Custom, Excise & Service Tax Tribunal
E. Merck Ltd vs Aurangabad on 6 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/4165/2005
[Arising out of Order-in-Appeal No: AKD(139) 109/2005 dated 20/10/2005 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad.]
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
E. Merck Ltd
Appellant
versus
Commissioner of Central Excise & Customs
Aurangabad
Respondent
Appearance:
None for the appellant Shri Ashuthosh Nath, Astt. Commissioner (AR) for the respondent CORAM:
Honble Shri Ramesh Nair, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 06/10/2016 Date of decision: 01/12/2016 ORDER NO: ____________________________ Per: Ramesh Nair:
The fact of the case is that the appellant are principal manufacturer of medicaments falling under Chapter 30 of Central Excise Tariff Act, 1985. They got their physician samples manufactured from M/s Atra Pharmaceuticals Ltd, Waluj, Aurangabad on loan-licence basis and cleared on payment of duty. The valuation of the goods was to be done by taking 115% of the cost of production of the manufactured goods. Accordingly, there was excess payment of duty. The excise duty payment was made under protest by M/s Atra Pharmaceuticals Ltd and got it reimbursed from the appellant. M/s Atra Pharmaceuticals filed their refund claim for excess duty paid which was rejected by the adjudicating authority on the ground of unjust enrichment as duty incidence has been passed on to another person i.e. Merck Limited.
2. The said order-in-original had been challenged by M/s Atra Pharmaceuticals Ltd before the appellate authority, who vide order-in-appeal No. BPS(334)/2004 dated 27/09/2004 ordered that the refund is admissible on merit but the amount was required to be credited to Consumer Welfare Fund. Thereafter, the appellant M/s Merck Limited filed refund claims on 05/07/2004 on the ground that they had actually borne the duty incidence and had not passed on the burden to anybody else as physician samples were meant for free distribution. The refund claim was rejected by the adjudicating authority vide order-in-original No. 02/RFD/2005 dated 03/06/2005 on the ground that since the refund claim filed by Atra Pharmaceuticals Ltd was sanctioned and credit to Consumer Welfare Fund, the same cannot be considered for refund to another party i.e. M/s Merck Limited and even otherwise the claims are time-barred. Hence refund cannot be sanctioned. Being aggrieved by the order-in-original dated 03/06/2005 an appeal was filed by the appellant before the Commissioner (Appeals) who vide the impugned order rejected the appeal of the appellant holding that:
Protest lodged by the manufacturer is of no help to the appellants refund claims which are thereby time barred in terms of Explanation (B)(e) appended to Section 11B of CEA 1944.
3. Being aggrieved by the impugned order-in-appeal the appellant is before us.
4. None appeared on behalf of the appellant despite notice nor any adjournment request was received. On perusal of the grounds of appeal, we find that the appellants submission is that refund claim has already been sanctioned and credited into Consumer Welfare Fund in respect of refund claim filed by the manufacturer, M/s Atra Pharmaceuticals Ltd. Excise duty was paid by the manufacturer, M/s Atra Pharmaceuticals Ltd on behalf of the appellant. Therefore, rejection of refund claim on time-bar is not correct as the same refund was sanctioned and claimed by the appellant. They further submit that the refund is on account of excess duty paid in respect of free physician sample. Therefore, there is no question of passing of the incidence of excise duty paid by M/s Atra Pharmaceuticals Ltd and reimbursed by the appellant. It was also submitted that since the duty was paid under protest the same will be equally applicable for the refund claim filed by the appellant. Therefore, the refund cannot be denied on the ground of time-bar. They relied upon the following judgments:
i. Sarabhai Chemicals Pvt Ltd v. Commissioner of Central Excise, Vadodara 2004 (168) ELT 70;
ii. National Winder v. Commissioner of Central Excise 2003 (154) ELT 350 (SC);
iii. Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. Commissioner of Central Excise 2004 (173) ELT A253.
5. On the other hand, the learned AR appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the refund claim filed by the manufacturer is an independent manufacturer, even though the manufacturing was done on loan-licence basis for the appellant, but refund is governed by Section 11B. In the present case, the appellant is bound by the provisions for refund provided under Section 11B. Payment of duty under protest by the manufacturer cannot be extended for filing refund by the purchaser i.e. the appellant, hence time-limit cannot be relaxed on the basis of payment under protest by the manufacturer. The appellant has to comply with the terms of unjust enrichment as well as on limitation and the appeal has failed to meet such compliance as refund claim was filed belatedly beyond the prescribed time-limit and also not satisfied the aspect of unjust enrichment. The learned AR rely upon the following decisions:
i. Western Coalfields Ltd v. Commissioner of Central Excise, Aurangabad 2011 (273) ELT 532 (Tri.-Mumbai) ii. Commissioner of Central Excise, Aurangabad v. South Eastern Coalfields Ltd 2011 (273) ELT 423
6. We have carefully considered the submissions made by both the sides. We find that, as regards unjust enrichment, the issue is not that where the appellant has passed on the incidence of duty borne by them to any other person but the Asstt. Commissioner in the order rejected the claim on two grounds i.e., firstly, once the refund claim was credited to Consumer Welfare Fund the same cannot be considered to be refunded to another party i.e. the appellant, and secondly, the claim is barred by limitation. Commissioner (Appeals) has already held that the first ground is not valid inasmuch as the claimant is not at fault if amount has been credited to the Consumer Welfare Fund. We also agree and hold that even though the amount was credited to the Consumer Welfare Fund, if the buyer of the goods comes forward and claim the refund and if he is eligible in terms of Section 11B, the refund should be granted to the buyer of the goods as a claimant. The only issue on which the Commissioner (Appeals) rejected the claim is limitation. It is the submission of the appellant that once the duty was paid under protest even though by the manufacturer, the same will continue to hold good for the refund claimed by the buyer i.e. the present appellant. In this regard, a three member bench of the Honble Supreme Court in the case of Commissioner of Central Excise v. Allied Photographic India Limited 2004 (166) ELT 3 (SC) has held as under:
13.?The point which still remains to be decided is - whether the respondent herein was entitled to refund without complying with Section 11B of the Act on the ground that it had stepped into the shoes of NIIL (manufacturer) which had paid the duty under protest. It was argued on behalf of the respondent that NIIL had paid the excise duty under protest pending final assessment, which was ultimately decided in favour of NIIL and since NIIL had sold the product to the respondent herein, the respondent was entitled to the benefit of the second proviso to Section 11B(1) which inter alia stated that limitation of six months shall not apply where duty had been paid under protest. We do not find any merit in this argument. In the case of Bombay Tyre International Ltd. (supra), it has been held by this Court that Section 3 of the said Act is a charging section whereas Section 4 is a computation section which covers assessment and collection of excise duty. That the basis of assessment under Section 4 was the real value of excisable goods which included manufacturing cost and manufacturing profit but excluded selling cost and selling profit. That the price charged by the manufacturer for sale of the goods represented the real value of the goods for assessment of excise duty. In the case of Atic Industries Ltd. v. H.H. Dave, Asstt. Collector of Central Excise reported in [1978 (2) E.L.T. (J444) (S.C.) = AIR 1975 SC 960], this Court has held that the resale price charged by a wholesale dealer who buys goods from the manufacturer cannot be included in the real value of excisable goods in terms of Section 4 of the said Act. Therefore, it is clear that the basis on which a manufacturer claims refund is different from the basis on which a buyer claims refund. The cost of purchase to the buyer consists of purchase price including taxes and duties payable on the date of purchase (other than the refund which is subsequently recoverable by the buyer from the Department). Consequently, it is not open to the buyer to include the refund amount in the cost of purchase on the date when he buys the goods as the right to refund accrues to him at a date after completion of the purchase depending upon his success in the assessment. Lastly, as stated above, Section 11B dealt with claim for refund of duty. It did not deal with making of refund. Therefore, Section 11B(3) stated that no refund shall be made except in terms of Section 11B(2). Section 11B(2)(e) conferred a right on the buyer to claim refund in cases where he proved that he had not passed on the duty to any other person. The entire scheme of Section 11B showed the difference between the rights of a manufacturer to claim refund and the right of the buyer to claim refund as separate and distinct. Moreover, under Section 4 of the said Act, every payment by the manufacturer, whether under protest or under provisional assessment was on his own account. The accounts of the manufacturer are different from the accounts of a buyer (distributor). Consequently, there is no merit in the argument advanced on behalf of the respondent that the distributor was entitled to claim refund of on account payment made under protest by the manufacturer without complying with Section 11B of the Act.
7. In view of the above observation of the Honble Supreme Court, benefit of payment of duty under protest made by the manufacturer cannot be extended to the buyer. Therefore, considering the above view of the Honble apex Court the present appellant cannot enjoy the benefit of payment of duty under protest by the manufacturer. We, therefore, following the aforesaid decision of the Honble Supreme Court, find that the refund claim filed by the appellant is beyond one year and therefore, the same is time-barred. We therefore, do not find any infirmity in the impugned order and the same is upheld.
8. The appeal is dismissed.
(Operative part Pronounced in Court on 01/12/2016) (C J Mathew) Member (Technical) (Ramesh Nair) Member (Judicial) */as 9 2