Customs, Excise and Gold Tribunal - Delhi
Tecil Chemicals & Hydro Power Ltd. vs Commr. Of C. Ex. on 24 October, 2002
Equivalent citations: 2002(84)ECC871, 2003(151)ELT136(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. This appeal has been filed by the appellants against the impugned order-in-appeal dated 30-10-2001 vide which the refund claim of the appellants had been rejected.
2. The facts are not much in dispute. The appellants are engaged in the manufacture of calcium carbide and acetylene black. Calcium carbide is captively used by them in the manufacture of final product, acetylene black. They did not make any declaration of this input (calcium carbide), in their price lists No. 10/78 and 11/78, filed by them in May and April 78. The Revenue Department, however, informed them that their input was excisable and they were required to declare in the price list and classification list and were also liable to pay duty thereon. They, thereafter in subsequent price list 12/78 and classification list 3/78 declared calcium carbide also. Thereafter, notice was issued to them on those price lists and classification lists regarding classification and valuation. Till the pendency of the dispute they started paying duty under protest. They were thereafter issued show cause notices in July 78, September 78, February 81 and April 81. The Assistant Collector who had adjudicated the notices declared the classification of the goods (calcium carbide) under Tariff Item 14AA and chargeable to duty at the highest price. That order of the Assistant Collector dated 30-12-78 was, however, set aside by the Commissioner (Appeals) vide order dated 29-7-82 for fresh decision in the matter.
3. After the remand, the Assistant Collector vide order dated 23-12-98 held that the calcium carbide captively used by the appellants in the manufacture of the final product, acetylene black, was not excisable. On the passing of that order, the appellants filed the present refund claim seeking refund of duty paid by them under protest during the period April 78 to May 83. The refund claim was filed by them on 13-4-99. Their claim was initially rejected by the Assistant Collector on the ground of limitation by holding the same to be time barred. The Commissioner (Appeals), however, set aside that order of the Assistant Collector dated 30-6-99, vide order dated 23-10-99 and allowed the refund of the duty amount of Rs. 82,86,691/- to the appellants by holding that the duty payment was made by the appellants under protest and as such, their refund claim could not be held to be time barred. He also held that the doctrine of unjust enrichment did not apply to the case. But the Tribunal on appeal set aside that order of the Commissioner (Appeals) vide order dated 10-5-2000 holding that the Apex Court judgment in the case of Union of India v. Solar Pesticides P. Ltd. - 2000 (116) E.L.T. 401 had not been considered wherein it has been observed that the doctrine of unjust enrichment applies to captively consumed goods also, and remanded the matter to the Commissioner (Appeals) for fresh decision.
4. After the remand, the learned Commissioner (Appeals) has taken the view through the impugned order, that the refund claim of the appellants, is hit by the doctrine of unjust enrichment.
5. Learned Counsel for the appellants had submitted that the doctrine of unjust enrichment did not apply to the case of the appellants on the grounds viz. (i) payment of duty was made under protest, (ii) the assessments made were provisional and final assessment was made only after passing of the order dated 23-12-98 by the Assistant Collector who held the calcium carbide, to be not excisable, (iii) the evidence regarding the non-passing of incidence of duty to the buyers produced by the appellants had not been properly appreciated and considered by the Commissioner (Appeals).
6. On the other hand, the learned JDR has simply reiterated the correctness of the impugned order of the Commissioner (Appeals).
7. We have heard both the sides and gone through the record.
8. From the record, it is quite evident that the duty on the calcium carbide used by the appellants captively in the manufacture of their final product acetylene black, during the period in question from April 1978 to May 1983, was paid by them under protest. This fact is clearly borne out from the earlier order of the Commissioner (Appeals), before remand by the Tribunal, dated 23-10-99. The learned Commissioner (Appeals) recorded the findings that the payment of duty was made under protest and these findings were never disturbed by the Tribunal vide order dated 10-5-2000 when the Tribunal remanded the matter back to the Commissioner (Appeals) for considering the question as to whether the refund claim of the appellants was hit by the bar of unjust enrichment or not. The duty was paid by the appellants under protest as they were of the view that their input calcium carbide was not excisable and they even initially did not declare the same in their price/classification lists filed in April and May 1978. It was only on the asking of the Department they declared the input calcium carbide in their subsequent price list 12/78 and classification list 3/78.
9. It is well settled law that when the duty had been paid under protest by an assessee the doctrine of unjust enrichment will not apply to his claim for the refund of the duty subsequently. In this view, we are fortified by the ratio of the law laid down by the Apex Court in Sinkhai Synthetics & Chemicals P. Ltd. v. Commissioner of Central Excise - 2002 (143) E.L.T. 17 (S.C.). In that case, the Apex Court has ruled that "refund of duty paid under protest would not be hit by the bar of unjust enrichment. The recoveries or refunds consequent upon final determination of duty liability would not be covered by Section 11A and Section 11B of the Central Excise Act." In the face of this ratio of the law laid down by the Apex Court, the appellants are entitled to the refund of the duty amount in question paid by them under protest and the same could not be disallowed or rejected, by the Commissioner (Appeals) by holding it to be hit by the bar of unjust enrichment.
10. It also remains undisputed that the assessments for the disputed period for which the duty was paid under protest by the appellants, were made provisional. They had been filing the price lists and classification lists from time to time and those were never approved finally during the period in question.
11. The Assistant Collector in his order dated 23-12-98 (page 10 para 2) had clearly observed that because of the dispute regarding classification, price and the excisability of the goods in question, the assessments of the appellants made were provisional. The approval of the classification lists and the price list was finally made only after the passing of the order dated 23-12-98 vide which the Assistant Collector held the goods, calcium carbide to be non-excisable. The assessments were also finalised at that time.
12. Even otherwise, since during the period in question i.e. April 78 to May 78, all clearances for captive consumption of the goods (calcium carbide) by the appellants, were made pending approval of the price and classification lists, these were provisional in nature. Their refund claim has arisen subsequent to the passing of the order dated 23-12-98 by the Assistant Collector vide which the show cause notices issued on the price lists and classification lists by the Department to the appellants, were finally dropped and their assessments were finalised.
13. In Rajiv Mardia v. Commissioner of Central Excise - 2001 (129) E.L.T. 334, the Larger Bench of the Tribunal has held that clearances of the goods effected pending finalisation of the price and classification lists, would be provisional in nature. The procedure contemplated by Rule 9B of the Central Excise Rules, is not to be followed.
14. It is equally well settled that the doctrine of unjust enrichment would not be applicable in a case where the refund claim has arisen subsequent to the finalisation of the provisional assessments. In this context, reference may be made to the Apex Court judgment in Sinkhai Synthetics & Chemicals (P) Ltd. (supra) wherein it has been observed that recoveries or refund consequent upon final determination of duty liability would not be governed by the provisions of Section 11A and Section 11B of the Central Excise Act. This very principle of law has been laid down by the Apex Court in a well known judgment in the case of Mafatlal Industries Ltd. v. Union of India -1997 (89) E.L.T. 247 (S.C.). The Tribunal has also followed this view of the Apex Court in GKN Invel Transmissions Ltd. v. Commissioner of Customs - 2001 (137) E.L.T. 527.
15. The Tribunal has also in Ponds (India) Ltd. v. Commissioner of Centra! Excise - 2000 (124) E.L.T. 202 had taken the view that if the assessments are provisional on one ground, the provisionality extends to the entire gamut of the assessment. In the face of the above referred facts and circumstances and the law on the point, the appellants' refund claim could not be rejected by invoking the principles of unjust enrichment which was not attracted to the case.
16. Apart from this, even on merits, the appellants have produced overwhelming evidence that the incidence of duty had not been passed on by them to the buyers. The incidence of duty could be said to had been passed on to the buyers/customers if the price of their final product, acetylene black had changed subsequent to the payment of duty on the inputs, calcium carbide, used by them for the manufacture of the product. Rather from the certificates issued by the Chartered Accountant, M/s. Suri and Company and M/s. Chandy and Zacheria placed on record by the appellants, show that the selling price of the final product was not influenced by the duty paid by them on calcium carbide. Their sale price of the final product remained almost the same and rather on some occasions it stood reduced even though consumption of calcium carbide had increased. The sale price was thus influenced only by the market and not on account of payment of duty on the inputs. The CA, M/s. Suri and Company, had also in the certificate, certified after going through the RG-I register, sale invoices, gate passes, etc., issued during the relevant period, that there had been no increase in the sale price of the final product of the appellants, on account of payment of duty on the inputs. They had further certified that the incidence of duty had not been passed on to the consumers. Their certificates find corroboration from various enclosed tables showing comparison of the cost with the sale price of the final product of the appellants during the disputed period. From these certificates, it is evident that the payment of duty on the inputs by the appellants did not effect the selling price of their final product.
17. The appellants have also produced the copies of the balance-sheets for the disputed period wherein the manufacturing and administrative expenses have been shown. Learned Commissioner (Appeals) has found fault with the balancesheets on the ground that they had not shown the duty paid under protest as the amount recoverable from the Government, therein.
But in our view, that could not be made basis for discarding the balance-sheets and no inference from that ommission could be taken that the incidence of duty had been passed on by the appellants to the consumers, The correctness of the Chartered Accountants' Certificates and the comparative tables of cost and selling price, sale invoices, gate passes produced by the appellants for the period in question, had not been doubted by the Commissioner (Appeals) in the impugned order. We do not find any sufficient ground to discard the certificates and other evidence produced by the appellants for proving that the incidence of duty had not been passed on by them, to the consumers.
18. It is well settled that the incidence of duty cannot be said to have been passed on by the consumers, if the sale price of the goods had remained the same before and after payment of duty by the assessee. In this context, reference may be made to, Commissioner of Central Excise, Kanpur v. Corona Cosmetics & Chemicals (P) Ltd. - 2000 (118) E.L.T. 356 (T) and Commissioner of Central Excise v. Minerva Mills - 2002 (141) E.L.T. 177, wherein it has been so ruled by the Tribunal. The Revenue had not produced any evidence to contradict the documentary evidence produced by the appellants referred to above. Therefore, the unrebutted evidence of the appellants that their selling price of the final product was not influenced by payment of duty on the inputs during the period in question and that the price remained the same or even on certain occasions stood reduced, deserves to be accepted. From all this evidence brought on record, it stands amply proved that the incidence of duty had not been passed on by the appellants to the buyers/consumers during the period in question.
19. In view of the discussions made above, the impugned order of the Commissioner (Appeals) holding the refund claim of the appellants to be hit by the bar of unjust enrichment, cannot be legally sustained and as such, the same is set aside. The appeal of the appellants is allowed. The appellants are entitled to the refund of the amount in dispute.