Custom, Excise & Service Tax Tribunal
Cce, Bangalore vs M/S. Itc Ltd on 5 April, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 08/12/2009
Date of decision:..
Appeal No.E/715/05
(Arising out of Order-in-Appeal No.73/2005-CE dt. 18/3/2005
passed by CCE(Appeals), Bangalore )
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
CCE, Bangalore
..Appellant(s)
Vs.
M/s. ITC Ltd.
..Respondent(s)
Appearance
Mr.S.K.Choudhary, Advocate for the Revenue.
Mr. K.S.Ravi Shankar and K.S.Naveen Kumar, Advocates for the respondent.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
FINAL ORDER No._______________________2010
Per M.V.Ravindran
This appeal is directed against Order-in-Appeal No.73/2005-CE dt. 18/3/2005. Revenue is in appeal in this case.
2. Relevant facts that arise for consideration are as under:-
M/s. ITC Ltd., Bangalore have preferred a refund claim with the Department to the tune of Rs.3.76 crores. A provisional assessment order was passed and the Central Excise duty due thereon was collected from the appellants from 1/10/1975 to 28/2/1983 provisionally consequent upon a valuation dispute of their products i.e. Cigarettes. The Department finalized this provisional assessment on 30/8/2002 after a protracted dispute. Consequent upon this finalization the Department, assessee noticed that they had paid Rs.3.76 crores more than what is due from them during the relevant period, and the Department asked them to claim refund of the same and accordingly they preferred this refund claim on 19/4/2003. Prior to 1/10/1975, also the Department finalized provisional assessment and demanded differential duty to the tune of Rs.3,00,07,511.57 which pertains to the period from 17/7/1973 to 30/9/1975. Since the appellants contested this demand in an appeal filed to this authority, an order-in-appeal bearing No.143/2004 dt. 13/8/2004 was passed by this authority directing the Assistant Commissioner, A Division, Bangalore to adjudicate the case Denovo and re-quantify the demand keeping in view certain guidelines given to him. The respondents have requested to adjust this re-quantified demand to their refund claim. The refund claim of Rs.3.76 crores of the respondent was sanctioned by the Asst. Commissioner A Division, Bangalore and ordered for crediting the same to Consumers Welfare Fund Account as he felt that the claim did not pass through successfully the test of unjust enrichment vide the Order-in-Original. Aggrieved by such an order, Revenue came in appeal before this Bench. This Bench vide its Final Order No.1939/2006 dt.22/11/2006 had dismissed the appeal and miscellaneous application filed by the Revenue on the ground that the authorization was improper. Aggrieved by such an order, Revenue preferred an appeal to the Honble High Court of Karnataka in Central Excise Appeal No.39 of 2007. This appeal was disposed of finally by their lordships vide their order dt. 30/10/2007 wherein their lordships had set aside the Final Order dt. 22/11/2006 restoring the appeal and remanded the matter for fresh consideration. Hence, this matter is being posted before us.
3. Ld. Counsel appearing on behalf of the Revenue gave us an overall view of the facts as herein above. Ld. Counsel for the Revenue would submit as under:-
a. From the facts narrated, it would be evident that the finalization of provisional assessments by the Proper officer under Rule 9B(5) did not result in refund of duty. Accordingly the question of adjusting the excess amount against the duty finally assessed as contemplated in subrule (5) of Rule 9B even before its amendment 1999 did not arise. On the contrary, under the said order certain deductions claimed by the company were rejected by the Asst. Commissioner while finalizing the assessment and the company was asked to pay a differential duty of Rs.583.19 cr. It was only after the company appealed against the said order of finalization of provisional assessment that the refund in question arose as a consequence appellate order.
b. In view of such admitted position, it becomes relevant to refer to the observation in Paragraph 95 in the Mafatlal Industries case [1997(89) ELT 247 (SC)] made in the context of Rule 9B(5) as it existed during the relevant period.
95. .. Sub-rule (5) provides that when the duty leviable on the goods is asssessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. . (emphasis supplied)
c. The above underlined law laid down by a nine judge Bench still holds good. The Commissioner (Appeals) has palpably failed to take note of the facts of the present case and the above observation of the Supreme Court with regard to applicability of Section 11B to refunds arising out of appellate or other civil proceedings. There is not even a whisper of this landmark judgment in the impugned appellate order. Applying the ratio of the said judgment to facts of the present case it is evident that the refund arose not on finalization of provisional assessment, but as a consequence of an appellate order after the company went in appeal against the order finalizing the assessments. Accordingly applying the ratio of the said judgment, the refund in question was rightly put to the test of unjust enrichment by the Divisional Officer and the Commissioner (Appeals ) has committed a grave error of law and facts in holding that the bar of unjust enrichment did not apply.
d. Reliance in this context is also placed on Supreme Court judgment in Coastal Glass & Chemicals Pvt. Ltd. [1997(92) ELT 460(SC)] wherein relying on the observation made in Paragraph 95 in MAFATLAL case as extracted above, the apex court held that the refund did not arise under Rule 9B(5) and hence the same is covered under Section 11B of the Central Excise Act.
e. Similarly in Hindustan Lever case [2004 (171) ELT 12 (Tri.Del)] after taking note of the Supreme Court observation in Paragraph 95 in Mafatlal case Tribunal made the following observation in Paragraph 9.1 of the said order:
9.1. The next issue which comes up for our decision is whether the bar of unjust enrichment will apply in respect of refund claim on account of allowing of freight charges on the finished goods. As observed by us earlier, while finalising the assessment the Asstt. Commissioner has not allowed the deduction in respect of freight charges. Thus under the provisions of sub-rule (5) of Rule 9B of the Central Excise Rules, no refund of Central Excise duty has accrued to the Appellants on finalisation of assessment. The refund has arisen only because final order passed under sub-rule (5) was challenged by the Appellants in appeal before the Commissioner (Appeals) and thereafter the deduction on account of freight charges were allowed to the Appellants. Thus the refund on account of freight charges has not accrued on account of finalisation of assessment but as a consequence of challenging the final assessments in appeal. .. (emphasis supplied)
Accordingly the Bench held that the refund was hit by the bar of unjust enrichment.(Para.9.3)
f. The ratio of this decision too will squarely apply to the facts of the present case in as much as the refund in this too has arisen on account of an appellate order and not on finalisation of provisional assessment. The Commissioner(Appeal)s order holding that the present claim is not hit by the bar of unjust enrichment is therefore clearly untenable.
g. Similar view had been expressed by the Tribunal earlier in their own (Hindustan Leaver- 2003 (154) ELT 482 (Tri).
case.
h. The Commissioner (Appeals) has erroneously applied the ratio of Supreme Court judgment in TVS Suzuki case [2003 (156) ELT 161 (S.C.)] without proper application of mind to the facts of that case which are distinguishable. In that case the refund has arisen at the time of finalisation of provisional assessment under sub-rule (5) of Rule 9B, unlike in the present case where the refund finally arose only as a consequence of the appellate order as pointed out earlier. It is for this reason that the Larger Bench of the Supreme Court in Allied Photographics India Ltd. case [2004(166) ELT 3(S.C.)] affirmed the judgment in TVS SUZUKI case as the same was found in accordance with the law laid down by the Supreme Court in MAFATLAL case.
i. For the aforesaid reasons, the Commissioners (Appeals ) order is liable to be set aside and the matter remanded to the original authority with direction to the respondent to rebut the legal presumption under Section 12 B of the Central Excise Act with such evidence as may be necessary.
j. Alternatively, for the sake of argument if the refund is considered as arising while finalizing provisional assessment under Rule 9B (5), in that event also the claim would be hit by the bar of unjust enrichment in view of the amendment carried out by Notification No.45/99 (NT) dated 25-6-1999 inserting a proviso under sub rule (5) subjecting all refunds arising from finalisation of provisional assessment to the test of unjust enrichment.
k. The Commissioner (Appeals) has grossly erred in holding that since the provisional assessment related to period prior to the said amendment, the same would not apply to the present case.
l. He has failed to appreciate that the relevant date for applying the amended provision is the date of finalisation of provisional assessment and not the period to which these assessment relate as held by several judicial pronouncements, some of which are mentioned below:
1). HINDUSATAN LEVER LTD.(supra) para 10. In this case even though the provisional assessments related to period 1995-1996, but since the same were finalized only in March 2000. the Tribunal held that the refund would he governed by the amended Rule 9B attracting the bar of unjust enrichment. The Tribunal also took note of the decision in the case of KORES INDIA LTD [2003 (156) ELI 1036 (T.Mum).
2) KHANDELWAL LAB.LTD. [2006 (195) ELT 300(Tri-Mum)].
3) WORKHARDT LIFE SCIENCES LTD.[ 2005 (192) ELT 594 (Tri-Chennai.) ]
4) STANDARD DRUM & BAREL MFG.CO. [2006-TIOL-39-HC-MUM-CX. / 2006 (199) ELT 590 (Born)]- In this case the Bombay High Court has in fact held that the bar of unjust enrichment under Section 11B would be applicable to refunds on finalisation of provisional assessment w.e.f. 1-8-1998 itself with insertion of clause (eb) to Explanation B in Section 11B of the Excise Act providing for limitation for claiming refund arising out of finalisation of provisional assessment. (paragraph 22 to 26 refer)
m. The Commissioner (Appeals) seems to have lost sight of the observation in para 3 in the TVS SUZUKI case (supra) on effect of the amendment to Rule 9B(5) which is extracted below: -
In order to get over the situation arising under Mafatlal Industries Ltd (supra,) vide Notification No.45/99-C.E.(NT) dated 25-6-l999, an amendment was made in sub-rule (5) of Rule 9B by adding a proviso thereto. The effect of that is that even after finalisation of provisional assessment under Rule 9B, if it is found that an assessee is entitled to refund, such refund shall not be made to him except in accordance with the procedure established under suh-section (2) of Section 11B of the Act.
(emphasis supplied)
He has also failed to appreciate that in TVS SUZUKI case the apex court particularly took note of the fact that the refund claim in that case was filed prior to the amendment to Rule 9B(5) as against in the present case where the claim for refund was filed well after the said amendment. The Commissioner(Appeals) order is clearly contrary to the said judgment of the Supreme Court and hence the same not sustainable.
n. In effect, therefore, whether the present claim is treated as a claim arising out of an appellate order or on finalisation of provisional assessment, either way the bar of unjust enrichment is attracted.
o. The Commissioner (Appeals) has also erred in holding that the bar of unjust enrichment would not apply as the deposits were made under courts orders/ made voluntarily subsequent to clearances of the goods relying on Tribunal decision in VST IND case (supra) which is contrary to the law laid down by the Supreme Court in JAIN SPINNERS LTI) case [1992 (61) ELT 321(S.C.)] agreed to by the said court in MAFATLAL case.
p. In JAIN SPINNERS case, the apex court held that as the amount deposited has to be held as one towards the duty, the bar of unjust enrichment was attracted to refund of such deposit. In view of such categorical law laid down by the apex court, any decision to the contrary has to be treated as not a good law and hence not binding.
Further, the Supreme Court in PARLEY INTERNATIONAL case [2005 (188) ELT A 81 (S.C.)] relying on its earlier judgments in ALLIED PIIOTOGRAPHICS INDIA LTD. and SAHAKARI KHAND UDYOG MANDAL LTD [2005 (181)ELT 328(S.C.)] dealing with applicability of the bar of unjust enrichment has ruled that the amount deposited post clearance even before adjudication would he hit by the bar of unjust enrichment.
q. It is not disputed that in the present case such deposits were made during the period when assessment were provisional which is not unusual. This fact therefore does not take away the provisionality of such deposits subject to adjustment at the time of finalization.
r. Supreme Court judgment in either TVS SUZUKI case or other decisions /judgments on the issue do not make any distinction between amounts deposited subsequent to clearance under whatever circumstance and duty paid at the time of clearance in view of observation made by the Supreme Court in JAIN SPlNNERS case.
s. The Commissioner(Appeals) findings that he as convinced that the company have not apparently passed on the incidence of such duty to their customers is not only based entirely on conjecture but unwarranted as well.
t. As held by the Tribunal (Bang) in the case of TOYOTA KIRLOSKAR MOTORS LTD. [2005 (187) ELT 499] that the cost pirce, selling price and profit/loss are very relevant factors in deciding whether duty of excise has been passed on or not.
u. Viewed from this angle, the Commissioner (Appeals) has failed to appreciate that the company has not disclosed what accounting treatment has been given to such deposits in their Books of Accounts and Balance Sheets for the relevant period.
v. It is not known whether the disputed amount deposited between 1983-1987 have been shown on the ASSETS side as RECEIVABLE in their Balance Sheets or charged off to REVENUE. If these amounts have been charged off to REVENUE, it amounts to cost and applying the general principle of costing and accounting the
presumption would he that the incidence has been passed on to buyers. If these amounts are charged off to REVENUE and treated as cost, the ITC having made profit all through this disputed period, the fact of passing on the incidence is quite evident.
w. The company as well as the lower appellate authority are under a wrong premise that the amounts deposited post clearance cant be passed on. It has not been appreciated by the lower appellate authority that even if it could not he passed on to the very buyers during period 1975-l983, the company, nevertheless, could still pass on the incidence to other dealers treating these as cost. At the same time getting refund from the Govt. would clearly amount to undue enrichment which is NOT permissible as held by several judicial pronouncements by now.
4.1. Ld. Counsel appearing on behalf of the respondents would submit that the entire case has arisen after the finalization of the provisional assessment done by the authorities. He would rely upon the following chart.
4.2. Subsequent to the said submission of the chart of dates and events in the case, ld. Counsel would urge as under:-
i). The Department has therefore accepted the order of the CCE(A) dt. 17.10.2005 in OIA No.187/2005 CE and has not appealed against the same and has refunded the money to the Respondent vide OI0 bearing No.42/2005 dt.15.12.2005. Therefore both the orders have attained finality, it is pertinent to submit that both the OIA and the OI0 refer to the gross refund claim of the Rs. 3,76,29,658/-, which is mentioned in the present appeal by the Revenue in the EA3 memorandum filed by them. The refund granted is Rs. 1,26,66,595/- after appropriating Rs. 2,49,63,062/- as mentioned in the OIO dt. 15.12.2005.
ii). Since the subsequent orders passed by the CCE(A) and the Asst. Commissioner have not been appealed against and have a direct connection with the present appeal and the impugned order, the present appeal becomes infructuous and more so because the amount has been refunded by appropriation of dues.
iii). The Department has in a review dt. 2.12.2005 as mentioned by the Asst. Commissioner in his order dt. 15.12.2005 on page 3, accepted the OIA directing refund passed by the CCE(A) on 17.10.2005. This being the position, the present appeal does not survive in law any longer and is liable to be dismissed.
iv). The events following the filing of appeal by the revenue or 16.06.2005, eclipse and overshadow the appeal and render the same abortive/infructuous and the appeal is liable to be dismissed as bereft of merit.
v). The Respondent submits that the following decisions of the SC have held that if an order has not been appealed against, it attains finality and judicial discipline requires that the Department cannot take contra stand subsequently. Reliance is placed on the following decisions:
a. Marsons Fan Industries Vs CCE 2008 (225) ELT 334 (SC)
b. CCE Vs. Novapan Industries Ltd., 2007(209) ELT 161 (SC)
c. Boving Fouress Vs. CCE, 2006 (202) ELT 389 (SC)
d. CCE Vs. Amar Bitumen and Allied Products Pvt. ltd., 2006 (202) ELT 213 (SC).
4.3. It is also his submission that the principles of unjust enrichment are not applicable in the case of provisional assessment under Section 11B of the Central Excise Act, 1944. For this proposition, he would rely upon the following case laws:-
a. Forbes Gokak Ltd. Vs. CCE [2005(182) ELT 219(T)]
b. CCE Vs. Asian Peroxide Ltd. [2006(205) ELT 266(T)]
c. ICI India Ltd. Vs. C&CE [2007(217) ELT 73(T)]
d. CC&CE Vs. Novopan Inds. Ltd. [2007(213) ELT 394(T)]
4.4. He would also rely upon the following Boards circulars for the very same proposition:-
a. Circular No.794/27/2004-CX dt. 23/6/2004.
b. Circular No.765/81/2003-CX dt. 10/12/2003.
4.5. It is his further submission that the Revenue authorities have arm twisted and collected the amount from them and are not denying the benefit of the amount despite the fact, having accepted that the assessee had paid the amount in excess than that is due from them during the relevant period.
5. We have considered the submissions made at length by both sides and perused the records. It is seen from the records that the issue was pertaining to period 1/1/1975 to 28/2/1983 after protracted dispute, the case having gone up to Apex court, the provisional assessments made during the relevant period was finalized by Order-in-Appeal dt. 30/8/2002, which resulted in excess payment by the respondents. Armed with such an order, the respondents filed refund application claiming excess payment vide their claim dt. 19/4/2003. The said refund claim was sought to be rejected by show cause notice dt. 17/6/2003 mainly on the ground that the respondent has to show the evidence regarding that they have not passed on the incidence of duty to any other persons.
6. On perusal of the entire case records, we find that the ld. Commissioner(Appeals) while allowing the appeal filed by the respondent has decided the issue by observing as under:-
(1) For refund arising on finalisation of provisional assessment under Rule 9(B), provisions of Section 11B will not apply. Moreover amendment made to Rule 9(B)(5) by way of inserting a proviso vide Notification No.45/99(NT) dt. 25/6/1999, is prospective and not retrospective. That means to say that if the refund claim which arose consequent upon finalisation of provisional assessment, pertains to the period prior to 25/6/1999, then the bar of unjust enrichment will not apply to such case, though the finalization of provisional assessment took place after 25/6/1999. The appellants quote many citations to this extent, the recent of which is the affirmation of the Honble Supreme Court (Larger Bench) of its judgment in the case of T.V.S. Suzuki Ltd - 2003 (156) ELT 161(SC). According to this judgment of Larger Bench of the Apex court, the bar of unjust enrichment will not apply to the refund cases, which arose due to finalisation of Provisional assessment especially for the cases pertaining to the period prior to the amendment of Rule 9(B)(5) i.e. prior to 25/6/1999. The Board has accepted this stand of the Apex Court as it is the law of the land now. In this connection, my attention was drawn to the latest instructions of the Board in circular No. 794/ 27/2004 CX cit 23.6.2004, (F No. 387/23/99JC). Since it is the Apex court judgment and the Board has also accepted it, I am bound by it & hence I conclude that the bar of unjust enrichment will not apply to this case of the appellants as it has arisen out of finalisation of Provisional assessment and pertains to prior to 25.6.99 (i.e. for 1.10.75 to 28.2.1983).
(2) Secondly, a keen perusal of the payment particulars furnished by the appellants in their additional submissions made on 15.2.2005, amply convinces me that these payments are in the nature of lumpsum payments, not made as and when clearance of excisable goods took place but after clearance and were made at the instance & insistence of the Department. Above all, these payments were made by the appellants during the pendency of the litigation connected with the valuation which has prompted to this provisional assessment. These should be considered as pre-deposits and made under protest though in many cases this under protest clause might not have been adopted by the appellants, yet payments were made due to the pressure from the Department much against their will. In all such cases, bar of unjust enrichment will not apply at all. Moreover when a deposit is made by the appellants without mentioning in the payment documents as to against which clearance documents/invoices this payment is made, naturally one can entertain the presumption that such amount is not collected by the appellants from their customers. On this count also lam fully convinced that the Department cannot put the embargo of unjust enrichment while refunding such excess payments.
(3) Thirdly, these payments are per-se payments made under protest. Doctrine of unjust enrichment will not apply to such under protest payments as per Apex Courts judgment in National Winders case appearing in 2003 (154) ELT 350 (SC). Though the Apex Court holds that this judgment is to be per incurrence, it has affirmed its judgment in the case of TVS Suzuki Ltd - 2003 (156) ELT 161 (SC). This proves beyond doubt, that the doctrine of unjust enrichment should not be made applicable to the cases of this type.
(4) In view of the foregoing deliberations I am fully convinced that the present refund claim of Rs. 3,76,29,658/- of M/s ITC Ltd, Bangalore pertaining to the period prior to 25/6/99 need not undergo unjust enrichment test and even if it is subjected to such test it succeeds in that attempt as the appellants have apparently not collected it from their customers as these payments are in the nature of deposits made posterior to the clearance of excisable goods.
7. The entire submission of the Revenue in the grounds of appeal and additional grounds of appeal and the written submissions filed by the ld. Counsel would urge only on the point that the respondent has to pass the test of unjust enrichment as provided under Section 11B. The various case laws, which have been cited by ld. Counsel for the Revenue would indicate that the assessee/respondent has to pass the rigors of Section 11B as regards the unjust enrichment. It is now a settled law by the Honble Supreme Court in various case laws that the unjust enrichment would apply in the case of the refund claims filed by the assessee subsequent to the provisional assessment being finalized. In view of this, the findings of the ld. Commissioner(Appeals) that the provisions of Section 11B will not be applicable to the refund claims which are filed consequent to the final assessment even if the period involved is prior to 25/6/1999 wherein on which date the provisions of Rule 9(B)(5) was inserted in the said Rule 9(B), is incorrect.
8. Be that as it may, this appeal of the Revenue could be disposed off on only the question of amount sought as refund is paid after clearances were made albeit on direction of court or department. We find from the records below that the appellant have been contesting from the beginning that the entire amount which has been claimed as refund by them was in respect of the payments which were supposed to be made by them for the clearances made during 01/10/1975 to 28/02/1983 after the clearances were effected and on the directions of various courts and the Departmental authorities. It is undisputed that the payments have been made by the appellant during the period 01/11/1983 to 27/02/1987. It is also seen from the records that the appellant have been contesting before lower authorities that they could not have passed on the incidence of duty to their customers in view of the fact
that the payments were made post clearances and on demand of the authorities. This stand of the appellant was negative by the ld. Asst. Commissioner by observing as under:-
10. .. As already narrated above, the assessee has failed to prove that the burden of duty paid by them is not passed on to any other person, as required under Section 12 read with Section 11B(2)(c) ibid.
9. It can be seen from the above reproduced portion of the order of the adjudicating authority that the adjudicating authority has not given any categorical findings regarding the submissions by the respondent that the amount having been deposited post clearances could not have been passed on to their customers. It was for the adjudicating authority to decide the plea made by the appellant in form of some findings or facts. In the absence of any such findings by the adjudicating authority, we have to hold that the adjudicating authority has accepted the submissions made by the appellant that the amounts being paid subsequent to the clearances could not have been passed on to the customers.
10. In an appeal against such an order, the assessee again took the same ground among other grounds before the ld. Commissioner(Appeals). Ld. Commissioner(Appeals) while allowing the appeal filed by the assessee has recorded that the test of unjust enrichment succeeds in favour of the assessee, as they have apparently not collected the amounts so paid from their customers and on the ground that these payments were made post clearances of the goods. As against these categorical finding, the submission of the ld. Counsel for the Revenue seems to be that the respondent could still have passed on the incidence to their customers treating this as cost. We find from the records that for this submission, the ld. Counsel or the Revenue has not adduced any evidence and is in thin air and presumptive. We also find that this is a new stand taken by the Revenue at the time of written submission, again totally unsupported by any evidence. In the absence of any evidence that the appellant could have passed on the duty liability and could be hit by the bar of unjust enrichment, we find that the decision of the Honble High Court of P&H in the case of CCE, Chandigarh Vs. Modi Oil & General Mills [2007(210) ELT 342(P&H)] in an identical issue, will cover the issue in favour of the respondent. We may respectfully reproduce the decision in entirety:-
The Revenue has approached this Court seeking reference under Section 35G of the Central Excise Act, 1944 (for brevity, the Act) seeking direction to the Central Excise and Gold Control Appellate Tribunal, New Delhi to state facts of the case and refer the question of law to this Court arising out of its final order dated 16-4-2002 (Annexure P-3) while deciding Appeal No. F/273/2002-N.B. The prayer made is to refer the following questions of law :-
Whether the Honble CEGAT has erred in allowing refund of Central Excise Duty even when the respondent No. 1 has failed to discharge the burden to prove that the incidence of duty had not been passed on to the buyer as required under sub-section (1) of Section 11B and Section 12B of the Central Excise Act, 1944?
Facts are not in dispute. The assessee-respondent No. 1 had been operating a hot steel re-rolling mill. It manufactures inter alia hot re-rolled products of non alloy steel which are chargeable to duty as per Section 3A of the Act read with Notification No. 31/97-C.E. (N.T.), dated 1-8-1997 which is assessed on the basis of annual production capacity (A.C.P.) of the unit. The assessee applied for A.C.P. on 5-9-1997 opting for payment of duty on lump sum basis on their final products under Rule 96ZP(3) of the Central Excise Rules, 1944 (for brevity, the Rules) read with Section 3A of the Act. The Range Officer under Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 recommended the A.C.P. to be 16583.687 MT on the basis of the assessees annual production of 1996-97. The Assistant Commissioner vide his order dated 23-3-1998 also recommended the same. The duty liability worked out is Rs. 4,14,592/-. The Commissioner vide his order dated 3-3-1999 determined the A.C.P. of the assessee as 13927.268 MT with effect from 1-9-1997 and 11922.960 MT with effect from 23-12-1997. As the assessee had deposited the excise duty for the period September, 1997 to March, 1999, it claimed vide their letter dated 5-3-1999 refund/adjustment of the amount paid in excess. The Assistant Commissioner, Patiala invoked the principle of undue enrichment by concluding that the assessee must have recovered the duty from their buyers by adding in the cost of their production. Consequently, a show cause notice was issued to the assessee for crediting the refund to the Consumer Welfare Fund. The Deputy Commissioner in his Order-in-Original dated 10-2-2001 (Annexure P-1) held that the assessee has actually collected the duty from their buyers and has, thus, passed on the incidence of duty to them. It was found that any refund if given to them would lead to unjust enrichment under the provisions of Section 12B of the Act and that the refund amount should be credited under Section 12C of the Act to Consumer Welfare Fund.
2.?The assessee filed an appeal before the Commissioner (Appeals) against the Order-in-Original, who accepted the appeal by holding that the assessee had deposited Rs. 10,87,824/- on 25-3-1998 in respect of the period 1997-98 after the goods had been cleared and, therefore, it could not be established that the amount of duty had passed on to the buyer. According to the Commissioner (Appeals) the duty liability amounting to Rs. 10,87,824/- determined by the Commissioner deposited by the assessee on 25-3-1998 was paid by the assessee from its own pocket. Therefore, the refund was held admissible. It was also found that in cases where duty is paid subsequent to the date of clearance, the presumption under Section 12B of the Act stood rebutted. However, in respect of the month of March, 1998 the deposit of Rs. 1,36,870/- was not refundable as it had been passed on to the buyer. The Revenue approached the CEGAT against the Order-in-Appeal dated 24-7-2001. The CEGAT vide its final order dated 16-4-2002 dismissed the appeal of the Revenue and upheld the Order-in-appeal by observing as under :-
5. We have heard the rival submissions. On careful consideration of the submissions made by both the sides we find that the respondents herein deposited Rs. 13,99,728/- towards central excise duty for the months of September, 1997 to February, 1998. The annual production capacity of the respondents unit was yet to be determined finally. The Assistant Commissioner directed the respondents herein on 16-3-98 to deposit Rs. 10,87,824/- more by 25-3-98 as their duty liability for the material period was Rs. 24,87,592/-. The respondents herein deposited a sum of Rs. 10,87,592/- under protest on 25-3-98 and for the month of March 1998 they deposited Rs. 1,36,670/- on 31-3-98. The Commissioner on 3-3-99 finally determined annual production capacity of the furnace. According to the final capacity the duty amount came to Rs. 58,49,290/- whereas the respondents herein had deposited Rs. 70,48,064/- in the material period.
7. We find in the instance case that the amount of Rs. 10,87,824/- for the period September, 1997 to February, 1998 was deposited on 25-3-98. We agree with the findings of the learned Commissioner that the amount of Rs. 10,87,824/- deposited on 25-3-98 on the demand of Assistant Commissioner was paid from their own pocket by the respondents herein. We do not find any legal or factual infirmity in this finding. In respect of the amount of Rs. 1,36,870/- deposited on 31-3-98 for the month of March 1998 the denial of refund to the respondents herein is not challenged as the goods were cleared during the month of deposit. In this view of the matter we do not see any reason to disagree with the findings of the learned Commissioner (Appeals)....
3.?We have heard learned counsel for the Revenue and find that no question of law would arise warranting acceptance of prayer of the Revenue to make a reference to this Court under Section 35G of the Act. The question whether the incidence of duty has been passed on to the buyer is necessarily a question of fact. The Commissioner (Appeals) as well as CEGAT in their respective orders dated 24-10-2001 and 16-4-2002 have recorded a categoric finding of fact that the incidence of duty could not be transferred to the buyer after the date of clearance as the duty had been paid on a subsequent date. This has been held to be sufficient to replace the presumption raised under Section 12B of the Act. Therefore, we find that no question of law warranting admission of this matter would arise and accordingly the application filed by the Revenue is dismissed.
11. Accordingly, respectfully following the ratio as laid down by the Honble High Court of P&H and no contrary decision being brought to our notice, in view of the above reasonings, we hold that the impugned order that sets aside the refund claim filed by the respondent is correct and legal and does not suffer from any infirmity. The amount of refund after appropriation against the dues from the respondent is correct and needs to be upheld.
12. Since we have disposed of the appeal on point as indicated herein above, we have not recorded any detailed findings on other points urged by both sides.
13. Appeal filed by the Revenue is rejected and impugned order is upheld.
(Pronounced in court on ..) (P.KARTHIKEYAN) Member (Technical) (M.V. RAVINDRAN) Member (Judicial) Nr 23