Custom, Excise & Service Tax Tribunal
M/S. Visaka Industries Ltd vs Cce, Guntur on 14 August, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
COURT - I
Appeal Involved:
E/3404/2012-SM
[Arising out of Order-in-Appeal No.49/2012 (G) CE dt. 10/10/2012 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals), Guntur.]
M/s. VISAKA INDUSTRIES LTD
Appellant
Versus
CCE, GUNTUR
Respondent
Appearance:
Mr. Ashok Deshpande, Advocate
For the Appellant
Mr. S. Teli, Dy. Commissioner (AR)
For the Respondent
Date of Hearing: 14/08/2013
Date of Decision: 14/08/2013
CORAM:
HON'BLE SHRI B.S.V.MURTHY , TECHNICAL MEMBER
Final Order No. 26338 / 2013
Order per. B.S.V.MURTHY
The appellant is engaged in the manufacture of asbestos cement producer. The appellants have two modes of selling for selling their products. The first mode is through their depots and the second mode is directly to the dealers from the factory gate. In respect of both clearances, the appellant requested for provisional assessment which was allowed by the department in the year 2006 and thereafter the provisional assessments have been continuing and litigation between the department and the assessee is also continuing continuously. The period involved in this case is from November 2010 to December 2010 and in respect of earlier periods at least one appeal filed by the appellant had come up before this Tribunal and this Tribunal vide Final Order No.78 & 79/2012 dated 3.2.2012 had allowed the appeal filed by the appellants and taken a view that unjust enrichment was not applicable in the facts and circumstances of the case. It was submitted that the issue is covered by the precedent Tribunals decision in their own case and therefore the appeal should be allowed in this case. However, on going through the records and hearing both the sides it is seen that the issue involved is not only unjust enrichment in this case but refund claim has also been rejected on the ground that the assessee had not challenged the order passed finalizing the provisional assessment for the months November 2010 and December 2010. Since there are two issues involved it would be proper to consider each issue.
2. The first issue is whether the claim of the department and the findings of the lower authorities that since the appellant did not challenge the order finalizing the provisional assessment, the refund claim cannot be considered is correct. This conclusion has been reached by both the lower authorities in view of the fact that while finalizing the provisional assessment, the authority had considered eligibility for refund in respect of direct sales at the factory gate also. At this juncture, it is necessary to take note of the fact that in the provisional assessment finalizing order, the Asst. Commissioner had observed that the appellant had not been able to show that the duty element which has been claimed as refund had not been passed on and therefore refund is not admissible.
3. In March 2011, the appellants filed a refund claim in respect of their clearances for the month of November and December, 2010 in respect of clearances made in November 2010 and December 2010. The refund claim was returned to the appellant by the department with the remarks that the refund claim is premature since the provisional assessment was not finalized. Immediately thereafter the appellants filed all the documents for finalization of provisional assessment in March 2011 itself and in July 2011 the Assistant Commissioner passed an order finalizing the provisional assessment in respect of depot clearances and found that the appellant was liable to pay an amount of approximately Rs.5.22 lakhs, and in respect of clearances directly at the factory gate the appellant was eligible for refund of Rs.2,04,310/-. However, he also observed simultaneously that the refund cannot be granted to the appellant since the appellants have not shown any evidence of not passing on the burden of duty to the customers. This order was not challenged by the appellant and has attained finality and has become one of the grounds for rejection of the refund claim filed in October 2007 by the appellant.
4. When the refund claim was filed in October 2007, a show-cause notice was issued to the appellant informing them that since they have not challenged the provisional assessment finalization order, the same has attained finality and the order also contained conclusion that the appellant is not eligible for refund and therefore the refund also cannot be considered. In addition to this, the claim of the appellant was also rejected on the ground that Chartered Accountants (CA) certificate, sales register, extract and the affidavit of the DGM (Works) produced by the appellants were not sufficient to come to the conclusion that the burden of proving that the duty element has not been passed on to the customers has not been discharged. The appellants filed an appeal against this decision which has been rejected by the Commissioner (A).
5. According to Rule 7(5) of Central Excise Rules, 2002, where the assessee is entitled to refund consequent to order of final assessment under sub-rule (3), subject to sub-rule (6) which provides for verification of unjust enrichment, there shall be paid an interest on such refund at the rate specified by the Central Government by Notification issued under Section 11BB of the Act from the first day of the month succeeding the month by which such refund is determined, till the date of refund.
5.1 It can be seen that this sub-rule covers the payment of interest from the first day of the month succeeding the month in which the quantum of refund is determined by the finalizing authority and sub-rule (6) also provides that the unjust enrichment hurdle has to be crossed if the refund has to be paid to the assessee.
5.2 The question that arises is whether the Assistant Commissioner was correct in taking a view that refund was not admissible on the ground of unjust enrichment at the time of finalization of the assessment in the absence of any evidence produced by the assessee or without giving an opportunity to the assessee to produce evidence that the duty element has not been passed on. If we read the provisions of Rule 7, the Rule requires only determination of the amount payable or amount refundable and the conditions under which the duty is to be paid by the assessee or the refund is to be granted. Basically, the condition is only for the refund of duty and calculation of interest. As regards the payment of duty which arises as a result of finalization, the assessee is required to pay the same since the Rule itself says that the assessee shall be liable to pay interest on any amount payable to Central Government. As regards the refund, the provisions of 11B have to be taken note of.
Section 11B(3) of Central Excise Act, 1944 reads as under:
Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).
Subsection (2) provides that on receipt of an application made, the Assistant Commissioner has to satisfy himself that the amount is refundable and thereafter he has to make an order to pay the refund and credit the amount to the consumer welfare fund or pay it to the assessee if the conditions in the proviso are satisfied. In view of the non obstante clause in Section 11B, the eligibility for refund could not have been determined at all while finalizing the assessment. Therefore, whatever conclusion has been reached in the finalization order as regards refund has to be treated as non est since it is totally contrary to the provisions of law.
5.3 Looking from another angle also, the refund claim could not have been rejected on the ground that the finalization order has not been challenged. It has to be noted that the very same Assistant Commissioner had considered the refund claim filed by the appellant in March 2011 and the refund was returned to the assessee saying that it was premature. This would lead to a conclusion that refund claim is required to be filed after an assessment order is passed. No doubt that there is no estoppel in statutory matters. Nevertheless, it is the duty of the officers also to advise the assessee properly. Having returned the refund claim with an observation that it is premature, which should have been filed after finalization of the assessment, the rejection of the refund claim after finalizing on the ground that the assessment order was not challenged, to say the least is illogical and in view of the observations made, is illegal also since the Assistant Commissioner who is implementing the Central Excise Act and Rules did not even bother to follow the rules and provisions of the Act before making such observations.
5.4 In view of the above observations, the first ground taken by the Revenue for rejecting the refund claim cannot be sustained.
6. Coming to the unjust enrichment, the Chartered Accountant (CA) certificate produced by the appellant before the original authority states that additional discounts allowed by the assessee have been verified as per the documents produced and also gives the details, which is basically a summary or total of all the transactions. In the description column, the certificate gives gross value of factory clearances on direct sales, discounts allowed in invoices, assessable value, duty paid, additional discount allowed on credit notes, net assessable value and excess duty paid which is claimed as refund. This is supported by the sales register which according to the original adjudicating authority, was also produced before him as seen from paragraph 6 of his order. In addition to this, the appellants also submitted an affidavit by the Deputy General Manager (DGM) (Works), in which the DGM certifies that the company had raised invoices and credit notes numbering 678 during November to December 2010. Documents were prepared in ERP package and invoices and credit notes were all generated in computer. It also says that that all the documents and registers are available and gives the address of the premises where the same are available.
6.1 In the case of A.K. Spintex Ltd. reported in 2009 (234) E.L.T. 41 (Raj.), the Honble High Court of Rajasthan observed that the presumption of unjust enrichment against an assessee is a rebuttable presumption and ceases once evidence is produced by the assessee. The observations of the Honble High Court in para 10 are relevant and are reproduced as under:
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.
In this case, the refund claim has been rejected on the ground of unjust enrichment with the observation that the duty element was passed on at the time of raising invoices and credit notes were issued subsequently and therefore, unjust enrichment hurdle has not been crossed. If the discount was allowed at the time of raising invoices itself, there was no need for provisional assessment and there was no need for subsequent issuance of credit notes and there was no need for refund claims also. This observation only shows that the authorities just did not want to examine the claim on merits.
6.2 I have already reproduced the brief summary of the observations of the contents of CA certificate and other documents. During the hearing, I also verified one invoice and a credit note issued to one of the dealers on a monthly basis and the relevant entries in the sales register produced before the authorities. From this, I find that it is quite easily verifiable as to whether the discount was allowed to the dealer and whether the amount was passed on. It was submission of the appellants before the lower authorities that the company maintained a running account in respect of dealers and when orders are placed by the dealers, the supplies were made by the appellants by raising the invoices and whenever additional discounts are allowed, credit notes were issued. Further, the DGM (Works) gave the address where the documents and records are located and also explained the process how the company is operating. Admittedly the company has used the ERP software package and the law also requires the company to give the details of software used by them and the accounts of reports that are generated, etc. Both the authorities should have got the claims verified if they wanted it and rejected it on the basis of solid observations as to whether the claims made by the appellants are correct or not. It was also possible for the original authority, since the provisional assessment has been going on for more than four years, to verify with some of the dealers as to whether they have received the amount of additional discount or not. This also has not been done. Therefore, the observation of the Honble High Court of Rajastan recording rebuttable evidence is squarely applicable here. Once the evidence is produced, its authenticity should have been examined and alternatively verification should have been conducted to show that claims made are wrong. Even now, both the authorities have not explained what exactly they need. During the hearing, the learned AR submitted that the CA certificate should have given the details invoice-wise. However, this is not the observation made by both the lower authorities and further, all it requires is the total amount shown in the sales register which has all the relevant columns covered by the CA certificate and if the total does not tally obviously there will be something wrong with the CA certificate. Even this exercise has not been done. Under these circumstances, I feel that the appellants have shown enough evidence to prove that there is no unjust enrichment in this case.
7. At this juncture, I have to take note of the fact that what is under challenge is the Order-in-Appeal and there is a need to consider the Order-in-Appeal also. On going through the Order-in-Appeal, paragraph 11, 12, 13 and 14 are relevant and are reproduced exactly as they appear in the Order-in-Appeal submitted as part of memorandum of appeal.
11. The assessee also mentioned various CESTAT, Bangalore orders passed in their favour. However it may be, the appellant has to file the appeal against the Original Provisional Assessment order. Since the appellant had deviated the procedure adopted by the Central Excise department, hence Case laws does not merit for consideration. However, at that time the then Assistant Commission, did not give any finding about the delay in filing the refund claim. All the issues are pertaining to unjust enrichment only.
12. As an organized Sector Company, very company should maintain the Creditors and Debtors registers and they will given credit note in their account current to the dealers Account. The appellant had simply submitted the Statements to the department but not produced the relevant Debtors ledgers to the department to substantiate that the amount was passed on to the buyer. The appellants had simply stated that they have given additional trade discount to their dealers to sell their goods situated in a distanced place. The veracity of sale of goods at the lower rate buy the buyer was not clearly substantiated by the appellant to the satisfaction of the departmental officers i.e. production of sale Invoice raises by the dealers at the lower rate. It they have simply certified by the Chartered Account, it does not merit for consideration, that the goods were sold by them at lower rate. So, the ground of the appellant does not merit for consideration.
13. In respect of the other Grounds filed by the appellant are not allowed, as they could not substantiate the issue properly.
14. In view of the above, the appeal is failed on merits and also as time barred in filing of the appeal as discussed in the preceding paras. Accordingly, I pass the following order.
ORDER
I uphold the Order-in-Original No.2/2012-CE dated 30.1.2012 passed by the Assistant Commissioner, Customs, Central Excise & Service Tax, Vijayawada Division, Vijayawada and the appeal filed by the appellant is dismissed. 7.1 As regards the provisional assessment dealt with in para 11, the order simply says that the appellant had deviated the procedure adopted by the Central Excise department and case laws does not merit for consideration. I am unable to make head or tail of this paragraph.
7.2 Secondly, there is another observation in para 11 that the Assistant Commissioner did not give any finding about the delay in filing the refund claim. In para 14, he has observed that the appeal is failed on merits as well as time bar. While stating that the appeal is time barred, absolutely there is no indication as to why the refund claim is time barred. In this case, the duty was paid in November and December 2010 and the first date to which the refund claim relates is November 1st, 2010 and admittedly the refund claim has been filed on 28.10.2011 which is well within the period of one year prescribed under Section 11B for filing the refund claim. The original adjudicating authority had noticed this correctly and therefore did not consider the appeal as time barred and did not record any finding. Without verifying any facts and without considering the legal aspects, the Commissioner (A) has reached the conclusion that refund claim is time barred. Moreover, while in para 11, it has been observed that the Assistant Commissioner did not give any finding about the delay in filing the refund claim. Para 14 gives an impression that filing of appeal in respect of finalization order is time barred. Suffice it to say, it is very difficult to understand what exactly the Commissioner (A) is saying in this regard.
7.3 In para 12, the Commissioner (A) has stated that the appellant did not produce debtors ledger. It is not possible to understand why debtors register is required. It is also not known whether the appellants were asked to produce the ledger since neither the original authority nor the show-cause notice had required the debtors ledger. The Commissioner (A) doesnt even explain why debtors ledger is required and what conclusion can be drawn from it. Further, he also talks of creditors and debtors ledgers which are required to be maintained by every company. Again it is not possible to understand how these ledgers would help in deciding about unjust enrichment. Further, he also seems to be denying the refund on the ground that sale of goods at the lower rate to the buyer from the dealer has not been proved by the appellant. The law does not contemplate this and there is no detailed observation as to why and how the price at which the dealers sale price is relevant and up to what level the department or the appellant is required to go to show that duty liability has not been passed on. The Commissioner (A) does not seem to have considered any issue in proper prospective in the impugned order.
8. The appellants have made detailed submissions and relied upon several decisions to support their case. I do not consider the requirement of consideration of these decisions since I have reached the conclusion that appellant is eligible for refund and the grounds taken for rejection are invalid in this case. In this case, another ground for coming to the conclusion that there are several orders already in favour of the appellant and one of them is by this Tribunal itself.
9. Before parting, I have to consider the decisions cited by the learned AR since he insisted that the decisions placed by him should also be considered. The first decision cited by the learned AR is decision in the case of Grasim Industries Ltd. vs. CCE reported in 2011 (271) E.L.T. 164 (S.C.). I find that this decision is not applicable to the facts of this case. In that case, the Honble Supreme Court in para 15 made the following observations:
15. So far as the issuance of the credit note is concerned, the same was issued only on 7.8.1991 although the duty was paid on 19.7.1989 and, therefore, the credit note was issued after two years of the payment of the duty and the clearance of the goods. In this connection, Section 12 of the Central Excise Act becomes relevant which indicates that the party who is liable to pay excise duty on any goods, has to file the sales invoice and other documents relating to assessment at the time of clearance of the goods itself. Therefore, when at the time of clearance no such document was filed and what is sought to be relied upon is a document issued after two years, the same raises a doubt and cannot be accepted as a reliable document. In the present case before me, the appellants have in fact submitted documents for finalization within three months from December 31st, 2010 and therefore the credit notes were issued much before the two years period and further, from the ledgers and the documents produced, it is quite clear that there cannot be any doubt about the passing on the benefit of discount to the dealers. The ratio of the decision has to be considered in the light of facts of the case. If the facts are not at all comparable, it would not be correct to apply the ratio.
9.1 Another decision relied upon by the learned AR in the case of A.K. Enterprises vs. CC: 2006 (199) E.L.T. 67 (Tri-Kolkata.), in that case it was observed that assessee had not produced sales invoices indicating the amount of duty which conforms part of sale price. Further, the Tribunal also observed that under Section 28D of Customs Act, there is a presumption that every person who paid duty is deemed to have passed full incidence to the buyers. In that case, the assessee-appellant had produced only a CA certificate and nothing else. I have already indicated that in this case besides the CA certificate which itself contains the relevant details, the appellant had produced direct sales register, the details of discount passed on and also an affidavit by the DGM (works). Therefore, on facts the decision in A.K. Enterprises cannot be applied to this case.
10. In the result, the appeal has to be allowed and accordingly is allowed with consequential relief, if any, to the appellant.
(Order Pronounced and Dictated in Open Court) B.S.V.MURTHY (TECHNICAL MEMBER) rv 16