ORDER
T.K. Jayaraman, Member (T)
1. This is a departmental appeal against OIA No 278/04 (G) CE dated 14.12.04 passed by the Commissioner of Central Excise (Appeals) Guntur.
2. The Commissioner (Appeals) passed the impugned order in terms of the order dated 6th May 2003 of the Supreme Court of India. According to the Supreme Court’s order, the Commissioner (Appeals) will hear the matter as directed by the Tribunal and still allow the parties to raise all issues as regards the valuation as well as rate and calculation of duty. The Commissioner (Appeals) has examined the entire issue on merits and finalized the provisional assessment. The period involved is 18.3.90 to 31.11.95. Consequent to the finalization of the provisional assessment, the Commissioner (Appeals) in the impugned order granted consequential relief of Rs 4,35,80,736/-. Revenue is aggrieved over the impugned order and has come before this Tribunal for relief on the following grounds.
1) The Commissioner (Appeals) has ordered refund without causing any verification of the unjust enrichment aspect. As per Section 12B of the Central Excise Act 1944, the incidence of duty paid by the appellant be deemed to have passed on to the buyer of goods and there is no dispute regarding rate of duty applicable during the relevant period, the appellant has passed on the full incidence of duty to the buyers of goods. Subsequent to the decision of Tribunal in the case of Fabworth (India) Ltd., , the appellant started raising the point of rate of duty applicable. The Commissioner (Appeals) is bound to follow the Act and Rules and he should have verified the aspect of appellant’s passing on the incidence of duty to the buyers before ordering for such refund or he should have directed the jurisdictional Assistant Commissioner to sanction refund subject to eligibility as had ordered by the Hon’ble Tribunal. In as much as the refund was without causing any verification to determine the eligibility as contemplated in the Act, the same is patently wrong and results in unjust enrichment to the appellants.
2) The decision of Larger bench of the Tribunal in the case of Fabworth (India) Limited was an offshoot of the decision of the Constitution Bench of the Hon’ble Supreme Court in the case of M/s Hyderabad Industries Ltd which over ruled the decision in the case of Khandelwal Metal & Engineering Works . The Hon’ble Supreme Court vide paras 20 & 21 of its decision in Hyderabad Industries Ltd., held that “During the pendency of these appeals interim orders were passed as a result of which some amount of additional duty was paid by the appellants, approximately fifty percent of the demand raised, and in respect of the balance amount bank guarantees were furnished. In the absence of any material on record we do not propose to decide whether the principle of unjust enrichment is applicable in these cases. Normally with the appeals being allowed the consequence of refund of additional duty paid follows. In these appeals, however, we have held that the decision in Khandelwal Metal & Engineering Works case does not lay down the correct law as indicated in this judgment. Having come to this conclusion about fourteen years after the decision in Khandelwal Metal & Engineering Works case was rendered it would not be equitable to require the refund of additional duty paid into the public exchequer.
At the same time the appellants having succeeded in these appeals cannot be asked to pay an additional amount towards the illegal demand. We, accordingly, allow these appeals with the result that the writ petitions filed by the appellants stand allowed. The demand of additional duty from the appellants was quashed but he respondents shall be liable to refund any additional duty realized so far from the appellants.
This ratio of the Apex Court’s decision is squarely applicable to this case, since the entire issue was a result of this decision and Commissioner (Appeals) ought to have followed the decision of the Constitution Bench.
2. Shri K.S. Reddy learned DR appeared for the Revenue and Shri G. Shivadas learned DR for the respondents.
3. The learned DR reiterated the grounds of appeal.
The learned advocate urged the following points.
1. Rule 9B(5) of the Central Excise Rules 1944 was amended with effect from 14.5.99 from which day, the provisions of Section 11B of the Central Excise Act 1944 was made applicable to the provisional assessments also. In the present case the period of dispute is 18.3.90 to 30.11.95. Hence the amended Rule 9B would not be applicable for finalization of provisional assessment during the above mentioned period even though, the finalization was done after 14.5.99. The learned advocate relied on the decision of the Hon’ble Supreme Court in the case of CCE Chennai v. TVS Suzuki reported in 2003 110 ECR 1 SC. The above decision was challenged by the department in a Revenue petition. The Revenue petition was dismissed as reported in 2004 (169) ELT A 149 (SC). The above decision of the Supreme Court has been relied and confirmed by Hon’ble Supreme Court in the case of CCE v. Allied Photographics . The observation of the Supreme Court in the case of Hyderabad Industries to the effect that no refund should be granted as a sequel to the decision is very specific to the parties concerned under Article 142 of the Constitution, What is binding on all assesses and parties is the law laid down under Article 141 of the Constitution as additional duty is not customs duty under Section 12 of the Customs Act. In view of the ruling of the Supreme Court, the Govt had to make various amendments to Section 3 of the Central Excise Act and also certain notifications. The Commissioner (Appeals) in the present case examined the entire issue of rate of duty as well as valuation and finalized the assessment. In the present proceedings, the department challenged only the unjust enrichment aspect which is act applicable in view of the legal position and the decided case laws during the period of provisional assessment.
2. We have gone through the records of the case carefully. The EOU is manufacturing Hydrogen Peroxide. There was a dispute regarding valuation of goods cleared for domestic tariff area. The issue went up to the CEGAT Bangalore The CEGAT vide its final Order 1186 dated 6.9.02 while examining the issue in detail observed that the respondents are liable to pay calculate the rate of duty at 50% of basic duty of customs in terms of notification No. 2/95 CE dated 4.1.95 in respect of the goods sold by them into DTA in as much as the basic customs duty is the only duty chargeable under Section 12 of the Customs act. The Tribunal while deciding the case followed the larger bench decision in the case of Fab Worth India Ltd . As the duties payable had to be worked out, the Tribunal remanded the matter to the Original Authority to recalculate the duties. The decision of the Tribunal was challenged by the Department before the Supreme Court. The Supreme Court in its order dated 6th May 2003 directed the Commissioner (Appeals) to rehear the matter and decide the issue on merits. Consequently the Commissioner (Appeals) issued the impugned order finalizing the provisional assessment. We find that the provisional assessments pertain to a period much before the amendments of Rule 9B of the Central Excise Rule 1944. During this period, provisions of Section 11B of the CE Act are not applicable to finalization of provisional assessment. The case laws cited by the learned advocate are very relevant. Moreover, the observation of the Supreme Court in the case of Hyderabad Industries to the effect that he respondents was not to be liable to refund, he is very specific to that case, and it can be made applicable to all the cases. In these circumstances the appeal of the Revenue is devoid of any merit. Hence we reject the same.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)