Custom, Excise & Service Tax Tribunal
Morganite Crucible India Ltd vs Commissioner Of Cgst & Cex-Nashik on 3 February, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH, MUMBAI
Excise Appeal No. 85786 of 2019
(Arising out of Order-in-Appeal No. NSK/EXCUS/000/APPL/413/18-19 dated
25.10.2018 passed by the Commissioner of GST & Central Excise (Appeals),
Nashik.)
M/s Morganite Crucible (India) Ltd. ........Appellant
Plot No. B-11, MIDC, Waluj,
Aurangabad - 431 136
VERSUS
Commissioner of CGST & ........Respondent
Central Excise, Nashik
Kendriya Rajaswa Bhawan, Old Agra Road, Gadkari
Chowk, Nasik, Maharashtra - 422 002
APPERANCE:
Shri Harish Bindu Madhavan, Advocate for the Appellant
Shri Sanjay Hasija, Superintendent, Authorised Representative for the
Respondent
CORAM:
HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)
FINAL ORDER NO. A/85068 / 2022
Date of Hearing: 16.12.2021
Date of Decision: 03.02.2022
Refusal by the Commissioner of GST & Central Excise
(Appeals), Nashik to credit the amount of refund to the Appellant's
account and crediting the same to the consumer welfare fund, is
assailed in this appeal by the Appellant.
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2. Facts of the case took a topsy-turvy turn. It started way back
in 2010 when Appellant received back Service Tax incentives and
Respondent-Department proposed to include the same in the
assessable value during which time Appellant had discharged the
duty liability voluntarily before the issue of Show-cause notice.
Ultimately the matter attained finality at the Commissioner
(Appeals)'s level where confirmation of such duty, penalty and
interest were set aside by the Commissioner of Central Excise &
Customs (Appeals), Nagpur in his order dated 31.05.2017 by setting
aside the Order-in-Original passed by the Additional Commissioner of
Central Excise, Customs & Service Tax, Aurangabad and allowing the
appeal with consequential relief. Thereafter, Appellant filed refund
claim but it was rejected vide Order-in-Original dated 29.09.2017.
Such rejection order was challenged before the Commissioner
(Appeals), Nashik who had held all issues including limitation, not
filing refund application in proper form and admissibility of refund
etc. in favour of the Appellant but held a finding that Appellant had
failed to cross the bar of unjust enrichment, for which he ordered the
refund amount to be credited to the consumer welfare fund instead
of crediting the same to the Appellant's account. The said order is
assailed before this forum.
3. Lengthy argument is led by both the sides on the legality of
including/not including the sales tax incentives in the assessable
value, acceptance of any payment made during the investigation as
paid under protest etc. Alternatively, learned Counsel for the
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Appellant had argued about the applicability of the judgment of
Hon'ble Allahabad High Court in the case of Ebiz.Com Pvt. Ltd. Vs.
Commissioner of Central Excise, Customs & Service Tax and Others
reported in 2016 (9) TMI 1274 to justify that deposit during
pendency of adjudication proceeding or investigation is in the nature
of deposit made under protest or pre-deposit and therefore principle
of unjust enrichment would not be attracted while learned Authorised
Representative for the Respondent-Department had placed his
reliance on the judgment of United Spirit Ltd. Vs. Commissioner of
Customs (Import), Nhava Sheva reported in 2008 (228) ELT 360
(Tri.-Mumbai) to say that doctrine of unjust enrichment is applicable
to all cases of refund irrespective of whether amount to be refunded
is duty or otherwise (Sahakari Khand Udyog Vs. CCE judgment of the
Hon'ble Supreme Court relied on), which will be discussed later. But
the noticeable fact in the appeal relates to the understanding of the
Commissioner (Appeals) concerning the meaning of "Shifting and
Incidence" of tax definition, as available in the Encyclopaedia
Britannica on which he rests his findings. It is required to be
reiterated here for a better clarity.
4. On the definition of "Shifting and Incidence", he borrowed the
following paragraph from www.britannica.com. It reads:
"The incidence of a tax rests on the person(s) whose
real net income is reduced by the tax. It is fundamental
that the real burden of taxation does not necessarily rest
upon the person who is legally responsible for payment of
the tax. General sales taxes are paid by business firms,
but most of the cost of the tax is actually passed on to
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those who buy the goods that are being taxed. In other
words, the tax is shifted from the business to the
consumer. Taxes may be shifted in several directions.
Forward shifting takes place if the burden falls entirely on
the user, rather than the supplier, of the commodity or
service in question - e.g., an excise tax on luxuries that
increase their price to the purchaser. Backward shifting
occurs when the price of the article taxed remains the
same but the cost of the tax is borne by those engaged in
producing it - e.g., through lower wages and salaries,
lower prices for raw materials or a lower return on
borrowed capital. Finally, a tax may not be shifted at all -
e.g., a tax on business profits may reduce the net income
of the business owner."
(Underlined to emphasise)
This paragraph noted above gives a clear understanding that
most of the cost of tax is actually passed on to the buyers but such
shifting the burden if remains backward then the cost of tax is borne
by those who are engaged in producing the product. Example of
such "Shifting and Incidence", as noted in the Encyclopaedia, was
lowering wages and salaries, lowering price of raw materials or a
lower return on borrowed capital. However, in some cases tax may
not be shifted at all and the payer bears the burden. Example of
such incidence is stated in the said paragraph as reducing the net
income of the business owner by way of reducing the business
benefit (which we in normal parlance call as reduction of profit
margin). This being the literal meaning of the above noted
paragraph, I fail to understand from where he borrowed this
inference that ultimate incidence of all taxes shifts from business to
the consumer and mere reflection of the same in the books of
account (perhaps he meant thereby receivable) does not reflect
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actual shifting of incidence. No prudent man would concur to his
finding that is based on erroneous understanding of simple English
sentence available in the Encyclopaedia Britannica strangely he
equated "most of the cost of tax" with "all taxes". Therefore, the
reasoning in his order on failure of the Appellant to pass the burden
of unjust enrichment appears to be erroneous. In view of fact that in
similar set of circumstances, as pointed out by the learned Counsel
for the Appellant, Hon'ble High Court of Allahabad in the case of
Ebiz.Com Pvt. Ltd. (supra), basing on the decision of Hon'ble Madras
High Court in the case of Commissioner of Central Excise,
Coimbatore Vs. Pricol Ltd. reported in 2015 (39) STR 190 (Mad.)
read with the order of Hon'ble High Court of Bombay in the case of
Nelco Ltd. that has been affirmed by the Hon'ble Apex Court basing
on the previous judgment of Suvidhe Ltd. and Mahavir Aluminium
(all passed contrary to the relied upon judgment of United Spirit Ltd.
(supra) by the Revenue but in confirmity to its appeal preferred in
the Hon'ble High Court of Bombay wherein it was finally ordered on
25.06.2009 that adjustment of balance fine amount against
redemption fine would not attract the principle of unjust enrichment)
has held a finding that such previously made deposits that was
considered to have met the requirement of Section 35F do not attract
"unjust enrichment", the following order is passed.
ORDER
5. The appeal is allowed and the order passed by the learned Commissioner of GST & Central Excise (Appeals), Nashik vide Order-
in-Appeal No. NSK/EXCUS/000/APPL/413/18-19 dated 25.10.2018 E/85786/2019 6 directing deposit of refund amount of Rs.6,52,053/- in the consumer welfare fund is hereby modified with a direction to pay the same with interest to the Appellant within 3 months of receipt of this order.
(Order pronounced in the open court on 03.02.2022) (Dr. Suvendu Kumar Pati) Member (Judicial) Prasad