ORDER
M.V. Ravindran, Member (J)
1. These two appeals are preferred against order in appeal dated 30th June, 2004 which upheld the order in original that rejected the refund claim of the appellant.
2. The relevant facts that arise for consideration are the appellant are manufacturers of cotton yarn and clear the same to their own depot on payment of appropriate duty. While clearing the goods from their factory, appellants are also offering cash discount to the buyers, subject to the condition that the payment is made within a specific time. On such receipt of payment from their buyers within the specified time, the appellant issue credit note in the range of 1.5% to 2% of the gross value of the invoice under which the goods were supplied. Appellants filed a refund claim on such credit notes which were issued to their buyers and the excise duty involved in these transactions on the ground that they had not received that amount of excise duty from their purchasers and the said excise duty is not payable by them to the department. The adjudicating authority rejected the refund claim relying upon the decision of the Larger Bench of the Tribunal in the case of Grasim Industries (Chemical Division) v. Commissioner of Central Excise, Bhopal as reported at . On an appeal, Commissioner (Appeal) also relying upon the very same decision dismissed the appeal.
3. Learned advocate appearing for the appellant submits that the issue involved in this case is regarding the receipt of the payment from the buyers of the appellant. It is his submission that initially when they clear the goods, the quantity of cash discount is made known to their buyers and on receipt of the payment with in the stipulated period, the cash discount is given to the appellant’s buyers on the gross value of the invoice, and as such the refund of duty not payable but paid by them is within the law. It is his submission that they have produced complete books of accounts before the lower authorities, but the lower authorities have not given any findings on these accounts. He also relies upon the decision of the Larger Bench in the case of S. Kumar’s Limited v. Commissioner of Central Excise, Indore as reported at .
4. The learned DR on the other hand submits that the provisions of Section 11B are very clear and the law in case of unjust enrichment is well settled by the Constitution Bench of the Hon’ble Supreme Court in the case of Mafatlal Industries. It is his submission once the invoice is issued, the presumption that the duty has not been passed on has to be adduced by the appellant by showing contrary evidence.
5. Considered the submissions made at length by both sides and perused records. I find from the records that the appellants are issuing invoices to their buyers from their depot. In particular, I checked up the facts in one invoice i.e. invoice No. A-61-20114 dated 06/08/02. I find that the gross value including the excise duty on this invoice is shown as Rs. 46,320/- (Rupees Forty Six Thousand Three Hundred and Twenty only) while the debtor’s ledger against these invoices shows the receipt of payment of Rs. 45,393/- (Rupees Forty Five Thousand Three Hundred and Ninety Three only). The difference of Rs. 926/- (Rupees Nine Hundred and Twenty Six only) is 2% of the gross invoice value as indicated in the said invoice. If that be so, then the amount of discount given by the appellant includes the basic excise duty and additional excise duty. Further, the appellant have been constantly arguing this point that the cash discount is given against all the payments received within a particular specific period of time, from their buyers and the issue is squarely covered by the decision of the Larger Bench in the case of S. Kumar’s Ltd. I find that the Commissioner (Appeal) in his order in appeal has not dealt with these two points specifically. The appellant’s contention that once they have received the payment within a specified time, then they give the cash discount including the amount of duty has to be looked into by the lower authorities in a detailed manner.
6. I find that the issue involved in this case squarely covered by the order of the Tribunal in the case of Peacock Industries Ltd. v. Commissioner of Central Excise, Jaipur as reported at 2005 (191) E.L.T. 1075 [Tri. – Del.], wherein the Tribunal at paragraph ‘4’ has held as under:
They cleared the goods under the duty-paid invoices to their distributors under the prompt payment discount scheme which was known to the distributors before receipt of the goods by them. For availing the benefit of that scheme, the distributors, accordingly, made the prompt payment of the goods to the appellants after deducting the discount and the duty amount involved thereon. The net payment and the duty thus received by the appellants from their distributors was less than what they had declared in their invoices and recorded in the books of account. Therefore, it is difficult to accept, as observed by the learned Commissioner (Appeals), that the appellants had passed on the incidence of duty to the distributors. The subsequent issuance of the credit notes by them in favour of the distributor, was not for the return of the duty amount already collected by them as per the invoices but with a view to square their accounts.
7. I also find that the Larger Bench of the Tribunal in the case of S. Kumar’s Ltd. (Supra) at paragraph ‘9’ has held as under:
As far as the claim for refund of Rs. 1,34,521/- is concerned since there is no dispute of the fact that this amount of duty had not been collected by the appellant, it is not hit by the principles of unjust enrichment. Subject to the above clarification, the appeal stands dismissed.
8. If the appellant’s claim that they have not received the full payment against the invoices, wherever they have given the cash discount including the excise duty is to be considered as correct, then the above two judgments cover the issue in favour of the appellant. Since the lower authorities have not considered these submissions of the appellant, the orders are non-speaking without any findings as to the points raised by appellant. In view of this, the impugned order is set aside and the matters have to be remanded back to the original adjudicating authority. Accordingly, the appeals are allowed by way of remand to the original adjudicating authority to consider the submissions of cash discount claimed by the appellants, looking into the books of accounts during the personal hearing before him. The appellants are at liberty to produce certificate by a Chartered Accountant in support, which also may be considered by the adjudicating authority. Appeals are allowed by way of remand.
(Dictated and pronounced in the open court)