TMI Blog2013 (3) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... 161 (S.C.)] on the appeal filed by Revenue, when the matter was remanded with the following direction. Without setting aside any of the findings recorded by the Commissioner (Appeals) or the original authority which framed the assessment. Tribunal taking altogether a new point which had not been taken by the assessee earlier, allowed the appeal on question No. 1. We are not satisfied with the manner in which the Tribunal has dealt with the matter. In our view, a deeper consideration is required. Accordingly, we set aside the order of the Tribunal in so far as question No. 1 regarding demand of ₹ 1,19,51,387/- made by notice dated 19-4-1996 is concerned and remit the case back to the Tribunal for a fresh consideration in accordance with law. Counsel for the department has rightly not challenged the question No. 2 since the leave was restricted to question No. 1 only. The findings recorded by the Tribunal on question No. 2 has attained finality. 2. As is seen the matter was remanded by Hon ble Supreme Court for fresh consideration in accordance with the law and for a deeper consideration of issue involved. We have, accordingly, heard Shri V. Sridharan, learned advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 14 licences indicated the quantities permitted for import against the licences. This quantity restriction was necessary inasmuch as value based advance licences were being converted into quantity based advance licences. 5. On receipt of the conversion permission, the appellant wrote to their jurisdictional Assistant Commissioner vide their letter dated 10-10-1995 that such credit was reversed on the assurance given by the officers that re-credit would be permitted immediately on conversion of VABAL into QABAL and they should be permitted to re-credit the said entry. Subsequently, vide their letter dated 23-12-1995, the above request was reiterated. Inasmuch as the appellants had re-credited the above amount originally debited by them in their RG-23A Part II vide Notification dated 12-8-1995, they were directed by Assistant Commissioner to deposit the above amount. 6. In the above background, show cause notice dated 19-4-1996 was issued to them, proposing to disallow the said Modvat credit on the ground that the appellant has availed the same without producing original duty paying document and as such has contravened provisions of Rule 57A read with Rule 57G of Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection raised by the Revenue, the above objection was raised in the notice issued to the appellant. Admittedly, the said reversal of debit entry was only an accounting entry, which would not require duty paying document. As it may be, the appellant s grievance is that the above ground was the only allegation in the show cause notice and the impugned order stand passed on altogether different reasons, based upon clarification received from the office of the Jt. Director. As such, submits the learned advocate that the impugned order of the Assistant Commissioner has travelled beyond the scope of the show cause notice and has confirmed the demand on an altogether new basis, which is not permissible. A document, which is not relied upon in the show cause notice, cannot be taken into note during the course of adjudication and the demand could not have been confirmed on an altogether different ground, not alleged in the notice. As such, it stands strongly submitted before us that reliance on the above clarification was not in accordance with the settled provisions of the jurisprudence. As such, impugned order is illegal, being violative of principles of natural justice. 9. Though, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BAL, the entire characteristic of the licences is changed. It is neither possible nor practicable for any given licence to be considered as VABAL for a particular period and then QABAL for the balance period. As such, it cannot be held that for the period prior to 5-4-1995 when the licences were amended, the same has to be considered as VABAL and for the period post 5-4-1995, the same has to be held as QABAL. 13. We agree with the above contention of the learned advocate. VABALs are based upon the value of the goods to be imported whereas QABALs are quantity based advance licences. For better appreciation, we may detail here some of the salient features of the VABAL and as also QABAL : The ceiling for import of inputs is fixed only in terms of value and not in terms of quantity. The name and description of the inputs to be imported with the CIF value up to which the inputs can be imported. If there are number of inputs with individual CIF limit, the importer/licencee has the flexibility to import any one or more of the inputs specified in the licence up to the overall value of the licences. There are restrictions with regard to import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o hold that such conversion of value based licences into quantity based licences was only with effect from the date of amendment. The said endorsement further allowed the appellant to import quantity of 1573.25 MTs of hot rolled steel coils, which is the total quantity required to be imported, based upon the input output norm and is not the quantity relatable to remaining portion of value based licences. This fact also indicates that the amendment of the licences was not mid-way but VABAL itself was converted/substituted by QABAL. 14. We also note that subsequently these licences were redeemed for the entire quantity without making any distinction between import made already on the basis of VABAL and no objection was ever raised by any authority. 15. In fact, the appellants have submitted that by converting licences from VABAL to QABAL, they are at disadvantageous position as they have been allowed to import less quantity which they would have imported under VABAL. In any case, it is their contention that if they would have applied for QABAL at the first instance itself, there could not have been any objection by D.G.F.T. authorities for issuance of said licences. It is on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Board of Excise Customs advised that amendment to a licence takes effect as if it existed on the date on which the licence was issued. This would indicate that the importer may claim the benefit of amendments from the date of issue of the licence itself. The above clarification issued also supports the view that conversion of value based advance licences into quantity based advance licences would relate back to the original date of issuance of licences and not from the date of conversion. 19. At this stage, we may deal with the objection raised by learned SDR that credit reversal was made by the appellant in terms of Amnesty scheme announced by Govt. on 3-1-1997 vide which the assessee who have availed the Modvat credit as also the benefit of the notification, were given an opportunity to reverse the credit so as to avail the benefit of the Notification No. 203/82. Apart from the fact that we have already hold that VABAL was converted into QABAL ab initio, in which case the appellant was entitled to avail the benefit of credit, it is to be seen that the debit was made by the appellant much before announcement of the said scheme i.e. in the year 1995 itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef. (Pronounced in Court on ) Sd/- (Archana Wadhwa) Member (Judicial) 22 . [Per : B.S.V. Murthy, Member (T)]. - After perusing the order passed by my learned sister, I find myself unable to agree with the same and hence record a separate order. 23. Even though the facts have been briefly stated by my learned sister, at the cost of repetition of some portions, facts are re-stated in more detail. 24. Instead of narrating the facts myself, I have chosen to reproduce the extracts of relevant facts as mentioned by the appellant in their reply to show cause notice issued to them by Revenue on 19-4-1996. 3. ..We are engaged in the manufacture of cold rolled coils of steel coils classified under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. We export 70% of the quantity produced in the factory. 4. We were holding both Quantity Based as well as Value Based Advance Licences. As per Import-Export Policy in vogue during 1993-94 and 1994-95 we were permitted to import only raw material Hot Rolled (Steel) Coils. 5. We made export against both the quantity based as well as the value based licences. Part of our export has taken place under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvat credit of the inputs used in the manufacture of goods exported under the advance licences once the value based advance licences were converted into quantity based licences. We specifically pointed out that the Hon ble Member has particularly clarified that we were entitled to re-credit that amount of input stage Modvat credit which was reversed earlier at the direction of the Dept. without any further formalities and approval from any authorities. 25. From the facts reproduced above, what comes out clearly is that the appellants were advised to reverse the Modvat credit availed by them on inputs and the facts reproduced also give an impression that only reason for advice to reverse the Modvat credit was pending consideration of interpretation of the conversion of valued based licences (VABAL) to Quantity based licences (QABAL) . Therefore, it is necessary to discuss the circumstances which prevailed at that point of time. During the hearing, I had asked the learned advocate appearing on behalf of the appellant specifically as to whether the reversal of credit made by them in 1995 was in connection with the Amnesty scheme. Learned advocate replied in the negative and submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is prohibited from taking any other action that is mandated under the law. 27. As per a report published in Financial Express dated 5-7-2008, the Revenue Secretary had required all the exporters who had availed the Modvat credit in respect of the goods exported under VABAL scheme to reverse the same before 15-7-2008. The relevant portion is extracted below : All exporters will have to reverse Modvat credit which has been availed by them for goods that have been exported prior to March, 31. Union Revenue Secretary Mr. M.R. Sivaraman told exporters here on Wednesday that if the goods held up in the customs warehouses have to be cleared, the exporters will have to reverse the Modvat credit. He was speaking at a seminar organized by the Federation of Indian Export Organisations (FIEO) to discuss problems of exporters relating to customs, central excise and income-tax. The exporters have been asked to reverse Modvat credit before July 15, failing which the revenue department would pursue legal action. The Government would consider the problems of exporters relating to the import of consignments stuck with customs only after they reverse the credit, said Sivaraman. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,51,387 on 16-7-1995 17-7-1995 ₹ 8 lakhs on 19-7-1995. The letter written by the appellant to the jurisdictional Assistant Collector on 17-7-1995 is very detailed and from this letter, the following facts emerge : (a) They had reversed ₹ 1 crore on 18-3-1995 on the basis of an assurance that they will be allowed to credit this amount immediately on getting their VABAL converted to QABAL. (emphasis added) (b) They had already submitted copies of endorsement by D.G.F.T. converting VABAL to QABAL. (c) A meeting of representatives of various companies was convened by Principal Collector, Vadodara on 15-7-1995 and they were specifically instructed to reverse the Modvat credit taken to avoid any action in that meeting. In the meeting, it was decided that the figure of Modvat credit availed on the input will be worked out by the respective unit and submitted for verification to the officers. (d) Since D.G.F.T. had converted all their VABAL to QABAL (except two licences which had also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the credit taken by them on 11-10-1995 without hearing from the department, was unauthorized. He also cited the decision of the Tribunal in M/s. Shakti Chemical Industries v. Collector Baroda - 1995 (76) E.L.T. 410 (Tri.-Bom.), wherein it was held that re-credit of duty debited suo motu without department s permission is not permissible. Since the appellants did not reverse amount after this letter, the show cause notice was issued. 35. The show cause notice was issued on the ground that credit taken on 11-10-1995 is unauthorised and irregular and not supported by documents. After considering reply submitted by the appellant, the Assistant Commissioner and Commissioner (Appeals) held that in view of the clarification issued by D.G.F.T. stating that the conversion of VABAL into QABAL will have only prospective effect for all purposes, credit taken without supporting documents such as invoices as prescribed in the rules is irregular. 36. The OIA was passed by Commissioner (Appeals) on 14-3-2000 and the appeal filed by the appellant before Tribunal was decided on 19-9-2000 which has been remanded back to this Tribunal for a deeper consideration and fresh decision by the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that they were informed by the office of the Assistant Commissioner that pending study of the interpretation of the conversion of VABAL into QABAL, they were to reverse the Modvat credit availed on the input used in the goods exported under VABAL. The narration above shows that all through the period, from Jan., 1995 till the date of issue of show cause notice, no one had given assurance to the appellant that they can take suo motu credit and conversion of licences would be sufficient for this purpose. The correspondence also clearly shows that department had obtained clarification from D.G.F.T. in view of the circumstances in this case and the same clarification could have been obtained by the appellant also since they were already in touch with the D.G.F.T. for conversion of their licences and all they had to do was to get a letter from D.G.F.T. and produce to the department that the conversion would have retrospective effect. Further, the original adjudicating authority and Commissioner (Appeals) did not travel beyond show cause notice since they were only countering the defence put up by the appellant that in view of the conversion of licences, by D.G.F.T. from VABAL i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out by D.G.F.T. is right or wrong can be the subject matter of the scrutiny and challenged by the customs authority? 42. After considering several decisions and the submissions, the Tribunal came to the conclusion that D.G.F.T. has no power to modify the licences retrospectively. The Larger Bench had also considered Para 25 of Customs Appraising Manual, which has been cited before us by the learned counsel. In view of the Larger Bench decision holding that amendment cannot be retrospective, the contention of the learned advocate that it is only Court who have to arrive at correct position of law, has also been fulfilled. Further the argument of the learned advocate that the credit taken by them on 11-10-1995 was only an accounting entry and therefore did not require any permission from any authority, is also not correct. This issue was again considered by Larger Bench of the Tribunal in the case of M/s. BDH Industries Ltd. v. CCE reported in 2008 (229) E.L.T. 364 (Tri.-LB), wherein it was held in view of the above, we answer the reference made to us by holding that all types of refunds have to be filed under Central Excise Act and Rules made thereunder and no suo motu credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that this point was not taken up by the assessee before the Commissioner is no answer. It is true that the assessee seems to have missed this point and its defence that the import was made not in terms of Notification 203/92 but of Notification 203/93 to which no such condition is attached; the point however is a basic and fundamental one. It should have occurred without it being pointed out to both the Assistant Commissioner, who adjudicated on the notice or Commissioner (Appeals) who confirmed this order. Whether it did or not the position as we have explained above. We therefore, answer this question in favour of the appellant. 45. From the background as discussed by me above, it may be seen that the issue of wrong availment of benefit of Notification No. 203/92 had attained a status of all India problem. From the Principal Collectors Conference in January, 1995 to January, 1997, when the Government came out with Amnesty scheme, the department was persuading the exporters and to reverse the credit since the Govt. did not want to harm the exporters. The statement of Revenue Secretary in July and the then Commerce Minister s observations published in newspaper the meeting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-credit of Modvat credit. The answer according to me is an uniequivocal : No . Another reason that can be considered for not allowing a new ground is that appellant cannot raise a new ground that respondent had another course of action which they did not choose. A new ground can be an alternative defence, but cannot be the one like this. 47. There are some more reasons as to why the appellant should not be allowed to raise new ground at this late stage. (i) Appellants have made a claim that they actually suffered a loss because of conversion of VABAL into QABAL. A statement submitted by the appellants in their memorandum of appeal at page 324 is reproduced below : Analysis of above statement shows that the appellants had imported 13487.787 tons of HR Coils and were required to export 12431.14 tons of CR Steel Coils, valued at 7048330 US $ whereas the actual value of the equivalent quantity was only US $ 6847463. The actual value addition on this basis is only 21% as against the requirement of 25% value addition required under VABAL scheme. This would mean that appellants have failed to fulfil the value addition condition of Notification No. 203/92. Because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 1-3-1995 8-5-1995/28-3-1995 18-4-1995 3499514, dated l8-1-1995 14 1-8-1997 22-3-1996/15-3-1995 3499627, dated 24-3-1995 It is noticed that the claim made by the appellant before the department that all advance licences had been converted (claim made on 11-10-1995), is not correct. The application for conversion in respect of Sr. No. 14 of the Table was made on 1-8-1997 and the conversion endorsement in respect of this licence is not available in the paper-book submitted by the appellant. The fact that copies of all amendments/endorsement sheets converting VABAL into QABAL is available from Pages 310 to 322, which comes actually to exactly 13, whereas total of licences under consideration is 14 shows that all licences had not been converted by 11-10-1995. Therefore, it is quite clear that their claim that all their licences had been converted into QABAL and therefore they could take the credit, is also incorrect and fortunately for the appellants, no one examined the claim made by them with records. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Technical) 49. [ Per : M.V. Ravindran, Member (J)]. - This Difference of Opinion is placed before me as per orders of Hon ble President for deciding the points of difference arose between the Bench while deciding the appeal No. E/1639/2000. 50. Following Difference of Opinion are indicated :- (i) Whether the contention of the ld. Advocate for the assessee that the impugned order has been made an altogether different new case which was not the basis of the show cause notice is correct as observed by the ld. Member (Judicial) or the impugned order had not travelled beyond the show cause notice in view of the fact that the credit taken by the appellants cannot be said to be a re-credit and therefore, the impugned order had not travelled beyond the show cause notice as held by Member (Technical)? (ii) Whether the contention that reversal of debit entry was only an accounting entry which would not require duty paying document has to be upheld in the facts and circumstances of the case as held by ld. Member (Judicial) or cannot be accepted in view of the decision of the Larger Bench of the Tribunal in the case of M/s. BDH Industries Ltd. v. CCE reported in 2008 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying documents as required under Rule 57G. Whereas, the order of the lower authorities (page 355 and page 365) proceeded on the basis that conversion of value based license into quantity based licence is effective only from the date of amendment and consequently, the appellants are not eligible for Modvat credit at all in respect of inputs used in the goods exported against value based advance licence. Further, the lower authorities also relied upon the communication dated 23-4-1996 from the office of Joint D.G.F.T., Vadodara, which was not relied upon in the show cause notice. It is submitted that the order of the lower authorities are bad in law inasmuch as they have travelled beyond the SCN and the orders were passed based on a document not relied upon in the show cause notice also. This is fatal and the orders have to be set aside on this ground alone. In this regard, the judgment of the Supreme Court in the following cases are referred to : (a) CC, Mumbai v. Toyo Engineering India Ltd. - 2006 (201) E.L.T. 513 (S.C.) (b) Saci Allied Products Ltd. v. CCE, Meerut - 2005 (183) E.L.T. 225 (S.C.) (c) Gujarat State Fertilizers Co. v. CCE - 1997 (91) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med in 2009 (242) E.L.T. A118 (Ker.) (b) Suwidhi Enterprises Another v. Union of India - 1989 (39) E.L.T. 369 (Bom.). The decision of P H High Court in the case of Vikrant Overseas - 2000 (123) E.L.T. 486 (P H) has been considered by the Bombay High Court. The distinguished feature in that case is that the licence was amended suo motu by the D.G.F.T. whereas in the case of Bhilwara Spinners, the licence was amended to the benefit of the licence holder, after the proceedings were initiated by the department. The High Court held that the amendment will cover the imports already made and held that the imports made under Zero duty EPCG Scheme should be considered as import under 10% EPCG Scheme, pursuant to the amendment made after the imports. In the present case also, while the exports were made prior to amendment/conversion of the licences, the imports, in most of the cases, were effected, after the amendment. Further, the licences were treated as quantity based advance licences by the ALC and also by the D.G.F.T. on 13-2-1998, when it allowed clubbing of as much as 60 QABALS (including the 14 QABALS in question). This was, after the so-called clarification dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently availment for credit of duty paid on the inputs used in the resultant product is not a bar under the quantity based advance licence scheme (Notification No. 204/92-Cus.). As regards time-bar, there is no dispute between the parties that the credit was reversed by the appellants at the instance of the department, under protest. This position has also been admitted by the counsel appeared for the Department during the course of personal hearing on 4-10-2011. Hence, time-bar is not an issue. As regards unjust enrichment, it is submitted that bar of unjust enrichment is not applicable in the present case. Firstly, the inputs on which credit has been taken, have been used in the manufacture of resultant product exported out of India. Secondly, even as per Section 118, such refund of duty paid on the inputs is not hit by unjust enrichment. Thirdly, credit on inputs taken as credit never forms part of cost of the final products, as held by the Supreme Court in Collector v. Dai Ichi Karkaria Ltd. - 1999 (112) E.L.T. 353 (S.C.). The letters dated 11-10-1995 and 23-12-1995 can be taken as refund claims in the matter and the Tribunal may be pleased to hold that the appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was reversed, under protest, pending conversion of the licenses by the D.G.F.T. Hence, it cannot be said that the reverse of the credit in the present case is in terms of the amnesty scheme. Difference of Opinion Point No. (v) : In view of the following decisions of the Tribunal, even if the imports and exports were made under value based advance licence, in terms of Notification No. 203/2002-Cus., reversal of credit is not correct or not necessary. It has been held so in the following decisions : (a) Dome Bell Investment (P) Ltd. v. CCE, Meerut - 1994 (34) RLT 194 (CESTAT) (b) Mardia Chemicals Ltd. v. CCE - 2006 (199) E.L.T. 110 (T) (c) Libra Polymers Pvt. Ltd. v. CCE - 2000 (126) E.L.T. 735 (T). Difference of Opinion Point No. (vi) : The Department never made any disputes regarding conversion of licences. Hence, the suggestion that the appellants made false claim is not correct. In fact, many of the observations and finding of the Hon ble Member (T) were never part of the records. In respect of one licence only (namely licence No. 3499627), the licence was converted/amended in 1997. The rest of the licences were converted in 1995 itself. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant had taken suo motu credit of the duty without any authority and without any provisions of law and hence whether the amendment to licences from VABAL to QABAL, whether the reversal of credit by the appellant to be considered in terms of amnesty scheme or not are all of academic nature. It is his submission that the benefit of Notification No. 203/92 cannot be invoked as on this precise ground, the Hon ble Apex Court had remanded the matter back to the Tribunal to re-hear the matter in deeper consideration. Hence, the appellant cannot be permitted to raise this new ground at this stage of hearing before Tribunal. 54. I have considered the submissions made at length by both sides and perused the records. 55. Since the facts of the case are already reproduced by the differing Bench, I am not reproducing the same in my order as these are not being disputed. 56. The entire issue in this case is regarding availment of Cenvat credit by the assessee-appellant herein of the amount which was debited by him on his own during the period from March and July, 1995. It is undisputed that during the period March and July, 1995, the appellant had reversed the amount availed as Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Apex Court in the case of Mafatlal Industries (cited supra) which makes it very clear that all types of refund claim be there of excess duty paid or otherwise are to be filed under Section 11B and have to pass the proof of not passing on the incidence of duty to others. The recent decisions of Hon ble Supreme Court in the case of Sahakari Khand Udyog and Others clearly laid down that all refunds have to pass through doctrine of unjust enrichment, even if it is not so expressly provided for in the statute. From these decisions it clearly emerges that all types of refund have to be filed under Section 11B of the Central Excise Act and no suo motu refund can be taken unless and until the department is satisfied that the incidence of duty has not been passed on. 13. In view of above, we answer the reference made to us by holding that all types of refund have to be filed under Central Excise Act and Rules made thereunder and no suo motu credit of the duty paid in excess may be taken by the assessee. The matter is now sent back to the referral bench for passing appropriate orders on the appeal before it. 58. Since the credit availed by the appellant suo motu is now considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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