ORDER
T.K. Jayaraman, Member (T)
1. The appellants’ refund claim to the tune of Rs. 1,88,884/- was rejected by the original authority on the ground of unjust enrichment. The appellate authority has confirmed the original authority’s order. Hence the appellants have come before this Tribunal.
2. Shri S. Ignatius, Adv. appeared on behalf of the appellants and Shri A. Jayachandran, DR for the revenue.
3. The brief facts of the case are as follows: The appellants manufacture ‘Carrier Breach Block assembly’, a commodity which is excisable. They participated in an open tender floated by the Ordnance Factory, Trichy, a defence establishment of the Govt. of India. Since the appellants fall under the SSI exemption and never exceeded Rs. 30.00 lacs clearance they quoted Rs. 621/- per unit as cum-duty price. In fact the duty is actually NIL in view of the SSI status of the appellants and very low clearance. They secured the order for supply of 1250 pieces on 13-10-2000. As per the order the price is inclusive of excise duty meaning that the cum-duty price is a firm price which will not be subjected to any change even if the duty structure is altered later. The appellants were under an obligation to supply the goods before 31-12-2000. The appellants experienced certain difficulties in honouring their commitment of supply within 31-12-2000, the stipulated date. Hence the Ordnance Factory extended the time limit up to 31-1-2001. They got a further extension of time till 30-6-2001. During the relevant period the goods were exempted. However, with effect from 1-3-2001 the SSI exemption on the goods was withdrawn. The SED was increased from 8% to 16%. Under these circumstances they made representation to the Govt. for continuing the SSI exemption on the goods expecting a favourable decision. They delayed the dispatch of goods to the Ordnance Factory and obtained a further extension of time till 31-8-2001. The Ordnance Factory vide letters dated 16-4-2001 and 2-7-2001 had made it clear that no increase in the price would be allowed on account of any statutory increase or fresh imposition of duty. In fact the appellants made a further representation dated 30-7-2001 to the General Manager, Ordnance Factory stating that while quoting the price of Rs. 621/- per piece they had only taken nil duty and in the changed circumstance they pleaded for amendment of the supply order by including 32% excise duty extra on submission of documentary proof for the payment of excise duty. However, the Ordnance Factory rejected their request in their letter dated 9-8-2001. The appellants were hopeful of positive response from Ministry of Finance, Govt. of India who were actively considering the representation of the appellants. Hence the appellants sought further extension of time till 30-9-2001 by their letters dated 25-8-2001 and 27-8-2001 reiterating that the payment of 32% duty would put them to heavy loss. Since the appellants could no longer get further extension they dispatched the goods in their invoice dated 3-10-2001 without actually knowing that the levy had been withdrawn with effect from 1-10-2001 by extending the benefit of the SSI exemption to them as before. While dispatching the goods they paid full duty amount of Rs. 1.88 lacs taking Rs. 621/- per piece as the cum-duty price. The excise invoices were prepared for the purpose of transport only. The commercial invoices were issued to the Ordnance Factory who settled the bills filed by them without any reference to the excise invoice. When they cleared the goods on 3-10-2001 by virtue of Govt. of India’s Notification dated 1-10-2001 the exemption was reintroduced. Hence the goods were not liable to duty on the date of clearance which is 3-10-2001. So they filed the refund claim for Rs. 1,88,884/- being the duly paid by them. The lower authority rejected the claim holding that the price of Rs. 621/- per piece is inclusive of excise duty. Moreover, the appellants had raised 3 invoices wherein the basic price has been declared as Rs. 470.46. Holding the view that the amount of Rs. 621/- per piece includes excise duty, which has been passed on to the buyers, the lower authority held that refund is hit by the bar of unjust enrichment. Hence the amount of duty was ordered to be credited to the Consumer Welfare Fund as per Section 11D of Central Excise Act, 1944. The Commissioner (Appeals) confirmed the Order-in-Original.
4. Ld. Advocate urged the following points :
(a) The appellants quoted Rs. 621/- per piece inclusive of excise duty when the item was under exemption. Therefore, the duty is nil and the amount of Rs. 621/- represents the basic cost without the element of excise duty. When the excise duty was reintroduced on account of withdrawal of exemption of the item from the SSI notification, the appellants represented to the Govt. of India for rein-troduction of exemption and also to the buyer for enhancement of the contract to include the duty element. There is clear evidence to show that the buyer, (Ordnance Factory) rejected the request of the appellants. In any case, the representation of the appellants was under active consideration of the Ministry of Finance, Govt. of India and on 1-10-2001 the exemption was reintroduced. When they cleared the goods they were not leviable to duty. However, on the date of clearance they were not aware of the exemption that is why they considered Rs. 621/-as cum-duty price and paid the duty thereon. Only for the sake of transporter they issued the excise invoice. Since the amount of Rs. 621/- does not take into account the actual excise duty, there is no question of passing on the burden to the buyer. Ld. Advocate relied on the decision of the Tribunal in the case of Poddar Industrial Corporation v. CCE [2003 (158) E.L.T. 473 (T) – 2003 (59) RLT 692] wherein the appellants who were availing SSI exemption paid duty at different slab rates. They issued proforma invoice indicating excise duty. However the price contracted with the buyers was a firm price which would not vary on account of variation in excise duty. In that case, the revenue contended that the contract price entered with the buyers already include the excise duty required to be paid and as such it has to be concluded that duty element has been passed on to the buyer. The Tribunal did not accept the contention of the revenue. In that case the proforma invoice were never handed over to the customers and the same did not accompany the goods. The revenue contended that during the period from 1-4-1993 to 11-6-1993 they were not paying any duty to the Govt. as they were under exemption. But their price included excise duty element and therefore a demand for an amount of Rs. 7,78,520.88 was made under Section 11D. The Tribunal did not accept the contention of the revenue. Ld. Advocate contended that the above-mentioned case makes it clear that when the price remained the same, irrespective of duty paid at different slab rates, Section 11D is not applicable as no amount representing as excise duty is collected from customers. He said the present case is even much stronger than the above-mentioned case. In this case it is very clear that what is collected from the buyer is only the basic price. Even though excise duty was paid the same was not payable in view of the exemption. Hence there is no question of passing on the burden to the buyer. Moreover excise duty was issued only for the purpose of transporter. In the commercial invoice issued no amount is shown as representing excise duty. In these circumstances he submitted that the refund should be given to the appellants.
5. Ld. DR contended that it is very clear that the price is inclusive of duty. It is also seen that they have issued the excise invoice. The excise duty is included in Rs. 621/- which is collected from the buyer. Hence duty has been passed on to the buyer and the appellant is not entitled for relief.
6. We have gone through the rival contentions. In the brief facts of the case the entire circumstance leading to the refund claim have been detailed. Hence we do not want to repeat the same. It is very clear that the appellants quoted an amount of Rs. 621/- per piece without including the excise duty element as at the time of quotation no duty was payable. The fact that the price is inclusive of duty does not mean that the price includes duty element when the duty is nil. When the exemption was withdrawn, the appellants made Herculean efforts for the re-introduction of the exemption notification. They were also successful when the Govt. of India re-introduced the exemption with effect from 1-10-2001. As law abiding citizens, the appellants paid excise duty treating Rs. 621/- as cum-duty price. This action of the appellants in the peculiar circumstances of the case should not be held against them to deny the rightful benefit due to them. Even though duty was paid on 3-10-2001 the same is not payable by virtue of re-introduction of exemption notification. The Ordnance Factory, Trichy were very clear that they would not pay more than Rs. 621/- which is contracted price when there was no duty leviable. In spite of the best efforts of the appellants, the Ordnance Factory said that they would not pay any amount more than Rs. 621/-. All these things indicate the fact that the amount of Rs. 621/- does not include the duty at the rate of 32% which has been paid by the appellants. Under these circumstances there is no question of passing on the burden of duty to the buyer. The appellants are entitled for the refund. Therefore we set aside the impugned order by allowing the appeal with consequential relief.