Custom, Excise & Service Tax Tribunal
M/S.Rajalakshmi Textile Processors ... vs Cce, Salem on 16 December, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/33, 36 and 53/2005 (By Assessee)
E/41/2005 (By Deptt.)
(Arising out of Orders-in-Appeal No. 384/2004-CE (SLM) dated 15.10.2004; No.386/2004 (CE) (SLM) dated 15.10.2004; No. 391/2004-CE (SLM) dated 25.10.2004 and No. 391/2004 CE (SLM) dated 25.10.2004 passed by the Commissioner of Central Excise (Appeals), Salem)
For approval and signature:
Honble Smt. Jyoti Balasundaram, Vice President
Honble Shri P. Karthikeyan, Member (T)
1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s.Rajalakshmi Textile Processors Pvt. Ltd.
M/s. SSM Processing Mills Ltd.
CCE, Salem
M/s. Sri Bhavani Textile Processors Pvt. Ltd. Appellants
Vs.
CCE, Salem
CCE, Salem
M/s. Sri Bhavani Textile Processors Pvt. Ltd.
CCE, Salem Respondents
Appearance Shri K.S. Venkatagiri, Advocate for the Assessees Shri V.V. Hariharan, Jt. CDR for the Revenue CORAM Honble Smt. Jyoti Balasundaram, Vice-President Honble Shri P. Karthikeyan, Member (T) Date of Hearing: 16.12.2008 Date of Decision: 16.12.2008 Final Order Nos. ____________ Per P. Karthikeyan The following appeals arose before us:
S. No. Appellant Appeal No. Material Period
01.
Rajalakshmi Textile Processors (Private) Ltd.
E/33/2005 08/99 to 12/99
02. SSM Processing Mills Ltd.
E/36/2005 07/99 to 12/99
03. CCE, Salem Vs. Sri Bhavani Textiles Processors (P) Ltd.
E/41/2005 08/99 to 10/99
04. Sri Bhavani Textile Processors E/53/2005 11/99 to 12/2000 These cases involve a common issue as to whether the refund claims of the assessees dealt with in the impugned orders were hit by the bar of unjust enrichment. The assessees in all these appeals are textile processors. During the material period the assessees worked under the compounded levy scheme introduced u/s 3A of the Central Excise Act (the Act). They processed textiles on job work basis. They paid duty on the Annual Capacity of Production (ACP) determined by the Commissioner. The assessees disputed the ACP fixed by the Commissioner including the gallery portion of the mills. Their claim to exclude the gallery portion in working out the ACP for payment of duty was eventually allowed by the Tribunal. During the period of dispute they paid duty under the compounded levy scheme on an ACP which had wrongly included the gallery portion. On the correct determination of the ACP following the Tribunal holding that gallery portion was not to be included for the computation of the ACP, the assessees claimed refund of the excess duty paid. The appeals filed by the assessees challenge the orders of Commissioner of Central Excise (Appeals) sustaining the refund orders of the original authority denying them refund of the excess duty paid during the material period. The appeal filed by the Revenue challenges an order of the Commissioner (Appeals) which had allowed refund claim of an amount of Rs.3,24,630/- excess paid by the assessee during the period 8/99 to 10/99. In the orders impugned in the appeals filed by the assessees and the appeal filed by the Revenue, the authorities have held that granting refund of the impugned amounts would involve unjust enrichment of the assessee. The assessee had charged a composite price during the material period and had not shown the duty element separately. The Revenues case in Appeal No. E/41/2005 and the orders impugned in the remaining appeals is that the assessees had not established that during the period when they had paid duty on the ACP computed including the gallery portion they had not passed on the duty relatable to the gallery portion. Excepting that the processing charges remained constant during the material period as well as before and after the material period the assessees have not been able to substantiate the claim that they had not passed on the excess duty paid during the material period. The assessees have relied on several case law in support of the claim that when the price was not changed in the wake of an upward revision of duty liability the assessee could not be held to have passed on the excess liability imposed. They place particular reliance on the decisions of the Tribunal in CCE, Bangalore Vs. Bangalore Textile (P) Ltd. reported in 2005 (179) ELT 494 (Tri. Bang.) and Jansons Textile Processors Vs. CCE, Salem Final Order No. 1215/2008 dated 24.10.2008 of Chennai Bench. Revenue has sought support form the judgment of the apex Court in Allied Photographics India Pvt. Ltd. 2004 (166) ELT 3 (SC) ? 2004 (173) ELT A191 (SC).
2. We have heard both sides and have carefully considered the case records and the submissions by both sides. Contesting the appeal filed by the Revenue it was averred that an amount of above Rs.9.4 lakhs was paid to the respondents therein towards excess duty paid on gallery portion and that the same was not challenged by the Revenue. Therefore refund of similar amounts due for the period from Aug. 99 to Oct. 99 could not be validly challenged. We find considerable force in this argument. Another argument raised against the appeal filed by the Revenue is that the grant of refund challenged by the Revenue is that an amount of Rs.3,24,630/- which had been paid in Nov. 99. This payment had occurred in respect of clearances made during Aug. 99 to Oct. 99. It was argued that in the light of the ratio of the decision of the Tribunal in Bhilwara Processors Ltd. 2004 (170) ELT 472 (Tri. Del.) the vice of unjust enrichment was not attracted when the disputed duty was paid subsequent to clearances. We find that grant of refund of Rs.3,24,630/- to the respondents was correctly made and no unjust enrichment could be found in the grant of refund. Unjust enrichment applies only when the excess duty is paid at the time of clearance of the goods. Therefore we find that the appeal filed by the Revenue is without any merit.
3. We find that the appellants who have challenged the orders of the Commissioner (Appeals) denying them refund of excess duty paid on the ground of unjust enrichment mainly for the fact that the assessees had not established that the impugned amounts had not been borne by them. We find that the assessees undertook the manufacturing activity as job workers and collected job charges. They had taken into account the duty liability fixed by the authorities with reference to the ACP and finalized the job charges to be collected. During an interregnum they had to pay an extra amount of duty on account of the refund of the ACP by the Commissioner. This was all along under dispute. On the dispute being resolved in their favour by the Tribunal the assessees continued to charge the same job charges as earlier including the period of dispute. We find that it is not reasonable to conclude that during the short period when the job workers had paid excess amount of duty they had included the same in the job charges. As the charges remained constant a reasonable conclusion would be that during the material period, a short period of dispute, the assessees had borne the burden of duty and had not passed on the same to their customers in the job charges. This was ratio of the decision of the Chennai Bench of the Tribunal in Jansons Textile Processors case cited by the assessees. Job workers charge a certain rate for processing textiles considering all relevant factors including the duty element. These are not frequently revised. In any case when the same job charges are collected for a considerable length of time which covered also a short period when the excise duty payable was a little higher amount it cannot be justifiably inferred that the job charges during that short period also included an element of extra duty. In the decision of the Tribunal in the Bangalore Textiles case (supra) it was held that job charges do not vary in tune with varying liability to excise duty on the processed fabrics. The charges remained constant and were not dependent on the duty liability. The Revenue has not found that the assessees had used clearance documents showing excise duty as charged during the material period. If any of them had used a printed format more relevant for pre-compounded levy scheme period which it provided for showing excise duty it cannot be relied upon to conclude that during the material period assessees had passed the excess excise duty they had borne. We are inclined to concur with the views held by the Tribunal in the decisions cited. We also find that a large number of decisions of the Tribunal, judgment of the Honble High Court of Madras and the apex Court had held the same view. The consistent view held in these judicial authorities is that when the price remained constant before and after the duty liability was enhanced it could be reasonably inferred that the assessee had not passed on the burden of excess duty. We find that the in Allied Photographics India case the apex Court had held that uniformity of price before and after the refund of duty did not lead to the inevitable conclusion that the assessee had not passed on the excess duty liability. Their lordships did not hold that in all situations uniformity of price before and after a duty liability was additionally imposed on the assessee could not be a decisive factor to decide the dispute in favour of the assessee. In the facts of the case where a job worker is involved does not sell the excisable goods and has to operate in an environment subject to compulsions of competition from similarly placed job workers. The assessees are not in a position to strength to dictate its charges can be reasonably concluded to have absorbed the duty burden when they disputed the liability and paid the same. In the circumstances we hold that grant of refund claim by the assessees would not involve unjust enrichment. The orders impugned in Appeal Nos. E/33/2005, 36/2005 and 53/2005 are therefore not sustainable and are set aside. The appeals are disposed of.
(Operative portion of the order was pronounced
in open court on 16.12.2008)
(P. KARTHIKEYAN) (JYOTI BALASUNDARAM)
Member (T) Vice President
Rex
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