAT Ltd. The provisional assessments were finalized by the Revenue and the demand of differential duty for the said period was confirmed based on the ultimate sale price of the goods sold by CEAT Ltd. in the market. In the appeal filed by M/s SATPL, the learned Commissioner (Appeals) had held that excise duty liability on the said goods was to be discharged by M/s SATPL on price for delivery at the time of clearance and removal of the goods i.e. the basis of provisional assessment was held to be improper and consequently, M/s SATPL had filed refund claim for excise duty paid and the same was rejected on the ground of unjust enrichment, which was also upheld by the Commissioner (Appeals). This Tribunal considered the facts and circumstances and the grounds taken by CEAT Ltd., that the price have remained the same during and after the period of refund. Following the decision of the Hon'ble Supreme Court in the case of Allied Photographics India Ltd. 2004 (166) ELT 3 (SC), wherein it was held that claim is hit by bar of unjust enrichment and the uniformity of price does not lead to the inevitable conclusion that the incidence of duty has not been passed on to the buyers and accordingly, the rejection of refund was upheld.
4.1 The learned AR further relies on the ruling of the Tribunal in the case of Sona Udyog Ltd. Vs. Commissioner of Central Excise, Indore-II 2005 (183) ELT 396 (Tri-Del), wherein also following the ruling of the Apex Court in the case of Allied Photographics Ltd. (supra) it was held that where there is no change in price structure it does not lead to the inevitable conclusion that the incidence of duty has not been passed on to the buyers. Reference is also drawn to the ruling of the Apex Court in the case of Commissioner of Central Excise, Mumbai-II Vs. Allied Photographics India Ltd. 2004 (166) ELT 3 (SC), wherein the fact that the manufacturer, New India Industries Ltd. (NIIL), of photographic printing paper, which have become chargeable to excise duty w.e.f. 1.3.1974. NIIL entered into distribution agreement with a firm Agfa Gevaert (India) Ltd. (AGIL) for supply of goods. The refund claim was filed subsequently by the buyer M/s AGIL before being renamed as Allied Photographic India Ltd. and in such circumstances, the Hon'ble Supreme Court held that in the facts the points for consideration are whether the incidence of duty was passed on by the manufacturer, to its distributor M/s AGIL and whether AGIL in turn passed on its burden to its dealers. On the first point, the manufacturer NIIL conceded in the earlier proceedings in the High Court that it has passed on duty burden to its distributor M/s AGIL. Therefore, the only question which was required to be decided was whether AGIL in turn passed on the duty burden to its dealers as alleged. It was argued by the Revenue that the total price paid by AGIL, the duty recovered by NIIL is a part of the sale price. As AGIL was sole distributor, it was concluded that it is highly improbable for a distributor to incur cost of purchase which included the 20% element of duty in addition to the purchase price without passing on its burden to its dealer. It was further held that uniformity in price before and after the filing of refund claim, that the duty has not been passed on to the buyers.
5. In reply, learned Counsel for the respondent assessee states that there is not dispute regarding the fact that the assessee has not collected anything more than what is stated in the commercial invoices and in view of the categorical finding of the Court below of not having any amount over and above the price as per commercial invoice, there can be no presumption that the respondent have collected the differential duty which it have claimed as refund. The respondent has also produced the balance-sheet along with invoices which was also considered by the Commissioner (Appeals). On perusal of the invoices, the balance-sheet and details sheet which contained the details of the working of the price collected, it is evident that payment is received as per the commercial invoice and the duty paid as per the excise invoices. Further, it was noticed that both the commercial and excise invoice are of even date. It is further pleaded by the respondent that the excise duty forms part of the assessable value for the purpose of Sales Tax calculation, and it is evident that they have charged Sales Tax by taking the lower assessable value and duty thereon for the said purposes. The respondent further relies on the ruling of the Hon'ble Apex Court in the case of Commissioner of Central Excise, Calcutta Vs. Panihati Rubber Ltd. 2006 (202) ELT 41 (SC), wherein the facts were that Panihati Rubber Ltd. supplied goods to Indian Railway and had paid excise duty. Such goods came to be classified under the sub-heading 4009.92, which was disputed by the Revenue and was finally decided in favour of the Panihati Rubber Ltd. and accordingly had applied for refund of the duty paid earlier. The said refund claim was rejected on the ground of unjust enrichment. Allowing the appeal of Panihati Rubber Ltd., the Tribunal had relied upon the certificate provided by the Indian Railway, which categorically stated that according to the contract, the prices were inclusive of excise duty. Further, subsequent certificate indicated that no amount of excise duty was included when pricing was working out. The Hon'ble Apex Court in view of the finding of fact of Tribunal observed that it is settled law that the finding of the fact of the Tribunal should be accepted by higher Court. It is not the case of the Revenue that while arriving at its finding, Panihati Rubber Ltd. had not passed on the amount of excise duty, and the Tribunal had not considered all relevant facts and accordingly, it was held that burden of duty was not passed. The respondent also relies on the ruling of the Hon'ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Gurgaon Vs. Uniproducts (India) Ltd. 2009 (238) ELT 735 (P&H), wherein the question before the Hon'ble High Court was whether the Tribunal allowing the appeal of the assessee respondent while ordering refund of excise duty paid is legal in view of the judgment of Supreme Court in the case of Charminar Nonwovens Ltd. 2004 (167) ELT 372 (SC) and is liable to be considered by the Tribunal afresh. The brief facts in the said case was that the assessee had made the price declaration dated 27.1.1998 and assessable value of duty had been shown separately in respect of various varieties. The sale price at the depot constitutes the assessable value of the duty of Central Excise. The Revenue had contended that the assessee had passed on the duty incidence to the buyers of the goods and therefore they are not entitled to retain the same. The Hon'ble High Court held that under Rule 52A of the Central Excise Rules, it is provided that no excisable goods shall be delivered from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorized agent and such invoice in case, the goods were covered under Chapter VIIA, such invoices were required to be countersigned by the proper officer. Rule 58 provided the various informations to be included in the invoices which included that the manufacturer is required to furnish declaration at Sr. No. (ix) to (xiii), which were Assessable value/Tariff value per unit, Total assessable value/tariff value, Tariff Heading No./Exemption Notification No., Rate of duty and total duty paid. It was found that it was not the case where the assessee had paid the duty and recovered the same. The declaration under the invoice was in pursuance to requirement, which requires to state and satisfies that particular in invoice are correct and represent the duty actually charged and there is no flaw in decision concerned. It was held that in such circumstances, doctrine of unjust enrichment would not be attracted as the manufacturer has not collected the excise duty from its buyers.
5.1 Further as regards the ruling in the case of CEAT Ltd. relied upon by the Revenue, it is contended that the ratio is not applicable as in CEAT case the assessment was provisional and not finalized when the refund arose. In CEAT case while the duty paid provisionlly was passed on to the buyers and entire duty was shown as expenditure in the Books of Account. Further, as regards the reliance placed by the Revenue on the Sona Udyog Ltd. case, it was contended that the ratio of this decision is also not applicable to the facts of the present case as the manufacturer was charging sale price. In the case of Sona Udyog, contenion was that the price had remained the same and hence, the facts herein are different as the assessee herein was charging sale price which included the duty payable on the sale price as per commercial invoice. The respondent was not collecting the higher duty and it was paid as per the excise invoice, which is evident from the fact that in the commercial invoice sale tax was paid on the price, which was lower and different than the price as per excise invoice.
5.2 So far the ruling of the Hon'ble Apex Court in the case of Allied Photographic India Ltd. (supra) is concerned, it was in respect of uniformity of price before and after the context of refund claim by the buyers wherein the present case, the Refund is claimed by the manufacturer and the ratio is not applicable. He, accordingly, prays for dismissing the appeal of the Revenue.
5. Having considered the rival contentions, I find that the categorical finding of fact as per the impugned order where the Commissioner (Appeals) has recorded in favour of the respondent assessee, that it has collected the duty of excise as per the commercial invoice and have not collected the higher duty as indicated in the excise invoice. Further, the appellate authority has considered the C.A. certificate which also categorically indicated that the assessee has not passed on the burden of duty/differential duty to its customers and had also relied ruling of the Tribunal in the case of Commissioner of Central Excise Vs. Shethia Audio Pvt. Ltd. 2003 (161) ELT 452. Further, I hold that ruling relied upon by the Revenue are not applicable in the facts and circumstances of the case. The main ground of the Revenue is that the learned Commissioner (Appeals) has allowed the appeal of the respondent assessee taking notice that the prices have remained the same before and during the period in dispute. It is not the case as evident on perusal of the impugned appellate order. Thus, I uphold the appellate order and dismiss the appeal of the Revenue. The respondent assessee will be entitled to refund with interest, if any, in accordance with law.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 11