TMI Blog2023 (11) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... held as time barred for the reason that the relevant date for counting the period of limitation has not even started - the rejection of three refund claims on the ground of time bar cannot be upheld. Unjust enrichment - HELD THAT:- The duty in this case is paid by the appellant on the normal transaction value and not the actual transaction value. The actual transaction value at which the goods were sold by the appellant may be different from the normal transaction value determined on the basis of maximum aggregate quantity of sale value. Further it was for the reason that correct assessable value could not have been determined at the time of clearance of the goods from the factory gate, the assessment were ordered to be provisional. The actual assessable value is as per the finalization order and duty determined accordingly. Appellants have produced a certificate dated December 15, 2021 from the Chartered Accountant, G Ganesh to establish that they have not passed on the burden of the duty to their customers - in view of the Certificate of Chartered Accountant it is abundantly evident that appellant have rebutted the presumption of having passed on the burden of duty claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: 9. Moreover the party has also not replied to the preposition of the Show Cause Notice that any such amount of refund should be credited to to the Consumer Welfare Fund in accordance with the provisions of Section 11 B (2) read with Section 12 C of the Act, ibid as the party is deemed to have passed on the full incidence of such duty to the buyer of such goods unless the contrary is proved by them as provided vide Section 12B of Central Excise Act, 1944 which they failed to do. Hence all the refund claims referred supra are also liable to be rejected as the amount claimed for refund by the party has been collected by them from the customers on account of central excise duty and paid to exchequer, and therefore is not refundable to them. 10. Further I find that all the show cause notices as detailed below were subject issues of the assessment orders in the present case. SL No SCN Number Date Amount involved (Rs) Period covered under Demand 1 06/Commr/Alld/13 dt 12.03.2013 1,55,09,285/- April 2008 to Sept 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments. In the final assessment orders, it was held that the appellant had paid excess duty, on account of discount allowed through credit notes. Further, all the final assessment orders were subject to the outcome of Show Cause Notices issued on the issue of non-inclusion of freight in the assessable value for the purposes of payment of duty; and (ii) The Adjudicating Authority vide the impugned Order, found that the first three claims were filed on 27.10.2017 after one year of the date of finalization of the provisional assessment and rejected the refund claims on the ground of unjust enrichment as well. he also held that the refund claims were also inadmissible, as the Show Cause Notices issued on the issue of the non inclusion of freight in the assessable value, have been confirmed by the concerned Adjudicating Authority. 4.2 First of all, I take up the issue of rejection of the first three refund claims of the appellant on the ground of time limitation. I find that clause (eb) of the Explanation under Section 11B of the Act, inserted w.e.f 01.08.1998, vide the Finance (No 2) Act, 1998 provides that relevant date in case where duty of excise is paid provisionall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teralia, held, as under: .... 4.3.4 The aforesaid decision of the Hon'ble Supreme Court was also affirmed by the Hon'ble Supreme Court vide order dated 27.04.2017 reported as Addison and Co Ltd. vs Commissioner {2017 (353) ELT A 64 (SC)]. 4.4 In this case, it is observed that the appellant have failed to show that incidence of duty had not been passed on to consumers. Since the dealers/ stockists/ consignment agents are not the ultimate consumers and the duty component initially passed onto the them, was further passed on by them, to ultimate consumers, I therefore, find that refund of such duty on the plea taht such duty returned back by issuing credit notes subsequent to clearance of goods, is hit by bar of unjust enrichment, in light of aforesaid decision of Hon'ble Supreme Court and as such, the six refund claims filed by the appellant, are hit by the bar of unjust enrichment. 4.5 Even otherwise, I find that when all the final assessments were subject to the outcome of Show Cause Notices issued on the issue of inclusion of freight element in the assessable and the demand raised in these Show Cause Notices have been confirmed by the concerned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest, if any, paid on such duty borne by the interest, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person. (f) ...... ........ Explanation: For the purpose of this section,- (A) .... (B) relevant date means,- (a) ... (b) ... (c) ... (d) ... (e) ... (ea) .... (eb) in case where duty of excise is paid provisionally under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof. (ec) .... (f) ... In terms of (eb) to the explanation under Section 11B, the relevant date is not the date of finalization of assessment but the date of adjustment of duty after finalization of assessment. If the order of Joint Commissioner, dated 30.12.2016 is taken to be the date of adjustment of the duties, paid in excess against the demand confirmed then the relevant date for computing the limitation for filing the refund claim will be the date of this order and not the date of finalization of assessment. That being so the refund claims could have been filed by the appellant upto 29.12.2017 without being hit by limitation as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by land, the date on which such goods pass the frontier, or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid; (c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required which exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory; (d) in a case where a manufacturer is required to pay a sum for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; (e) in a case where duty of excise is paid provisionally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated by him, if such assessee executes a bond in the proper form with such surety or sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed. (2) ..... (3) The Collector may permit the assessee to enter into a general bond in the proper Form with such surety or sufficient security in such amount or under such conditions as the Collector approves for assessment of any goods provisionally from time to time: Provided that, in the event of death, insolvency or insufficiency of the surety or where the amount of the bond is inadequate, the Collector may, in his discretion, demand a fresh bond and may, if the security furnished for a bond is not adequate, demand additional security. (4) 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 not so assessed. (5) 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 aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11B underwent a drastic change vide Central Excises and Customs Laws (Amendment) Act, 40 of 1991 (hereinafter referred to as the Amendment Act ). By the Amendment Act, the concept of unjust enrichment as undeserved profit was introduced. We reproduce herein below amended section 11B: Section 11B: Claim for refund of duty. ..... 9. According to statement of objects and reasons for enacting the Amendment Act, the Public Accounts Committee recommended introduction of suitable legislation to amend the said Act to deny refunds in cases of unjust enrichment. Under the amended section 11B(3) of the said Act, notwithstanding anything to the contrary in any judgment, decree, order or direction of the appellate Tribunal or any Court, no refund was to be made except in accordance with section 11B(2) of the said Act. Further, there was substitution of sub-clause (e) to explanation B to section 11B(1) by which the original sub- clause (e) was deleted and substituted by new sub-clause (e) under which in cases where duty has been passed on by the manufacturer to the buyer, the relevant date for computing the period of limitation would commence from the date of purchase of goods by the buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overned by Section 11-A or Section 11-B, 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 the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11-B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9-B(5) reagitating the issues already decided under Rule 9-B assuming that such a refund claim lies and is allowed, it would obviously be governed by Section 11-B. It follows logically that position would be the same in the converse situation. 11. At the outset it may be pointed out that in para 104 there is nothing to suggest that payment of duty under protest does not attract bar of unjust enrichment. Para 104 only states that if refund arises upon finalization of provisional assessment, section 11B will not apply. 12. In the present case, reliance was placed by the respondent M/s APIL on the above para in support of its contention that payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent was not entitled to refund. From the perusal of the above it is quite evident that the issue for consideration before the Hon'ble Apex Court was not qua the determination of the relevant date as per explanation to Section 11B, but was in respect of duty paid under protest, and whether the observation made by the Apex Court in the para 104 of the decision in case of Mafatlal Industries can be made applicable to the duty paid under protest. Thus in our view the reliance placed by the Commissioner (Appeal) on this decision for upholding the rejection of three refund claims on the ground of limitation is totally misplaced. 4.5 Rule 7 of the Central Excise Rules, 2002 is a self contained rule. It provides for the situations in which the assessment can be ordered to be made provisional and the manner of finalization of assessment. It also provides for recovery and refund of the duty short paid or paid excess the relevant provisions of the said rule are reproduced below: 7. Provisional Assessment (1) Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borne by him (assessee). If the assessee fails to produce such proof/evidence, the Assistant/deputy Commissioner of Central Excise will pass an order for depositing the amount in Consumer Welfare Fund in the prescribed manner. Otherwise, the refund shall be give along with interest at the rate specified by the Central Government by Notification issued under Section 11BB of the Act from the first day of the month succeeding the month for which such refund is determined, till the date of refund. 4.6 From the above it is quite evident that the refund arising on the account of finalization of provisional assessment ahs to be paid either to the claimant/ applicant or credited to fund, without the requirement of any further application under Section 11B i.e. the refunds on finalization of the provisional assessment cannot be subjected to limitation as provided for by the Section 11B. In our view rejection of refund claims on the ground of limitation is contrary to the provision of Rule 7 of Central Excise Rules, 2002 and also contrary to para 2.8 of Central Excise Manual, referred above. 4.7 From the perusal of the Section 11 B (1) along with explanation at (eb) it is quite evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: 4. Civil Appeal No. 7906 of 2002 will be taken as the lead matter as SLP (C) Nos. 18426, 23722, 18425, 18423 of 2015 and 12282, 16141 and 16142 of 2016 and Civil Appeal No. 14689 of 2015 were disposed of by the Andhra Pradesh High Court by following the Madras High Court‟s impugned judgment in Civil Appeal No. 7906 of 2002. Civil Appeal No. 8488 of 2009 and SLP No. 25055 of 2009 will be dealt with separately as the facts and the point involved are slightly different. Civil Appeal No. 7906 of 2002 5. The respondent in the above appeal is a manufacturer of cutting tools. The respondent-Assessee filed a refund claim for Rs. 40,22,133/- on 19.07.1988 and a supplementary refund claim for Rs. 5,44,688/- on 15.06.1989 towards excise duty paid on various taxes and discounts such as turnover tax, surcharge, additional sales discounts, transitory insurance, excise discounts, additional discounts and turnover discounts. The said claim was later on revised to Rs. 40,37,938/- on 17.08.1988. The claim of the Assessee was that the said amount was deductable from the excise duty. The Department was of the opinion that the refund towards turnover discount and additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 998, taking note of the fact of the existence of divergent views on the point. 1. Whether by passing on the duty element on the discount to its dealers the applicant had satisfied the requirements of proviso d‟ to sub Section 11-B (2) of the Central Excise Act, 1944 and was therefore, entitled to be paid the amount claimed as refund? 2. Whether the Tribunal after finding that the burden of duty was passed on by the applicant to its various dealers by issue of credit notes was right in concluding that the ingredients of Section 11-B were not satisfied. 9. The High Court of Madras answered the reference in favour of the Assessee by its judgment dated 23.11.2000. The High Court held that the refund towards deduction of turnover discount cannot be denied on the ground that there was no evidence to show who is the ultimate consumer of the product and as to whether the ultimate consumer had borne the burden of the duty. According to the High Court, Section 11-B of the Act cannot be construed as having reference to the ultimate Consumer and it would be sufficient for the claimant to show that he did not pass on the burden of duty to any other person. It was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds turnover discount. 16. In the instant case, the Assessee has admitted that the incidence of duty was originally passed on to the buyer. There is no material brought on record to show that the buyer to whom the incidence of duty was passed on by the Assessee did not pass it on to any other person. There is a statutory presumption under Section 12-B of the Act that the duty has been passed on to the ultimate consumer. It is clear from the facts of the instant case that the duty which was originally paid by the Assessee was passed on. The refund claimed by the Assessee is for an amount which is part of the excise duty paid earlier and passed on. The Assessee who did not bear the burden of the duty, though entitled to claim deduction, is not entitled for a refund as he would be unjustly enriched. 22. The High Court proceeded on an erroneous assumption of fact as well. It was held by the High Court that there is no unjust enrichment as the burden has not been passed on. The High Court‟s interpretation of Section 11-B is also not correct. 23. In view of the above findings, the judgment of the High Court is liable to be set aside. The Assessee is not entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent-Assessee manufactures Pesticide formulations which are used as pesticides in agricultural farms. The Pesticides are sold at the factory gate and also through depots. The Assessee submitted an application for refund towards allowable discounts after the removal of goods from the factory. Credit notes were issued by the Assessee in favour of the buyers towards trade discounts which also contained a component of the excise duty. There is no dispute regarding the fact of payment of the excise duty originally by the manufacturer being passed on to his buyers. The refund claim of the Assessee was rejected by the Deputy Commissioner vide Order-in-Original No. 58 of 2002 dated 30.12.2002. The above said order was reversed by the Commissioner of Customs and Central Excise by his order dated 12.03.2003. 30. The Revenue filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Division, Bangalore which was allowed. The Assessee preferred an appeal to the High Court aggrieved by the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Division, Bangalore. The High Court following its own judgment in Andhra Pradesh Pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of passing the incidence of duty by the owners of the fabric to their customers does not arise. 33. In Central Excise Appeal No. 34 of 2005 filed by the Union of India through Commissioner of Central Excise, Jaipur, the High Court of Judicature for Rajasthan at Jodhpur confirmed the order of the Central Excise and Service Tax Appellate Tribunal. Challenging the said judgment of the High Court dated 26.11.2008, the Union of India has filed the above Appeal. The contention raised by the Revenue before the High Court regarding the presumption under Section 12-B of the Act was rejected by the High Court by holding that once the Assessee shows that he has not passed on the duty to his buyer, then the burden shifts to the Revenue. The submission that there is a presumption of the duty being passed on to the ultimate consumer was not accepted by the High Court. The High Court held that the claim for refund should be accepted once the Assessee shows that he has raised a credit note regarding the excess duty. The High Court had further held that passing on the burden of excise duty to the ultimate buyer cannot be left in the realm of presumption. 34. In Civil Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Appeal No. 100 of 2008. 36. Except for a factual dispute about the genuineness of the certificate issued by the Chartered Accountant and the credit notes raised by the Assessee regarding the return of the excess duty paid by the Assessee, there is no dispute in this case of the duty being passed on to any other person by the buyer. As it is clear that the Assessee has borne the burden of duty, it cannot be said that it is not entitled for the refund of the excess duty paid. In view of the facts of this case being different from Civil Appeal No. 7906 of 2002, the appeal preferred by the Revenue is dismissed. 4.10 In the identically worded orders for finalization of assessment following has been recorded by the Deputy Commissioner: 2. The party vide their letter C. No MHD/CEX/PA-IV/2014-15 dated 26.12.2014 made a request for extension of permission for clearance of their goods i.e. Asbestos Cement Products provisionally under Rule 7 of the Central excise Rules, 2002 for the period from 01.01.2015 to 31.03.2015 for the reasons mentioned in earlier letters i.e. on the following grounds:- (i) Due to various commercial exigencies the goods in question are sold at d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 01.01.2015 to 31.03.2015. The party's request for the acceptance of above mentioned bond and bank guarantee was accepted. 6. In this regard, I observe that the assessment of the period under reference i.e. 01.01.2015 to 31.03.2015 is to be finalized as per provisions of Rule 2 (b) and Rule 7 of Central Excise valuation (Determination of Price of Excisable Goods) Rules, 2000 which inter alia states that Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place ) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. 7. The instant case has been taken up in light of the above provisions of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisional assessment requested letter dated 26.12.2014. Thus again a letter dated 18.09.2015 was sent to the party to elaborate the issue. Again the party replied wherein it stated s stated in our previous letter dated 14.07.2015 the element of freight is now no factor influencing transaction price of our various products. Therefore our prayer for allowing provisional assessment is only on account of trade discounts to be allowed on fulfilment of conditions for eligibility. 9. Apparently the party has submitted it calculation chart for final assessment excluding the element of freight for amounting at the assessable value for payment of Central Excise duty. The calculation chart, as also certified by the Chartered Accountant, pertain only to discount to dealers/ purchasers. Thus the normal transaction value and the duty excess (+)/ short (-) paid month wise separately for factory gate sale and depot sale (duty provisionally paid from factory to depot on stock transfer) allowing deduction of dealer discount only. The freight element .... Thereafter the duty calculation charts as provided by the appellant are reproduced in the order. We reproduce these charts as taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 299,02,496.0 0 306,16,928.0 0 - 7,14,432.0 0 Grand Total 819,26,883.0 0 839,71,024.0 0 - 20,44,141. 00 Adjudication No 29/Final Assesment/2015 dated 20.11.2015 Apr- 15 FACTORY GATE SALE 17,845. 47 1891,20,637. 25 1891,20,637. 25 41,40,113.7 8 1849,80,523. 00 FACTORY TO DEPOT 7,147.2 8 756,83,963.4 6 807,63,469.4 3 22,65,896.8 9 784,97,573.0 0 TOTAL 24,992. 75 2648,04,600. 71 2698,84,106. 68 64,06,010.6 7 2634,78,096. 00 329,34,762.0 0 331,00,579.0 0 - 1,65,817.0 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,356. 25 1344,81,469. 73 1378,15,811. 04 54,75,095.1 1 1323,40,715. 93 165,42,589.0 0 168,10,186.0 0 - 2,67,597.0 0 Aug- 15 FACTORY GATE SALE 4,231.4 9 442,93,436.1 8 442,93,436.1 8 25,50,691.5 6 417,42,744.6 2 FACTORY TO DEPOT 2,890.5 3 306,76,730.6 9 327,34,824.0 2 16,07,923.5 6 311,26,900.4 6 TOTAL 7,122.0 2 749,70,166.8 7 770,28,260.2 0 41,58,615.1 2 728,69,645.0 8 91,08,706.00 93,71,272.00 - 2,62,566.0 0 Sep- 15 FACTORY GATE SALE 5,733.0 8 578,39,046.8 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139,89,823.0 0 - 1,05,469.0 0 Dec- 15 FACTORY GATE SALE 9,184.1 1 945,20,006.9 4 945,20,006.9 4 79,21,613.3 3 865,98,393.6 1 FACTORY TO DEPOT 7,079.3 8 773,43,501.1 8 779,53,532.1 7 57,02,456.0 0 722,51,076.1 7 TOTAL 16,263. 49 1718,63,508. 12 1724,73,539. 11 136,24,069. 33 1588,49,469. 78 198,56,184.0 0 214,82,942.0 0 - 16,26,758. 00 Grand Total 443,49,899.0 0 464,19,048.0 0 - 20,69,149. 00 Adjudication No 06/Final Assesment/2015 dated 01.06.2016 Jan- 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 654,40,162.0 0 681,66,534.0 0 - 27,26,372. 00 Adjudication No 06/Final Assesment/2015 dated 01.06.2016 Apr- 16 FACTORY GATE SALE 8,726.8 8 928,75,365.0 0 928,75,365.0 0 67,33,084.0 0 861,42,281.0 0 FACTORY TO DEPOT 7,972.1 3 858,28,848.0 0 915,57,449.0 0 66,87,748.0 0 848,69,701.0 0 TOTAL 16,699. 01 1787,04,213. 00 1844,32,814. 00 134,20,832. 00 1710,11,982. 00 213,76,498.0 0 223,38,030.0 0 - 9,61,532.0 0 Mar- 16 FACTORY GATE SALE 16,726. 56 1734,78,528. 00 1734,78,528. 00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place ) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. 4.12 From the above Rules it is quite evident that the duty in this case is paid by the appellant on the normal transaction value and not the actual transaction value. The actual transaction value at which the goods were sold by the appellant may be different from the normal transaction value determined on the basis of maximum aggregate quantity of sale value. Further it was for the reason that correct assessable value could not have been determined at the time of clearance of the goods from the factory gate, the assessment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Thirty Four). On appeal having been filed by M/s HIL against the order dated 30.12.2016, the Commissioner (Appeal) vide his order dated 22.03.2018 allowed the appeal filed by HIL and reversed the order passed by the Joint Commissioner. In view of the facts stated above, it is certified that there is no short payment of duty on the goods sold at factory gate during the period from January 2015 to July 2016. (iv) This is to certify that M/s HIL have transferred the goods to their various depots and consignment agents under the cover of invoices variant duty payable by them have been shown separately. Duty of Excise paid by them on transfer of goods have been borne by them. In respect of the sale of goods from depots and consignment agents to its customer's invoice have been issued showing therein composite price inclusive of element of excise duty. They have realized only the discounted price from their buyers and realized the same element of duty as has been determined by the Assistant Commissioner/ Deputy Commissioner on finalization of assessment, therefore there is no unjust enrichment on this account. 4.14 Impugned order and the order in original have e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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