Customs, Excise and Gold Tribunal - Delhi
Oswal Chemicals And Fertilisers Ltd. vs Cce on 20 November, 2003
Equivalent citations: 2004(92)ECC216, 2004(164)ELT89(TRI-DEL)
ORDER K.D. Mankar, Member (J)
1. The appellants are seeking refund of excise duty, which they had allegedly paid in excess than was required to be paid under the law. The appellants manufacture fertilizers and they procured naptha from refineries during the period from 25.9.96 to 16.10.96 on payment of duty. In terms of Notification No. 75/84-CE and its successor Notification No. 8/96-CE dated 23.7.96, naptha cleared fro manufacture of ammonia and urea is eligible for concessional rate of duty, subject to observance of procedure contained in Chapter X of the Central Excise Rules 1944. The said procedure envisaged obtaining a L6 licence and obtaining the supplies under CT2 certificates. Due to their inability to obtain the L6 licence during the relevant time, the appellants procured the supplies from M/s. Bahrat Petroleum (BPCL) on payment of price which included full excise duty as against the price inclusive of concessional rate prescribed in the notification. On establishing their claim before the jurisdictional Central Excise authorities for obtaining naptha on payment of concessional duty under Notification No. 8/96-CE dated 23.7.96, they started obtaining the supplies of naptha at the concessional rate from 17.12.1998 onwards. The present appeal relates to deniel of refund of excess duty paid for the pas period. when they did not have the L6 licence and the supplies were obtained on payment of price comprising full duty, without the cover of CT-2 certificate.
1.2 The claim was rejected by the lower authorities on two ground :-
(i) Time Bar : - the manufacturer (refinery) did not lodge any protest at the point of payment of duty, hence the claim filed beyond 6 months is time-barred.
(ii) Lucus standi of the appellants : - Only the manufacturer who has paid the duty can claim refund and not the appellants, who have not paid any duty to the Govt.
2. The appellants are pleading that rejection of claim of both the grounds is without justification. The DR, on the other hand, pleads in support of the order.
3. Heard both sides.
4. So far as the first ground is concerned we note that, the "appellants" who are the users of "naptha" had approached the Department authorities having jurisdiction over their factory for obtaining naptha at concessional rate and also indicated in various communications that pending clearance for L6 licence, they would be obtaining their supplies against full payment of duty. The contents for the communication do contain an implied protest. The procedure for making payment under protest as stipulated under Rule 233B can refer only to a "manufacturer". Since the appellants are claiming refund in the capacity of any "any person" non-adherence of the procedure contained in the said rule would not take away the facts that there excited a protest. Therefore, the appellants are pleading that the claim cannot be rejected on the ground of limitations, payment being under protest. We are not making any pronouncement on this point in view of the discussions in the succeeding paras.
5.1 As regard the rejection on the ground of lack of "locus standi" is concerned we note that, no doubt, the provisions of Section 11B permit claiming of refund by "any person", besides a manufacturer, it is nevertheless necessary for such a person to demonstrate that, he is such a person who has paid the excess excise duty to the Government. We note that the language of the provision contained in Section 11B (1) is very clear and precise. It states as under :-
"Any person claiming refund of any duty of excise may make an application for refund of such an application for refund of such duty to the [Assistant Commissioner of Central Excise] before the expiry of six months [from the relevant date] [in such form and manner] as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12(A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed of such duty had not been passed on by him to any other person". Or It must be seen that the applicant is required to furnish documentary evidence to establish that the amount of duty of excise in respect of which such refund is claimed was collected from him, or paid by him. (emphasis supplied).
5.2 Excise duty being an indirect tax, the incidence of the tax is borne by the ultimate customer who consumes the goods. For the purposes of the Central Excise Law, such an ultimate customer is not a person, who can be said to have paid the duty, though in terms of economics he indeed has borne the incidence. The tax is paid by the manufacturer alone, at the point of clearance of the goods from the factory, in terms of Rules 9 & 49 of the Central Excise Rules 1944. Rule 7 of the said rules inter alia provides that every person who manufactures excisable goods shall pay the duty.....The Rule 7 further provides that duty has to be paid to the designated authority. Therefore, whenever there is a short payment, recovery is also effected from the manufacturer by the concerned authority and not from the ultimate customer, though in economic terms, the duty has been paid by the ultimate consumer.
6. It must be remembered that "demand" and "refund" are merely two sides of the same coin namely assessment of goods to Central Excise duty. The goods in this case are "naptha". These have been subjected to excise duty at the factory in which the same were manufactured namely the refinery. In this case, it is to be noted that, the said naptha was manufactured by M/s I.O.C. The same was despatched to M/s. BPCL on payment of full duty. The appellants had purchased the said naptha from M/s. BPCL on payment of a price which included full excise duty. The conclusion as to whether the payment of duty by the refinery, in respect of the consignments cleared to the appellants was in excess of the payment due under the law or otherwise has to be arrived at by the Central Excise officers in charge of the refinery. The learned Commissioner (Appeals) in his findings has correctly held that M/s. IOC, the manufacturer could not have had the knowledge of the intended use of a portion of naptha that was to be eventually sold by their buyer viz. BPCL, to claim concessional payment of duty. In order to enable the assessing officers to come to such a conclusion, it is necessary that, the manufacturer who has paid the duty in respect of these consignments, namely the "Refinery" has to furnish the details of payment of full duty along with the ground/claim for duty concession. Where such a claim succeeds, the refundable amount becomes payable to the manufacturer and the duty paying documents are thereafter suitably corrected to reflect the actual amount in the credit of the Govt., after offsetting the refunded amount. Therefore, it is obvious that in terms of the aforesaid position only the 'refinery' can seek refund and not the "appellants" who are the purchasers of naptha and the so called "excess duty" paid by them to the suppliers is not an excise duty a part of the price, paid to the seller. Further, such a claim must be lodged with the Assistant Commissioner of Central Excise, having jurisdiction over the refinery and not with the Assistant Commissioner having jurisdiction over appellant's factory. As the reading of the entire text of Section 11B reveals, it is the Assistant Commissioner in charge of the refinery alone, who not only can determine the computation of refundable amount, but also other eligibility parameters such as acceptance of duty paying documents, limitation, unjust enrichment etc. with reference to the duty paid by the refinery.
7. As mentioned at the outset, the appellants are claiming the refund as being "any other person". It is their case that, besides a manufacturer "any other person" can also claim refund as provided under Section 11B of the Act. It is claimed that, since they have paid higher duty than was required they can claim refund of this excess duty.
8. As already noted by us the, duty on naptha has been paid by the refinery in the jurisdiction of the Central Excise, where the refinery is located and the said duty is paid by appropriate debit in the Account current (PLA) which is maintained with the concerned commissionerate, in the jurisdiction of which the refinery is located. Unless the said payments are reopened through the process of reassessment, no refund can generate. From the appeal, we note that, while the duty was paid by M/s IOC, the appellants have purchased naptha from M/s. BPCL who obtained the said naptha from the refinery on transfer basis. So, the payment made by the appellants to M/s BPCL is a payment of price of the product. The refund of duty can be claimed only against the duty paying documents in respect of which there is a positive finding of the competent authority accepting the fact that a part of the whole of duty shown to have been paid on the said documents is in excess. Not only this, the refund has to be filed with the jurisdictional Central Excise authorities namely, the Assistant Commissioner of Central Excise in whose jurisdiction the duty has been paid. The appellants have approached the Central Excise authorities in charge of their unit. Further, they do not have the duty paying documents showing payment of duty by the refinery in respect of the quantities received by them via the marketing division of M/s. BPCL. They only have a work sheet, which shows the correlation between the sale invoices issued by the marketing division of M/s BPCL. They have traced the despatch of corresponding bulk quantity from the refinery (on payment of full duty) to BPCL out of which a part (as reflected in the sale invoices issued to the appellants) is dispatched to them. The appellants claim that from this data, the actual higher duty paid by the refinery for the quantities received by the appellants can be deduced on a pro rata basis and the refund amount as claimed by them must be held to be admissible.
9. We see no merits in these arguments. As noted by us earlier, in order to accept the proposition that there was an excess payment of duty at the point of initial clearance of naptha from the refinery, a positive finding to this effect from the competent authority viz. the Central Excise authorities in charge of the refinery is a must. The appellants claimed that, though naptha was eligible for concessional rate prescribed in Notification No. 75/84-CE, at the time of its clearance from refinery, at the material time, it was cleared on payment of higher rate of duty. The duty payment having been made by the refinery, it is for the refinery to make that claim before the concerned jurisdictional authority. The refund can generate only in the event this claim succeeds. It is not the claim of the appellants that the refinery ever made such a claim. Therefore, the appellants cannot claim the refund of the so-called excess payment made by the refinery. We have noted that, the notification in question provides multiple rates of duty concession for naptha used in the manufacture of fertilizer and duty concession will depend on specific usage within the fertilizer plant. The AC, Central Excise in charge of the refinery needs to determine this aspect to arrive at the amount of refund due on merits, as and when the refinery decides to make such a claim. The appellants do not have any locus standi to make such a claim as rightly held by the authorities below.
10. We have already observed that that, rigours of accounting require that all excess/short payments have to refer to the payments made originally through the concerned account current (PLA). Short payments or refunds must finally figure in the said PLA through appropriate reference/accounting entry. In case the refund as claimed by the appellants was to be accepted by Central Excise Assistant Commissioner in charge of the appellant's factory, there is no duty paying document pertaining to the appellants which can show that from Appellant's PLA any excess duty has been paid. The Assistant Commissioner in charge of the appellant's factory cannot sit in judgment over the correctness or otherwise of payment of duty made by the naptha manufacturer. Therefore, the AC Central Excise in charge of appellant's factory has no jurisdiction to entertain the refund claim in question. The claim has, therefore, been correctly rejected on the ground of locus standi.
11. The appellants want us to brush aside the above position by pleading that, when Section 11B speaks of filing of a refund claim by "any person", the appellants being such a person, the refund must be sanctioned, notwithstanding the position mentioned above which according to the appellants is purely an internal matter of the Department. We are unable to subscribe to such a view. So far as non-maintainability of the claim before the Assistant Commissioner, Central Excise having jurisdiction over the appellant's factory is concerned, our observations in the preceding para make it abundantly clear that, the claim having been filed before a wrong authority, the same is not maintainable. This then takes us to the next question as to whether or not, the appellants can stake the refund claim before the Assistant Commissioner of Central Excise in charge of refinery, from whether the naptha was claimed to have been sourced by the appellants, in the capacity of a "person" other than a manufacturer.
12. It is true that as the position stands today, Section 11B permits claim of refund, not only by the manufacturer but also by any other person. But this does not mean that any person on a street can claim refund from the nearest Central Excise officer in respect of any purchase which he has made from his grocer claiming that he has paid higher duty than was due on the goods. Assuming that excise duty portion is visible in the price paid by him and it also happens to be higher than what should have been normally paid, even in that case, can such a person claim refund of excise duty in the aforesaid manner. The answer is obviously no. What the person has paid to the seller is a price and not excise duty. Besides such a wide interpretation will require identification of an authority who is competent to sanction the refund, with reference to the factory where the product was actually manufacture. therefore, such a wide interpretation of law cannot be said to be flowing from the language of Section 11B.
13. In the backdrop of the above analysis the next question is as to "who" could be the "other person" besides a manufacturer who can claim refund of duty as provided under Section 11B?
14. We not that, in the context of grant of refund of duty paid on the 'saloon cars' which get registered as taxis, after their clearance from the factory, CBEC has prescribed a procedure vide Circular No. 169/3/96-CX dated 23.1.1996 issued from F.No. 268/9/96-CX.8. In terms of the said circular the taxi owner (purchaser of saloon car) obtains the refund of excess duty paid on saloon cars cleared from the factory, from the manufacturer and not from the Central Excise. The manufacturer in turn claims the refund of the said amount from the Central Excise authorities having jurisdiction over the car-manufacturing factory. This is one illustration of refund being paid to another person i.e. taxi owner, via the car manufacturer. The situation of the appellants is analogous. Therefore, we hold that it is only the refinery which has a locus standi to claim refund in accordance with law and not the appellants.
15.1 Besides the above situation, we also note that there are instances where besides the manufacturer, a person like a merchant exporter can claim refund of Central Excise duty from the Central Excise authorities in charge of the manufacturer's factory. In that situation the manufacturer affixes a disclaimer on the body of the export document stating that he has not objection in case the amount of duty due to be refunded on completion of export, is paid to the merchant exporter.
15.2 There are also few more situations where a person other than the manufacturer can claim refund of duty. For example in cases where there is an arrangement to manufacture goods on job work basis, such as the cases of processing of fabrics, the raw material suppliers (Merchant manufacturers) make payment of duty in the premises of job workers, whereas in respect of actual processing job done (in the absence of acceptance of duty liability by the merchant) duty liability, must be discharged by the job workers. So, though a mutual undertaking executed before the Central Excise Deptt. the rights and claims (for refund etc.) get transferred to raw material supplier (i.e. any other person) and not the actual manufacturer.
15.3 Similarly, the refund under the Modvat scheme, relating to excess duty payment on "inputs cleared as such" can be claimed where it is held as admissible, by the user of the input not by the input manufacture. This is also a case where refund is available to "any person" other than a manufacturer.
15.4 It is, therefore, obvious that the situation of a refund claim filed by a person other than a manufacturer is not something which is hypothetical but is actual. The ratio of judgments cited in favour of allowing refund to a "person other than a manufacturers" has therefore to be applied only to such other persons who get covered within the category of eligible persons as discussed in the preceeding paras. However, we cannot accept the appellant's contention that, the provisions contained in Section 11B are so open ended that any one can claim refund of excise duty from the nearest Central Excise officer, on the ground that excise duty component of a price is higher than what was required to be paid by the manufacturer. In our analysis the right to claim refund by any other person under Section 11N is circumscribed within the perimeter we have outlined in our discussions herein above. In terms of Section 1B(1) it is absolutely necessary that the person claiming refund must demonstrate that he has paid the duty to the Government and "not a price inclusive of higher duty amount to the seller".
16. Summing up we hold that, refund claim
(i) having been filed before a wrong authority and
(ii) the appellants lacking the locus standi to file the said claims as analyses by us in the preceeding paras have been correctly rejected by the authorities below.
17. Therefore, we do not deem it necessary to examine the merits of the claim as well as the aspect of application of time-bar.
18. Accordingly, we reject the appeal.