Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs M/S. Purna Ssk Ltd on 26 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1451/2007 & E/1662/2010 (Arising out of Order-in-Appeal No. AGS (204)65/2009 dt. 07/09/2009 & AGS(106)13/2010 dated 22.06.2010 passed by the Commissioner (Appeals) Central Excise & Customs, Aurangabad ) For approval and signature: Honble Shri Ramesh Nair, 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 : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Commissioner of Central Excise & Customs, Aurangabad
:
Appellant
VS
M/s. Purna SSK Ltd.
:
Respondent
Appearance
Shri S.V. Nair, Asstt. Commr. (A.R.) for Appellant
Shri Deepak V. Marne, Cost Accountant for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 26/02/2016
Date of decision: 26/02/2016
ORDER NO.
These appeals are directed against Order-in-Appeal Nos. AGS (204)65/2009 dt. 07/09/2009 & AGS(106)13/2010 dated 22.06.2010 passed by the Commissioner (Appeals) Central Excise & Customs, Aurangabad whereby the Ld. Commissioner allowed the appeal of the appellant with consequential relief.
2. The fact of the case is that the appellant is engaged in the manufacture of Denatured Alcohol and Ethyl Alcohol from the captive use of molasses generated in the factory. The molasses were used in the manufacture of dutiable Denatured Ethyl Alcohol and non excisable alcohol for human consumption called Rectified Spirit. During the period from March 2005 to April 2005, the respondents cleared Alcohol from the factory which was manufactured from the molasses issued for the manufacture of rectified spirit. The department had recovered the duty of molasses contained in the Ethyl Alcohol cleared during March 2005 to April 2005 at the rate of Rs.1000/- PMT. as the rate of duty on molasses was revised upwards to Rs.1000/- PMT w.e.f.1.3.2005. The respondent paid differential duty of Rs.11,81,851/- under protest and subsequently filed refund claim with the department on 26.7.2005 under Section 11B of Central Excise Act, 1944. The Assistant Commissioner rejected the refund claim vide Order-in-Original No.03/Ref/2006 dt. 27.4.2006, against which, in an appeal by the respondent the Ld. Commissioner (Appeals) vide Order-in-Appeal No. RKR (116)114/2006 dt. 28.7.2006 remanded the matter to the Assistant Commissioner, Central Excise & Customs for fresh decision in the matter. The Assistant Commissioner in de novo adjudication rejected the refund vide OIO No. 04/Ref/2007 dt. 3.10.2007. On further filing appeal against the said OIO by the respondent, the Commissioner (Appeals) Aurangabad again remanded the case back to the Assistant Commissioner, vide OIA No. RKR(28)274/07 dt. 14.1.2008 with the observations that if the molasses were issued prior to 1.3.2005 the appellants have a strong case in the light of Rule 5(2) of Central Excise Rules, 2002. The Assistant Commissioner, Central Excise & Customs in de novo adjudication vide OIO No. 16/Ref/2008 dt. 27.2.2009 once again rejected the refund. Against the said OIO dt. 27.2.2009, in the appeal filed by the respondent, they once again submitted that it was established that the molasses were issued prior to 1.3.2005. Further during the period from 1.3.2005 to 30.5.2005 there was no production and clearance of the molasses in the factory. The Ld. Commissioner (Appeals) setting aside the OIO dt. 27.2.2009 allowed the appeal of the respondent. In the impugned order, on the issue of unjust enrichment, the Ld. Commissioner (Appeals) has given finding that the appellant had cleared the goods i.e. molasses to themselves and hence passing of the burden does not arise. Being aggrieved by the impugned order, the Revenue is in appeal.
3. Shri S.V. Nair Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterating the grounds of appeal submits that respondent had a practice to discharge excise duty on molasses at the time of clearance of the final products as at the time of manufacture of molasses, it cannot be ascertained that how much molasses is used in dutiable and non-dutiable goods. According to such practice, the duty liability arises on the basis of clearance of final product. Hence, the respondent had correctly discharged the duty on molasses, which cannot be said to be in excess. As regard unjust enrichment, the Ld. A.R. submits that the Ld. Commissioner (Appeals) has wrongly found that due to captive consumption of molasses, the unjust enrichment is not applicable. He placed reliance on the Honble Supreme Court decision in the case of Union of India Vs. Solar Pesticides Pvt. Ltd. 2000 (116) 401 (S.C.) wherein the Honble Apex Court held that even in case of captive consumption the assessee is required to establish that the incidence of duty amount, for which refund is sought for, has not been passed on to any other person. Therefore, the finding of the Ld. Commissioner is clearly against the judgment of Honble Supreme Court.
4. On the other hand, Shri Deepak V. Marne. Ld. Cost Accountant, appearing on behalf of the respondent submits that since the duty was paid on the molasses, which has been consumed captively in the manufacture of rectified spirit, the incidence of duty paid on molasses has not been passed on whereas the same was borne by the respondent.
5. I have carefully considered the submissions made by both sides. I find that in the very same matter the Ld. Commissioner (Appeals) had initially remanded twice to the Assistant Commissioner and on third round allowed the appeal of the respondent giving a clear finding on the fact that the molasses so manufactured, on which the duty at the rate of Rs.1000/- PMT paid was manufactured during the period December 2004 to February 2005. He also given the finding that there is no manufacturing of molasses from 1.3.2005 to 30.4.2005. From this finding, I do not find any force in the submission of the Revenue that on such production of molasses the duty is payable as per the revised rate of Rs.1000/- PMT instead of Rs.500/- PMT which was prevailing prior to 1.3.2005 therefore, I agree with the finding of the Ld. Commissioner. I hold that the respondent have paid excess duty on the molasses used captively. As regard unjust enrichment, I find that the Ld. Commissioner (Appeals) contended that the unjust enrichment is not applicable for the reason that the molasses was used captively, I do not agree with this findings of the Commissioner (Appeals). It was held by the Honble Supreme Court in the case of Solar Pesticides Pvt. Ltd. (supra) that even in the case of captive consumption, the provisions of unjust enrichment is applicable. However, since the Commissioner (Appeals) given finding on the law point, no verification was done at any stage, on the facts that whether incidence of refund amount has been passed on to any other person or otherwise. As regard other Appeal No. E/1662/2010, I find that this appeal was filed against the Commissioner (Appeals) order. Since the original order the Assistant Commissioner had sanctioned the refund implementing the earlier Order-in-Appeal dt. 27.2.2009, this appeal proceeding is consequential to the proceedings of appeal No.E/145/2009. Therefore I do no find it necessary to give a separate finding on the Appeal No. E/1662/2010. Both the impugned orders are set aside and the matters are remanded to the original adjudicating authority to verify the aspect of unjust enrichment and to pass a fresh order. Needless to say that the respondent should be given opportunity for filing necessary documents and for personal hearing. The adjudicating authority shall pass de novo adjudication order within a period of three months from the date of receipt of this order. The appeals are disposed of by way of remand to the original adjudicating authority.
(Pronounced & Dictated in court) (Ramesh Nair) Member (Judicial) SM.
7Appeal No. E/1451/2007 & E/1662/2010