Custom, Excise & Service Tax Tribunal
M/S. Savita Oil Technologies Ltd vs Commissioner Of Central Excise, ... on 3 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/2170/10 [Arising out of Order-in- Appeal No. PKS/300/BEL/2010 dated 17/9/2010 passed by the Commissioner (Appeals) Central Excise, Mumbai-III] For approval and signature: Honble Mr Ramesh Nair, 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
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3. Whether Their Lordships wish to see the fair copy : seen
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4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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M/s. Savita Oil Technologies Ltd
:
Appellants
VS
Commissioner of Central Excise, Belapur
:
Respondent
Appearance
Shri. Mehul Jivani, C.A. for the Appellants
Shri. V.K. Shastri, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 3/2/2016
Date of decision: /2016
ORDER NO.
This appeal is directed against the Order-in- Appeal No. PKS/300/BEL/2010 dated 17/9/2010 passed by the Commissioner (Appeals) Central Excise, Mumbai-III, whereby Ld. Commissioner(Appeals) upheld the Order-in-Original, denying the refund claim on the ground of unjust enrichment and dismissed the appeal of the appellant.
2. The fact of the case is that the appellant cleared the Lubricating Oil through the depot and claimed discount from the basic selling prices and excise duty was charged to the customers on the discounted price. However as per the provisional assessment the duty was paid without considering basic selling price as transaction value that means excise duty was paid on the price without deduction of discount. In the finalization of the assessment vide Order-in-Original No. 06/DYR/08-09 dated 11/9/2008 and No. 27/DYR/08-098 dated 21/10/2008 discount was allowed. Accordingly, in the assessment order it was mentioned that the appellant may file separate refund claim under Section 11B in respect of excess paid duty. The appellant filed refund claim in respect of excess paid duty for an amount of Rs. 39,57,598/-. The adjudicating authority, vide Order-in-Original No. 1020/09-10 dated 17/2/2010 though sanctioned the refund claim but credited the same into the consumer welfare fund under Section 11B of Central Excise Act, 1944 read with subrule (5) and (6) of Rule 7 of the Central Excise Rules, 2002. The adjudicating authority given the findings, that the appellant at the time of payment of excise duty did not show the same as receivable in the balance sheet. However the said amount was shown under the Loans and Advances in the financial account for the year 2008-09. It was further found that excise duty paid in excess was booked under the profit and loss account in the relevant balance sheet therefore it stands passed on to any other persons, therefore unjust enrichment become applicable. Aggrieved by the adjudication order, appellant filed appeal before the Commissioner (Appeals). Concurring with the original authority upheld the Order-in-Original and dismissed the appeal filed by the appellant, therefore the appellant is before me.
3. Shri. Mehul Jivani, Ld. C.A appearing on behalf of the appellant submits that only issue involved is unjust enrichment. The appellant in the balance sheet for the year 2008-09 shown the refund amount as receivable. The whole basis of crediting the refund amount in the consumer welfare fund is that the appellant did not show the refund amount as receivable in the balance sheet for the year 2007-08. He submits that the amount can be shown as receivable in the balance sheet only when it is ascertained that the amount is refundable. In the present case only after finalization of the balance sheet, it was ascertained that how much amount is refundable and accordingly it was shown as receivable in the balance sheet of 2008-09. He also submits that at the time of payment of excise duty, excess duty paid on discount amount was not charged to the customers which is clearly evident from the records. Therefore excess duty paid was not passed on to the customers to whom the goods were sold. Therefore in one hand the duty paid in excess was not charged to the customers and on the other hand the same amount has been shown as receivable in the balance sheet of 2008-09. C. A. Certificate to this effect was also produced. With these undisputed evidences, it is established that the incidence of duty paid in excess has not been passed on to any other persons. He placed reliance on the following judgments:
(a) Union of India Vs. A.K. Spintex Ltd [2009(234) ELT 41(Raj.)]
(b) A.P. Paper Mills Ltd Vs. Commr. of C. Ex. Visakhapatnam[2014(306) ELT 344(A.P.)]
(c) Commissioner of Central Excise, Belgaum Vs. Gokak Mills[2013(295) ELT 392(Kar.)]
(d) Commissioner of C. Ex. Mangalore-3 Vs. Solaris Chemtech Ltd[2011(273) ELT 191(Kar.)]
(e) Advance Steel Tubes Ltd Vs. Commissioner of C. Ex. Ghaziabad[2014(310) ELT 370(Tri. Del.)]
(f) Eastern Shipping Agency Vs. Commr. of Service Tax, Ahmedabad[2013(32) S.T.R. 630(Tri. Ahmd.)]
(g) Ranade & Co. Vs. Commissioner of Service tax, Ahmedabad[2013(32) S.T.R. 613 (Tri. Ahmd.)]
(h) Commissioner of Central Excise, Pune-III Vs. Cummins India Ltd[2008(221)ELT 525 (Tri. Mum)]
(i) Radico Khaitan Ltd Vs. Commissioner of Service Tax, Delhi[2014(34) S.T.R. 586(Tri. Del.)]
(j) Shree Krishna Nylon Pvt Ltd Vs. Commissioner of C. Ex., Mumbai-III[2015(327) ELT 626 (Tri. Mumbai)]
(k) Commissioner of Central Excise, PUne-I Vs. Sandvik Asia Ltd[2015(323) ELT 431 (Bom)]
4. On the other hand, Shri. V.K. Shastri, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that since the appellant had not booked the amount as receivable in the book of account for the year 2007-08 and even though it is shown in the balance sheet of 2008-09 the incidence was already passed on in the year 2007-08 therefore unjust enrichment is applicable.
5. I have carefully considered the submissions made by both the sides and perused the record.
6. I find that the fact is not under dispute that the refund has arisen out of the finalization of the provisional assessment. The appellant have paid the duty on the basic sale price. However, while raising the sale invoice from the depot they have shown basic price minus discount and on the discounted price excise duty was charged to their customers which clearly shows that the excess paid duty was not collected atleast from the customers to whom the goods were sold. The appellant even though shown the excess paid duty as receivable in the balance sheet for the year 2008-09 and not shown the same in the balance sheet for the year 2007-08 does not establish that incidence of duty was passed on to any other persons. Once the amount shown as receivable, it becomes refundable. Accounting treatment such as not showing the receivable in the 2007-08 and shown the same in 2008-09 is not permitted as per the wish of individual. It is acceptable norms under the Income Tax therefore the lower authority could not have questioned about accounting treatment given in the balance sheet which is audited and accepted by the statutory authority. I do not agree with the contention of the Revenue that if an amount was not shown as receivable in the particular year and it was subsequently shown as receivable the incidence of such amount stands passed on, for the simple reason that if the incidence of particular amount assumably passed on to any other persons then it cannot be permitted under Income Tax law to book the same amount as receivable in the subsequent financial year. Therefore in my view even in the year 2008-09 when the amount was shown as receivable, it can be clearly established that the incidence of duty has not been passed on. The lower authority have presumed that even though the excess paid duty was not directly passed on to these customers to whom the goods were sold but it might have been passed on to any other person. In my view when the amount was shown as receivable coupled with fact that the said excess paid duty was not recovered from the concerned customers, without any contrary evidence it cannot be presumed that incidence was passed on to any other person. It is not convincing that burden of an amount related to particular customer can be shifted to any other person. In the present cut throat competitive commercial world, if the goods are sold at a particular competitive price, just for sake of recovery of any liability the same cannot be loaded in the price arbitrarily and charged to any customers. No customer would accept such burden therefore the presumption of the lower departmental authority has no basis that the incidence of excess paid duty was passed on to any other person. I find that the evidence produced by the appellant such as booking of amount in the balance sheet as receivable and the fact that excess paid duty was not recovered from the concerned customer, if these evidences are not sufficient as per the lower authority, then it is onus on the department to bring the evidence to show that incidence of duty has actually been passed on. In the present case no such evidences was brought on record by the department that incidence of excess paid duty was indirectly passed on to any other persons. In this regard some judgments relied upon by the Ld. Counsel directly covered the issue of the present case, which are reproduced below:
A.K. Spintex Ltd (supra)
14.?In our view, the stand cannot be accepted. Passing on the burden of excise duty to the next purchaser, cannot be left in the realm of presumption. In cases, where the assessee is able to show, that the burden is not passed on, or it has been reversed, the claim of refund cannot be denied. A.P. Paper Mills Ltd (supra)
4.?In C.E.A. No. 51 of 2004, the Assistant Commissioner of Central Excise, who was the primary authority, had himself allowed the refund claims, which were reversed by the appellate authority - Commissioner (Appeals) filed by the department. Whereas in the transactions in CEA Nos. 9, 10 and 21 of 2005, the primary as well as appellate authorities and also the Tribunal had refused to grant the refund claims. As common questions of law and fact are involved in these appeals, they are being disposed off by common order. Eastern Shipping Agency (supra)
7.?Ld. AR, on the other hand, would submit that the Chartered Accountants certificate is not specific and has not been given on the principles of standard accounting practices. He would submit that in the judgment of the Honble Supreme Court in the case of Solar Pesticides Ltd. - 2010 (116) E.L.T. 401 (S.C.), Honble Supreme Court has specifically stated that incidence of duty, if passed on directly or indirectly, the refund is hit by unjust enrichment clause. It is his submission that in the case in hand, the appellant had booked the amount which has been paid by them as expenses, which would indicate that said amount was indirectly passed on to their customers.
8.?I have considered the submissions made at length by both sides and perused the records.
9.?The issue involved in this case is regarding refund claim which has been filed by the appellant on receiving Order-in-Appeal dated 3-12-2010, wherein the first appellate authority has reduced the tax liability on the appellant. The said Order-in-Appeal was not contested by the Revenue or the assessee. Subsequent to such an order, the refund claim has been filed by the appellant for an amount of Rs. 3,31,608/-, which is an amount paid in excess by the appellant on being pointed out by the audit party.
10.?The first appellate authority, in this case, has held against the appellant only on the ground that the appellant has booked the amount in their Profit & Loss Account as expenses and such duty/Service Tax liability having paid subsequently, could not be collected by the appellant from their clients, but arguments have been discarded only on the ground that the appellant has not recorded the payments in balance sheet as receivables. I find that this finding of the first appellate authority is not in consonance with the law inasmuch as Honble High Court of Punjab & Haryana in the case of Modi Oil & General Mills - 2007 (210) E.L.T. 342 (P & H), has specifically held that the doctrine of unjust enrichment will not apply to a situation, wherein the assessee is directed to pay the amount and pays the same, on being pointed out by the authorities and he claims the refund of the same when he succeeds in the proceedings. The findings of the first appellate authority that this amount has not been shown as receivables, will also not carry the Revenues case any further, for the simple reason that the Chartered Accountant has given certificate dated 21-4-2011 which reads as under :-
Paresh & Co.
Chartered Accountants To Whom It May Concern We have verified Books of Accounts like Cash/Bank Book and Ledger Accounts of M/s. The Eastern Shipping Agency, Ahmedabad and upon verification, I certify that M/s. The Eastern Shipping Agency, Ahmedabad has paid the following amounts vide Challan No. 3, dated 30-4-2010:
Nature of Payment Amount (Rs.) Service Tax 1,83,220/-
Interest 1,25,075/-
Penalty 5,000/-
Penalty 45,805/-
Total Amount Paid 3,59,100/-
(Rupees Three Lakhs, Fifty Nine Thousands only) towards the alleged Service Tax liability for the period from October 2003 to April 2006.
I further certify that M/s. The Eastern Shipping Agency, Ahmedabad have not passed and/or recovered the said sum from the clients and the said sum have been borne and paid by the firm.
For Paresh & Company Chartered Accountants Sd/-
(P.M. Shah)
7.?The said Chartered Accountants certificate as reproduced above has been sought to be discarded by the first appellate authority summarily indicating that the said certificate does not disclose accounting practices whatsoever and that the said certificate is based on the accounts. In my considered view, these findings of the first appellate authority are far from reality, inasmuch as it can be seen from the Chartered Accountants certificate that Chartered Accountant has categorically certified that he has verified the books of account like Cash/Bank Book and Ledger Accounts and on verification, he has certified that the amount has not been passed on by the appellant to their clients. In my view, the decision in the case of Crane Betel Nut Powder Works (supra) (wherein I was one of the Member), would directly apply in this case.
8.?I also find strong force in the contentions of the ld. Counsel that the judgment of the Honble High Court of Gujarat in the case of Mangal Textile Mills Pvt. Ltd. (supra) would apply inasmuch as the certificate of Chartered Accountant produced by the appellant was not disputed by the Revenue authorities, by bringing on record any other opinion contrary to the Chartered Accountants certificate.
9.?I find that the various case laws cited by ld. Counsel are directly on the point.
10.?In view of the foregoing and also the binding judicial pronouncements, I find that the impugned order is unsustainable and is liable to be set aside.
Ranade & Co. (supra)
2.?Heard both the sides. Even though several decisions were cited by both the sides relating to admissibility or otherwise of the refund claim on grounds such as the amount is not a duty but only a deposit; the amount was shown as expenditure in the balance sheet and whether such showing would amount to collection of the same from the customers or not and whether Service Tax was to be shown in the invoice or not etc. I feel that it is not necessary to consider all these decisions to come to a conclusion since in my opinion the facts in this case are clear enough to show that there was no unjust enrichment and refund claim is admissible. Firstly, I am in total agreement with the submission made by the ld. consultant that the appellant was rendering different types of services during the relevant period and wherever the service rendered was a taxable service, the invoice was showing the Service Tax separately and paying the same to the department. Where the appellant felt that the service was not liable to Service Tax, no Service Tax was collected. This itself in my opinion would be sufficient to show that the appellant had not collected the amount from the customers. Original adjudicating authority took the view that Service Tax should have been shown as nil which in my opinion was not required. Coming to the fact that the amount was shown as expenditure in the balance sheet after paying the amount to the department, obviously this has to be shown as an expenditure since the amount was not collected from the customers. The only omission that can be used for rejecting the refund claim is the fact that appellants have not shown it as a receivable amount. However, the appellant relied upon the decision of the Tribunal in the case of Sunbeam Auto Ltd. - 2005 (185) E.L.T. 297 (Tri.-Del.). In para 5 of this decision, it was observed Further the appellant is keeping this amount in their account as sales expenses and some were deducted out of their profit, therefore, the refund claim cannot be denied on this ground also. Having regard to the facts and circumstances and also the amount involved, I find that appellant is eligible for the refund claimed by them and allow the appeal with consequential relief to the appellant.
Sandvik Asia Ltd(supra)
4.?On perusal of the impugned order and considering the arguments of both learned counsel, we are unable to agree with Mr. Kantharia. The Tribunal was not concerned with the treatment given to the amount and as deposited in the Assessees profit and loss account. It is immaterial and irrelevant for the Tribunal and equally for us as to what the Assessee terms this amount in his Books of Account. Even if it is shown on the expense side that does not mean that the presumption that the burden has been passed to the consumer can be raised.
From the above judgments wherein facts were that even if amount of duty, for which refund is sought for, has been booked as expenditure, it is sufficient to conclude that incidence of duty has been passed on. It was held in the above judgments that in case of duty shown to have been collected from particular person then it cannot be presumed the same could have been collected from any other person unless positive evidence is brought on record. As per my above discussion, the facts of the case and settled legal position as referred above, I am of the view that impugned order is not sustainable. The appellant have substantially established that the incidence of excess paid duty has not been passed on to any other person and department could not bring any material contrary to the evidence produced by the appellant. I therefore set aside the impugned order, allow the appeal of the appellant with consequential relief, if any, in accordance with law.
(Order pronounced in court on_______________) Ramesh Nair Member (Judicial) sk 13 E/2170/10