Custom, Excise & Service Tax Tribunal
M/S. Eveready Industries India vs C.C.E Lucknow on 26 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/458/2006 -Ex[DB]
[Arising out of Order-In-Appeal No. 467-CE/06 dated: 14.11.2005 passed by Commissioner (Appeals) Lucknow]
For approval and signature:
Hon'ble Mr. Rakesh Kumar, Member (Technical)
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
1
Whether Press Reporters may be allowed to see 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 in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Eveready Industries India ...Appellant
Vs.
C.C.E Lucknow Respondent
Appearance:
Sh. B.L. Narsimhan, Advocate for the Appellants Mr. Yahspal Sharma, DR for the Respondent CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing.26.12.2014 FINAL ORDER NO. 55041 /2014-Ex(Br) Per S.K. Mohanty (for the Bench):
This appeal is directed against the impugned order dated 14.11.2005, wherein rejection of refund claim of Rs. 52,53,026/- (reduced to Rs. 43,39,333/-) in the adjudication order was upheld by the Commissioner of Central Excise (Appeals), Lucknow. In the impugned order, it has been held that refund claim is not admissible to the appellant, as it is hit by the bar of unjust enrichment.
2. The brief facts of the case, leading to this appeal, are as follows:-
The appellant is a manufacturer of flash lights (torches). Each individual torch is packed in polythene covers and thereafter are packed in printed cartons (primary packing). 25 to 50 nos. of such individual cartons are then packed in bigger cartons (secondary packing) and are cleared to the depots, from where the torches are sold to the customers. During the disputed period, the appellant did not include the cost of secondary packing in the value of torches for the purpose of payment of Central Excise duty, which was disputed by the Central Excise department in the adjudication proceedings. The Order-in-Original dated 30.12.1987 passed in this regard was also confirmed in the Order-in-Appeal dated 14.06.1991, against which appeal was filed by the appellant before the Tribunal. During pendency of the appeal before the Tribunal, the appellant had deposited the Central Excise duty under protest as confirmed in the Order-in-Original dated 30.12.1987. The Central Excise duty was deposited by including the cost of secondary packing in the assessable value of the torches. Consequent upon the favorable decision by the Tribunal vide order dated 30.11.1998, the appellant had filed the application, claiming refund of excess duty paid under protest, which was dismissed by the authorities below. Hence, this present appeal before this Tribunal.
2. Sh. B.L. Narsimhan, the. Ld. Counsel appearing for the appellant submitted that the appellant did not recover the duty paid on the secondary packing from the customers, as such excess payment of duty has been accounted for under the heading "Loans and Advances" in the Balance Sheet as recoverable from the Central Excise department. He further submitted that the said amount has not been debited to the customer's account. The ld. Advocate also submitted the certificate dated 17.10.2005 issued by the practicing Chartered Accountant, certifying that the excess paid Central Excise duty has been shown as receivable from the Department under the accounting head "loans & Advances". According to the ld. Advocate, since the balance sheet reflects the amount of refund as recoverable from the department, the duty burden in such case cannot be held to be passed on to the customers, and thus, the refund amount cannot be transferred to the consumer welfare fund. To substantiate his above stand, the Ld. Advocate for the appellant has cited the following decisions of the Tribunal:
(i) Dabur India Ltd. -Vs.- CCE, Ghaziabad [2008(228) ELT 131(TRI. Del)]
(ii) Madura Coats (P) Ltd. -Vs.- CCE, Kolkata-IV [2007 (219) ELT 545 (Tri. Kolkata)]
(iii) MRF Ltd. -Vs.- C.C. (Port), Kolkata [2008 (225) ELT 246 (Tri. Kolkata)]
(iv) Amarnath Envioplast Ltd. -Vs.- C.C., Kolkata [2007 (219) ELT 989 (Tri. Kolkata)]
(v) JK Industries Ltd -Vs.- C.C., Kolkata [2007 (217) ELT 111 (Tri.- Kolkata)]
(vi) Berger Paints India Ltd. -Vs.- CCE, Kolkata-IV [2007 (219) ELT 550 (Tri. Kolkata)]
(vii) RB Agarwalla & Co. (P) Ltd. -Vs.- C.C.E., Bhubaneshwar-II [2007 (8) STR 499 (Tri. Kolkata)]
3. Sh. Yashpal Sharma, the Ld. AR appearing for the Revenue reiterated the findings recorded in the impugned order and submitted that the refund is not permissible to the appellant, since the incidence of duty element has been passed on to the consumers.
4. Heard the Ld. Counsel for both sides and perused the records.
5. The issue involved in the present case for consideration by this Tribunal is with regard to applicability of the doctrine of unjust enrichment to the refund application filed by the appellant i.e. whether the amount of refund should be paid to the appellant or to be credited to the Consumer Welfare Fund, by way of rejection of the refund application.
6. Claim for refund of Central Excise duty is contained in Section 11B of the Central Excise Act, 1944. In terms of sub-section (1) of the said section, an application for refund of Central Excise duty shall be made to the jurisdictional Assistant/Deputy Commissioner of Central Excise. Sub-section (2) of the said section provides that on receipt of the refund application, if the said statutory authority is satisfied that the duty paid by the applicant is refundable, then he has to pass an order accordingly and the amount of refund shall be credited to the Consumer Welfare Fund. As per the first proviso to sub-section (2) of the said section, the amount of duty as determined by the statutory authority shall, instead of being credited to the said Fund, be paid to the applicant, if such amount is relatable to the duty paid by the manufacturer, if he had not passed on the incidence of such duty to any other person. Section 12B of the Act contains fiction to the effect that every person who has paid the duty of excise on any goods under the Act shall be deemed to have passed on the full incidence of the duty to the buyer of the goods. This presumption is rebuttable by the person who claims refund of the duty of excise. Therefore, every person claiming refund under Section 11B of the Act has to demonstrate by relevant documentary evidence that he is not benefited by unjust enrichment. If the incidence of duty paid is borne by another/any other person, then the person claiming the refund will be unjustly enriched at the cost of other(s). Thus, in such eventuality, the refund amount shall be credited to the said Fund, instead of sanctioning in favour of the applicant.
7. The appellant was all along contesting the issue of leviability of Central Excise duty on the cost of secondary packing with the Central Excise department. Therefore, during initial period, the appellant did not discharge any duty on the secondary packing. The appellant started paying duty on the secondary packing under protest subsequent to the Adjudication Order dated 30.12.1987. It is an admitted fact on record that the protest payment of duty has not been recovered by the appellant from its customers. This fact is evident from the books of accounts maintained by the appellant, where the customers account has not been debited with such duty amount. The duty paid on the secondary packing has been accounted for by the appellant under the heading Loans and Advances in the Balance Sheet as receivable from the Central Excise department. M/s Damle Dhandhania & Co., Chartered Accountants, upon verification of the Books of Accounts maintained by the appellant, in their certificate dated 14.08.2009 has also endorsed the said fact. It is evident from the Balance Sheet and the certificate issued by the Chartered Accountant firm that the incidence of Central Excise duty has not been passed on by the appellant to its customers or any other person and the same has been borne by itself. As held by Honble Rajasthan High Court in the case of UOI vs A K Spintex reported in 2009 (234) ELT 41 (Raj.) the presumption under section 12 B is a rebuttable presumption and once the assesse produces evidence in support of his claim of having not passed on the incidence of duty whose refund is claimed, to the customers, the burden of proof would shift to the Department to prove that the claim of the assessee is false. In this case the Department has not produced any evidence to prove that the certificate of the Chartered Accountant M/s Damle Dhanndhania & Co., is false. Therefore, we are of the considered view that rejection of refund claim on the ground of doctrine of unjust enrichment is not legal and proper. The decisions cited by the ld. Advocate for the appellant also support our said view.
8. In view of above, the impugned order is set aside and the appeal is allowed with consequential relief to the appellant.
(Operative part of the order pronounced in open court) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member(Judicial) Neha Page | 1