Custom, Excise & Service Tax Tribunal
India Medtronic Pvt Ltd vs Vadodara-I on 20 November, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Zonal Bench, Ahmedabad
Appeal No. E/10743/2018-SM
(Arising out of OIA No. VAD-EXCUS-001-APP-698-2017-18 dated
29/12/2017 passed by Commissioner (Appeals) Commissioner of Central
Excise, Customs and Service Tax-VADODARA-I)
India Medtronic Pvt. Ltd. - Appellant
Vs.
C.C.E. & S.T.-Vadodara, - Respondent
Represented by:
For the appellant : Shri Willingdon Christian, Advocate For the respondent : Shri Jeetesh Nagori, Addl. Commr. (AR) CORAM:
Hon'ble Mr. Ramesh Nair, Member (Judicial) Date of Hearing: 27/09/2018 Date of Decision:20/11/2018 Order No. A/12615 / 2018 Per: Ramesh Nair This appeal is directed against the order in appeal no. VAD-EXCUS-
001-APP-698-2017-1 8 dated 20.12.2017 passed by Commr (A) Vadodara whereby the matter of refund was remanded to the Adjudicating Authority to verify the facts on the basis of various books of accounts that whether the appellants have passed on the incidence of refund to any other person or otherwise. In other words, to test the unjust enrichment as provided under section 11B of Central Excise Act, 1944, the appellant filed the present appeal challenging the said order.
2. Shri Willingdon Christian, Ld. Advocate appearing on behalf of the appellant at the outset submit that the refund sought for by the appellant is in respect of demand of duty raised by way of show cause notice dated 09.03.1999. Against the demand, the appellant before Adjudication paid an 2 E/10743/2018-SM amount of Rs. 38 lakhs. He submits that the demand came to be set aside.
Therefore, there is no consequential refund. He That since the amount was paid before the Adjudication, it is a deposit and not the duty. Therefore, the refund in respect of any amount which is a deposit will not be governed by section 11B. Hence, the provision of unjust enrichment is not applicable. In his support, he placed reliance on the various judgements cited below:
1. CC (Import) Vs. Finacord Chemicals (P) Ltd. 2015 (319) ELT 616 (SC)
2. CCE Vs. Sandvik Asia Ltd. 2017 (52) STR 112 (Bom.)
3. CCE Vs. J.M. Baxi & Co. 2011 (271) ELT 19 (Guj.)
4. Parle International Ltd. Vs. UOI 2001 (127) ELT 329 (Guj.)
5. Gujarat Insecticides Ltd. Vs. UOI 2005 (183) ELT 9 (Guj.)
6. CCE Vs. Pricol Ltd. 2015 (320) ELT 703 (Mad.)
7. CCE Vs. UCAL Fuel System Ltd. 2014 (306) ELT 26 (Mad.)
8. Nelco Ltd. Vs. UOI 2002 (144) ELT 56 (Bom.), 2002 (144) ELT A104 (SC)
9. Suvidhe Ltd. Vs. UOI 1996(82) ELT 177 (Bom.), 1997 (94) ELTA159 (S.C.)
10.Indian Thermoplastics (P) Ltd Vs. CC 2003 (57) RLT 121 (Cegat-LB)
11. Aadishwar Motors (P) Ltd. Vs. Commr. Of ST 2014 (33) STR 329 (T)
12. CC Vs. Mahalaxmi Exports 2010 (258) ELT 217 (Guj.)
13. Ebiz Com Pvt. Ltd. Vs. CCE 2017 (49) STR 389 (All.)
3. Shri S.N. Gohil, Ld. Supdt. (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. I have carefully considered the submission made by both the sides and perused the records. In the present case, there is no dispute that the amount of Rs. 38 lakhs was paid by the appellant as duty under the head 'Excise duty' which on the adjudication was appropriated against the confirmed demand. Therefore, it cannot be said that amount of Rs. 38 lakhs deposited 3 E/10743/2018-SM by the appellant is not towards duty but only as a pre deposit. Even if it is considered that the amount paid is not duty, the only mechanism provided in Central Excise Act for refund is under section 11B of Central Excise 1944.
This issue has been considered by division bench of this Tribunal in detail.
Therefore, I need not to discuss the issue again, as such, the issue is decided by the tribunal in the case of Petronet LNG. Ltd. vide final order no.
A/11614/2018 dated 01.09.2018. I find that in the said judgment as reproduced below:
―4. We have carefully considered the submissions made by both the sides and perused the record. We find that the limited issue to be decided by us is, whether refund claim filed by the appellant is governed by Section 27 of the Customs Act, 1962 and consequently it is time-barred or otherwise. We find that though the amount of refund claim is related to duty paid and the said amount is customs duty including the duty on the actual receipt quantity. Therefore, the entire amount paid by the appellant is nothing but customs duty only irrespective to the fact that certain portion of the duty was not payable. Under the Customs Act, any amount which is refundable has to pass the test provided under Section 27 of the Customs Act, 1962. In the said Act, there is no other provisions made for refund of any amount which was paid either without authority of law or was not payable for any reason. Therefore, all the refund claims under the Customs Act has to be dealt with under the provisions of Section 27. The departmental authority has no legal authority to process and sanction the refunds going out of Section 27 of the Customs Act, 1962. Therefore, the Customs authorities have to process and dispose the refunds only and only under Section 27 of the Customs Act, 1962. Though in the identical facts, the Hon'ble Bombay High Court in the judgment cited by ld. Counsel, in case of refund, in respect of duty paid on short imported goods held that limitation under Section 27 is not applicable. However, the Hon'ble Supreme Court in various judgments held that all the refund claims of customs and excise has to be governed by Section 27 of the Customs Act or Section 11B of the Central Excise Act, 1944. In the case of Collector of Central Excise, Chandigarh vs. Doaba Co-operative Sugar Mills - 1988 (37) E.L.T. 478 (S.C.), the Hon'ble Apex Court held as under:-
"6. It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light. But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to
4 E/10743/2018-SM initiate proceedings in the Civil Court for recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund. This was the view taken by the Tribunal in a previous decision in the case of Miles India Ltd. v. The Assistant Collector of Customs but it was assailed before this Court. The appeal was withdrawn. This Court observed that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefore in the relevant provisions of the Customs Act, 1962. If really the payment of the duty was under a mistake of law, the party might seek recourse to such alternative remedy as it might be advised. See the observations of this Court in Miles India Ltd. v. The Assistant Collector of Customs [1987(30) E.L.T.641 (S.C.) = 1985 E.C.R. 289].
7. In the aforesaid view of the matter the Tribunal was right. The appeal, therefore, has no merits and it is accordingly not entertained and dismissed. There is no order as to costs."
From the above judgment, it is clear that even if there is refund of duty which was recovered without authority of law, the refund made before the departmental authority, limitation provided under Customs/Central Excise Act shall be applicable. The Hon'ble Supreme Court has held that authorities functioning under an Act is bound by its provisions and any refund proceedings beyond the limitation provided under the Customs/ Central Excise Act, the same can be initiated in the Civil Court. Accordingly, the time limit under the Customs Act is applicable. We are also of the view that the Tribunal being creature of the statue and under Customs Act have to deal with any refund case within four corners of the Customs Act, since the provisions for refund is only provided under Section 27 of the Customs Act, 1962. This Tribunal also cannot by-pass the same and decide the refund claims under general law. The Hon'ble Supreme Court in a land mark judgment in the case of Mafatlal Industries Limited vs. UOI - 1997 (89) ELT 247 (SC) has endorsed the aforesaid judgment in the case of Doaba Co-operative Sugar Mills (supra). In the case of UOI vs. Namdang Tea Estate - 2004 (164) ELT 132 (SC), the Hon'ble Supreme Court held that claim filed beyond the stipulated time is not admissible. In the case of UOI vs. VIP Industries Limited - 1998 (101) ELT 8 (SC) the Hon'ble Supreme Court in the facts of the case held that assessee filing refund claim for past four years following a favourable decision on classification in the case of a manufacturer of similar goods, set-aside the Hon'ble High Court order which directed the Assistant Commissioner to consider the claim for beyond limitation period without taking into consideration the question of limitation. Accordingly, the High Court judgment was set-aside. In the case of Porcelain Electrical Manufacturing Company vs. Collector of Central Excise, New Delhi - 1998 (98) ELT 583 (SC), the Hon'ble Supreme Court held that refund claim filed before the departmental authorities to be governed by the time limit provided under the statute, general law of limitation not available. The decisions where assessee has invoked extraordinary jurisdiction of the High Courts and the Courts have applied the period of limitation of three years, the same is inapplicable to cases where the refund application has been moved before the Revenue authority. The decision in the case Escorts Limited vs. UOI - 1998 (97)ELT 211 (SC), the Hon'ble Apex Court has held that application for refund is presented before the Customs authority under Section 27 of Customs Act, 1962, the said authority must necessarily operate within the four corners of the said Act and cannot 5 E/10743/2018-SM have recourse to Section 72 of the Indian Contract Act, 1872 and the delayed application rightly rejected as time barred. The Hon'ble Supreme Court in the case of UOI vs. Amines and Plasticizers Limited held that refund claims filed beyond the period prescribed under Customs Act, 1962, the High Court order directing the Revenue to ignore the period of limitation and dispose of the refund claim stands set aside in the light of law declared in Mafatlal's case and the refund claim was held to be dismissed as barred by time. The Hon'ble Supreme Court in the case of UOI vs. Kirloskar Pneumatic Company - 1996 (84) ELT 401 (SC) held that the High Courts under writ jurisdiction cannot direct the Customs authorities to ignore the time limit prescribed under Section 27 of the Customs Act, even though High Court itself may not be bound by the time limit of the said Section, Articles 226 and 227 of the Constitution of India. In view of the above judgment, only the High Court, under writ jurisdiction, can exercise the inherent power provided in it but the said power cannot be enjoyed by the Tribunal. In the case of Paros Electronics Pvt. Limited vs. UOI - 1996 (83) ELT 261 (SC), the Hon'ble Supreme Court held that customs authorities cannot grant refund, being a creation of statute they are bound by limitation of Section 27 of the Customs Act.
5. On the analysis of above judgments of Hon'ble Supreme Court, the gist is that any refund filed before the Customs/ Central Excise authorities can only process the claim under Customs/ Central Excise Acts and the departmental authorities have no jurisdiction to go beyond the provisions made under the Act and limitations provided under Section 27/Section 11B.
6. As regards the alternative submissions made by ld. Counsel that refund claim was filed within time limit from the date of receipt of Tribunal order, we find that the issue on merits was already decided in favour of the appellant by the Commissioner (Appeal) vide order dated 04.12.2013, thereafter, the appellant became eligible for refund. Even though the department had filed appeal against the Commissioner (Appeal) order before the Tribunal but since no stay was granted, the departmental authority was bound to sanction the refund claim in terms of CBEC Circular 572/9/2001-CX dated 22.02.2001. The relevant para of the Circular is reproduced as under:-
"(3) The cases where refund arises due to order of Commissioner (Appeals) or Commissioner of Central Excise/Customs and decision is taken to contest them before CEGAT.
In such cases appeal/stay application should be filed expeditiously well before the expiry of stipulated period of three months (and not waiting for the last date of filing of appeal). However, no refund/rebate claim should be withheld on the ground that an appeal has been filed against the order giving the relief, unless stay order has been obtained. It would be the responsibility of the concerned Commissioner to obtain stay order expeditiously where the orders passed by Commissioner (Appeals) suffer from serious infirmities and it involves grant of heavy refunds."
Therefore, the period of one year shall be reckoned from the date of receipt of Commissioner (Appeal) order and not from the date of receipt of Tribunal's order.
6 E/10743/2018-SM
7. For the refund claims arising out of order settling the dispute, there is specific provision made under Section 27(1B) which is reproduced below:-
"Section 27 - Claim of refund of duty: -
(1B) Save as otherwise provided in this section, the period of limitation of one year shall be computed in the following manner, namely:--
(a) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 25, the limitation of one year shall be computed from the date of issue of such order;
(b) where the duty becomes refundable as a consequence of any judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction;
As per clause (b) of sub Section (1B) of Section 27, where the duty became refundable as a consequence of any judgment, decree, order or direction of the appellate authority, the limitation of one year shall be computed from the date of such judgment, decree, order or direction. In the present case, the demand of duty on short imported goods stands set-aside as per the order of Commissioner (Appeal) and as a consequence, the appellant become eligible for refund of the said amount. Therefore, in terms of clause (b) of sub-Section (1B) of Section 27, the period of one year shall be computed from the date of Commissioner (Appeal) order. Accordingly, the refund application filed beyond one year from that date is clearly time barred.
8. The Hon'ble Supreme Court in the case of Dena Snuff Pvt. Limited vs. CCE, Chandigarh - 2003 (157) ELT 500 (SC) has held that in case of any dispute on merits, the period of limitation would start to run from the date of final decision in assessee's own case. In view of the above judgment also it is clear that appellant could have filed the refund claim within one year from the date of Commissioner (Appeal) order by which the dispute on demand of duty was settled.
In view of the above discussions, we are of the view that the departmental authority has no legal authority to sanction the refund filed beyond limitation. Accordingly, the impugned order is upheld and the appeal is dismissed.‖
4. In view of above judgment it can be seen that the core issue decided is duty or deposit, the refund is governed by section 11B of the Central Excise 1944. Accordingly, the issue of unjust enrichment has to be dealt with before sanctioning of any refund. Following the above judgment we hold that the provision of unjust enrichment is applicable in the case of appellant's 7 E/10743/2018-SM refund. Hence, the order passed by the Ld. Commissioner (A) is upheld. The appeal is dismissed.
(Pronounced in the open Court on 20/11/2018) (Ramesh Nair) Member (Judicial) DS