ORDER
S.S. Kang, Vice-President
1. Heard both sides.
2. In pursuance to the remand order passed by the Tribunal, the adjudicating authority rejected the refund claim filed by the appellant.
3. The brief facts of the case are that the appellants are engaged in the manufacture of sugar and their production is to be cleared as free sale sugar as well as levy sugar which is allowed to be cleared as such. The free sale sugar is liable to duty @ Rs. 85/- per qtl. whereas levy sugar is leviable to pay duty @ Rs. 52/- per qtl. The Sugar Directorate, Sugar & Edible Oils Department, Ministry of Food and Consumer Affairs vide letter dated 28-10-98 directed the appellant to clear additional quantity of 198.9 MTs of sugar as levy sugar out of quota of free sale sugar. On receipt of this letter, the appellant cleared sugar at the rate applicable to sugar for levy sale sugar but paid duty i.e. @ Rs. 85/- per qtl. which applicable to free sale sugar. This letter was amended subsequently by letter dated 17-11-98 whereby it has been clarified that the condition the levy sugar is out of free sale portion is deleted. The appellant on receipt of the first letter dated 28-10-98 cleared the levy sugar and paid duty as applicable to the free sale sugar because the letter under which this levy sugar was cleared contains that this levy sale is out of quota of free sale portion subsequently this condition was deleted. The appellant filed a refund claim in respect of the quantity which was cleared as levy sugar which is liable to pay duty @ Rs. 52/- per qtl. whereas the appellant paid @ Rs. 85/- per qtl.
4. The adjudicating authority as well as Commissioner (Appeals) rejected the refund claim on the ground that subsequent to clearance variation in the conditions will not effect the payment of appropriate duty at the time of clearance, after relying upon the decision of Hon’ble Supreme Court in the case of MRF Ltd. v. CCE .
5. The contention of the appellant is that the ratio of the above decision is not applicable in the facts of the present case. As the appellant had actually cleared the levy sugar and paid duty as per free sale sugar applicable and in view of the letter issued by the Sugar Directorate dated 28-10-98 the higher duty was paid because the above-mentioned letter contains a clause that this levy sugar is out of the free sugar and this quantity purchased by the Central Government is out of the free sale portion. This condition was subsequently withdrawn. The contention is that as the sugar was cleared as levy sugar at the rate applicable to the levy sugar, therefore, there is no price variation after the clearance of the sugar in question. The appellant also produced the certificate issued by the U.P. Cooperative Federation Ltd. to the effect that the quantity of 198.9 qtls. sugar was released by the appellant received by them and they had only paid duty @ Rs. 52/- per qtl. and they had also paid the price of levy sugar only. The contention is that as the customer has not paid the duty at higher rate, therefore, the provisions of unjust enrichment are not applicable.
6. The contention of the Revenue is that the appellant cleared the free sale sugar as levy sugar, therefore, they are liable to pay duty as per rate applicable to the free sugar. Further, the contention is that as the goods were assessed at the time of clearance to appropriate duty, therefore, subsequent change in repect of the status of the goods from free to levy sugar will not effect the payment of duty at the time of clearance of the goods.
7. In this case, the appellant was directed to clear 198.9 Mts. of free sale sugar as levy sugar vide letter dated 28-10-98 issued by the Sugar Directorate, Government of India. In the letter, it was mentioned that this sugar is out of the free sale portion. In view of this letter, the appellant cleared the sugar of UP Cooperative Federation Ltd. at the rate applicable to the levy sugar but appellant paid duty as applicable on free sale sugar in view of the letter. Subsequently the condition that this sugar is out of free sale portion was withdrawn. This letter was conveyed vide letter dated 17-11-98. As the appellant had cleared the levy sugar at the rate applicable to the levy sugar, therefore, the rejection of the refund claim that there was subsequent change in the price variation will not effect the payment of duty is not sustainable. As the appellant had cleared the levy sugar, therefore, Central Excise duty is liable to be recovered from the appellant as applicable to levy sugar. The appellants are entitled for the refund of excise duty which was paid. In respect of the unjust enrichment, the appellant produced the certificate issued by the UP Co-operative Federation Ltd. which was produced before lower authorities also to the effect that the quantity of sugar in question was released from UP Co-operative Federation Ltd. they had only paid excise duty @ Rs. 52/- per qtl. as leviable to the levy sugar. This certificate was not controverted by the lower authorities. In these circumstances, as the burden of duty has not been passed on to the customers. The impugned order is set aside and the appeal is allowed.
(Dictated & pronounced in open court on 5-8-2005)