ORDER
S.S. Sekhon, Member (T)
1. Appellants are an assessee under the Central Excise Act, 1944, for the product Pan Masala/Gulla being cleared by them they were paying duty under Heading 2106.00. They were informed & directed vide dated 12-12-2000, by the Central Excise Authorities of Vadodara factory to pay duty under Heading 2404.40 at higher rate.
1.2 Assessee complied with the said direction issued & paid duty at higher rate for the months of January & February, 2001 under protest.
1.3 Duty to be effected with effect from 1-3-2001, of the Traffic, the assessee filed a refund claim dated 13-8-2001 for the excess duty discharged during the months of January & February, 2001 under protest. The claim also made of duty paid on Dharmada amount included in the invoice value bench the extra duty due to change in classification.
2.1 The claim of refund was rejected by the Dy. Commissioner on the findings. –
I have carefully gone through the case records, grounds of refund claim and submission made by the assessee during the personal hearing. I do not find merit in the submission made by the assessee that they have not changed the price structure despite the fact that price structure was changed by them as evident from the invoices issued prior to change of duty structure and post change of duty structure. It is beyond any dispute that in invoices they have shown duty separately and duty was charged accordingly, which inter alia makes well evident that the incidence of duty paid as excise duty has been passed on to the customer and it is not refundable to the assessee. The concept of passing on of the incidence of duty squarely arise in this case as burden of duty paid on final products were directly passed on to the buyer which gives ample space for application of the bar of unjust enrichment. The relied upon case laws are also not relevant in the present case. This is a fact that the assessee recovered the Central Excise Duties as mentioned in the invoices raised by the assessee from their respective customers and they have failed to produce the evidences that if the refund claim is to be sanctioned then it will not enrich them unjustly as required to be satisfied under unjust enrichment. For the above reasons the refund claim requires to be credited to the Customer Welfare Fund established under Section 12C of Central Excise Act, 1944 even if considerable.
2.2 In appeal, Commissioner (Appeal), found as follows –
As regards, refund of differential duty amounting to Rs. 2,50,01,941 /- paid during the period from January to February, 2001 after reclassification of the goods, the appellants contended that there was no change in composite price and composite price remained the same before and after reclassification of the goods. However, I find from the records that the duty was separately shown in invoices and accordingly duty has been collected from the customers. Therefore, more argument that the price structure was not revised or no change in the composite price has taken place will not be sufficient to prove that the excess incidence of duty was not passed on to customer but absorbed by themselves in their pricing mechanism inasmuch as invoices issued by the appellants do not show composite price and duty is indicated separately. The appellant have not produced any documentary evidence to prove that differential duty has been absorbed by them in their pricing mechanism by lowering the basic sale price. The reduced price structure can be due to any other reason like reduction in profit margin or modification of cost structure. This does not establish that the burden of them. The ratio of the case laws relied upon by the appellant is not applicable to the appellants case, since the facts of the case referred to in the aforesaid judgment/decisions are produced by the appellant pertaining to the material period do not show composite price and the duty has been shown separately. In view of above, the amount of refund claim respect of differential duty is hit by principle of unjust enrichment and has rightly been held so by the original authority.
As regards appellants argument regarding refund of duty amounting to Rs. 5,79,125/- which was recovered by the officers on 23-5-2000 by debiting in PLA on charity/Dharmada amount and which was simply over-looked by Original Authority, while rejecting the entire refund claim, I find that the appellants while claiming the refund of Rs. 2,55,81,066/- on 13-8-2001 included the amount of duty paid on charity/dharmada amount. However, there is no mention in the Adjudicating order in this regard. However, I find from the records submitted by the appellants that the appellants have paid Central Excise duty amounting to Rs. 5,79,125/- on charity/dharmada amount vide PLA Entry No. 3/16, dated 23-5-2001 under protest. I further find whatever, duty is paid by making debit entry in PLA, subsequent to date of clearance of the goods, presumption to the effect that the incidence of duty has been passed on to the buyers, will not be attracted. In the appellants case, I find that during the period from January, 2001 to February, 2001, the appellants have recovered/collected additional amount as charity/dharmada from their buyers and paid duty on the said amount on 25-5-2001. Moreover, I find that the SCN, dated 3-12-2002 issued for recovery of duty on charity amount collected during Jan. & Feb., 2001 was subsequently dropped by the Additional Authority vide OIO no Dem/42/2002, dated 28-2-2002.
The Hon’ble CEGAT in case of Punjab Beverages Pvt. Ltd. v. Collector of Central Excise, Chandigarh – 2000 (118) E.L.T. 506 held that duty when paid by making debit entries in PLA subsequent to date of clearance of goods, presumption of Section 12B of Central Excise Act, 1944 as to unjust enrichment not attracted.
Following the ratio of said decision, I hold that the appellant is entitled to get refund of duty amounting to Rs. 5,79,125/- (Rs. Five Lakhs Seventy Nine Thousand One Hundred Twenty-Five Only).
2.3 Hence this appeal against the denial of refund claim of Rs. 2,50,01,941/-
3.1 On hearing both sides & considering the facts it is found –
(a) The reliance of the ld. DR on the para 18 of the decision in case of Allied Photograph – which reads as :
“18 Before concluding, we may state that uniformity in price before and after, the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. Hence, even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact.
& para 7 of the decision of CCE v. Kores India Ltd. – (Tribunal) would not lead, to the only conclusion that Bar of Unjust enrichment, a rebuttable presumption, would apply, as price prior and post such additional payments of the duty remain the same. It is not inevitable in all cases to arrive at such conclusion or presume so. A reading of the provision of Section 12B, indicates that the bar could be successfully lifted, in such cases, where the assessee can discharges obligation cast upon him that such duty burden was not passed on to another person. The test is whether the manufacturer had reimbursed the duty to the exchequer from the proceeds of such an amount received from customers or has met such an obligation from other costs/charges projects, “which both these decision relied by the ld. DR admits to be available & probable or possible.
(b) In this view, proceeding to examine the facts in this case, which are not disputed, as regards the documents of the Vadodara factory, it is found –
(i) the appellants have submitted in detail the reasons for preferring a refund claim which was rejected by the Divisional Deputy Commissioner and subsequently the Commissioner (Appeal) has confirmed this action of the Deputy Commissioner. After the Hon’ble Supreme Court gave some opinion, that gutkha was tobacco, all the Central Excise offices in the country had considered this issue but the Vadodara Commissionerate went one step ahead by issuing directions to reclassify the goods and discharge duty accordingly. The Appellants had no alternative. They could not have stopped the manufacturing activities and at the same time they could not disobey the orders of the jurisdictional Deputy Commissioner, who had given directions without considering the practice/procedure followed at the factories of the same & other such manufacturers in other Jurisdictions. The Appellants have a very very few C&F Agents through whom goods are dispatched, to whom they informed about the action taken by the Central Excise Department and the obligations the appellants had to comply with. The Appellants informed them that the Excise duty liability would be discharged on the higher side due to such instructions of reclassification of goods from the department. The Appellants, who were confident that the directions of the Department were wrong, did not change the total unit price and they absorbed the excess duty demands discharged under protest themselves. They had written letter to Department that they would pay duty under protest, as they would not agree with the directions of the Department they had to abide by it and paid duty UNDER PROTEST.
ii) in terms of the Central Excise Rules, no excisable goods could be cleared from a factory, except under an invoice containing all the particulars prescribed therein. Therefore, it was compulsory for the Appellants to prepare an invoice and show the rate of duty and the duty payable and discharged though under protest the Appellants was bound to submit a monthly return under Rule 173G(3) with reference to the invoices issued. The Appellants had also had to assess the duty due in the return in terms of Rule 173F. In view of all these compulsions, Appellants had no other way than showing the details in the invoices for the purpose of compliance under the provisions of Central Excise Law. Appellants had to show the details of the duty in the invoices during the material time. In other words, the Appellants maintained the same commodity price in market during the material time, which existed immediately before the change. In this change over, the Appellants adjustments in the price structure was a desire to maintain, price in marked to be unchanged. And they could not complete with their own same products being cleared from factories in other jurisdiction by recovery the excess duties, discharged at Vadodara factory, from their customers. By keeping the buyers purchased price same, they have established that they have not passed on the excess duty collected to the buyers. They managed to absorb the incidence of increase in duty by changing the structure, as follows as submitted. That was the only legal way inasmuch as they could not show duty payable under Chapter 21 and paid under Chapter 24, in each of the invoices issued for removal of goods.
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Sr.No. Particulars Duty liability dis- Duty liability
charged under discharged un-
Chapter 21 during during January,
December, 2000 der Chapter 24
during January
2001
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I
i Description Manikchand Gut- Manikchand
kha 2 gms Gutkha 2 gms
ii Invoice No.& 1144/22-12-2000 1316/31-1-2001
date
iii No. of cases 100 cases 100 cases
iv Assessable Rs. 4,00,000/- Rs. 5,51,333/-
value (tariff value)
V Basic price Rs. 6,72,000/- Rs. 5,51,333/-
vi Total duty
paid
BED Rs. 64,000/- Rs. 88,213.28
SED Rs. 96,000/- Rs. 1,32,319.92
AED - Rs. 55,133.30
total Rs. 1,60,000/- Rs. 2,75,666.50
vii Charity - Rs. 5,000/-
viii Total invoice Rs. 8,32,000/- Rs. 8,32,000/-
price
ix Price per case Rs. 8,320/- Rs. 8,320/-
inclusive of
taxes
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Sr.No. Particulars Duty liability dis- Duty liability
charged under discharged un-
Chapter 21 during during January,
December, 2000 der Chapter 24
during Jan. &
Feb.,2001
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II
i Description Manikchand Manikchand
Gutkha 4 gms Gutkha 4 gms
ii Invoice No. 1126/19-12-2000 1210/5-1-2001
&date
iii no of cases 25 cases 25 cases
iv Assessable Rs. 1,25,000/- Rs. 1,56,125/-
value (tariff value)
V Basic price Rs. 1,85,437.50 Rs. 1,56,125/-
vi Total duty
paid
BED Rs. 20,000/- Rs. 24,890/-
SED Rs. 30,000/- Rs. 37,470/-
AED - Rs. 15,612.5
Total Rs. 50,000/- Rs. 78,062.50
vii Charity - Rs. 1,250/-
viii Total invoice Rs. 2,35,437.50 Rs. 2,35,437.51
price
ix Price per case Rs. 9417.5 Rs. 9,417.5
inclusive of
taxes
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The charity amount shown was forcibly included in the assessable value and duty recovered during the months of January & February, 2001 and the whole of duty on charity so recovered has been now ordered to be refunded in this OIA as it has been found to be not hit by bar of Unjust enrichment.
(iii) From this comparison chart, it is seen that the total value per case of Manikchand Gutkha 2 gms. containing 4,000 pouches was Rs. 8,320/- prior to reclassification of goods. After reclassification, during the material time the price of one case of Manikchand Gutkha 2 gms. remained to be Rs. 8,320/- only. Similarly, the total value per case of Manik-chand and Gutkha 4 gms. Prior to reclassification was Rs. 9,417.5. After reclassification and during the material time the total price per case of Manikchand Gutkha 4 gms. was Rs. 9,417.50. From this it is crystal clear that the total price remained unchanged and the excess duty was not passed on to the customers.
(iv) The Commissioner found “I find from the records that duty was separately shown in invoices and accordingly duty has been collected from the customers. Mere argument that the price structure not revised or no change in the composite price has taken place will not be sufficient to prove that the excess incident of duty was not passed on to customers inasmuch as invoices issued by the Appellants do not show the composite price and duty is indicated separately.” It is interesting to note that Respondent on page 6 of OIA in line 3 of first para mentions that mere argument that the price structure not revised… etc. In line 11 of the same para it is mentioned that the reduced price structure can be due to… etc. These are contradictions, unexplained, exhibly a mind but to somehow reject the claim.
(v) The Appellant relies on the below mentioned case laws :
The Tribunal in Collector v. Metro Tyres Ltd. – 1995 (80) E.L.T. 410 had held “Assessee’s invoice during the material period showing a composite price and duty not indicated separately-sales price of the goods before as well as after the event (reclassification) remained the same.
Conclusion-incidence of higher duty not passed on to customers.” The Central Excise Department had filed an appeal in the Hon’ble Supreme Court 2002 (143) E.L.T. A75 against this aforementioned Tribunal order. The Appeal has been dismissed by the Supreme Court by ordering, “what is involved is the Assessment of evidence as to whether or not the assessee had passed on the burden of excise duty to their customers”. In the case of Appellant herein, also this is the evidence that the sale price of the goods before as well as after the reclassification remained the same.
(vi) The Hon’ble Supreme Court of India in Mafatlal Industries Ltd. v. Union of India – , is pleased to order a judgment in regard to the matter of refunds of Central Excise and Customs case. In para 91 it is clarified “Just because duty is not separately shown in invoice price, it does not follow that the manufacturer is not passing on the duty nor does it follow therefrom that the manufacturer is absorbing duty himself. The manner of preparing the invoice is not conclusive”. The Hon’ble Supreme Court has further expressed in para 247 of the judgment “even if the duty element was separately shown in the invoice what the buyer pays is the price of the product and nothing else.” In para 208 the Apex Court expresses buyer of the goods pays price of the goods and not excise duty. Excise duty is payable by the manufacturer. Then it is concluded refund of excess tax realized from tax payer not to be refused on the ground that burden of such tax has been passed on to the consumer.
(vii) In a further judgment in Assistant Collector of Customs v. Anam Electrical Manufacturing Co. – , the Hon’ble Supreme Court, referring to their earlier ordered “In Mafatlal Industries aforesaid have ordered “In pursuance of requirement of averment/assertion by applicant for refund as contemplated in such application/Appeal shall be entertained only if applicant/Appellants files and affidavit stating that he has not passed on the burden of the duty involved to another person.”
(viii) In view of this judgment of Hon’ble Supreme Court, the appellants have made and affidavit stating in that they have not passed on the burden of duty involved to another person. Copy of the affidavit enclosed.
(ix) In Tecil Chemicals & Hydro Power Ltd. v. Commissioner – , the Tribunal has held “Refund-unjust enrichment – Incidence of duty shown by assessee to have not passed on to buyers, sale price having remained constant before and after payment of duty of assessee – Refund admissible – Section 11B of Central Excise Act, 1944. Copy of the case law enclosed and marked as Exhibit-U.
(c) In this view of the matter on facts, we found no reasons to bar this refund on grounds of unjust enrichment, as arrived by the lower authority. The order is set aside & refund ordered to be granted since it is not otherwise impugned.
3.2 Appeal to be disposed in above terms.
3.3 Ordered accordingly.
(Pronounced in Court)