Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Central Excise vs Christine Hoden (I) Pvt. Ltd. on 9 January, 2003
Equivalent citations: 2003(155)ELT271(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Representative of the respondent seeks adjournment to produce documents. He is not able to say why, despite sufficient notice, these documents have not been produced.
2. Having heard both sides, we proceed to dictate our order.
3. The appeal by Christine Hoden (I) Pvt. Ltd. and Primella Sanitary Products Pvt. Ltd. was against the order of the Assistant Commissioner holding that the refund of duty paid by these assessees is in excess and not being shown to have been passed on to the buyer as required in terms of the proviso under Sub-section (2) of Section 11B rejecting the claim for refund. The Commissioner (Appeals) accepted the submission before him that the price of sanitary napkins that the respondent manufactured during the period from 29-11-1995 to 8-8-1996 when the duty was not payable, was the same and therefore the incidence of duty had not been passed on. He therefore ordered the refund to be paid to the claimants. This order is being challenged by the Commissioner.
4. Various elements form part of a price. In the ordinary course, such a price would not be less than the cost of manufacture and other incidental cost indicated to taking the goods to the market, excise duty and other taxes payable on these goods, and reasonable margin of profit. After all the profit is the reason for which the manufacturer sells the goods. It can however happen, and does always happen that the price at which the manufacturer sells the goods may not incorporate all these elements. Although the cost of manufacture has generally to be received, the manufacturer also has to keep in mind the market condition. The manufacturer has necessarily to price its products in accordance with "what the traffic will bear". If, for example, there is a rival whose product is cheaper than that of the manufacturer, he will necessarily have to reduce his price in order to get a share of his market. In that situation, he may be willing to forgo his profit or even incur a loss. He may also bear the burden of duty himself. An example is to make it clear. Let us say cost of manufacture and incidental cost would be Rs. 60/-. The manufacturer may sell his product at Rs. 100/- per unit where no excise duty is payable. We will assume that no other tax is payable. Rs. 40/- then represents the profit. Now duty of Rs. 20/- per unit is imposed on the product. Very lightly that the manufacturer if he can increase the price of product by the amount of duty payable and the price of the product is Rs. 120/-. He may however also decide that in order not to lose his market segment, to reduce or forgo his profit. He may thus continue to sell the product at Rs. 100/-reducing the profit.
5. We agree that in that situation, it is difficult to say whether the element that has not been passed on would be duty or would be the profit. However the burden of proving or that the incidence of duty has not been passed on rests upon the person who claims refund. Section 11(B)2 is clear. It is the claimant who must show that incidence of duty had not been passed on.
6. Counsel for the respondent cites various decisions of the Tribunal in support of the proposition. The decision in Thermon Heat Tracers Ltd. v. CCE - 2001 (132) E.L.T. 455 was not based upon this but merely held that the proviso under Section 11B(2) will not apply in a case where the manufacturer has initially transferred the burden of duty but before the refund is filed takes it back upon himself. The other decision he essentially relies upon is the decision of the Tribunal in CCE v. Metro Tyres Ltd. - 1995 (80) E.L.T. 410 which advances the view that where the price before and after the levy of duty is the same the incidence of duty has not been transferred. Neither of this decision nor any other relied upon was of this point that we have now considered. What has been shown to be passed something other than duty.
7. The representative of the respondent was not able to rebut except to rely upon the decision or seeks time.
8. In these circumstances, we hold that the finding of the Commissioner (Appeals) cannot be upheld. However we note the contention of the counsel for the respondent that while the Commissioner (Appeals) passed two orders disposing of appeals 71/98 and 72/98, only one appeal has been filed by the department. We therefore restrict this appeal to appeal disposed of by the Commissioner in his order 71/98. The appeal is accordingly allowed and that order set aside.