Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. Caterpillar India Pvt. Ltd on 1 April, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/106/04/MAS
E/CR/01/04/MAS
[Arising out of Order-in-Original No.112/2003 (M II) dated 10.10.03 passed by the Commissioner of Central Excise (Appeals), Chennai]
For approval and signature:
Honbe Ms. Jyoti Balasundaram, Vice President
Honble Mr. P. Karthikeyan, 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? :
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 the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise,
Chennai-II
Appellant
Versus
M/s. Caterpillar India Pvt. Ltd.
Respondents
Appearance:
Sh. V.V. Hariharan, JCDR.
Sh. R. Raghavan Adv.
Shri M. Kannan, Adv.
For the Appellant For the Respondents CORAM:
Ms. Jyoti Balasundaram, Vice President Mr. P. Karthikeyan, Member (Technical) Date of hearing :1.4.09 Date of decision:1.4.09 Final Order No.____________ Per P. KARTHIKEYAN The respondents M/s. Caterpillar India Ltd cleared credit availed inputs during the period 9.2.01 to 9/02. They paid duty on the inputs as if the same were manufactured by them. Compared to the credit availed, they had paid much higher amounts on removal of the inputs as such and therefore they claimed refund of the excess duty paid for four different periods as per the following details. Sl No. Date of filing Claim Period to which claim relates Refund claimed Rs.
1. 19.06.2001 09.02.01 to 30.04.01 4,43,890/-
2. 03.01.2002 05/01 to 09/01 10,90,643/-
3. 04.06.2002 10/01 to 03/02 8,59,217/-
4. 16.12.2002 04/02 to 09/02 10,67,318/-
Total 34,61,068/-
After due process of law, the original authority sanctioned refund of the excess amount paid by the respondents for the period 2/01 to 4/01 and credited an amount of Rs.4,43,890/- to the Consumer Welfare Fund (CWP). As regards the remaining three claims, the original authority rejected the claims on the ground of payment of the same in excess of what is required as per the provisions regulating removal of inputs as such. The amount of Rs.4,43,890/- sanctioned for the period 2/01 to 4/01 also included an excess duty amount of Rs.88,410/- held as admissible on account of the deductions from value found to be admissible. The original authority also sanctioned refund of duty found admissible to the respondents on account of eligible deductions and credit the same to CWF. In the impugned order, the Commissioner (Appeals) held that refund claim for the period 2/01 to 4/01 was admissible to the respondents and its grant did not attract vice of unjust enrichment. He did not pass any order on the remaining claims. In Appeal No.E/106/04, Revenue challenges this order of the Commissioner (Appeals). In the cross-objections filed, the respondents canvasses the case that they are eligible for refund of the various amounts covered by all the four claims and that sanction of the refund amounts will not entail unjust enrichment of the respondent.
2. We have heard both sides. The dispute involved is the amount required to be paid by an assessee when it removes as such inputs or capital goods on which Cenvat credit was taken.
Explanation to Rule 57B (i)(b) of Central Excise Rules, 1944 (upto 28.2.2001) Explanation:- When inputs or capital goods are removed from the factory, the manufacturer of the final products shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured ;in the said factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A Rule 57AB (1C) of Central Excise Rules, 1944 (from 01.03.2001 to 30.06.2001) When inputs or capital goods, on which credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable and on the value determined for such goods under Section 4 of the said Central Excise Act, and such removal shall be made under the cover of an invoice referred to in Rule 52A.
Rule 3(4) of Cenvat Credit Rules, 2001 (from 01.07.2001 to 28.2.2002) When inputs or capital on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal land on the value determined for such goods under Section 4 or Section 4A of the Act, as the case may be, and such removal shall be made under the cove r of an invoice referred to in Rule 7 Rule 3 (4) of Cenvat Credit Rules, 2002 (from 01.03.2002 to 28.2.2003) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under Section 4 or Section 4A of the Act, as the case may be, and such removal shall be made under the cover of an invoice referred to in rule 7.
During the material period viz. from 9.2.01 to 28.2.01, Rule 57AB(1)(b) of Central Excise Rules, 1944, from 1.3.01 to 30.6.01 Rule 57AB (1)(c) of CER, during 1.7.01 to 28.2.02 Rule 3 (4) of CCR, 2001 and during 1.3.02 to 28.2.03 Rule 3(b) of CCR 2002 contained the provisions which regulated payment of the duty on removal of inputs or capital goods as such. These provisions were of to the effect that the amount payable was equal to the duty as if such goods were manufactured by the assessee. The amount was equal to the duty of excise leviable on such goods at the rate applicable to such goods on the date of their removal and on the value determined for such goods under Section 4 or Section 4A of the Act as the case may be. The Revenue has raised the ground that the respondents had paid on removal of inputs as such during the material period in accordance with the relevant statutory provisions and that the claim for refund had been correctly rejected by the original authority. Reliance is also placed on Circular No.816/93/2005 dated 16.6.2005 issued by the Board which had clarified that prior to 1.2.03 amount of duty to be paid on removal of inputs as such would govern by the provisions of Rule 57AB(1)(c) o f CER, Rule 3(4) of CCR, 2001 or amended Rule 3(4) of CCR, 2002.
3. In the cross objections filed by the respondents, they have relied on various case law including Eicher Tractors Vs. CCE, Jaipur [2005 (189) ELT 131 (Tri.LB)]. In addition to the various case law, the respondents have placed reliance on Circular No.813/10/05 dated 25.4.05 issued by the CBEC. As regards the unjust enrichment, the respondent submits that they had produced Chartered Accountants certificate in proof of their claim that the amount claimed had not been passed on the consumer.
4. We have carefully considered the facts of the case and the rival submissions. The issue to be decided is whether the respondents were required to pay any amount in excess of what was availed at the time of receipt of inputs at the time of removal of inputs as such. Another related issue to be decided is whether refund of excess amount paid by the respondents would involve their unjust enrichment.
5. We find that the issue is no longer res integra. The Larger Bench of this Tribunal had decided that during the period when the erstwhile sub-rule (1) ( c ) of Rule 57 AB of CER, Rule 3(4) of CCR, 2001 and 2002, a manufacturer was required to pay an amount equal to the credit availed in respect of inputs or capital goods at the time of their removal as such. This position remains unchanged under Rule 3(5) of CCR, 2004. In para 6 of the above decision, the Tribunal had observed as follows:-
6. It is seen that the Board vide its circular dated 25-4-2005 has categorically said that clarifications given in this Circular supersede the earlier Circular dated 1-7-2002 . The revenue cannot argue against its own Circular, when the Board has stated that the provisions of the Rule 3(5) of the Cenvat Credit Rules, 2004 would apply in respect of the capital goods and inputs on which credit has been availed are removed as such. We may reproduce the said Rule 3(5) of the Cenvat Credit Rules, 2004 which reads as under :
3(5) When inputs or capital goods, on which? Cenvat credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9. In the light of the above decision, we find that the respondents are eligible for the refund of the excess amounts they had paid subject to the test of unjust enrichment. We find force in the contention of the Revenue that Chartered Accountants certificate was not sufficient and that the Commissioner (Appeals) wrongly held that the grant of refund for the period 2/01 to 4/01 was free from the vice of unjust enrichment. We order that all the claims filed by the respondents shall be allowed by the original authority after examining them from the angle of unjust enrichment. The appeal filed by the Revenue and the cross-objection filed by the respondents are disposed of accordingly, by way of remand. Needless to say that the respondents shall be heard before the issue is decided afresh.
(Operative part of the order pronounced in open court on 1.4.09)
(P. KARTHIKEYAN) (JYOTI BALASUNDARAM)
MEMBER (T) VICE PRESIDENT
Swamy
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