Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Pune Ii vs M/S. Three M Paper Manufacturing Co. ... on 17 September, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
Appeal No. E/422/08 - Mum
(Arising out of Order-in-Appeal No. PII/PAP/07/2008 dated 28.01.2008 passed by the Commissioner of Central Excise (Appeals), Pune II).
For approval and signature:
Honble Shri Ashok Jindal, 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 :
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?
Commissioner of Central Excise, Pune II
:
Appellants
Versus
M/s. Three M Paper Manufacturing Co. Pvt. Ltd.
Respondents
Appearance Shri Kishori Lal, SDR for Appellants Shri A.V. Naik, Advocate for Respondents CORAM:
Honble Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 03.09.09 Date of Decision : ORDER NO.
Per : Ashok Jindal This appeal is filed by the Revenue.
2. Brief facts of the case are that the respondents are manufacturers of paper and paper Board and availing Cenvat credit facility on waste and scrap of papers i.e. inputs and utilizing the said credit for payment of duty on the final product. The respondent received inputs namely paper in bundles which are pressed and shaped in bundles with use of iron strips, pins, clips etc. The appellant has sold the scrap of iron strips, pins clips etc. which are being used for bundling waste paper without payment of duty. On pointing out by the Department regarding non payment of duty on these items, the appellant discharged the duty liability of Rs.21,781/- by way of reversal in the Cenvat Account. Thereafter the respondent filed refund claim for the said amount on the ground that the duty is not payable on such scrap cleared on commercial invoice in terms of Notification No. 89/95 CE dated 18.5.1995. The respondent was issued with a show cause notice dated 10.01.2006 directing them to show cause
(i) as to why the refund claim should not be rejected as exemption from payment of duty on the waste and scrap claimed under Notification No. 89/95 is not applicable to them,
(ii) as to why the same should not be rejected in as much as they have failed to produce documentary evidence to show that the incidence of duty has not been passed to any other person as envisaged in the sub-section (1) of Section 11B of the Central Excise Act, 1944, and
(iii) as to why if such portion of refund claim is found admissible should not be credited to the Consumer Welfare Fund and the refund claim was rejected.
3. Aggrieved by the order, the respondent preferred an appeal before the Commissioner (Appeals) who in turn held that the ratio laid down in the case of M/s. West Coast Industrial Gases Ltd. 2003 (155) ELT 11 (SC) and the Boards Circular No. 721/37/2003 CX dated 6.6.2003 are squarely applicable in the instant case. In view of the clarification issued by the Board, no duty shall be payable and no reversal of credit is warranted on waste packages used for packing inputs on which credit has been taken, when cleared from the factory of manufacturer availing cenvat credit. Therefore, duty paid on the waste and scrap under protest by the respondent is an excess payment and is required to be refunded. Therefore the lower appellate authority has held that the refund of Rs.21,781/- is admissible to the respondent. Against the said order, the respondent was issued a fresh show cause notice dated 2.7.2007 wherein the respondent was directed as to why the refund claim of Rs.21,781/- should not be rejected in as much as, they have passed on duty incidence to their customers and recovered the amount of duty paid from the customers which is evidenced from the copies of the Profit & Loss Account submitted by them as envisaged in sub-section (1) of Section 11B and if the whole or any portion of such refund claim is found admissible, then why the same should not be credited to the Consumer Welfare Fund on the ground of unjust enrichment.
4. The Dy. Commissioner vide Order dated 10.9.2007 has rejected the refund claim and credited the same to the Consumer Welfare Fund holding that the amount of duty paid is shown as revenue expenditure in their Books of Accounts for the financial year 2004-05 which clearly implies that this has been taken into consideration while working out the cost of end-product and therefore it can be confirmed that the incidence of duty has been passed on to the customers. Thus, the doctrine of unjust enrichment comes into play in the instant case.
5. Aggrieved by the said order, the respondent preferred an appeal before the lower appellate authority who held that the said expenditure shown in the Books of Accounts is independent and has no nexus in their final product. Further held that the duty paid on the scrap but was cleared those waste during the financial year 2002-03 and 2003-04 and they were directed to pay duty on the clearances of waste and scrap during the year 2005-06. Accordingly, the duty was paid subsequent to clearance would not have been passed on to any other person. On this count, the respondent succeeded and it was held that the bar of unjust enrichment is not applicable to the respondent and the refund claim was allowed to the respondent.
6. Aggrieved by the same, the Revenue is in appeal before me.
7. Shri. Kishori Lal, learned SDR appearing on behalf of the Revenue contended that the refund claim is hit by bar of unjust enrichment and before allowing the refund claim the respondent has to declare that the incidence of duty has not been passed on to their customers. To support his contention he relied on Sahakari Khand Udyog Mandal Ltd. vs. CCE & Cus. - 2005 (181) ELT 328 (S.C.). He further relied on the Tribunals order No. A/1127/C-IV/SMB/2007 dated 14.8.2007 in the case of CCE, Pune II vs. Super Craft Foundry wherein in the similar facts, the Tribunal held that in the light of apex courts decision in Sahakari Khand Udyog Mandal Ltd. vs. CCE 2005 (181) ELT 328 (SC), the assessee has to discharge the burden cast upon them to establish that the bar of unjust enrichment was not attracted against them.
8. On the other hand Shri. A.V. Naik, learned Advocate appearing for the respondent submitted that in their case bar of unjust enrichment is not applicable merely on the ground that the duty paid is shown as expenditure in the Profit & Loss Account of the respondent. Moreover, he contended that the waste and scrap was sold in the year 2002-03 and 2003-04 and paid the duty under protest in 2005-06. In these circumstances, it is very much clear that incidence of duty has not been passed on to the customers. To support his contention he placed reliance on GE BE Pvt. Ltd. vs. CC, Bangalore 2008 (228) ELT 285 (Tri.- Bang.), in the similar facts where the appellant deposited the duty during the course of investigation and shown only as expenditure in the Profit & Loss Account, the Tribunal held that bar of unjust enrichment cannot be raised by filing an appeal. Amount shown as expenditure cannot be said to have been passed on to the consumer. He further placed reliance on Triveni Chemicals Ltd. vs. Union of India 2007 (207) ELT 324 (S.C.) wherein it was held that application for refund rejected by Assessing Authority which order attained finality, plea of unjust enrichment though raised before authority was not raised before the Appellate Authority, if no such plea was raised, only because the assessee filed an application to be dealt with on administrative side for refund subsequently, same would not attract provisions of Section 11B of the Central Excise Act, 1944. Refund allowed by the Appellate Authority, Application filed subsequently to proceed with matter on administrative side, Authorities bound to comply with order passed in view of doctrine of judicial discipline, plea cannot be raised subsequently that appellant was to prove that burden of duty had not been passed to customers.
9. On careful examination of the submissions made by both the parties, I find that the case of the respondent is squarely covered by GE BE Pvt. Ltd. (supra) and the refund claim of the respondent has not been hit by bar of unjust enrichment and the lower Appellate Authority has rightly allowed the refund claim of the respondent.
10. In view of above, I uphold the impugned order and the appeal filed by the Revenue, being without any merit, is rejected.
(Pronounced in Court on ..) (Ashok Jindal) Member (Judicial) nsk 6