Custom, Excise & Service Tax Tribunal
Herbicides India Ltd vs Jaipur I on 23 October, 2019
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Excise Appeal No.52141 of 2019 (SM)
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Excise Appeal No.52141 of 2019 (SM)
[Arising out of order in appeal No.40(SM)CE/JPR/2019 dated 19.02.2019 passed by the
Commissioner (Appeals), Central Excise & Central Goods and Service Tax, Jaipur]
M/s. Herbicides India Ltd. Appellant
13, Prakash Apartment,
5-Ansari Road,
Daryaganj,
New Delhi-110 002.
VERSUS
Commissioner of Central Goods and
Service Tax, Customs and Central Excise, Respondent
NCR Building, Statute Circle, C-Scheme, Jaipur, Rajasthan-302 005.
APPEARANCE:
Shri Manoj Swarup, Shri Abhishek Swarup and Ms.Lalita Kohli, Advocates for the appellant.
Shri K. Poddar, Authorised Representative for the respondent CORAM: HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO.51371 of 2019 DATE OF HEARING: 12.09.2019 DATE OF DECISION: 23.10.2019 ANIL CHOUDHARY:
The present appeal has been filed by the appellant/assessee - Herbicides India Ltd., against the order-in-appeal rejecting their claim for grant of interest on the delayed refund and secondly, against the finding of the ld. Commissioner that the refund has been wrongly granted being, barred by limitation as well as also hit by unjust enrichment, thus, raising a demand for repayment of the refund granted (with interest). 2
Excise Appeal No.52141 of 2019 (SM)
2. The brief facts are that the appellant. - Herbicides India Ltd. (HIL) was manufacturing since 1992 the product under brand name 'ACHIEVER GRANULES' (plant growth regulator) and was clearing the same under chapter sub-heading 3808.00 by paying applicable excise duty. 2.1 That during September, 2001 appellant introduced new product 'ACHIEVER GOLD' (Bio-Extract organic fertilizer). The product is formulated with Sea weed extracts, Bentonite clay, Rice bran wax & nutrients, etc as basic raw material.
2.2 That, as such, the appellant applied to the Superintendent Excise Department, Range V for amendment of Registration certificate dated 16.10.2001, by including the product ACHIEVER GOLD under Chapter Heading 3101.00 of the Central Excise Tariff Act, 1955. That the appellant had been classifying and clearing the product under sub heading No.3808.20 upto the month of February, 2002 and paid excise duty @ 16% advalorem. 2.3 The Department being satisfied duly amended the RC dated 03.12.2001, approved the inclusion of Achiever Gold as Bio Fertiliser under Chapter Heading 3101.00 and issued the fresh certificate accordingly. 2.4 That the appellant in the month of Feb-March 2002, transferred and cleared the product 'ACHIEVER Gold' (plant growth regulator) as liquid bio- extract organic fertilizer and not plant growth regulator, under sub heading 3101.00 with NIL Rate of Duty and same was duly disclosed in ER-1 of March, 2002.
2.5 That the Department was regularly pressurizing and insisting that Achiever Gold is Plant Growth Regulator and not falling under Bio-Fertiliser and instead falling under Chapter sub-heading 3808.00, and issued a show 3 Excise Appeal No.52141 of 2019 (SM) cause notice dated 04.04.2003 for the Bio-Fertilizer manufactured and cleared without payment of duty, amounting to Rs. 22,08,198/-. 2.6 That in order to avoid any dispute about the classification of the product ACHIEVER GOLD and problem in clearance, appellant vide their latter ref: HIL/JPR/2003-04 dated 29.05.2003 to Assistant Commissioner, Division II, Jaipur, agreed to clear the product Achiever Gold after payment of duty @ 16% as Duty under Protest, reserving their right to claim back the amount of duty paid under protest.
2.7 The appellant company during the period December, 2002 to June, 2004 paid the duty amount of Rs.42,12,262/- under protest, under proper intimation to Revenue. The following show cause notices were issued and adjudicated and confirmed the demand of duty and penalties were imposed:-
SCN dated Period Amount of demand Amount of Adjudication Order (Rs.) Penalty 4.4.2003 March 2002 22,08,198 5,00,000/- Order-in-Original No.70/2004 to Nov. under Rule 5 dated 20.01.2005 and order-
2002 in-appeal No.173(MPM)
CE/JPR-I/2005 dated
24.06.2005.
20.01.2015 Oct 2004 41,33,291/- 8,00,000/- Order-in-Original No. 126-
to July 2005 dated 6.1.2006 and
2005 125/2005 dated 20.12.2005.
3. Being aggrieved, the appellant preferred appeal before the ld.
Commissioner (Appeals). By the order-in-appeal dated 24.06.2005, the Commissioner (Appeals) held the classification dispute in favour of the appellant /assessee holding that their product - 'ACHIEVER Gold' (plant growth regulator) Fertilizer is classifiable under CTH 3101.00 attracting nil rate of duty.
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Excise Appeal No.52141 of 2019 (SM)
4. The Asstt. Commissioner vide order-in-original dated 10.08.2017 was pleased to record the finding that the refund arises in favour of the appellant/assessee as the duty was paid under protest due to classification dispute, which stood settled initially by order dated 24.06.2005 of the Commissioner (Appeals) and finally by order of this Tribunal dated 7.6.2016. It was further noticed that the proposal to file appeal before the Hon'ble Supreme Court was turned down by the CBEC vide communication dated 03.01.2017. It was further found that the appellant /assessee has paid the total duty amount during the period December, 2002 to June, 2004 amounting to Rs.42,12,262/-. Further, the Asstt. Commissioner called for a report from the then Jurisdictional Central Excise Range -I, Division Bench- II, Jaipur for necessary verification. The Range Officer submitted his verification report dated 21.07.2017, 24.07.2017 and 27.07.2017. It was further found that the appellant/assessee was entitled to refund in terms of Section 11 B of the Act read with Circular No.275/37/2000-CX-A8 dated 2.1.2002. It was further observed that under the facts and circumstances, refund is neither hit by limitation nor hit by unjust enrichment, as the same does not arise in the facts and circumstances of the case.
5. As regards the claim of interest, it has been held that the appellant/assessee did not file refund claim prior to 11.05.2017 and as the refund is being granted within three months from the date of application, interest does not arise or not payable under Section 11 BB of the Act. Accordingly, the refund of principal amount of Rs.42,12,262/- was sanctioned and disbursed.
6. Being aggrieved, the Department preferred appeal before the Commissioner (Appeals) on the ground that the Adjudicating Authority sanctioned the refund in question considering the same as consequential 5 Excise Appeal No.52141 of 2019 (SM) refund, in view of the order of the Commissioner (Appeals) and the Tribunal, without examining the issue of time bar and unjust enrichment. As per Revenue, the relevant date under Section 11 B(5) (B) (cc) of the Central Excise Act was the date of order of the Commissioner (Appeals) being 24/25.06.2005.Further, from such date about 11-12 years have passed from the date of the order-in-appeal, in preferring the refund claim, which was filed on 12.05.2017. Therefore, the refund claim appeared to be time barred as the same has been preferred after more than one year from the relevant date. It further appeared to Revenue that the appellant /assessee should have produced documentary evidence to establish that the burden of duty claimed as refund was not passed on by them to any other person. But from the impugned order, it appeared that the Adjudicating Authority did not examine the issue of unjust enrichment. The Commissioner (Appeals) was pleased to allow both the grounds in favour of the Revenue, allowing the appeal, after issue of notice to the respondent/assessee dated 26.11.2018 requiring them to show cause with evidence on both the issues.
7. The appellant had filed reply to the show cause notice issued by the Commissioner (Appeals) on 22.12.2018, explaining that the appellant had paid duty under protest, thus, on this score alone, there would be no time limit in claiming the refund. Secondly, even after passing of the order-in- appeal dated 24.06.2005 in their favour by the Commissioner (Appeals), the Department continued to issue show cause notices demanding payment of central excise duty for the same dispute. 16 show cause notices were issued during the period August, 2005 to June, 2015, demanding payment of central excise duty with interest and penalty, totally ignoring the order-in- appeal passed by the Commissioner (Appeals), under the fact that the Revenue had preferred appeal before this Tribunal. As regards the second issue of unjust enrichment, it was pointed out that the Adjudicating 6 Excise Appeal No.52141 of 2019 (SM) Authority granting refund has taken notice of the fact that the appellants have not charged duty in their invoices for clearance of the goods to their buyers. Further, the duty was deposited under protest and subsequently, the show cause notice was issued by the Revenue. Further, there is no case of Revenue that the appellant had raised any supplementary invoices or debit notes on the buyers of their goods. Further, in response to the notice issued by the Superintendent dated 19.05.2017 for adjudicating of refund, the appellant had furnished various documents in support of their claim including the audited balance sheet, the statutory Auditor's Certificate, Affidavit by the competent officers of the company, evidence of payment of duty, etc. Further, the Director of the Company had appeared before the Asstt. Commissioner along with their Auditor and had explained the documents including the balance sheet. It was only upon satisfaction arrived at by the Range Officers on the ground of unjust enrichment that the refund was sanctioned by order dated 10.08.2017. It was also pointed out that the refund claim has been pre-audited by the competent authority and thus, there is no reason for Revenue to file the appeal. The appellant/assessee had also led evidences by furnishing certificates from two of the buyers of their products for the period under dispute viz. M/s. Trades Worth, P.O. Indore (M.P.) and M/s.Sanjay Trading Company, 41, Chaurangi Road, Kolkata-71.
8. Being aggrieved with the order-in-appeal holding that the refund is wrongly sanctioned with further order of recovery, the appellant/assessee have preferred appeal, before this Tribunal.
9. Pursuant to sanction of refund (order-in-original) being aggrieved for non-grant of interest on the ground of pre-deposit / deposit under Section 35 F, the appellant /assessee preferred appeals before the Commissioner 7 Excise Appeal No.52141 of 2019 (SM) (Appeals) for grant of interest under Section 11 BB/35 FF, which was rejected, by common order-in-appeal.
10. The appellant preferred appeal before this Tribunal.
11. Heard the parties.
12. Ld. Counsel for the appellant has argued that it is an admitted fact that the appellant has not charged duty in the invoices on the goods cleared. Further, the admitted fact is that the appellant had informed the Revenue about the classification being adopted, along with details of their product, attracting nil rate of duty. Further, upon demand of duty by Revenue and issue of show cause notice, the appellant paid the duty under protest. Pursuant to confirmation of duty vide order-in-original, the appellant immediately preferred appeals before the Commissioner (Appeals, on the issue of challenging the change in classification by the Revenue demanding duty. Further, in spite of the fact that the appellant was successful in appeal before the Commissioner (Appeals) in June, 2005, Revenue chose to issue further periodical notices till June, 2015 i.e. nearly for about 10 years pending the decision of the Revenue's appeal before this Tribunal. Thus, in view of the stand of the Revenue, the appellant had no occasion to apply for refund, the matter remained subjudice before the Tribunal. Thus, the lis continued between the appellant/assessee and the Revenue. Further, the admitted fact is that the appellant on being successful before this Tribunal as the Revenue's appeal was dismissed, immediately filed for refund. Ld. Counsel further drew my attention to the CBEC instructions F.No.275/35/2000-CX.8A dated 2.1.2002, wherein amount of pre-deposit made in terms of Section 35 F of the Central Excise Act/129 E of the Customs Act, following instructions were issued as contained in para-3, which is quoted hereinbelow:-
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Excise Appeal No.52141 of 2019 (SM)
3. In order to attain uniformity and to regulate such refunds it is clarified that refund applications under Section 11 B(1) of the Central Excise Act, 1944 or under Section 27(1) of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested xerox copy of the order-in-appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested xerox copy of the challan in Form TR-6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant/Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the purpose.
All pending refund applications already made under the relevant provisions of the Indirect Tax Enactments for return of such deposits and which are pending with the Authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly, bank guarantees executed in lieu of cash deposits shall also be returned.
4. The above instructions may be brought to the notice of the field formations with a request to comply with the directions and settle all the claims without any further delay. Any deviation and resultant liability to interest on delayed refunds shall be viewed strictly.
5. All the trade associations may be requested to bring the contents of this circular to the knowledge of their members and the trade in general."
13. Ld. Counsel further urges that the Commissioner (Appeals) has failed to consider their reply in response to the show cause notice issued by him. In respect of the categorical reply given by them, there is no reference to the same in the impugned order, and as to why the same is not found acceptable. Thus, the impugned order is cryptic and suffers from violation of principles of natural justice. Further, no case of unjust enrichment is made 9 Excise Appeal No.52141 of 2019 (SM) out against the appellant/assessee and only on the bald allegations of lack of examination by the Adjudicating Authority, the refund has been disallowed. Further, he urges that the refund claimed is not time barred under the facts and circumstances. Accordingly, he prays for allowing the appeal with appropriate relief i.e. grant of interest on the refund amount.
14. Ld. Authorised Representative for the Revenue has relied upon the order of the Commissioner (Appeals).
15. Having considered the rival contentions, after examining the facts on record, it is evident that the appellant/assessee has not charged duty from the buyers of their goods, nor issued any debit notes subsequently nor have issued any supplementary bill. Thus, there is no way by which the appellant could have collected any amount subsequently. The said facts are supported by the various evidences led by them before the court below i.e. copy of invoices, balance sheet, Chartered Accountant's Certificate, Affidavit, etc. It is also an admitted fact that the appellant has deposited duty subsequently (post clearance) of goods, on such demand being raised due to classification dispute raised by the Revenue. Further, it is an established legal principle that where the duty is paid under protest, there is no time limit for claim of refund. Further, I find that in terms of instructions of CBEC dated 2.2.2002, mentioned hereinabove, the Adjudicating Authority was bound to refund the amount of duty deposited by the appellant under protest, which was in the nature of pre-deposit under Section 35 F. Duty paid under protest, ipso facto becomes pre-deposit under Section 35 F, on filing of appeal. Accordingly, I hold that the appellant is entitled to interest on refund from the date of filing the appeal (when such deposit under protest became pre- deposit under Section 35 F) till the date of grant of refund. Accordingly, the appeal is allowed and the impugned order-in-appeal is set aside. 10
Excise Appeal No.52141 of 2019 (SM) Accordingly, the Adjudicating Authority is directed to grant interest, within a period of 45 days from the date of receipt of the copy of this order.
(Pronounced on 23.10.2019).
(Anil Choudhary) Member (Judicial) Ckp