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Commissioner of Central Excise, Mumbai Versus Swan Mills Ltd. And Vice-Versa

2017 (12) TMI 329 - CESTAT MUMBAI

Refund of excess duty paid - unjust enrichment - Held that: - M/s Swan Mills had paid duty on Yarn used captively in manufacture of Fabrics which was otherwise not exempted - The Commissioner (Appeals) while remanding the case to the adjudicating authority had directed to take assistance of Assistant Director (Cost) to ascertain as to whether the incidence of duty was passed on or otherwise. The Deputy Commissioner got verified the books of accounts from the Assistant Director (Cost) and held th .....

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ipur Versus M/s. Simplex Engineering & Foundary Works P. Ltd [2015 (11) TMI 662 - CESTAT NEW DELHI]. - In absence of anything contrary on record to such cost report the unjust enrichment and issue of time bar would not arise and the same cannot be grounds to reject the refunds - refund allowed - appeal dismissed - decided against Revenue. - Appeal No. E/4020-R/99, E/3142, 3143/02 - Dated:- 14-11-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri N. N. Prabhudes .....

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een filed by M/s Swan Mills against common Order-in-Appeal dt. 28.03.2002 wherein the Commissioner (Appeals) has set aside the orders dt. 01.01.2001 of the adjudicating authority sanctioning refund of ₹ 55,92,105/- plus ₹ 1,39,323/- and order dt. 09.01.2001 whereby refund of ₹ 29,25,044/- was sanctioned. 2. The brief facts of the case are that M/s Swan Mill Ltd are manufacturers of Yarn and Fabrics falling under Chapters 52, 54 & 55 of the Schedule to the Central Excise Tar .....

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(later amended to ₹ 55,92,105/-) for the period September 1996 to April 1997 and ₹ 1,39,323/- for the period September 1996 June 1997 on 7.8.1998 on the ground that they have paid duty on blended yarn and cotton yarn at spindle point, though the same was exempted in terms of Notification No. 22/96-CE dt 23.7.1996. They were issued three Show Cause Notices proposing rejection of the claim on the ground of unjust enrichment. Vide Order dt. 14.09.98 the claim for ₹ 54,66,421/- an .....

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tively consumed and the doctrine of unjust enrichment is not attracted. The revenue filed Appeal No. E/4020-R/99 against the said Order-in-Appeal dt. 31.08.1999 before the Tribunal. In case of refund of ₹ 28,80,545/- the case was remanded back by the Commissioner (Appeals) to the adjudicating authority to study the Appellant s records of costing and sale relevant to the period preferably with the assistance of AD (Cost). The Adjudicating authority after verification passed Order-in-Origina .....

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e the Tribunal. All the three appeals were taken up together by the Tribunal and resultantly the Appeal filed by M/s Swan Mills were dismissed whereas the appeal filed by revenue was allowed. The order of the Tribunal was set aside by the Hon ble High Court and the appeals were remanded back to the Tribunal for fresh consideration. The Hon ble High Court order is reproduced below: By the present appeal which is directed against the Order dated 25-2-2005, passed by the Customs, Excise & Servi .....

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e as credit of Modvat and hence such credit is not hit by the doctrine of unjust enrichment, in view of its coverage under clause (c) to first proviso to sub-section (2) of Section 11B of the Central Excise Act, 1944, and in a case where the Revenue in its appeal had not challenged the findings of the Commissioner (Appeals) s Order-in-Appeal dated 28-3-2002 (at Exhibit- J ) holding that unjust enrichment is not applicable and further, Assistant Director (Cost), in his report dated 12-9-2000 has .....

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acts are required to be noted for appreciating the argument of Mr. Patil, learned counsel appearing for the appellants. The appellants are engaged in the manufacture of textile yarn and fabrics and at their factory in Mumbai. They are registered with the Central Excise Department. Further, setting out the products which were manufactured during the relevant period (April, 1994 to March, 1995), it is contended that the assessable value approved by the Assistant Director (Cost) was found to be les .....

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pinion that the claims could be rejected on the ground of unjust enrichment. 5.The initial orders were passed rejecting the two Refund Applications. Against the two Orders-in-Original, dated 14-9-1998 and 30-10-1998, two appeals were filed before the First Appellate Authority. The First Appellate Authority was of the opinion that certain clarifications will have to be made and they are not to be found in the impugned orders and hence restored the refund claim and for reconsideration by the Compe .....

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inciple of unjust enrichment which was invoked has been rightly invoked by the Department. Therefore, there was an order passed. But it appears that the Department filed Review Appeals against the two Orders-in-Original and that is on the assumption that the two Orders-in-Original grant partial relief. In these appeals and which were disposed of on 28-3-2002, the Order-in-Original was set aside and the Appellate Authority granted refund by this order. But he also held that the Departmental objec .....

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der of the Tribunal by filing applications for rectification of mistakes. These applications have also been rejected on 2-12-2005. 7.Against the above two orders, the present appeal is filed by the assessee. 8.We have found from a reading of the Tribunal s order and it is difficult to make out as to what prevailed upon the Tribunal to pass a cryptic order and by holding that there is substance in the Departmental objection on the point of limitation. 9.The Tribunal concluded that the doctrine of .....

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pure legal issue. Our normal and ordinary understanding is that such a plea raises a mixed question of law and facts and it is only after the applicable facts attract a bar and those facts are admitted, but the issue raised is whether the interpretation of the legal provision bars the remedy, then, it could be, in a given case, said to be a pure legal issue. Ordinarily, however, it is a mixed question. It is only when Tribunals like CESTAT in the present case arrive at a definite conclusion that .....

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t with no alternative but to remand the appeals back to the Tribunal. We accordingly set aside the impugned order. We restore the appeals to the file of the Tribunal for a decision afresh on merits and in accordance with law. The Tribunal should not be influenced by any of its earlier findings and conclusions. It should decide the matters afresh. We equally clarify that beyond referring to the legal position and ordinarily to be found, we have not expressed any opinion on the rival contentions. .....

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ri N. N. Prabhudesai, Ld. Superintendent (A.R.) appearing for the revenue submitted that even in case of captive consumption the doctrine of unjust enrichment would apply. That no documentary evidence was produced to show that the duty element was not passed on to the buyer of goods. The duty element was included in the price of goods. In terms of Section 12 B it is presumed that duty incidence has been passed on to the buyers. It does not make difference between refund of duty on direct sale an .....

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nt would apply to captive consumption also. In case of Appeal No. E/3142-43/2000 filed by M/s Swan Mills against OIA dt. 29.03.2002 of the Commissioner (Appeals), we find that M/s Swan Mills had paid duty on Yarn used captively in manufacture of Fabrics which was otherwise not exempted. The Commissioner (Appeals) while remanding the case to the adjudicating authority had directed to take assistance of Assistant Director (Cost) to ascertain as to whether the incidence of duty was passed on or oth .....

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ct the claim on grounds of time bar, it proposed to reject the claim only on grounds of unjust enrichment. Even the issue of time bar was not before the Commissioner (Appeals). The Department as respondent also did not raise the issue of time bar by filing any cross-objection. Therefore issue of limitation cannot be raised either by Adjudicating authority or by the Ld. Commissioner(Appeals). In the second round of litigation as held in the following judgment. (i) Commr. Of C. Ex., Raipur Vs. Sim .....

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unds cannot be rejected on the grounds of time bar. It is also fact that in case of refund of ₹ 29,25,044/- the refund arose on valuation was approved by AD (Costs) on 3.4.1996 and claim was filed on 2.7.1996. Since the AD(Cost) finalized the value the assessment can be deemed as provisional assessment as held by the Hon ble Supreme Court in case of M/s SAMRAT INTERNATIONAL (P) LTD. Vs. CCE 1992 (58) E.L.T. 561 (S.C.) and Ester Industries Vs. CCE, , MEERUT 2001 (131) ELT 91 (TRI). Same vie .....

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r dt. 1.1.2001 and 9.1.2001 which is reproduced below: Adjudication order dt. 1.1.2001. In support of the claim the assessee has furnished the following documents which were thoroughly examined and scrutinized by the Assistant Director (Cost) from the cost angle to see whether the duty of yarn twice paid has been passed on to the customer by the assessee or not and he opined in his letter issued under F. No.ADC/III/10-12/2000/Swan Mills dated 12/9/2000, that their refund is not hit by unjust enr .....

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uperintendent (Tech) on this count and found the claim arithmetically correct which was brought to the notice of Assistant Director (Cost) after Assistant Director (Cost) has sent his report. Assistant Director (Cost has also observed in his report that actual calculation will be done by the range and division office. Accordingly, it has been done. Therefore the ratio of Solar Pesticides is applicable in the present case to that extent the party satisfied to the authorities with the help of cost .....

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