Commissioner, Central Excise & Service ... vs M/S Cadila Veterinary

Appeal No.E/1204/2010 [Arising out of OIA No.123/2010(Ahd-I)CE/MM/Commr(A)/Ahd, dt.03.05.2010, passed by Commissioner of Central Excise & Customs (Appeals), Ahmedabad]

Commissioner, Central Excise & Service Tax, Ahmedabad Appellant

Vs

M/s Cadila Veterinary Respondent

Represented by:

For Appellant: Shri S.K. Shukla, A.R. For Respondent: Shri J.C. Patel, Advocate

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL)

Date of Hearing/Decision:25.02.2015

Order No. A/10180 / 2015, dt.25.02.015

Per: P.K. Das

1. Revenue filed this appeal against the order of the Commissioner (Appeals) whereby the Adjudication order was set aside and the appeal filed by the Respondent was allowed.

2. After hearing both the sides and on perusal of the records, I find that the Adjudicating authority passed the order as per remand order No.A/1100-1101/WZB/AHD/2008, dt.01.05.2008 passed by the Tribunal. The facts of the case as recorded in the Tribunals order dt.01.05.2008 are reproduced below:-

2.?As per facts on record, the assessee is engaged in the manufacture of feed supplement. During the relevant period there was dispute about the classification of the same. Whereas the appellants had classified the goods under chapter heading 23.02, Revenue classified the same under chapter 29. The dispute of classification was finally settled by Commissioner (Appeals) vide his order dated 12-2-1998 upholding the assessees stand. As a result, assessee became entitled to refund of duty paid extra on the goods cleared by them during the period April, 1993 to March, 1995. The said refund claims were rejected by the Asst. Commissioner on the ground of unjust enrichment after following the due process of adjudication. However, the said order of Asst. Commissioner was set aside by Commissioner (Appeals) and the matter was remanded with directions to verify as to whether the incidence of duty was passed on by the assessee to their customers or not. During the course of such de-novo proceedings, a committee under Deputy Commissioner was constituted to verify the records, who vice his report dated 5-7-2002 submitted that except for an amount of Rs. 1,83,274/- the incidence of duty does not stand passed on by the assessee to its buyers. However, the said report of the Dy. Commissioner was not accepted by the Asst. Commissioner while passing order in de novo proceedings, who again rejected the refund claim on the point of unjust enrichment. The said order of Asst. Commissioner was again appealed against by the assessee before Commissioner (Appeals), who vide his impugned order held in favour of the assessee and allowed the refund claim. However, in respect of part of the refund claim, he held that the same should be credited to their modvat account in stead of being paid in cash.

3. The Tribunal remanded the matter to the Adjudicating authority with certain directions as under:

9.?As regards the assessees appeal against that part of the order vide which a part of the duty has been directed to be refunded by crediting the same in modvat account, we find that the appellants have taken a specific stand that their factory is closed since long past and that appellant has no use of the credit now permitted to be taken in the modvat account. We note that the Larger Bench of the Tribunal in the case of M/s. Guari Plasticulture (P) Ltd. [2006 (202) E.L.T. 199 (Tri.-LB)] has held that there is no bar in allowing the refund of such credit in cash provided the assessee is able to establish that on account of the use of such credit for payment of disputed duty and now refunded amount, they were compelled to pay the duty out of the PLA during the period. As such, we would direct the original Adjudicating Authority to verify the above aspect and then decide the issue pertaining to refund claim of Rs. 19,38,750/- ordered to be credit in modvat account, in the light of the law declared by the Larger Bench in the above referred case. Accordingly, appeal filed by the assessee is allowed by way of remand and Revenues appeal is rejected.

4. In the de-novo Adjudication order, the Adjudicating authority disallowed the cash refund of Rs.19,38,750.00 and upheld the earlier Adjudication order. The Commissioner (Appeals) set aside the Adjudication order and allowed the appeal filed by the Revenue.

5. The learned Authorised Representative submits that the Revenue filed the appeal against the Tribunals remand order dt.01.05.2008 before the Honble High Court, which is still pending. I find that the Adjudicating Authority and the Commissioner (Appeals) have already passed the order as per the Tribunals order. Revenue has filed this appeal against the order of Commissioner (Appeals), and therefore, the submissions made by learned Authorised Representative has no merits.

6. On perusal of the records and the Tribunals order, it is clear that the Tribunal remanded the matter to the Adjudicating authority to verify the use of CENVAT Credit on payment of disputed duty and now refunded amount, the assessee were compelled to pay duty out of the PLA during the said period. It is also seen that the Tribunal categorically observed the decision of the Larger Bench of the Tribunal in the case of Gauri Plasticulture (P) Ltd Vs CCE Indore  2006 (202) ELT 199 (Tri-LB) is applicable in the present case. I find that despite the observation of the Tribunal, the Adjudicating authority observed that the decision of the Larger Bench of the Tribunal in the case of Gauri Plasticulture (P) Ltd (supra) is not applicable in the present case. It is also noted that despite the order of the Tribunal, the Adjudicating Authority upheld the earlier Adjudication order. I find that the Commissioner (Appeals) has given detailed findings on this issue and he has also verified the documents as directed by the Tribunal. For proper appreciation of the case, the relevant findings of the Commissioner (Appeals) are reproduced below:-

8. From the above, I observe that lower authority has acted beyond the specific direction given by the Honble Tribunal. As per the direction the issue was very limited to examine and verify as to whether the appellant is able to establish that on account of the use of MODVAT Credit for payment of disputed duty and now refunded amount, they were compelled to pay the duty out of the PLA during the period. But, I find that lower authority in her impugned order has not only ignored the said direction but also crossed the limit by upholding the earlier OIO No.29/AC/2007/Refund, dt.24.10.2007 which has already been decided by the Honble Tribunal. This is extra-judicial and non-application of mind on the part of lower authority. I observe that appellant has produced a calculation sheet marked Annexure 5 with their submissions showing the details of payment of total duty of Rs.1,72,47,694.54 from PLA account out of which a sum of Rs.62,16,584 was paid from PLA against the product in dispute and Rs.1,10,31,111 was paid in PLA account for undisputed products. Thus, it is clear that during the relevant period, because of the compulsion to pay duty from the CENVAT Credit on the dispute goods (which were finally held to be totally exempt), the appellant were compelled to pay the duty out of PLA on disputed goods. If there had been no dispute, this amount which is now sought to be refunded, would have been used to pay duty on the undisputed final goods and thereby duty in cash to that extent would have been saved. Additionally, I find there is another judgment of the Ahmedabad Tribunal which fits the facts of this case also. This judgment is in the case of Plas Pack Industries Vs CCE Ahmedabad III  2009 (243) ELT 741. In this case, it has been held that duty paid from CENVAT can be refunded in cash as the unit was closed. In view of this, as the appellant unit is closed, it would be all the more reason to grant the unit refund in cash.

9. In view of above, I set aside the impugned order and allow the appeal filed by the appellant.

7. I find that the Revenue has not disputed the examination of records by the Commissioner (Appeals) in the grounds of appeal. In my considered view, the Commissioner (Appeals) passed the order following the directions of remand order dated 01.5.2008, of the Tribunal. Revenue stated in the grounds of appeal that they preferred appeal before Hon'ble High Court against the Tribunals order, which is still pending. No order was passed by the Hon'ble High Court against the Final Order dated 01.5.2008. Commissioner (Appeals) rightly passed the order as per directions of the Tribunal.

8. In view of the above discussion, I do not find any reason to interfere the order of the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.

(Dictated & Pronounced in Court)

(P.K. Das) Member (Judicial)

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