Custom, Excise & Service Tax Tribunal
Cce, Hyderabad - Iv vs M/S Victory Transformers & Switchgears on 22 June, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court I Appeal No. E/301-302/2010 (Arising out of Order-in-Appeal No. 55 & 56/2009 (H-IV) CE dt. 24.11.2009 passed by Commissioner (Appeals-II), CCE & ST, Hyderabad ) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Honble Sh. Madhu Mohan Damodhar, 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 their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? CCE, Hyderabad - IV ..Appellant(s) Vs. M/s Victory Transformers & Switchgears Pvt Ltd., ..Respondent(s)
Appearance Sh. S.V. Nair, Assistant Commissioner (AR) for the Appellant.
None for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Honble Sh. Madhu Mohan Damodhar, Member(Technical) Date of Hearing: 22.06.2016 Date of Decision: 22.06.2015 FINAL ORDER No._______________________ [Order per: Madhu Mohan Damodhar] Both the appeals have been filed by department against the order of Commissioner (Appeals). Today when the case came up for hearing as per published list none appeared for the respondent. Being an old matter the case was taken for disposal after hearing the department and perusal of records:
The facts of the case are that the respondent M/s Victory Transformers & Switchgears Private Limited, Jeedimetla, Hyderabad, Andhra Pradesh, is a manufacturer of Electrical Transformers falling under Tariff Item Nos. 85043200 and 85043300 of the First Schedule to the Central Excise Tariff Act, 1985. The Electrical Transformers are supplied to various Distribution Companies of Andhra Pradesh State Electricity Board (APSEB) who in turn issue Purchase Orders to the assessee for supply of Transformers to various Discoms like APCPDCL, EPDCL, HPDCL after finalizing the prices, terms and conditions for the Transformers. The assessee filed two refund claims on 14.02.2008 and 12.12.2008 respectively on the ground that their buyer M/s APCPDCL has reduced the basic prices subsequent to their clearances. On perusal of the documents, the lower adjudicating authority noticed that they did not submit the relevant purchase orders relating to the refund claim filed on 14.02.2008. On pointing out, they filed some documents on 02.04.2008. After verification of the records, show cause notices were issued for rejection of refund claims on the following grounds:
(a) The assessee failed to give in writing the reasons for payment of duty on provisional basis under Rule 7 of the Central Excise Rules, 2002 on the goods cleared for the period claimed in the application of refund claim.
(b) The deduction made towards penalty for late delivery of goods does not change the value of goods mentioned in the purchase order.
The Assistant Commissioner of Central Excise, Hyderabad N Division vide Order-in-Original No. 338/IR/2009-IO dated 20.08.2009 rejected the refund claim filed by the respondent for the amount of Rs. 52,84,016/- on the ground that the amount deducted towards delayed supply of goods is in the nature of penalty which is not a deductible amount for arriving at the transaction value as per Section 4(3)(d) of the Central Excise Act, 1944 and also on the ground that the assessee failed to produce the relevant documents in support of the claim, under the provisions of Section 11 B read with Section 12 A of the Central Excise Act, 1944.
Aggrieved by the above order, the assessee filed an appeal before the Commissioner (Appeals) who vide Orders-in-Appeal Nos. 55 & 56/2009 (H-IV) CE dated 24.11.2009 held that they are entitled for refund of amount subject to the provisions of Section 11 B of the Central Excise Act, 1944.
2. The Department have come up in appeal against these orders of Commissioner (Appeals). On behalf of the appellants, the learned AR, Sh. S.V. Nair reiterated the grounds of appeal and vehemently argued that both the cases require to be remanded for denovo consideration for the following reasons:
Electrical Transformers are supplied to various Distribution Companies of Andhra Pradesh State Electricity Board (APSEB) against the approved Tenders. As per the Purchase Order conditions, the assessee is required to supply the goods as per the Purchase Orders and in case of delay in the supply schedule, the value of the goods shall be reduced by 0.5% per week of delay subject to a maximum of 5%. The abatement claimed by the assessee on penalties levied/damages claimed by the buyer for non-fulfillment of the conditions of the agreement i.e. delay in supply of the goods is not permissible under Section 4 of the Central Excise Act, 1944. The Chief General Manager, APCPDCL vide letters dated 27.12.2008 and 13.03.2009 informed that no amount was reduced from the Central Excise duty on account of penalty charges as the penalty is with reference to non-compliance of the conditions of the Purchase Order and not in the nature of deductions. Moreover, in the present case, the assessable value charged by the assessee in the invoice was not altered or affected by conditions of the Purchase Order. It is, therefore, confirmed that the assessee has realized the full amount of duty on the basic price and not on the reduced price. Consequently, no refund arises on merits as well as on grounds of unjust enrichment.
In terms of Section 11 B (1) of the Central Excise Act, 1944, any person claiming refund of any duty of Excise is required to enclose the documentary or other evidence including the documents referred to in Section 12 A of the Act ibid to establish that the amount of duty of incidence of such duty has not been passed on by him to any other person. Whereas, in the instant case, the assessee had passed on the duty burden to the customers by raising the invoice under Rule 11 of Central Excise Rules, 2002 which is inclusive of the Excise duty. Further, the customer of the assessee accepted the total invoice value of the goods which includes Central Excise invoice value and determined the amount payable to the assessee. The said deduction made by the buyer is on account of non-performance of contract/obligation and does not relate to the value of the goods. Hence, the refund claim is hit by doctrine of unjust enrichment provided under Sec 11 B of the Central Excise Act, 1944 as held by the adjudicating authority in the Order-in-Original.
Commissioner (Appeals) has relied on the decisions of Honble CESTAT in the cases of United Telecom Ltd., Vs CCE, Bangalore, [2006 (204) E.L.T. 626 (Tn-Bang)] and CCE, Chandigarh, H.F.C.L. [2008 (231) E.L.T. 307 (Tn-Del)] wherein the above decision of United Telecom Ltd., was relied upon. In the present case, APCPDCL, informed that no amount was reduced from the Central Excise duty on account of penalty charges as the penalty is with reference to non-compliance of the conditions of the Purchase Order and not in the nature of deductions. Therefore, the ratio of the said decisions does not apply to the present case as the facts and circumstances are different. Hence, reliance of the Commissioner (Appeals) on the said decisions is misplaced.
3. The learned AR placed reliance on the following judgments:
(i) Andrew Telecom (I) Pvt Ltd., Vs Commissioner of Cus. & C. Ex., Goa [2014 (34) S.T.R. 562 (Bom)]
(ii) Commr. of Cus. & C. Ex.., Hydearabad-IV Vs Victory Electricals Ltd., [2013 (298) E.L.T. 534 (Tri.-LB)]
(iii) Traco Cable Co. Ltd., Vs Commissioner of Central Excise, Cochin [2004 (172) E.L.T. 33 (Tri.-Bang.)]
(iv) Commissioner of C. Ex., Nagpur Vs Maharashtra Cylinder Ltd., [2003 (157) E.L.T. 688 (Tri.- Mumbai)]
4. We find merit in the contentions put forth by the Revenue. It is a fact that the Commissioner (Appeals) has not addressed the issue of unjust enrichment which the original authority had held as affecting the refund claim. We therefore find ourselves in agreement with the plea put forth by Revenue and remand both the appeals to the original authority for addressing whether the refund claims are hit by unjust enrichment. The appeals are allowed by way of remand.
(Operative part of this order was pronounced in court
on conclusion of the hearing)
(MADHU MOHAN DAMODHAR) (SULEKHA BEEVI C.S.)
MEMBER(TECHNICAL) MEMBER(JUDICIAL)
Jaya.
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