Cce-Bhopal vs 6. M/S. Bulk Explosives Pvt. Ltd

[Arising out of Orders-in-appeal No. (1) 59-CE/BPL/2006 (2) 73-CE/BPL/2006 (3)57-CE/BPL/2006 dated 22.3.2006 (4) 55-CE/BPL/2006 (5) 75-CE/BPL/2006 dated 28.03.2006 and (6)78-CE/BPL/2006 dated 29.03.2006 passed by Commissioner (Appeals), Customs & Central Excise, Bhopal (M.P.)]

For Approval and Signature:

Honble Smt. Sulekha Beevi C.S., Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

CCE-Bhopal Appellants

Vs.

1. M/s. Premier Explosives Ltd.

2. M/s. Keltech Engg. Ltd.

3. M/s. IBP Co. Ltd.

4. M/s. Solar Capitals Ltd

5. M/s. Emul Tak Pvt. Ltd., and

6. M/s. Bulk Explosives Pvt. Ltd. Respondents

Appearance: Shri Govind Dixit, DR for the appellants.

S/Sh Ajayan T.V., P.V. Sadavarte, L.P. Asthana, Amit, Kumar, CA for the respondents.

Coram: Honble Smt. Sulekha Beevi C.S., Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 53030-53035/2015

Per: B. Ravichandran

These are six appeals filed by Revenue against the orders passed by Commissioner (Appeals). As the issue involved is similar, these appeals are taken up together for disposal. The facts of the case are that the respondents are engaged in the manufacture of explosives liable to Central Excise duty. They have filed refund claims towards duty paid by them consequent on finalization of price between them and the buyer. The assessments were provisional at the time of clearance of goods. These claims were rejected by the original authority on the ground that the excess duty has been collected by the respondents from their respective buyers and hence, refund now will result in unjust enrichment. On appeals filed by the respondents, the Commissioner (Appeals) vide impugned orders set aside the original orders and held the respondents eligible for refund as such claims were not hit by the principle of unjust enrichment. Aggrieved by these orders, the Revenue is in appeal before us. In the grounds of appeal, it was contended that the learned Commissioner (Appeals) failed to appreciate the Tribunals decision in the case of Sangam Processor (Bhilwara) Ltd. Vs. Collector of C. Excise, Jaipur, 1994 (71) ELT 1989 CEGAT which was upheld by the Honble Supreme Court. The Revenue also relied on the Board Circular dated 18/6/1997 to state that even if the credit notes are issued, the doctrine of unjust enrichment will apply.

2. During the arguments, the learned AR strongly contended that issue of credit note letter will not help the respondents to overcome the bar of unjust enrichment. He reiterated that this Tribunals decision in the case of Snagam Processor (Bhilwari) Ltd. (Supra) as affirmed by the Honble Supreme Court, should have been followed by the lower authority while considering the issue. On the other hand, learned counsels appearing on behalf of the respondents stated that the ratio of this Tribunals decision in the case of Sangam Processors (Bhilwari) Ltd. is not applicable to the present case both on the ground of different facts and also later cases decided by this Tribunal and various High Courts and affirmed by the Honble Supreme Court. Our attention was drawn to various case laws, more specifically to the following:

1. Addison & Co. Vs. Commissioner of C. Ex., Madras reported in 201 (129) ELT 44 (Mad.)

2. Union of India Vs. A.K. Spintex Limited reported in 2009 (234) ELT 41 (Raj.)

3. Commissioner of Central Excise, Ghaziabad Vs. Mahavir Cylinders reported in 2012 (284) ELT 54 (Tri-Del)

4. Commissioner of C. Ex., Nagpur Vs. Solar Capitals Ltd. reported in 2006 (205) ELT 403 (Tri-Mumbai)

5. CCE-Bhopal Vs. Indian Explosives Limited reported in 2015 (315) ELT 606 (Tri.-Delhi).

6. Commissioner of Central Excise, Jaipur Vs. Universal Cylinders Limited reported in 2004 (175) ELT 202 Tribunal Delhi.

7. Commissioner of Central Excise, Raipur Vs. IBP Limited reported in 2013 (288) ELT 385 (Tri.-Delhi)

3. It was contended on behalf of the respondents that in their case assessments were provisional as the final price of goods was to be settled later. On settlement of such price, the excess amount paid towards duty was returned by credit note to the buyers to adjust the same from the outstanding payments due to the respondents. They have pleaded that the bar of unjust enrichment will not apply in the case of settlement of price subsequent to removal of goods and credit notes issued for the differences collected towards duty.

4. Heard both the sides and examined the appeal records.

5. In the present cases, the only point for decision is whether or not the respondent eligible to get refund of excess duty paid in cases where such excess duty collected from the buyers were restored to the buyers by way of credit notes. The Revenue relied on this Tribunals decision in the case of Sangam Processors (Bhilwari) Ltd. (Supra), we find that in the said case, the Tribunal was dealing with the refund claim which arose after issue of notification under Section 11C of the Central Excise Act, 1944. The Tribunal held that the appellants have passed on incidence of tax and held that in terms of section 11C (2) when the duty incidence was passed on to the customers, the refund claim to the appellant will be hit by the bar of unjust enrichment. We find in the present set of cases the goods were cleared on provisional assessment and subsequently the coal companies finalized the prices which were on the lower side resulting in the excess payment of Central Excise Duty on goods already cleared under provisional assessment. The differential duty collected from the buyer by the respondents at the time of original clearances was restored back to the buyers by way of credit notes which was adjusted against the dues of the respondents. The set of facts in the present appeals are thus materially different from the case of Sangam Processors (Bhilwari) Ltd. Further, the Honble Rajasthan High Court in the case of A.K. Spintex Limited (Supra) held that the Revenues contention that issue of debit note or credit note cannot have the effect of reversal of passing of the burden as it is only a paper transaction to get undue benefits by the assessee cannot be accepted. The Honble High Court held that in cases where the assessee is able to show that the burden is not passed on, or it has been reversed the claim of refund cannot be denied.

6. The Honble Madras High Court in the case of Addison & Co. (Supra) held as below:

The language employed in Section 11B therefore is not capable of being construed as having reference to the ultimate consumer of the product. What has to be demonstrated by the claimant is that the burden of the duty paid had not been passed on by him to any other person. The passing on will occur only if the person who claims refund of duty as shifted the burden to another. There can be no passing on of the incidence of the duty if he merely reduces his burden by receiving the refund. The possibility that the dealer who has obtained goods from the manufacturer may charge to his buyer the full amount of the duty ignoring the refund received by the manufacturer cannot be a ground for denying refund to the manufacturer.

The word buyer used in Section 12B also cannot be construed as referring to the ultimate consumer. The buyer referred to therein in the normal circumstances is the buyer who buys the goods from the person who has paid duty.

The primary object of the provision which is intended to deter or prevent unjust enrichment is to prevent enrichment of the person who has paid duty and who seeks refund of the same. It is not directed at the buyer who has entered into arms length transactions with manufacturer and has sold the goods to sub-dealers, retailers or consumers.

7. This Tribunal had occasion to examine similar issues earlier. In case of IBP Limited (Supra) it was held that when initially goods have been supplied at a provisional price which subsequently had been reduced and when the higher price initially charged along with higher duty had been adjusted by the assessee from the subsequent supplies made, it cannot be said that the incidence of duty has been passed on by the assessee to their customer as held in Universal Cylinders Limited. The said judgment of the Tribunal has been affirmed by the Honble Apex Court reported in 2005 (179) ELT A41.

8. In the case of IBP Limited (Supra), this Tribunal held that if the credit notes are genuine and had been acted upon resulting in neutralizing the higher incidence of duty earlier passed on, the refund claim would no longer be hit by the principle of unjust enrichment. In the case of Mahavir Cylinder (Supra) this Tribunal referred to the Honble Supreme Courts decision in the case of Sangam Processors (Bhilwari) Ltd. and distinguished the facts regarding refunds arising after the notification issued under Section 11C and reduction in duty liability consequent on variation in price as per contract which was adjusted by the buyer. The Tribunal relied on Universal Cylinders as affirmed by the Honble Supreme Court ruled in the favour of the assessee. Similar view was taken by this Tribunal in the case of Indian Explosives Limited (Supra) after referring to various decisions of this Tribunal and Honble High Court of Rajasthan. Considering the above position and various case laws, we find no reason to interfere with the impugned orders passed by the learned Commissioner (Appeals). Accordingly, we dismiss the appeals filed by the Revenue.

(Sulekha Beevi .C.S)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

Ritu

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