TMI Blog2019 (1) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... said adhoc exemption order has been issued or by way of non-payment of duty in respect of the goods covered by the said adhoc exemption order and still not cleared from the source, i.e. from the factory of supplier or from the port of clearance in case of imported goods. Sub-section (2) to Section 5A, is an exceptional power available with the Government to exempt specified goods to be used for specified purpose by a specified person in public interest. This power is over riding the power under sub- section (1), wherein the exemption is granted in general to all the users of the said goods subject to such conditions as may be specified - In our view there is no dispute in respect of the operation of adhoc exemption order by way of refund under section 11B. If such a view is taken then it will make the Insertion of clause (ee) in explanation to section 11B otiose - refund allowed. Whether bar under the erstwhile Rule 57C be applicable in this case i.e. because the supplier has availed the Modvat Credit Of the inputs used in manufacture and supply of the finished goods to person to whom Adhoc Exemption Order has been issued under Section 5A(2), the refund claim seeking exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was valid only upto 31.03.1995, issuing another order for the same period from 1990 orders in respect of the same goods supplied by the same manufacturer/ suppliers in terms of quantity and value to the appellant cannot be but for rectification of the operational difficulties faced in the operation of first order. Thus in our view Section 38A Of the Central Excise Act, 1944 would not be applicable in the present case. Whether the appellants have produced sufficient documentary evidence to establish that they have paid the duty for which they are seeking the refund, to satisfy the requirements of Section 11B? - Held that:- From the said documents it is quite evident that appellants have produced the duty paying documents in respect of which the refund has been claimed before the concerned authorities. Even the adjudicating authority do not dispute the production of the said documents along with the refund claims. In absence of any evidence to the contrary the averments made with regards to non production of documents as required under Section 11B of the Central Excise Act, 1944 do not merit acceptance. Whether Bar of Unjust enrichment applicable in such cases where the refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 Pursuant to the adhoc exemption order dated 1 st May 2002 issued from F No 134/8/2000-CX.4 by the Government of India, exercising power under Section 5A (2) Of the Central Excise Act, 1944, appellants preferred two refund claim under Section 11B of the Central Excise Act, 1994 as detailed below: S N Reference No and Date Amount 'Rs 1 F No KRN/RN/CED/ITSPL dated 17.10.2002 87,78,584/- 2 F No KRN/RN/CED/PIPE dated 17.10.2002 3,50,34,644/- 2.2 Both the refund Claims were considered by the Assistant Commissioner Central Excise Division Ratnagiri and disposed of with order as follows: ORDER 1) I, sanction the Refund claim of ₹ 3,50,34,644 paid as Central Excise duty and order to credit the said amount to the Consumer Welfare Fund established under Section 12-C read with sub-section (1) of the Section 11B of the Act. 2) I reject the refund claim amounting to ₹ 87,78,384/- being a Central Excise paid by M/s Isco Track Sleepers, Kudai, under the provisions of sub-section (1) of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re entitled to refund of excise duty. Since the only ground on which the refund has been denied by the Assistant Commissioner was ground of unjust enrichment, hence when he holds that this ground do not exist the refund should have been allowed. iv. Adhoc Exemption Order dated 2nd May 20-02 was issued in supersession of the earlier Adhoc Exemption Order dated 4th April 1994, the legal effect thereof was that the earlier order was obliterated /given up and there could be no recourse to the same. A fortori, any proceedings, which had been commenced pursuant to the said Adhoc Exemption Order dated 4th April, 1994 would also abate and were of no consequence. Thus only proceedings, which remained relevant, were the ones, which were initiated pursuant to the Adhoc Exemption Order dated 2nd May 2002. 3.2 Revenue has in its appeal has challenged the order of the Commissioner (Appeal) stating that:- i. The order of adjudicating authority to sanction the refund claims of ₹ 3,50,3r4,644/- and crediting the same to Consumer Welfare Fund is erroneous in as much as Appellants have failed to produce any duty paying documents to establish that the amount of duty in respect of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of Assistant Commissioner of 1995 was not challenged by them is incorrect, in as much as the said order was challenged before Commissioner (Appeal) and then before Tribunal. Tribunal dismissed the appeal filed on the ground that the clearance from Committee of secretaries was required before the appeals can be filed. Tribunal granted liberty to revive the appeals as and when the aforesaid clearance was obtained. e. Appellants approached the Committee of Secretaries, and after deliberations within the Committee of Secretaries, fresh Adhoc Exemption Order was issued in 2002 superseding the earlier order of 1994. f. Since fresh adhoc exemption order has been issued there was no need to revive the appeals before the Tribunal, and fresh refund application made before the jurisdictional officers.. The proceedings in the refund application pursuant to the adhoc exemption order of 1994 do not lend any support to the findings of the Commissioner (Appeals). g. Since the exemption has been granted in respect of the pre-stressed concrete sleepers received by them on payment of duty from various specified suppliers, they alone where eligible to the refund of duty paid in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the burden of duty has not been passed on further and hence refund claim cannot be allowed in their favour. (Mafatlal Industries Ltd. [1997 (89) ELT 247 (SC)] Solar Pesticides Pvt. Ltd. [2000 (116) ELT 401 (SC) 95 (SC)] e. In case of National Winder {2003 (154) ELT 350 (SC)] it has been categorically held that conditions of Section 11B need to be complied by the buyer of goods if he is claiming the refund. f. In case of Grasim Industries [2015 (318) ELT 594 (SC)] it has been held that bar of unjust enrichment applies also to cases of captive consumption of capital goods and in case of Allied Photo graphics India Ltd. [2004 (166) ELT 3 (SC)], Larger bench of Supreme Court has laid own that, the distributor, purchaser who claims to have borne the incidence of duty, must prove that they have not passed on the incidence of duty to any other person. g. In case of Addison Co 2016-TIOL-146-SC-CX-LB apex court has laid down that buyer has to show that the incidence of duty has not been passed on to any other person. Appellants have failed to demonstrate the same. Hence refund cannot be allowed to them. h. PSIL has not filed any appeal against the assessment of goods cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be grounds for rejection of appeal filed by the appellant p. The appellants have in fact capitalized the expenses claimed by them as refund as is evident from 17th Annual Report 2006-07, 18th Annual Report 2007-08 and Unaudited Financial Results for the Half Year ending 30.09.2017. Having capitalized the said expenses they have passed on the burden of incidence of duty further. Hence for this reason the refund claims need to be rejected. Thus the appeal filed by department allowed and that filed by the appellant be rejected. 5.1 We have considered the submissions made by Counsel for the Appellant and by learned Authorized Representative for the revenue and also the submissions made in the appeals filed by the Appellant (E/2445/05) and that filed by Revenue (E/2943/05). 5.2 Since the issue has long drawn history it is worthwhile to list down the dates and corresponding events Date Event 04.04.1994 Ad Hoc Exemption Order issued by Ministry of finance exempting payment of duty on manufacture of concrete sleeper for the period December 1990 to 31st March 1995. 27.07.1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims for sums of ₹ 3,50,34,644/- and ₹ 87,78,584/- 22.09.2005 Assistant Commissioner passed the OIO allowing refund of ₹ 46,27,943/- as is paid in the Personal Ledger Account to the Appellant 25.10.2002 Assistant Commissioner called upon the Appellant to furnish documentary evidence in support of their refund claim. 18.12.2002 Prestress informed the Deputy Commissioner that the Appellant had borne the incidence of excise duty. 26.11.2002 Deputy Commissioner purported to list out discrepancies in the Refund Claims filed by the Appellant and returned the same with a direction that fresh refund claims be filed by the Appellant. 17.12.2002 Deputy Commissioner issued a show cause notice calling upon the Appellant to show cause as to why their refund claims should not be rejected. 24.01.2003 Assistant Commissioner called upon the Appellant to provide an invoice wise statement duly supported by invoice copies of procurement of concrete sleepers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as claimed. 29.04.2005 Vide the OIA the Commissioner held that the Appellant had not passed the incidence of excise duty and were entitled to refund of ₹ 36,10,839.68. In respect of the balance amount of ₹ 3,04,47,529/- and ₹ 87,78,584/-, he held that the Appellant was not entitled as they had allegedly not challenged the OIO passed by the Assistant Commissioner. 5.3 The questions for consideration can be framed as follows: - i. What is the scope and impact of the Adhoc 0045emption Order issued under Section 5A(2).Whether the refund claim permissible in terms of Adhoc Exemption Order issued under Section 5A(2) of the Central Excise Act, 1944, when the goods have been assessed to duty and cleared on payment of duty, by the supplier at the time supply of goods? ii. Whether bar under the erstwhile Rule 57C be applicable in this case i.e. because the supplier has availed the Modvat Credit Of the inputs used in manufacture and supply of the finished goods to person to whom Adhoc Exemption Order has been issued under Section 5A(2), the refund claim seeking exemption from duty be granted.? iii. Where the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally contemplates an individual order but since in the present case large number of cases were involved the Central Government rightly drew out a general policy and laid down that if an applicant satisfies the conditions laid down therein he would be granted an exemption order. But nevertheless in point of fact an exemption order has to be passed in each specific case. There is no general exemption as is contemplated in Section 25(1) of the Customs Act. 6.4 Hon ble Rajasthan High Court has in case of Amrit Nahata [2003 (152) ELT 301 (Raj)] held- 15. Learned counsel then contended that if the petitioner is not entitled to benefit of the Scheme informed on 20th July, 1982, at least his case is liable to be considered under Section 25(2) of the Custom Act for grant of exemption keeping in view the special facts and circumstances of the case. In the facts and circumstances of the present case, we are not inclined to grant this prayer. The goods have been imported long back in 1985, the person for whose benefit the concession was granted is no more alive and more importantly the provisions of Section 25(2) can only be invoked in public interest and not to grant benefit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General of India on the scope of Section 25(2) of the Customs Act, 1962, excerpted below: If the requirements Of Section 25(2) are satisfied, I am of the view that an exemption can be passed Under Section 25(2) even after the goods have been imported. An exemption can also be granted even after the duty has been paid in which event, the duty paid has to be refunded . 5. All Commissioners are re quested to bring the con tents of this circular to the attention of concerned officers and ensure that benefit of Ad-hoc Exemption Order is not denied on the grounds mentioned in para 2 above of this letter. 6.6 Thus in view of specific clarification issued by Central Board of Excise and Custom, to the effect that in case where the goods exempted by an adhoc exemption order, have been cleared on payment of duty, for the reason that the adhoc exemption order has been issued after the clearance of the goods after assessment and payment of duty, the duty paid will have to be refunded. Thus such adhoc exemption orders will be operated in cases of such goods cleared on payment of duty by way of refund to the person qua who the said exemption has been issued. 6.7 The decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice differential unless it is shown that there was some agreement in this behalf with the Government and the latter had agreed to refund the excise duty to the extent of the reduced price. That being so, we see no merit in this appeal brought by the assessee and dismiss the same with no order as to costs. Thus Hon'ble Apex Court has clearly laid down, that in case the subsequent reduction in price was on account of direction of the government, then the refund will be admissible if there was agreement between the Government and assessee to refund the amount of duty paid to the extent of price reduction, i.e. mere reduction in price cannot be ground for refund, but if said reduction in price is admitted and exemption granted in respect of the duty that has already been paid on enhanced price, then refund will be admissible. 6.9 In case of Flock India which has been subsequently followed in the case of Priya Blue Industries and BPL Telecom, Hon'ble Supreme Court held as follows: 10. Coming to the question that is raised there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of assessment. 6.11 Sub-section (2) to Section 5A, is an exceptional power available with the Government to exempt specified goods to be used for specified purpose by a specified person in public interest. This power is over riding the power under sub- section (1), wherein the exemption is granted in general to all the users of the said goods subject to such conditions as may be specified. 6.12. In our view there is no dispute in respect of the operation of adhoc exemption order by way of refund under section 11B. If such a view is taken then it will make the Insertion of clause (ee) in explanation to section 11B otiose. The said amendment Central excise Act, 1944 is reproduced below: (ee) in the case of goods which are exempt from payment of duty by a special order issued under sub- section (2) of section 5A, the date of issue of such order; . 6.13 If the view as canvassed by the learned Authorized Representative relying on these case laws is accepted then there can be no case of refund in respect of the adhoc exemption order issued under sub section (2) of section 5A, and thus there would be no rational behind this insertion. Even adjudicating authority and Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l holds, it cannot be implemented. We can see no satisfactory explanation and, in fact, there cannot be any other than that when the Government gave the ad hoc exemption, it knew that it could do so. 6. The ad hoc exemption in this case specifically identifies the consignment that it was meant to cover. We have seen that it was issued after the goods had been cleared. We think that the obvious and sensible step, therefore, is to.........implement it just as it was issued because that evidently was the wish of the exemption giving power. 7.1 Now coming to issue at ii , i.e. whether the erstwhile Rule 57C of Central Excise Rules 1944 bar the claim of adhoc exemption order issued under sub section (2) of Section 5A. We are not in agreement with the view canvassed by the learned Authorized Representative. In the present case the goods have been cleared on payment of duty by the supplier/ manufacturer who has availed the MODVAT Credit on the inputs used in manufacture of the said goods. Once the goods are cleared by the person availing the MODVAT Credit on payment of duty, requirements of rule 57C of the erstwhile Central Excise Rules, 1944 are satisfied. For ease of ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods cleared will not attract rule 57C. 7.3 The fallacy in the argument advanced by the learned Authorized Representative is that as per him adhoc exemption was availed/ available to the supplier / manufacturer supplying the goods whereas the correct position in law as discussed by us in para 6, is that the said exemption is qua the receiver of the goods. 7.4 Thus the submissions to the effect that in the present case the supplier/ manufacturer has availed the MODVAT Credit in respect of the inputs used in manufacture of the finished goods, to the recipient availing the benefit of adhoc exemption order issued under Section 5A(2) of the Central Excise Act, 1944 is not tenable. 8.1 Now coming to issue at iii . It is the submission of the revenue and also one of the major reason advanced by Commissioner (Appeal) that the proceedings in respect of the refund had been concluded when the matter was adjudicated by the Assistant Commissioner, allowing the refund in respect of the duty payments which were within the period of limitation as then prescribed by Section 11B. Further during the arguments of appeal it was submitted that the order of adjudicating authority was Challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ONGC and the order of Tribunal in their own case appellants took up the matter with the Committee of Secretaries. After deliberations in the Committee of Secretaries and various correspondences between the Ministry of Railway and Ministry of Finance Adhoc Exemption Order of 2002, was issued. The various correspondences showing the directions of the Committee are reproduced below: 8.4 From the correspondence as indicated above it is quite evident that one of the issue in respect of the adhoc exemption order was in relation to rejection of the refund claims on the ground that they had been filed beyond the period of six months from the date of payment of duty. After considering all the facts, committee of secretaries on 17.08.2000 directed the Ministry of Railway and Ministry of Finance to resolve the dispute at the earliest. It is in this process of resolution of dispute, Ministry of Finance, issued the Adhoc Exemption Order in 2002. 8.5 Thus in our View the matter in respect of the refund claims filed pursuant to the earlier adhoc exemption order was not finally decided by the order of the Assistant Commissioner, or even the order of Tribunal dismissin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities and subsequent rejection of the appeal filed by the appellant (Refer to letter dated 17.11.2000 Of Financial Commissioner Ex Officio Secretary, Ministry of Railways to Finance Secretary). Being aware of Rejection of the refund claims, Ministry of Finance preferred to issue the Adhoc Exemption Order afresh. For each of reference the adhoc exemption orders of 1994 and 2002 are reproduced below: 9.3 From the perusal of the above two orders it is evident that the second order of 2002 has been issued superseding the earlier order of 1994. Revenue has cited section 38A (a) (b) of Central Excise Act, 1944 to argue that All refund claimed and finalized under such superseded order cannot revive and the previous operation of Order dated 4.04.1994 cannot be affected. For ease of reference said provisions of section 38A are reproduced below: 3844. Effect of amendments, etc,. of rules, notifications or orders.- Where any rule, notification or order made or issued under this Act or any notification issued under such rule, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, supers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. Thus in our view Section 38A Of the Central Excise Act, 1944 would not be applicable in the present case. Similar view has been expressed by the larger bench of tribunal in case of Chennai Petroleum Corpn Ltd. [2008 (228) ELT 533 (T-LB)] in following words: 14. The learned counsel has made a feeble attempt to claim support from Section 6 Of the General Clauses Act, 1897 to his submission that the supersession of Rule 140(2) of the Central Excise Rules, 1944 did not affect the 'deemed warehouse' status already acquired thereunder. We have found in the Central Excise Act a provision similar to Section 6 of the General Clauses Act and the same is Section 38A. Where specific provision exists in the Central Excise Act declaring the effect of amendments of rules, notifications and orders, Section 6 of the General Clauses Act has no application. We shall now refer to Section 38A of the Central Excise Act to fortify Our point. This Section reads as under :- Section 38A. Effect Of amendments, etc., of rules, notifications or orders. - Where any rule, notification or order made or issued under this Act or any notification or order issued under. such rule, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Hon'ble High Court in Indorama case (vide supra), the Central Excise Rules, 1944 ceased to have legal force when the Central Excise (No. 2) Rules, 2001 came into force. Where Rule 140(2) ceased to have effect, the Government s order issued thereunder could not survive. 10.1 Now on issue at appellants have submitted and demonstrated that they had filed all the duty paying documents along with refund claim filed by them when they filed the refund claim in 1994. The copy of one of such letters in respect of Prestress (India) Pvt Ltd is reproduced below: 10.2 From the said documents it is quite evident that appellants have produced the duty paying documents in respect of which the refund has been claimed before the concerned authorities. Even the adjudicating authority do not dispute the production of the said documents along with the refund claims. In absence of any evidence to the contrary the averments made with regards to non production of documents as required under Section 11B of the Central Excise Act, 1944 do hot merit acceptance. 11.1 Now coming to the issue of unjust enrichment which is issue at vi of the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person. 11.2 In terms of e in Proviso to section 11B(2), the refund will be paid to the claimant if he is the buyer and has not passed on the burden of the said duty on to any other person. In the present case the appellants are the consumer of the goods and have utilized the said goods in creation of Konkan Rail Project, for which the adhoc exemption order Of 1994 and the 2002 issued. While issuing the said exemption order, in the preamble to the said orders it has been specifically recorded that- The Konkan Railway Corporation has requested for exemption from payment of duty under Section 5A(2) of Central Excise Act, 1944 for concrete sleepers required to be used for railway lines. The Konkan Railway has entered into contract with four factories along the route of this line for manufacture and supply of pre stressed concrete sleepers. The fact recorded in the said preamble points to the fact that the said goods in respect of which said adhoc exemption order has been provided are to be used by the appellant in the railway line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the consumers as provided in Section 12D. 11.5 In National Winders case supra, Hon'ble Apex Court held 5. However, it must be clarified that before refund can be claimed either by the manufacturer or by the purchaser, the conditions of Section 11B must be fulfilled viz., it must be shown that the amount of duty of excise in relation to which such refund is claimed was collected from or paid by the person claiming refund and that the incidence of such duty has not been passed on by him to any other person. Therefore, even in a claim for refund by the purchaser, he would have to satisfy the Department that these conditions are fulfilled before any refund can be made to him. 11.6 In Solar Pesticides case, Hon'ble Apex Court held as follows:- 22. The High Court in considering the question of the applicability of the doctrine of unjust enrichment had relied upon the decision of this Court in HMM Limited Anr. v. Administrator, Bangalore City Corporation, Bangalore and Anr. (1997 (91) E.L.T. 27 (S.C.) = [1989] Supp. 1 SCR 353]. That case pertained to the levy of octroi on goods on their entry into the city limits. Octroi had been collected o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umed in the manufacture of a final product. Whether the incidence of the duty had been passed on to the consumer was not decided by the High Court in Solar Pesticide's case (supra) because in its opinion the principle of unjust enrichment could not apply to the Cases Of captive consumption. In the case of Solar Pesticide Pvt. Ltd., therefore, we do not go into this question whether the incidence of duty had not been passed on by the respondent. This appeal is, accordingly, allowed and the impugned judgment of the High Court is set aside, the effect of which would be that the writ petition filed by the Solar Pesticide Pvt. Ltd. stands dismissed. Writ Petition (C) No. 189 of 1993 filed by M/s. Solar Pesticides Pvt. Ltd. in this Court also stands dismissed. No costs From the said decision it is evident that court should not hold that bar of unjust enrichment while considering an application of refund under Customs Act, 1962, Section 27 shall not apply in case of captive consumption, but should record a finding to the effect after examination of relevant facts whether the burden of said duty has been passed on or not. Same is the ratio of the Apex Court decision in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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