TMI Blog2018 (1) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Appeal dismissed - decided against Revenue. - C.M.A. Nos. 3490 and 3491 of 2017 - - - Dated:- 18-12-2017 - S. Manikumar And R. Pongiappan, JJ For the Appellant : Mr.A.P.Srinivas JUDGMENT ( Judgment of this Court was made by S. Manikumar, J. ) Instant Civil Miscellaneous Appeals have been filed against the common Final Order Nos.40457 and 40458 of 2015, dated 24.04.2015, on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. 2. Substantial question of law raised in the instant appeals is, Whether in the facts and circumstances of the case CESTAT is legally correct in holding that uniformity of price before and after the finalization of provisional assessment is sufficient to rebut the presumption that the incidence of duty has not passed on to the buyers especially when statutorily the onus is on the respondent/assessee to prove conclusively with evidences that bar of unjust enrichment would not act against his as envisaged in Section 11B of the Central Excise Act, 1944? 3. Supporting the above, Mr.A.P.Srinivas, learned counsel for the appellant, submitted that during the material time the final products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso is that even after finalisation of the provisional assessment under Rule 98(5), if it is found that an assessee is entitled to refund, such refund shall not be made to him except in accordance with the procedure established under sub-section (2) of Section 11B of the Act. 5. It is also the submission of the learned counsel for the appellant that the Hon'ble Supreme Court in CCE, MUMBAI-II Vs. ALLIED PHOTOGRAPHICSINDIA LTD. reported in [2004(106) ELT 3(5.C.)] observed, as under: 12. In the present case, reliance was placed by the respondent APIL on the above para in support of its contention that payment of duty under protest and payment of duty under provisional assessment are both on account payments under the Act. We do not find any merit in this argument. As discussed, there is a basic difference between duty paid under protest and duty paid under Rule 98.7The duty paid under protest falls under Section 118 whereas duty paid under provisional assessment falls under Rule 98. That Section 118 deals with claim for refund whereas Rule 98 deals with making of refund, in which case the, assessee has not to comply with Section 118. Therefore, Section. 118 and Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, he cannot collect the duty from the purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched. A claim for refund made under the provisions of the Act can succeed only if the assessee alleges and establishes that he has not passed on the burden of the duty to any person/other persons. His refund claim Shall be allowed/decreed only when he establishes that he has not passed on the burden of duty or to the extent he has not so passed on, as the case may be. Where the burden of duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can ultimately claim its refund. But whether such person does not come forward or where it is not possible to refund the amount to him for one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein, has failed to prove that, it has not passed on the incidence of duty, to its buyers and hence CESTAT, Madras in upholding the order of Commissioner (Appeals), is not correct and liable to be, set aside. 9. Learned counsel for the appellant further submitted that Section 12B of the Act, raises a presumption of law, that until the contrary is proved, every person who has paid duty of excise on any goods, shall be deemed to have passed on the full incidence of such duty, to the buyers of such goods. Though presumption, created in this Section, is rebuttable but very strong, cogent, tangible evidence is required to be brought on record by the assessee, to rebut the same, and to claim refund of duty. M/s. Aquasub Engineering has failed to rebut the statutory presumption, by adducing any convincing and unimpeachable evidence. The fact that they showed composite price, in the invoices, does not lead to an irresistible conclusion, that they had not passed on the incidence of duty on the buyers. These invoices were prepared by them. 10. Learned counsel for the appellant submitted that it is difficult to assume, that composite price calculated and recorded by them, in the invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not follow that the manufacturer is not passing on the duty. Nor does it follow therefrom that the manufacturer is absorbing duty himself. The manner of preparing the invoice is not conclusive..... In view of this proposition of law propounded by the Apex Court while laying down the guidelines and the situations for invoking the doctrine of unjust enrichment the observations made by the Tribunal in the above said case cannot be given preference. Therefore, the decision of CESTAT in relying on the above case to arrive at its decision is erroneous. 14. Learned counsel for the appellant also submitted that the judgment of the Tribunal, in the said case, had been affirmed by the Hon'ble Apex Court, by dismissing the appeal of the Revenue, as reported in 1997 (94) E.L.T.A51 (Courtroom Highlights). However, it is not clear that on what grounds the appeal of the Revenue was dismissed, as the issue of classification was also involved therein, besides the claim of refund. Hence, learned counsel for the appellant submitted that the above decision is not squarely applicable to the facts of the present case. For the reasons stated supra, learned counsel for the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units at the time of clearance itself for valuation purpose, they had requested for the provisional assessment pending finalisation of their financial accounts for the year 2001-02 as it was done in the earlier financial year and the request was conceded by the Department; When the provisional assessment became ripe for finalisation, the appellants had furnished necessary cost statement for verification and the Department had also requested the service of AD(cost), Trichy for detailed examination of cost data; As a result, it was finalised based on the cost sheet furnished by AD(cost), Trichy and found acceptable by the appellants; On finalisation, they had claimed the refund of excess duty paid and the excess duty relates to the duty paid on the difference in the values of the stampings adopted before and after the finalisation. Here the applicability of the principle of unjust enrichment is nobody's case. Hence the question reduces to whether or not the incidence of duty under claim has been passed on to the buyer. Since the expression 'incidence of duty' means the burden of duty, it includes even the duty passed indirectly in terms of Apex Court's decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urvive in business if he does so. Only in case of distress sales, such a thing is understandable but distress sales are not a normal feature and cannot, therefore, constitute a basis for judging the validity or reasonableness of a provision. Similarly, no one will ordinarily pass on less excise duty than what is exigible and payable. A manufacturer may dip into his profits but would not further dip into the excise duty component. He will do so only in the case of a distress sale again. Just because duty is not separately shown in the invoice price, it does not follow that the manufacturer is not passing on the duty. Nor does it follow therefrom that the manufacturer is absorbing the duty himself. The manner of preparing the invoice is not conclusive. While we cannot visualise all situations, the fact remains that, generally speaking, every manufacturer will sell his goods at something above the cost-price plus duty. There may be a loss-making concern but the loss occurs not because of the levy of the excise duty - which is uniformly levied on all manufacturers of similar goods - but for other reasons. No manufacturer can say with any reasonableness that he cannot survive in busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 104 of the judgment of this Court in the case of Mafatlal Industries Ltd. (supra) :- 104. Rule 9B provides for provisional assessment in situations specified in clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short, of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be . Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11b, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Act. This argument was obviously advanced because unless the two payments are equated as contended, the respondent M/s. APIL was required to comply with Section 11B. In this matter, duty has been paid under protest. It is the case of the respondent M/s.APIL that since such payment was similar to payment under Rule 96, the respondent M/s.APIL was not required to comply with Section 11B. In the light of the discussion hereinabove, we hold that the respondent was bound to comply with Section 11B. Lastly, in any event, the application dated 11-2-1997 fell in the category of refund claim being made after finalisation of assessment of NIIL and, therefore, Section 11B had to be complied with in terms of Para 104 of the above judgment in the case of Mafatlal Industries Ltd. (supra). For above stated reasons, since there was failure to comply with Section 11B, the respondent was not entitled to refund. Not withstanding the applicability, of unjust enrichment to the present refund case because of the subsequent amendment to Rule 9B(5), the fact remains that it makes a distinction between claiming of refund and making of refund and the possibility of both arising as a consequenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y payment with the duty short paid on the said types before arriving at the duty amount eligible for sanctioning refund. In an ideal situation where the entire excess duty paid had occasioned adjustment towards the duty short paid in the course of finalisation of assessment and which is acceptable in law, an occasion for refunding the excess duty paid would not have obviously arisen but in effect it would amount to not only sanctioning but also granting the refund. If and when such adjustment is acceptable in law, it is because of the fact that there is no unjust enrichment in the circumstance of the case and as such it is a relevant factor to construe and also logical to conclude that the incidence of duty was not passed on to the buyer. 8. It is further seen from the price structure of certain submersible pump sets given by the appellants for the period from 1996-97 to 2003-04 the list price of these pump sets remained constant and that the deductions from the list price like discount/charity only varied. Particularly for the year 2001-02 there is no difference in the discount rate and the charity collected, when compared to the previous year. This would in other words mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of refund claim by the buyer and has not over-ruled any decision which dealt with the claim of refund by the manufacturer and hence distinguishable. A careful scrutiny reveals that though the Hon'ble Supreme Court gave the ruling that uniformity in price before and after assessment did not lead to an inevitable conclusion that incidence of duty was not passed on to the buyer since such uniformity may be due to various factors, yet this does not preclude an assessee to prove his case by showing additional evidences besides the fact of uniformity in price. This is so because the presumption under erstwhile Rule 9B(5) followed by Rule 7 of Central Excise (No.2) Rules, 2001 is rebuttable. The relevant portion in para 17 is extracted hereunder:- .....In the present case, the refund claim is made by a buyer and not by the manufacturer. The buyer says that he has not passed on the burden to its dealers. The buyer has bought the goods from the manufacturer paying the purchase price which included cost of purchase plus taxes and duties on the date of purchase. In such cases, cost of purchase to the buyer is a relevant factor. None of the authorities below have looked into this as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue, any finalisation of assessable value is applicable only to the period under provisional assessment and cannot determine the duty liability for the subsequent period which is again subject to provisional assessment and hence no way to pass on the incidence of duty indirectly to the buyer especially when the price remains constant through out. Moreover, the refund claim is not by the buyer but by the manufacturer-appellants and also the situation in the present case is different in that the case involves provisional assessment which was conceded by the Department as both the Department and the appellants had no other option. Similarly, in the case of Solar Pesticides Pvt. Ltd, the question before the Hon'ble Supreme Court was that whether the doctrine of unjust enrichment would be applicable in respect of raw material imported and consumed in the manufacture of a final product. The Apex Court in para 24 has held as follows:- in our opinion, the principle of unjust enrichment incorporated in Section 27 of the (Customs) Act would be applicable in respect of imported raw material and captively consumed in the manufacture of a final product. Whether the incidence of the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove decision, I have no reason to differ from the view already held by him on the same issue. 17. Though, before the CESTAT, Madras, the Commissioner of Central Excise, Coimbatore, filed two appeals against the order in Appeal No.111 of 2004, dated 20.04.2004 and O.I.A.No.278 of 2005 dated 11.11.2005, and reiterated the grounds of appeal and submitted that the adjudicating authority has rightly credited the refund to the Consumer Welfare Fund, and that there was unjust enrichment and submitted that the lower appellate authority, has relied on photocopies of the invoice, and there was no evidence, to show that the price has not been changed and therefore he also submits that Chartered Accountant certificate submitted is only a stereotype one and ought not have been accepted by the lower appellate authority. CESTAT, Madras, after considering the rival submissions and the decisions relied on by both parties, at Paragraphs Nos.5 to 7, held as follows:- 5. I have carefully considered the submission of both sides. The short issue in this case is as to whether refund sanctioned allowed in the impugned order is hit by unjust enrichment or not. There is no dispute on the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the adjustment of excess duty payment with the duty short paid on the said types before arriving at the duty amount eligible for sanctioning refund. In an ideal situation where the entire excess duty paid had occasioned adjustment towards the duty short paid in the course of finalisation of assessment and which is acceptable in law, an occasion for refunding the excess duty paid would not have obviously arisen but in effect it would amount to not only sanctioning but also granting the refund. If and when such adjustment is acceptable in law, it is because of the fact that there is no unjust enrichment in the circumstance of the case and as such it is a relevant factor to construe and also logical to conclude that the incidence of duty was not passed on to the buyer 6. From the above, it is clear that respondents opted for provisional assessment for want of cost of raw materials consumed in the manufacture of exempted goods and placed much reliance on the certificate of the Chartered Accountant. In a number of decisions of Hon'ble Apex Court and High Court as well as Tribunal, the Courts have consistently held that when there is no change in the price of the final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
