Custom, Excise & Service Tax Tribunal
Vilsons Roofing Product Pvt. Ltd vs Commissioner Of Central Excise on 28 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.E/1502 to 1505/11 (Arising out of Order-in-Appeal No.PII/VSGRAO/50-53/11 dated 30/06/2011 passed by Commissioner of Central Excise (Appeals), Pune) For approval and signature: Honble Mr. Raju, Member (Technical) 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 :Yes 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? ========================================
Vilsons Roofing Product Pvt. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Kolhapur Appearance:
Shri.Prasad Tendulkar, Advocate for appellant Shri.SV Nair, Asst. Comm. (AR) for respondent CORAM:
Honble Mr. Raju, Member (Technical) Date of Hearing : 28/04/2016 Date of Decision : /05/2016 ORDER NO Per: Raju
1. The appellants, M/s.Vilsons Roofing Product Pvt. Ltd. have filed these appeals against the rejection of refund claims. The appellants are manufacturer of Asbestos products and the market prices of the said products vary frequently. The appellants claimed that after the clearance of goods from the factory gate, they were giving credit notes to the buyers to accommodate the fluctuations of prices. It was claimed by them that the request for provisional assessment was denied and their appeal against the said order is pending in Tribunal. The refund claims were denied on the ground of unjust enrichment. The show-cause notice invoked solely the ground of unjust enrichment. The order-in-original as well as in appeal also did not discuss the issue of merits.
2. The learned Counsel for the appellants argued that there is no case of unjust enrichment. He claimed that they had submitted a certificate of Chartered Accountant which certified as follows:
We hereby certify that the Ledger Account of Excise refund claim receivable account is showing a debit balance as on 31/03/2010 of Rs.38,38,579/- under current assets and it is not charged to profit and loss account. It represents the amount claimed to be receivable as refund of Central Excise being the Central Excise paid on rate difference, for the period April 2009 to March 2010.
2.1 He argued that they have issued credit notes to the buyers and therefore, they have not passed on the burden of duty to the buyers. Under these circumstances, he argued that refund claim should not be rejected on the grounds of unjust enrichment.
3. The learned AR relies on the impugned order. He argued that the goods have been supplied to the customers of the type Cement Company, Kirana Merchant, Tiles Depot, Saw Mill, Traders, Sales Corporation, Trading Company, Hardware & General Stores, Distributors. It was argued that since the entire duty has been charged at the time of clearance and these buyers would have recovered the same from the ultimate customers. It is clear that any refund at this stage would amounts to unjust enrichment.
4. I find that the entire case of the appellant is based on the Chartered Accountant certificate and the credit notes. The appellants have relied on the decision of the Tribunal in the case of Gopi Krishna Processors Pvt. Ltd., Vs. CCE, Jalandhar 2007 (210) ELT 529 (Tri-Del) to assert that the certificate of Chartered Accountant to the effect that the refund amount sought is not debited to the trading. Profit and loss account is sufficient to establish that the burden of duty was not passed on. The appellant also relied on the decision of the Honble High Court of Rajasthan in the case of AK Spintex Ltd. 2009 (234) ELT 41 (RAJ). In the said decision, the Honble High Court has observed as follows:
8.?Therefore, the question required to be examined is, as to whether despite exchanges of debit notes and credit notes respectively, between the assessee and its immediate purchaser, the assessee is not entitled to claim refund, so as to find, that the Tribunal was wrong in allowing the refund.
9.?On the face of the things itself, it is clear that once the goods are supplied, the property in the goods passes to the purchaser, and seller becomes entitled to the price, and once the debit note is issued by the purchaser, and corresponding credit note is issued by the seller, the price of the goods stand reduced to the extent of debit note and credit note, meaning thereby, that after issuance of debit note and credit note, the price of goods charged by the seller, from the purchaser, is the price, initially billed, minus the amount of the debit note, and credit note, and therefore, when the debit notes and credit notes are issued and effected, which are not disputed, it cannot be assumed, that incidence of burden of excise duty has been passed on to the purchaser.
10.?So far as Section 12B is concerned, it only places burden of proof on the assessee, by enacting the presumption, against him, and does not do anything beyond it. The burden placed on the assessee, by Sec. 12B, obviously, is a rebuttable one, and the assessee may lead evidence in rebuttal, by proving issuance of debit note and credit note, likewise there may be cases, where purchaser may refund the amount to seller, in cash, or may issue some bank note, like Cheque, or Draft, for refund of the amount, or there may be case, where goods are sold on credit, and while making payment of price of the goods the purchaser may debit the amount, and thus, pay lesser amount to the seller, and if all those facts are shown and proved, the burden placed on the assessee, by Sec. 12B, would shift on the revenue, then, it is required for revenue, to prove, either that the theory projected by the assessee, is fake and false, or that the burden has actually been passed on. Once the assessee leads reliable evidence, about his having not passed burden on the purchaser, and revenue fails to rebut that evidence, the presumption enacted by Sec. 12B, stands sufficiently rebutted, and cannot survive ad infinitum.
It is seen that in the said case, there was peculiar circumstances in so far as the customers had refused to accept the assessment. Para 4 of the said decision elaborates the facts which reads as follows:
4.?It was the date 11-6-2001, on which the said notification was amended vide Notification No. 25/2001-CE, whereby the deemed credit was increased to 50%. In the order of the Tribunal, there is a confusion, as to whether the amendment was effective from 1-6-2001 or 11-6-2001. It however, not in dispute, that the Notification was issued on 11-6-2001, and since the controversy in the present case, relates only to the period 11-6-2001 to 13-6-2001, we need not go into the question, as to whether the notification was effective from 1-6-2001 or 11-6-2001. The assessee continued to make clearance of the processed fabric, on payment of 55% duty, instead of 50%, up to 13-6-2001, with deemed credit benefit @ 45% to their customers. However, the customers were aware of the change in the rates, and protested against the charge of duty, @ 55%, and thereupon, the customers immediately issued debit notes to the assessee, with a view to take credit of the differential amount of duty. Accordingly, the assessee filed a claim for refund of duty in the sum of Rs. 61,146/- contending, that this amount has neither been realized from their customers, nor the duty has been passed on to the customers. The application for refund was rejected on the ground, that the duty liability was passed on to the customers, and subsequent credit notes issued to the customers, does not make the bar of unjust enrichment inapplicable. Against the rejection, appeal was filed before the Commissioner (Appeals), which too was disposed, relying upon the judgment of the Tribunal in CCE, Madras v. Addison & Co. reported in 1997 (93) E.L.T. 429, wherein it was held, that if after the date of payment of duty, any payments are made, same cannot be taken cognizance of for the purpose of Section 11B. The assessee carried the matter, by further appeal, before the Tribunal, relying upon Larger Bench judgment of the Tribunal, in S. Kumars Ltd. v. CCE, Indore - 2003 (153) E.L.T. 217, wherein it was noticed, that since there is no dispute on the fact, that this amount of duty has not been collected by the appellants, it is not hit by the principle of unjust enrichment. The learned Tribunal found, that there is substantial force in submission of the learned counsel for the assessee, incidence of duty has not been passed on by them to their customers, who had immediately objected to charging of duty @ 55% instead of 50%, with effect from 11-6-2001, and once the customers protested, the assessee immediately issued credit notes, which have not been disputed by the revenue, it cannot be claimed that incidence of duty, of which refund is now being sought, by the appellant, has been passed on to the customers. It was held, that question of passing the incidence of duty, to the customers, which has not been paid by them, to their customers, does not arise, thus, the appeal was allowed.
In these circumstances, the facts of the case are different from those in the case of AK Spintex Ltd. (supra). I find that in the case of Sangam Processors (Bhilwara) Ltd. (1994 (71) ELT 989. In para 4 of the said decision, the Tribunal has observed as follows:
4. The submissions made? by both the parties, herein, have been carefully, considered. In all these appeals, the question to be determined is whether the appellants can be said to be eligible for refund of the duty claimed by them in terms of Sec. 11C of Central Excises & Salt Act, 1944, which reads as under :
Sub-section 2 of Sec. 11C provides for refund of duty that has been paid on the goods in respect of which Notification under Sec. 11C has been issued. Therefore, the refund claim under sub-sec. (2) should flow from the 11C Notification, and as a consequence thereof, which is, further, indicated by the requirement therein that the application should be made to the Assistant Collector within six months from the issue of the Notification. The provisions of Sec. 11C and sub-sec. (2), thereof cannot come into play in the case of any other refund application made under Sec. 11B for reasons other than the issue of 11C Notification. In the present appeals, appellants had filed refund claims in the year 1986 whereas the 11C Notification 35/88 was issued much later on 21-12-1988 when sub-sec. (2) was already on the statute. Moreover, sub-sec. (2) was inserted and came into effect on 1-7-1988 and was in force when the refund claim was disposed of by the Assistant Collector for the first time in his orders in these cases issued in January, 1989 rejecting their claims for non-fulfilment of condition in sub-sec. (2) that the duty should not have been passed on to any other person. The appellants do not deny the fact that during the relevant period they had passed on the duty incidence to the customers and their claim is that the incidence of duty so passed on had since been made good by the appellants granting credit notes to the customers as verified by the Assistant Collector in his second order during de novo proceedings and that thereby they have fulfilled the condition in Sec. 11C(2). It is not possible to accept the contention because a plain reading of Sec. 11C(2) would show what is required thereunder is that the person claiming refund should apply within six months of the issue of 11C Notification with satisfactory proof to show that duty incidence has not been passed on to `any other person. Such is not the case here because in these cases the appellants have admittedly passed on the incidence at the time of clearance of the goods on payment of duty and had filed the refund claims under Sec. 11B in 1986 and at much later stage, apparently, after the insertion and coming into force of sub-sec. (2) to Sec. 11C from 1-7-1988, and even before the issue of notification under Sec. 11C on 21-12-1988 in respect of their goods, the appellants have sought to show that the duty incidence passed on had been remedied by issue of credit notes to customers. It is not possible to interpret sub-sec. (2) of Sec. 11C to accommodate such situations and to say that even when duty has been passed on to the customers at the time of clearance the assessee can still claim refund under Sec. 11C(2) of Central Excises and Salt Act by issuing credit notes. The Tribunal decision in the case of Collector of Central Excise v. Mahavir Spg. Mills (supra) does not also advance the case of the appellants as it was a decision relating to a demand of duty and not a refund claim rendered in the context of Sec. 11C prior to introduction of sub-sec. (2) thereto. In the result, there is no reason to interfere with the order passed by the Collector (Appeals) and the appeals are rejected.
The said decision was upheld by the Honble Supreme Court as reported in 1994 (70) ELT A-182. The Tribunal in the case of Oriental Textile Processing Co. Pvt. Ltd. 2012 (276) ELT 257 (Tri-Del) has observed as follows:
5.?The appeal filed against connected matter involving similar issue was dismissed by the Apex Court and that is reported in Rajasthan Processors (India) Ltd. v. Collector - 1994 (70) E.L.T. A182 as well as in Rajasthan Spinning & Weaving Ltd. v. Collector - 1999 (112) E.L.T. A115 (S.C.). Once the law having been clearly laid down that mere issuance of the credit notes or debit notes subsequent to the collection of the duty incidents in terms of the invoices issued at the time of the sale of the goods do not amount to discharging the burden which is required to be discharged by the assessee, to come out of the principle of unjust enrichment applicable in such cases, merely because the buyers of the respondent had issued the debit notes and had made reference to such debit notes in their ledger books that itself cannot be sufficient to say that the respondent had discharged their burden in that regard. The appellants, therefore, are justified in contending that consequent on the failure on the part of the respondent to establish the duty incident has not been passed over to the customers, the authorities below erred in dropping the proceedings. Being so, the order passed by the authority below are not sustainable and are liable to be set aside with consequential relief. Accordingly, the appeal succeeds. The impugned order along with the order of the Adjudicating Authority is set aside with consequential relief.
6. In view of the above, since the facts are same, relying on the decision of Honble Supreme Court in the case of Sangam Processors (supra) and the decision of the Tribunal in the case of Oriential Textile Processing Co. Pvt. Ltd. (supra), the appeals are dismissed.
(Pronounced in Court on .) (Raju) Member (Technical) pj 1 5 Appeal No.E/1502 to 1505/11