9911796707
TMI Blog2023 (10) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... 19axm001. The petitioner is engaged in manufacture of coffee and tea premixes and was paying the central excise duty. However, the petitioner was availing exemption by way of refund of excise duty in terms of Notification No. 56/2002-CE dated 14.11.2002 as amended. 4 The said exemption notification had laid down a mechanism for availing the benefit of exemption by providing that the manufacturer shall first deposit the excise duty from available CENVAT Credit and in case there remains some balance to be paid, the same shall be paid by debit from Current Account (PLA). After payment of duty as aforesaid, the manufacturer/assessee shall file refund claim and the same would be paid to it through cheque. 5 Indisputably, the excise duty on the subject goods manufactured by the petitioner came to be withdrawn with effect from 01-03-2008 and on this date, an amount of Rs. 75,01,664/- was lying in Current Account (PLA) of the assessee-petitioner. 6 Since no amount was anymore required to be kept in the Current Account due to withdrawal of excise duty of the goods manufactured by the petitioner, as such the petitioner on 04.04.2008 had filed an application for refund of unspent amount ly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance duty" paid, which, of course, is liable to be appropriated towards actual duty payable at the time of removal of exciseable goods. He, therefore, urges that unspent amount in PLA is nothing but excise duty paid in advance and, thus, its refund would be governed by Sections 11B and 11BB of the Act. 14 Attention of this Court is also invited to the proviso to Section 11B (2) to steer clear the stand of the respondents. Learned counsel urges us to take a holistic view of the matter and hold the petitioner entitled to interest under Section 11BB by declaring "unspent amount in PLA" as duty of excise for the purpose of refund under Section 11B of the Act. Submissions on behalf of the respondents : 15 Per contra, Mr. Jagpaul Singh, the learned counsel for the Revenue argues that the refund envisaged under Notification No. 56/2002-CE is not on account of any excess payment of duty by the manufacturer/assessee but is basically designed to operationalise exemption. He submits that unspent amount lying in Current Account (PLA) is an amount belonging to the manufacturer, kept in PLA only to pay the excise duty as and when due without any hassles. He vehemently urges this Court to dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates, set forth in the said Second Schedule; Provided that the duty of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a hundred per cent export oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). ...................................................................". 18 As is evident from bare reading of Section 3, in particular sub-section 1 thereof, duty of excise is leviable on all excisable goods which are produced or manufactured in India in the manner prescribed and at the rates set forth in Fourth Schedule. It is, thus, crystal clear that event of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly comes out that excise duty must be paid by manufacturer latest when he removes excisable goods from manufacturing or production Unit. It is, in this context, we need to examine and analyze Rule 173-F and 173-G, which for facility of reference is set out below:-. "173-F. Assessee to determine the duty due on the goods and to remove them on payment thereof :- Where the assessee has complied with the provisions of rules 173B,173D, and, where applicable, 173C, he shall himself assess the duty due on the excisable goods intended to be removed and shall not, except as othiswise expressly provided in these rules, remove such goods unless he has paid the duty so determined. 173-G. Procedure to be followed by the assessee- (1) Every assessee shall keep an account current with the Collector separately for each excisable goods falling under different [Chapters of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) in such form and manner as the Collector may require, of the duties payable on the excisable goods and in particular such account ( and also the account in Form R.G.23, if the assessee is availing of the procedure prescribed in rule 173-K) shall be maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve such goods only after paying the duty so determined. In short, the assessee is obliged to pay self determined duty of excise payable on the excisable goods manufactured by his/it and the stage of payment of such duty is the removal of such goods from the manufacturing premises. 21. So far as Rule 173-G is concerned, suffice it to point out that it is mandatory of each assessee to keep current account also called PLA (Personal Ledger Account) with Collector of Excise in respect of each excisable good in which an assessee shall periodically make credit by cash payment into the treasury so as to keep balance sufficient to cover the duty due on the goods intended to be removed. 22 Each time, an assessee removes a consignment of excisable goods, he shall pay the duty as self determined by his in terms of Rule 173-F by debit to such current account (PLA). The amount lying in the current account is meant to be utilized only for payment of duty so as to enable the assessee to remove excisable goods in a hassle free process. He may not be required to deposit excise duty in bank to get a challan each time he has to remove a consignment of excisable goods. 23 As we find further from cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [duty and interest, if any, paid on such duty] has been paid under protest. If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the [duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the Commissioner of Central Excise (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdered to be refunded under sub-section (2) of Section 11-B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, [not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed [by the Central Government, by notification in the Official Gazette,] on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty: Provided that where any duty ordered to be refunded under sub-section (2) of Section 11-B in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty." 26. Indisputably, Section 11B deals with claim for refund of duty of excise and interest, if any, paid on such duty. As we have already explained that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) any sum referred to in clause (ii) of sub-section (1) of section 36. (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution 6 [or a State financial corporation or a State industrial investment corporation], in accordance with the terms and conditions of the agreement (e) any sum payable by the assessee as interest on any 9 [loan or advances] from a scheduled bank 10[or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank] in accordance with the terms and conditions of the agreement governing 11[such loan or advances], 12[or] 12[ (f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his 13[employee, or]] 14[ (g) any sum payable by the assessee to the Indian Railways for the use of railway assets,] 1. 243 shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cannot remove the goods manufactured by it, unless sufficient amounts are kept in credit : ...and the assessee shall periodically made credit in such account- current, by cash payment into the treasury, so as to keep the balances, in such account-current sufficient to cover the duly due on the goods intended to be removed at any time, and every such assessee shall pay the duty determined by him for consignment by debit to such account-current before removal of the goods The revenue's contention that the amounts in credit also relate to goods not manufactured, and therefore not relatable to any "liability incurred" is, in the opinion of this Court, without any basis. The arrangement prescribed by the rule is both a collection mechanism - dictated by convenience, as well as mandatory. It is convenient, for the reason that if the assessee were to be asked to pay the exact amount, through some other method, by deposit, as a precondition for clearance, that would have been cumbersome to it as well as the revenue; it would also have led to problems of storage of goods, and slow down their supply and distribution. The Rule makers pragmatically directed that "sufficient" amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction under Section 43B of the Act. In this view of the matter, the appeal deserves to be allowed. 15. This court also notices that the Supreme Court has upheld the view which allows assessee's to claim credits, such as Modvat, etc, falling within the description of liability paid, to escape the mischief of Section 43B. (CA 6721/2012 : CIT Vs. Shri Ram Honda Power Equipment Corporation, decided on 19.09.2012). As a result of the above discussion, the first question is answered in favour of the assessee, and against the revenue. (underlined by me) 33. Hon'ble the Supreme Court in Modipon Limited (supra), while answering the question in affirmative, in para 10 held thus:- "10. Deposit of Central Excise Duty in the PLA is a statutory requirement. The Central Excise Rules, 1944, specify a distinct procedure for payment of excise duty leviable on manufactured goods. It is a procedure designed to bring in orderly conduct in the matter of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal of each consignment of goods from his/its unit. It is, because of such understanding, the legislature has provided, by engrafting proviso to Section 11B(2) of the Act, that such amount of duty excise which is relatable to the unspent amount in PLA is to be paid to the asseessee. In such a matter, there would be no question of passing on of the duty to the consumer that may attract the doctrine of unjust enrichment. We hope that we have unequivocally answered the question formulated. 37. Once we hold that the unspent amount in "PLA" is duty of excise, a fortiori Section 11B and Section 11BB would be attracted. If the refund claimed on account of unspent amount in PLA is not paid within three months, it shall become payable with interest till it is actually paid. 38. The judgments relied upon by Mr. Jagpaul are contrary to the view taken by Hon'ble the Supreme Court in Modipon case (supra). CESTAT Benches in the cases relied upon have not adverted to proviso to Section 11B(2) and the Rule 174-G have erroneously come to a conclusion that unspent amount lying in PLA is money belonging to assessee kept in advance for payment of "duty of excise" and not the "excise duty" actua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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