Commissioner vs The on 22 October, 2008

Gujarat High Court
Commissioner vs The on 22 October, 2008
Author: D.A.Mehta,&Nbsp;Honble Smt. Kumari,&Nbsp;
   Gujarat High Court Case Information System 







TAXAP/1239/2008	 6/ 8	ORDER 






APPEAL No. 1239 of 2008





LTD. - Opponent(s)

Appearance : 
HRIDAY BUCH for Appellant(s) : 1, 
Adv. with MR RC SAXENA, Adv. for                                M/S
TRIVEDI & GUPTA for Opponent(s) :









: 22/10/2008 




1. The
appellant-Revenue has proposed the following two questions:

(A) Whether
in the facts and circumstances of the case the respondent is entitled
to refund of Rs.10,83,216/- as ordered by the Commissioner (Appeals)
and upheld by the Tribunal?

(B) Whether
in the facts and circumstances of the case, the Commissioner
(Appeals) and Tribunal are justified in holding that there was no
unjust enrichment even though the respondent removed / cleared the
goods without indicating the element of Excise Duty in their sales
invoice, contrary to Section 12A of the Central Excise Act, 1944?

2. Heard
learned counsel for the appellant. Inviting attention to the
observations made in Paragraphs No.36 and 37 of the order in original
made by the adjudicating authority, it was contended that both,
Commissioner (Appeals) and the Tribunal, were in error in holding
that the incidence of duty had not been passed on to the customers.
That the claim made by respondent-assessee for refund was rightly
held to be inadmissible on the basis of applicability of principle of
unjust enrichment considering the fact that the commercial invoices
prepared by the depot did not contain bifurcation of the price and
the excise duty components. That respondent-assessee having not
discharged the onus, the findings recorded by Commissioner (Appeals)
and the Tribunal were perverse, giving rise to a substantial question
of law, more particularly, the second question proposed.

against that, learned advocate appearing for respondent-assessee
referred to Paragraph No.24 of the order in original to emphasize
that the assessee had not received any amount qua the discounted
portion and hence, there was no question of passing over the duty
incidence to the customers.

3. In
the impugned order, the Tribunal has reproduced the findings of
Commissioner (Appeals) which read as under:

considering the matter, I find that it is not disputed by the
Department that duty was paid by the appellants at the factory gate
on the entire quantity of goods at the time of stock transfer to the
depots. Subsequently, in terms of the Free Unit Discount Scheme, the
goods were cleared to their customers from various depots under
commercial invoices in which also the Free Units supplied to the
customers were stated. The order in original has also accepted that
the rate mentioned in the commercial invoices tally with the rate
(inclusive of excise) in the central excise invoices. However, as the
commercial invoices show only a composite value and not the basic
value + central excise duty element separately, the adjudicating
authority held that the appellants have not been able to prove that
duty burden on the Free Units portion had not been passed on.

10.8 I
am unable to agree with the above reasoning of the adjudicating
authority for the following reasons:

There is no statutory requirement that commercial invoices should
show the break-up of value into basic value + central excise duty,

Since the appellants have not realized any amount in respect of the
Free goods they have also not passed on the duty element on these
goods (which had been paid by them at the time of stock transfer of
the said goods from the factory).

The case is squarely covered by the ratio of the following case laws:

Vishakapatanam vs. M/s. Andhra Pradesh Paper Mills Ltd. – 2006 (198)
ELT 237 (Tri-Bang.)

Chemicals vs. C.C.E., Vadodara 2004 (168) ELT 70 (Tri-Mum.)

therefore, find that the appellants have discharged the burden of
proving that duty has not been passed on in the subject case and
hence they are entitled to the refund of Rs.10,83,216/- sanctioned by
the adjudicating authority but credited to the Consumer Welfare Fund.

view of the discussion and findings above, the order of the
adjudicating authority is upheld except with regard to the order in
respect of refund of Rs.10,83,216/- which is modified to the extent
that the same is admissible to the appellants and hereby allowed.

4. The
Tribunal has further found that once the quantity discount is known
and passed on, deduction is admissible. That Revenue has not proved
that free units as per the Scheme of Trade Discount had not been
parted with by the assessee. In light of the aforesaid findings
concurrently recorded by both the appellate authorities, only to
ascertain whether factually the respondent-assessee had received
anything more, namely, even the value of the free units, the Court
considered the record. The following findings recorded by the
adjudicating authority in fact go to establish the claim of the
assessee that incidence of duty in relation to free units had not
been passed on and the assessee had not received anything qua the
quantity discount granted.

19. I
have also perused the re-conciliation statements presented (along
with the Invoices) showing therein a co-relation between the factory
Invoice and Depot/ C&F Agent’s Invoice along with details of
Discounts being given. On verification with the respective factory
Invoices and the Invoices issued from the Depot/ C&F Agent’s
place, it is clearly found that goods description in the commercial
Invoice vis-a-vis that in factory’s invoice is easily identifiable
with respect to the particular Batch No . (Though same
description of goods but with different batch numbers are also
appearing) and at the end of the Invoices, were summing up the total
bill amount the discount portion is clearly indicated (either in
percentage terms and/or its quantification) and had been deducted
from the total amount. It is also noticed that Unit Price charged for
the goods sold from the Depot / C&F Agent’s place is also same as
that the Unit price at factory gate (both the invoices are indicating
Unit Price) and the discount had been given on the overall price
charged. This way the Discount had been really been passed on.

20. On
verification of the payment particularly on sample basis, it is found
that the assessee has received the payment only to the extent of
Discounted portion.

5. In
light of the aforesaid position and facts, it is apparent that
reliance on provisions of Section 12A of the Central Excise Act,
1944, cannot carry the case of appellant any further. The said
Section requires that every person who is liable to pay duty of
excise on any goods shall, at the time of clearance of the goods,
prominently indicate in all the documents relating to assessment,
sales invoice, etc., the amount of such duty which will form part of
the price at which the goods are to be sold. On a plain reading, the
phrase at the time of clearance of the goods cannot be read to
mean removal of goods from the depot to their further destination,
but can only mean removal of goods from the manufacturing unit in the
first instance. In the facts of the present case, the record reveals,
and there is no dispute as to the said fact, that at the time of
clearance of the goods, the invoice in question carried the details
of excise duty component separately qua the price of the goods

6. In
the circumstances, on none of the grounds pleaded can any legal
infirmity be found in the impugned order of the Tribunal.
Accordingly, in absence of any substantial question of law, the
appeal is dismissed. Notice discharged.


Kumari, J.)




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