TMI Blog2011 (7) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent to the Government and as such, there is no contravention of the provisions of Section 11D, the question of asking them to pay this amount to the Government does not arise. Whether the respondent are entitled to adjustment of the duty payable on the intermediate products manufactured by them against the duty paid on CJKs which were not dutiable - Held that:- The process of adjustment of duty paid on CJK on which no duty is payable, towards duty liability in respect of the intermediate products, on which duty is payable, amounts to just changing the head under which the duty had been paid and so long as the duty is not being refunded to the respondent, there would not be any unjust enrichment. - refund of tax means giving the tax paid back to the assessee, which he can use the way he wants and the same can not be equaled with adjustment of tax paid under some head which was not payable, against tax liability under some other head, which is to be discharged. For such adjustment no application under Section 11B is required - Decided against the revenue by third member decision. - E/479-480/2006 - 592-593/2011-EX(DB), - Dated:- 1-7-2011 - S/Shri D.N. Panda, S.K. Gaule, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing adjustment will be contrary to sanction of refund without following the procedure prescribed under Section 11B (ibid) and the same will get covered under the doctrine of unjust enrichment. They also placed reliance on the following decisions :- (i) M/s. Sahakari Khand Udyog Ltd. - 2005 (181) E.L.T. 328 (S.C.) (ii) CCE, Hyderabad v. M/s. Divya Enterprises Ltd. - 2003 (153) E.L.T. 497 (S.C.). (iii) M/s. Bhilwara Synthetics Ltd. v. CCE, Jaipur - 2000 (124) E.L.T. 277 (Tribunal). The contention of the appellants is that the plea taken by learned Counsel for the respondent that they have paid excess amount on final product compared to duty liability at intermediate stage and the entire exercise of department is revenue neutral, is not correct. The contention is that the adjustment allowed by the Commissioner (Appeals) while relying upon the Hon ble Supreme Court s decision in the case of Divya Enterprises Ltd., reported in 2003 (153) E.L.T. 497 (S.C.) relates to availment of benefit of notification. 4. The respondent filed cross objection. The contention of the respondent is that plea of the appellant that duty wrongly paid is required to be deposited with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntermediate goods before the original authority the learned Commissioner has directed the lower adjudicating authority to allow the adjustment in duty along with interest after verifying the records and set aside the penalty of Rs. 1 lakh imposed under Rule 25 of Central Excise Rules. Para 3 of Hon ble Supreme Court s decision in the case of Divya Enterprises read as under :- Under this Notification Jerry toweling was exempted. However the terry-towelling fabric was not exempted. Respondents have paid duty on the exempted item i.e. on towels but duty has not been paid on the fabric. As the notification does not exempt fabrics, duty has to be paid on the fabric under the heading 5802.12 . We, however, direct that the respondent will be given adjustment for the duty paid on the towels. If on calculation of duty, it is found that higher amount has been paid than what is due on the fabric, then the claim for refund will be allow. If on the other hand it is found that some duty has still to be paid then the respondent shall pay the duty . Keeping in view the Hon ble Supreme Court s decision in totality we do not find any infirmity in the order of the learned Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as CJK) assembled by the Respondent not amounting to manufacture was not dutiable as held by the Tribunal in terms of order dated 15-3-2000 in Appeal Case No. E/A/2235/97-B reported in 2001 (130) E.L.T. 854 (Tri. - Del.) and upheld by the Hon ble Supreme Court in terms of judgment and order dated 3-3-2000 (as per SCN at page 29 of the appeal folder). 12. The CJK was result of assembly of intermediate goods manufactured by the respondent without payment of duty and certain bought out items. Consequent upon decision of Apex Court Apex Court, no levy of Central Excise duty on CJK reached finality. Accordingly the Respondent in terms of its letter dated 31-10-2003 intimated the department that they shall pay Central Excise duty on the intermediate goods manufactured by them for use in assembly of the Cable Jointing Kits (CJK) and would not pay Central Excise duty on CJK as held by Apex Court. 13. Despite resolution of dispute as above, the Respondent failed to pay excise duty on the intermediate goods manufactured by them for use in assembly of CJK for the period November 2002 to March 2003. For such failure to pay the duty liability, Show Cause Notice (SCN) dated 5-12-2003 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by learned Commissioner (Appeals) is thus contrary to law. Accordingly, Revenue should succeed in its appeal in toto without any order for adjustment. 17. In view of serious arguments of Revenue as above, it would be proper to explain the submission of Revenue by a mathematical example taking hypothetical figures as under :- Example (in Rs.) (A) Excise Duty payable on CJK : (Not being dutiable for no manufacture of CJK done following Apex Court judgment Nil and judgment of Hon ble High Court of Andhara Pradesh). Nil (B) Excise duty realised by Assessee from public on a sale price of Rs. 130/- of CJK 30/- (C) Duty payable on intermediate goods used for assembly of CJK. 10/- (D) Duty paid by Assessee deducting duty payable on intermediate goods out of public money. 20/- NOTE : In view of adjustment of Rs. 10/- allowed by learned Appellate Authority, the Assessee without suffering any duty liability from its pocket on intermediate goods pays such liability from public money of Rs. 30/- realised unauthorisedly and is unjustly enriched at the cost of public t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn and placed before Hon ble President for appropriate order. Sd/- D.N. Panda Member (J) (4-6-2010) 22 [Order per : S.K. Gaule, Member (T)]. - No decision was pronounced, in this case, at any stage. I prepared the draft as per the notes, dated 7-4-2010, on the order sheet and handed over the unsigned copy, thereof. Now the order is signed and returned. Sd/- S.K. Gaule Member (T) (9-7-2010) DIFFERENCE OF OPINION 23. Since there is a difference of opinion between the two Members, the Registry is required to place the record of the Appeal before the Hon ble President for appropriate orders under Section 129-C(5) of Customs Act, 1962 to resolve following difference of opinion : Whether Appeal of Revenue in Appeal Case No. E/480/2006 before the Tribunal against the impugned order is liable to be dismissed as held by the Technical Member or Order-in-Original is required to be restored setting aside the first Appeal order, allowing Appeal of Revenue as held by the Judicial Member . (Pronounced in the open Court on ) Sd/- S.K. Gaule Member (T) Sd/- D.N. Panda Member (J) Fresh sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 on the ground that the final product was exempt from duty while in reality the activity of the appellant was not manufacture and its final product was not dutiable/Appellant s contention that it was entitled to cenvat credit on manufactured goods was denied for the reason that cenvat credit is governed by specific rules and procedures and ex post facto compliance does not provide remedy for failure to comply with substantive provisions of tax law at appropriate stage and issue of cenvat credit claim was outside the scope of the proceeding. 28. While the factual aspect of the matter was as above, in second appeal before Tribunal, upon hearing both sides two separate orders have been recorded by each Member giving rise to following differences for reference u/s 129C(5) of Customs Act, 1962 to the Hon ble President following the ratio laid down by Hon ble High Court of Gujarat in the case of CCE C v. Jagat Texturising reported in 2010 (225) E.L.T. 353 (Guj.) = 2010 (20) S.T.R. 564 (Guj.) for appropriate order : (i) Whether the respondent has right to realise duty from buyers on CJK when such goods were not manufactured and not dutiable as held by Tribunal and affirmed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of this judgement was that while CJK is not excisable commodity, the intermediate products manufactured by the respondent which were being supplied along with the bought-out items as CJK would be chargeable to duty as the same would no longer be eligible for duty exemption under Notification No. 67/95-C.E. However, the respondent, in spite of Hon ble Supreme Court s judgment dated 3-3-2001 continued to pay duty on CJK till October, 2003 when they intimated the department that from the next month they would not be paying duty on CJK. The dispute in this case pertains to the period from April, 2003 to October, 2003. 30.2 As mentioned above, during the period when the respondents were paying duty on CJK they were also availing Cenvat credit of duty paid on inputs used in the manufacture of intermediate products being supplied as CJK along with bought-out items and were availing Cenvat credit in respect of such inputs and bought-out items. The department was of the view that during the period from 1-4-2003 to 31-10-2003, the respondents were liable to pay the duty on the intermediate products manufactured by them, as no duty was chargeable on their finished products as CJK. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in this regard, the Commissioner (Appeals) relied upon the Hon ble Supreme Court s judgment in case of CCE v. Divya Enterprises Ltd. reported in 2003 (153) E.L.T. 497 (S.C.). Earlier, the Addl. Commissioner, however in his order had not allowed this request of the respondent for adjustment. The department is in appeal before the Tribunal against the part of the Commissioner (Appeals) s order permitting adjustment of duty paid on CJK towards the respondent s duty liability in respect of intermediate products. The department s appeal against this order is No. E/480/2006. 30.6 The other show cause notice regarding demand of Cenvat credit of Rs. 20,50,911/- was adjudicated by the Addl. Commissioner by Order-in-Original No. 1/ADC/VK/PKL/05 dated 27-1-2005 by which - (a) Cenvat credit demand of Rs. 20,50,911/- was confirmed against the appellants along with interest; and (b) penalty of Rs. 50,000/- was imposed on them under Rule 13 of the Cenvat Credit Rules. 30.6.1 The Addl. Commissioner in this order also did not accept the respondent s plea that the Cenvat credit should be treated as having been reversed, as the respondent had paid duty on CJK by fully utilising t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 2005 (181) E.L.T. 328 (S.C.)? (3) Whether the Respondent is entitled to adjustment of duty payable on intermediate goods manufactured by it against the duty paid on CJK which was not a dutiable goods following decision of Apex Court in the case of Divya Enterprises Ltd. reported in 2003 (153) E.L.T. 497 (S.C.) and excess if any paid refundable? 32. The Hon ble President, CESTAT vide Order dated 16-11-2010 ordered the listing of the matter for decision on points of difference before the undersigned. 33. Heard both sides. 34. Shri S.R. Meena, learned Departmental Representative, pleaded that the adjustment of the duty payable on the intermediate products against the duty paid on CJK would amount to refund of duty paid on CJK, which is not permissible, in this case, as no application for such refund has been filled, that in any case, the refund is hit by unjust enrichment, as there is no dispute that the entire duty paid by the respondent on CJK had been realised recovered by them form the customers, that the respondent should have filed refund claim under Section 11B for refund of duty paid on CJK and since no such refund claim has been filed, there is no question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es upon the judgement of the Larger Bench of the Tribunal in the case of Unison Metals Ltd. v. CCE, Ahmedabad reported in 2006 (204) E.L.T. 323 (Tribunal-LB) = 2006 (4) S.T.R. 491 (Tribunal-LB.) and also the Board s Circular No. 870/8/2008-CX., dated 16-5-2008 and that since there is no unjust enrichment in permitting such adjustment, there is no infirmity in the impugned order. He emphasised that in this situation, the duty payable on the intermediate products can always be adjusted from the duty already paid on the finished products on CJK and there is no unjust enrichment in permitting this adjustment. 36. I have carefully considered the submissions from both the sides and perused the records. There are three points which have been referred to this Bench. Coming to the first and second point as to whether the respondents had right to realise the duty from the buyers on CJK when such goods were not manufactured and were not dutiable as held by the Tribunal and affirmed by the Apex Court and whether the respondent, in view of the provisions of Section 11D shall not be called upon to deposit into the treasury the duty realised by them in respect of CJK from the customers, I find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, I find that the main objection of the department to this adjustment is that the same amounts to refund, which is not permissible as the same would result in unjust enrichment. Unjust enrichment takes place in a situation where some amount representing duty is collected by an assessee from his customer and the same is either not paid to the Government or having been paid, is refunded to him. In this case, neither of this has happened, as the amount representing duty collected by the respondent was paid by them to the Government and by the process of adjustment, it is not being refunded to the respondent. The process of adjustment of duty paid on CJK on which no duty is payable, towards duty liability in respect of the intermediate products, on which duty is payable, amounts to just changing the head under which the duty had been paid and so long as the duty is not being refunded to the respondent, there would not be any unjust enrichment. In my view, refund of tax means giving the tax paid back to the assessee, which he can use the way he wants and the same can not be equaled with adjustment of tax paid under some head which was not payable, against tax liability under some ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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