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[Cites 4, Cited by 0]

Jharkhand High Court

Mcnally Bharat Engineering Co. vs Commissioner,Central Excise on 4 February, 2011

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                                         Tax Appeal No. 3 of 2005
                                                    ­­­­­­­­­
                     Against the order passed by the Customs Excise and Service Tax Appellate
                     Tribunal, East Zonal Bench, Kolkata in Appeal No. ESM­193 of 2003 dated
                     11.08.2004

 Order No. A­538/KOL/04.

McNally Bharat Engineering Company Limited, Dhanbad    ...    Appellant                                             Versus   Commissioner of Central Excise, Ranchi      ...    Respondent                                          ­­­­­­­­­           PRESENT    HON'BLE THE CHIEF JUSTICE                      HON'BLE MR. JUSTICE D. N. PATEL    ­­­­­­­­­ For the Appellant : M/s Binod Poddar, Sr. Advocate,  Darshan Poddar, Deepak Sinha,  Piyush Poddar, Vikash Pandey, Advocates  For the Respondent : Mr. P.K. Prasad, Sr. Advocate Ms. Ruby Parween, Advocate  ­­­­­­­­­                    Oral order                    Per D.N. Patel, J.

                    Dated: 4   th     February, 2011:

      
1. This appeal has been preferred under Section 35­G of the Central  Excise Act, 1944 (hereinafter to be referred as the Act, 1944 for the sake of  brevity)   against   an   order   passed   by   the   Customs,   Excise   and   Service   Tax  Appellate   Tribunal,   East   Zonal   Bench,   Kolkata   dated   11th  August,   2004   in  Appeal No. ESM­193 of 2003 Order No. A­538/KOL/04, whereby, the claim  for refund of the excess excise duty, paid by the appellant, was rejected and  the order passed by the Commissioner (Appeals), Customs & Central Excise,  Ranchi   was   confirmed.   The   appellant   had   made   claim   for   refund   under  Section 11­B of the Act, 1944. 
2. Learned   senior   counsel   appearing   for   the   appellant   submitted  that the Bharat Heavy Electricals Limited (BHEL), Tiruchirapalli, which is a  Government of India Undertaking, placed an order dated 8th August, 2001 to  the appellant­company for machining and teeth cutting of the three numbers  of raw castings supplied by it.  The aforesaid job work, which was to be done  by the appellant, was finally to be supplied to M/s Andhra Pradesh Power  Generation Corporation Limited, who is a purchaser from the Bharat Heavy  Electricals Limited (BHEL), because original order was given by M/s Andhra  Pradesh   Power   Generation   Corporation   Limited   to   the   Bharat   Heavy  Electricals   Limited   (BHEL)   and   ultimately   the   Bharat   Heavy   Electricals  2 Limited (BHEL) had placed an order of job work to be done by the appellant. 

Thus, as per the purchase order,  job work was done and  the bill was  sent to  the Bharat Heavy Electricals Limited (BHEL).  

3. It   is   further   submitted   by   learned   senior   counsel   appearing   for   the  appellant that by mistake excess excise duty was paid by the appellant by  adding machining charges and packing and forwarding charges on the sale  value. In  fact, excise  duty was  payable  only on  sale  value, which was Rs.  30,50,000/­. By mistake, the appellant has miscalculated the sale value by  adding cost of machining of Rs. 5,01,760/­ and by adding the cost of packing  and forwarding of Rs. 15,052.80/­ in a sale value of Rs. 30,50,000/­. Thus,  there was an error on the part of the appellant in calculation of the excise  duty. 

4. It   is   further   submitted   by   learned   senior   counsel   appearing   for   the  appellant that the sale value of Rs. 30,50,000/­ was inclusive of excise duty.  The   sale   price   was   also   inclusive   of   packing   and   forwarding   charges.   The  excess duty paid by the appellant comes to Rs. 2,48,070/­ and, therefore, an  application  for refund under Section 11­B of the Act, 1944 was preferred,  which   was   received   by   the   office   of   the   Deputy   Commissioner   of   Central  Excise   Division,   Dhanbad   on   25th  September,   2002.   A   certificate   of   the  Chartered   Accountant   was   also   supplied   to   the   effect   that   the   amount   of  excess   excise   duty,   so   paid,   has   not   been   paid   by   the   costumer   of   the  appellant. The same are at Annexure­7 and at Annexure­10 to the memo of  the   appeal.   The   certificate   of   the   Chartered   Accountant   is   dated   21 st  September, 2002. 

5. It is further submitted by learned senior counsel appearing for  the   appellant   that   the   aforesaid   show   cause   notice   issued   by   the   Deputy  Commissioner, Central Excise Division, Dhanbad was replied on 18th February,  2003 and paragraph 7 of the reply reads as under:­       "7. The certificate of Chartered Accountant was submitted to your honour   along with the refund claim application for your kind consideration. We again   enclose a copy of the same for your kind reference." 

6. It   is   further   submitted   by   learned   senior   counsel   appearing   for   the  appellant that while deciding the  aforesaid show cause notice, the  Deputy  Commissioner, Central Excise Division, Dhanbad has not properly appreciated  the certificate given by the Chartered Accountant. The amount of excess duty  has not been paid by the customer of the appellant i.e. it has not been paid by  3 the Bharat Heavy Electricals Limited (BHEL) and, thereafter, the order was  passed  against the  present  appellant by  the  Deputy Commissioner, Central  Excise Division, Dhanbad in order­in­original dated 28th  March, 2003. Being  aggrieved   and   feeling   dissatisfied   by   the   aforesaid   order­in­original,   the  appellant had preferred an order­in­appeal before the appellate authority i.e.  before the Commissioner (Appeals), Customs & Central Excise, Ranchi. Before  the appellate authority also, it was submitted that the incidence of excess­ paid duty has not been passed on to the customer i.e. to the Bharat Heavy  Electricals   Limited   (BHEL).   But   this   aspect   has   also   not   been   properly  appreciated   by   the   Commissioner   (Appeals),   Customs   &   Central   Excise,  Ranchi and the appeal preferred by the appellant was dismissed. Against this  order   of   order­in­appeal   dated   7th  August,   2003,   an   appeal   was   preferred  before   the   Customs,   Excise   &   Service   Tax   Appellate   Tribunal,   East   Zonal  Bench, Kolkata being Appeal No. ESM­193 of 2003. The Tribunal has also not  properly appreciated the fact that incidence of duty has not been passed on to  the  Bharat Heavy Electricals  Limited (BHEL). The  certificate  issued by the  Chartered Accountant has also not been properly appreciated and the appeal  preferred by the appellant was dismissed. The Tribunal has also not properly  appreciated the decision rendered by the very same Tribunal in Appeal No.  ESM­104 of 2003 dated 24th  December, 2003 [McNally Bharat Engineering  Company   Limited,   Dhanbad   (appellant)   vs.   CCE,   Ranchi]   as   reported   in  2004(61)   RLT   207   (CESTAT­Kol.)   and   being   aggrieved   by   this   order,   the  present Tax Appeal has been preferred under Section 35­G of the Act, 1944  mainly   on   the   ground   that   the   Tribunal   has   not   at   all   considered   the  certificate issued by the Chartered Accountant to the effect that the incidence  of duty has not been passed on to the customer of the appellant i.e. to the  Bharat Heavy Electricals Limited (BHEL).

7. It   is   also   submitted   by   learned   senior   counsel   appearing   for   the  appellant that the reason/ground, which was never given in the show cause  notice,   has   been   advanced   by   the   Tribunal.   Whether   a   MODVAT/CENVAT  credit has been availed or not by the customer of the appellant i.e. by   the  Bharat Heavy Electricals  Limited (BHEL),  cannot  be  a  reason  for  denying  the claim of refund and it was never a reason given in the show cause notice. 

8. It is further submitted by learned senior counsel appearing for  the appellant that the reason was given in paragraph 5 of the order passed by  the Tribunal that from the evidences submitted by the appellant it is also not  4 established that the incidence of excess­paid duty was not passed on to the  customer   of   the   appellant   in   the   form   of   availment   of   MODVAT/CENVAT  credit.  The aforesaid reason given by the Tribunal for dismissing the appeal,  runs counter to the fact that Bharat Heavy Electricals Limited (BHEL) is not a  manufacturer of goods and, therefore, no question of claiming any MODVAT/ CENVAT credit, whatsoever, arises and, therefore, let the matter be remanded  to the Tribunal for deciding afresh the claim of the appellant for refund of the  excess excise duty paid by it.

9. Learned senior counsel appearing for the respondent mainly submitted  that   there  is   a   presumption  under  Section  11­B   of   the   Act,  1944   that   the  manufacturer has passed on the  incidence of duty upon it's customer. The  appellant has failed to rebut the presumption under Section 11­B of the Act,  1944. Moreover, there is a consistent finding of the fact in order­in­original,  order­in­appeal as well as in the order passed by the Tribunal and, therefore,  this   Court   may   not   interfere   with   these   consistent   finding   of   facts   and,  therefore, the present Tax Appeal preferred by the appellant deserves to be  dismissed.  

10. Having heard learned senior counsels for both sides and looking  to the facts and circumstances of the case, it appears that:­

(i)   The   Bharat   Heavy   Electricals   Limited   (BHEL)   placed   a   purchase  order   with   the   appellant   for   machining   and   teeth   cutting   of   three  numbers of raw castings supplied by it. This job work was done by the  appellant.

(ii)  It  further   appears   from   the   facts   of  the   case   that  the   sale   value  between the appellant and the Bharat Heavy Electricals Limited (BHEL)  means   the   sale   value   between   the   Bharat   Heavy   Electricals   Limited  (BHEL)   and   M/s   Andhra   Pradesh   Power   Generation   Corporation  Limited (APGENCO). The sale value was at Rs. 30,50,000/­ and instead  of  pay excise  duty of  this  amount,  it  appears  that  the  appellant has  added   cost   of   machining   at   Rs.   5,01,760/   and   cost   of   packing   and  forwarding charges amounting to Rs. 15,052.80 to the sale value of Rs.  30,50,000/­   and     thus     excise     duty     was     paid   in   excess   on   these  consolidated   amounts   and   thus   a   claim   of   refund   was   made   by   the  appellant for refund of excess payment of excise duty amounting to Rs.  2,48,070/­.   A   certificate   of   the   Chartered   Accountant   was   also  forwarded (which is at Annexure­10 to the memo of this appeal). The  5 same was received by the office of the Central Excise Division, Dhanbad  dated 25th  September, 2002 (as per Annexure­7 to the memo of this  appeal). The Chartered Accountant has also mentioned that the amount  of excess excise duty, so paid, has not been paid or passed over to the  Bharat Heavy Electricals Limited (BHEL), Tiruchirapalli­a Government  of India Undertaking.

(iii) It further appears that despite the certificate was given, neither it  has   been   properly   appreciated   by   the   Deputy   Commissioner,   Central  Excise Division, Dhanbad nor by the Commissioner (Appeals), Customs  & Central Excise, Ranchi nor by the Customs Excise and Service Tax  Appellate Tribunal, East Zonal Bench, Kolkata.

(iv) It further appears that the only reason given in the show cause  notice that burden of duty has also been passed to the buyer. Show  cause notice dated 5th  February, 2003 was received by the appellant,  wherein, following ground was mentioned:­     "The subject claim of refund filed by the assessee does not appear to be   proper in view of the facts that the burden of duty has already been passed on to   the buyers at the time of clearance of goods and hence it fulfills the aspect of   unjust enrichment under Section 11B of Central Excise Act, 1944.       Therefore,   the   said   assessee   are   hereby  called   upon   to  show   cause   to  the   Deputy   Commissioner,   Central   Excise,   Dhanbad   having   office   at   H.E.   School   Road, Bhisti Para, Hirapur, Dhanbad as to why their refund claim amounting to   Rs. 2,48,070/­ should not be rejected on the above grounds under Section 11B of   Central Excise Act, 1944."

       Nowhere it was mentioned in the show cause notice given by the  Deputy   Commissioner,   Central   Excise   Division,   Dhanbad   dated   5th  February,   2003   (Annexure   8)   that   whether   the   purchaser   of   the  appellant has availed any MODVAT/CENVAT credit. Despite this fact,  the Tribunal has travelled beyond the show cause notice and has given  a reasoning in paragraph 5 of the order passed by the Tribunal that the  appellant   has   not   established   whether   incidence   of   excess   paid   duty  was   not   passed   to   the   customer   in   the   form   of   availment   of  MODVAT/CENVAT credit. Had this reason been given in the show cause  notice, the appellant could have given detailed answer.  Moreover, the  Bharat Heavy Electricals Limited (BHEL) is not a manufacturer of the  goods   and,   therefore,  no question   of   availment  of   MODVAT/CENVAT  credit, whatsoever, arises. This aspect of the matter has also not been  properly appreciated by the Tribunal.

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11. In view of the aforesaid facts, reasons and also looking to the  decision rendered by the Customs Excise and Service Tax Appellate Tribunal,  East   Zonal   Bench,   Kolkata   in   between   the   very   same   appellant   vs.   CCE,  Ranchi as reported in 2004(61) RLT 207 (CESTAT­Kol.), we hereby quash and  set aside the order passed  by  the Customs Excise and Service Tax Appellate  Tribunal, East Zonal Bench, Kolkata in Appeal No. ESM­193 of 2003 dated  11th  August,   2004   Order   No.   A­538/KOL/04   and   we   hereby   remand   the  matter to the Customs Excise and Service Tax Appellate Tribunal, East Zonal  Bench, Kolkata for its afresh hearing in the Appeal No. ESM­193 of 2003 on  its own merits, without being influenced by the earlier order passed by the  Tribunal, after giving an adequate opportunity of being heard to the parties. 

12. This Tax Appeal is allowed and disposed of, in view of the aforesaid  observations and directions.

     

                           (Bhagwati Prasad,  C.J.)                                   (D.N. Patel, J.) Jharkhand High Court, Ranchi Dated: the 4th February, 2011 Ajay/      N.A.F.R.