Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Nashik vs Raymond Ltd on 23 June, 2015
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
ST/89433/14
- Mum
(Arising out Order-in-Appeal No. NSK-EXCUS-000-APP-25-14-15 dated 09.07.2014 passed by the Commissioner of Central Excise (Appeals), Nashik)
For approval and signature:
Honble Mr. M.V. Ravindran, 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 No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Commissioner of Central Excise, Nashik
Appellant
Vs.
Raymond Ltd.
Respondent
Appearance:
Shri S.V. Nair, Supdt. (AR) for the appellant Shri Prasad Paranjape, Advocate for the respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Date of hearing : 11-06-2015 Date of decision : 23.06.2015 O R D E R No:..
This appeal is directed against Order-in-Appeal No. NSK-EXCUS-000-APP-25-14-15 dated 09.07.2014.
2. The issue involved in this case is regarding an amount of refund of Rs. 24,86,657/- to the respondent assessee. Revenue is in appeal against the impugned order as the first appellate authority held in favour of the respondent based upon conclusion that the respondent has been able to rebut the charge of unjust enrichment.
3. The facts of the case, in brief, are the respondent had availed the services of goods transport operators during the period16/11/1997 to 02/01/1998. Revenue authorities were of the view that respondent is liable to discharge service tax as a recipient of service. A show cause notice dated 01.08.2002 was issued demanding service tax and interest thereof and for imposition of penalty. The respondent discharged the service tax liability under protest and contested the issue on merits before the higher judicial fora. After protracted litigation in the matter the Tribunal vide final order no. A/1456-1457/13 dated 04.04.2013 had allowed the appeal of respondent and held that they are not liable to pay the service tax and directed the lower authority to refund the amount after deciding the issue of unjust enrichment. The adjudicating authority in compliance of Tribunals order decided the refund claim and held that respondent having debited the P & L account as expenditure, must have passed on the incidence of duty and held that respondent has failed the hurdle of unjust enrichment. Aggrieved by such an order respondent preferred an appeal before the first appellate authority. The first appellate authority held in favour of assessee.
4. The Departmental representative after taking me through the facts of the case, would submit that the issue has not been considered by the first appellate authority correctly. It is his submission that the first appellate authority has not considered the fact that due to retrospective amendment the service tax liability needs to be discharged by the respondent assessee. He would try to take me through the history of the taxability on goods transport operators and submit that once the service tax liability arises, it needs to be discharged and was done so correctly by the respondent assessee, hence the question of refunding the amount does not arise. It is his submission that the respondent had booked the amounts deposited as expenditure more specifically as business expenditure in the profit and loss accounts for the financial year 2003-04. It is his submission that the booking of the amount as an expenditure that too as business expenses, the respondent assessee would include this amount in the costing of final products. It is his submission that once an amount is shown as expenses it automatically enters into pricing of the products though it may not form part of costing because of some accounting standards or statutory obligations. It is his submission that the respondent should have shown the said amount as assets or as deposits or as receivables in the books of accounts. It is his submission even if the price of the final product does not change, it does not mean that the amount which is shown as expenses is not part of the cost of the final product. It is his submission that the chartered accountants certificate is silent as to what documents were examined and how he has arrived at the conclusion that the incidence of tax is not passed on.
5. Learned advocate appearing on behalf of the respondent would defend order. It is his submission that first appellate authority has correctly appreciated the facts and held in their favour. He would draw my attention to the certificate issued by chartered accountant. It is his submission that the certificate is very clear as to the treatment given for the amount debited in expenses. He would specifically draw my attention to the findings recorded by the first appellate authority and submit that there is a categorical finding that the amounts deposited towards purported tax liability was not recoverable from the customers of steel division. He would also submit that the amount paid by the respondent was much after the divesting of steel division. He would submit that just because the amount is shown as expenses mean that the incidence is passed on in final products. He would rely upon the following decisions > Birla Corporation Ltd. Vs. CCE 2008 (231) ELT 482 > CCE vs. Pauls Engineering Industries P. Ltd. 2008 (10) STR 561
6. I have considered the submissions made at length by both sides.
7. The issue as put forth by both the parties is regarding refund of amount paid towards alleged service tax liability, which was not due as held by tribunal in the respondents same case.
8. First appellate authority while allowing the appeal filed by the respondent held that they have passed the hurdle of unjust enrichment. The findings of the first appellate authority are as under:
In this case it could be all the more difficult for the appellant to pass on the Service Tax burden by enhancing the price of goods or Services relating to their other Divisions as their concerned steel unit had been divested long back in 2000-2001 itself. Deputy Commissioner has also not cited any evidence or dropped any hint that the appellant had ever increased the price of the goods or services during the year 2003-2004 on account of which there could be even faintest foundation for arriving at the conclusion that the burden of Service Tax was passed on to the customer of their other business through instrumentality of pricing. No other sound rationale is also provided in the order to sustain her view. On the contrary the Chartered Accountants, viz. M/s. V B Dalal & Co., have also examined the records of the appellant and have clearly certified that they have not passed on the Service Tax burden to any third person but it has been borne by the appellant only. This certificate was also placed before her and its veracity has not been contradicted by giving any sound reason. She has just stated that Chartered Accountant's certificate is not binding which is not enough. However, after having considered all the above referred facts and reasons, I do not have any hesitation in saying that the appellant has rebutted the initial presumption of having passed on the Tax burden to others and after this point onus was on the department to establish that the appellant had actually passed on the Tax burden to others. But it is seen from above that the Deputy Commissioner has stuck to the above referred presumption till last on the basis of their accountal of Service Tax amount in their Profit & Loss account alone and has not considered objectively any other relevant material as discussed above. If no distinction is drawn between presumption and conclusion and both are construed synonymously, no refund can be admissible in any case even when such expenditure is absorbed in their profit and not passed on to the customers through the price of goods or services.
9. As against such a factual findings it is seen from the grounds of appeal that there is no rebuttal nor any contrary evidence has been produced. The certificate issued by the chartered accountant which was produced before lower authorities reads as under:
10. If the revenue authorities were not inclined to accept the chartered account are content certificate, they should have adduced some evidence that the incidence of duty has been passed on nor any further clarification was sought from respondent or their CA. Feeble attempt is made in the grounds of appeal to state that it is not clear as what records were checked by the chartered accountant. In my view, a chartered accountant is an expert and as can be seen from the above reproduced certificate, he has verified the records and then came to a conclusion that incidence of tax is not passed on.
11. I find that that this bench in the case Birla Corporation Ltd case (supra) held as under:
5.?As regards the plea of the appellants that the doctrine of unjust enrichment will not apply in the case when the inputs were not received by them, I am in agreement with the plea raised by ld. DR that unless the appellant establish that this amount does not form part of their expenditure and not recovered either directly or indirectly from the customers, doctrine of unjust enrichment will still apply. Similarly proviso (c) to Section 11B(2) is not applicable in the present case as the inputs in this case have admittedly not been received in the factory premises and therefore the question of its use in accordance with law or provisions of notification simply does not arise. However, as regard of 3rd plea, I find that the Commissioner (Appeals) has rejected the Chartered Accountant certificate by just stating that there is no specific mention in the certificate that incidence of duty has not been passed on to any other customers and the certificate is vague. I do not agree with the contention of the ld. DR that once the amount has been shown as expenses in the profit and loss account, it has to be presumed that the incidence of duty has been passed on to the customers as this is not sufficient as has been held by Madras High Court in the case of Flow Tech Power (cited supra). From the perusal of the C.A. certificate, I find that he has clearly mentioned that debit to sundry adjustment account does not amount to passing on expenses/losses to the customers. This finding has not been challenged by the Revenue except saying that this is vague. This finding is very specific and if the Revenue has any doubt on the same it could have asked for further clarification from the Chartered Accountant. Having not done so I hold that Chartered Accountant certificate is clear that such amounts are not passed on to the customer and I accordingly hold that incidence of duty has not been passed on to the customers. In view of this refund cannot be credited to the Consumer Welfare Account and the appellants are entitled to the same. I accordingly, set aside the order of Commissioner (Appeals) and allow the appeal with consequential relief. (Emphasis supplied)
12. On the issue of unjust enrichment, of the service tax paid on goods transport operator services for the period in question, this bench in the case of Pauls Engineering Industries Pvt. Ltd., (supra) held as under
8.?On perusal of the Chartered Accountants certificate produced before the ld. Commissioner (Appeals) and now produced before me, I find that reliance was placed by ld. Commissioner (Appeals) on that certificate, as it was produced, on his direction.
9.?It has been rightly pointed out by the ld. Counsel that in the case of B.G. Chitale (supra),I sitting, singly, took a view that the Chartered Accountants certificate having verified the entire books of accounts and having come to the conclusion that the incidence of duty has not been passed on to the recipients in a case, has to be considered as correct. In view of the fact that already a view on the issue has taken by this court, I find that the order of the Commissioner (Appeals) is correct and does not suffer any infirmity. As regards the claim of ld. SDR as to reference to Larger Bench, I find that the view expressed by this Bench in the case of B.G. Chitale (supra) was in respect of an identical issue i.e. Service tax paid on the GTA service and subsequent refund. The case law referred by the SDR is in respect of the excise duty paid, subsequently claimed as a refund by the respondent.
10.?As such, since the issue involved in this case is of refund of the service tax, which was subsequently paid by the assessee, due to the retrospective amendment, as regards the Service tax liability as recipient of services GTA, I find that issue is squarely covered in favour of the respondent and the Commissioner (Appeals) has come to correct conclusion. Accordingly, the appeal filed by the revenue is rejected.
13. In view of the foregoing and in the peculiar facts and circumstances of this case, it has to be held that there is no infirmity in the impugned order.
14. Since I have disposed off the appeal on merits itself, I am not recording any findings on various other submissions made by both sides.
15. The impugned order is upheld and the appeal is rejected.
(Pronounced in Court on ..) (M.V. Ravindran) Member (Judicial) //SR 11