M/S. International Transformers (P) ... vs Cce, Lucknow

[Arising out of Order-in-Appeal No.45-CE/2013 dated 08.11.2013 passed by the Commissioner (Appeals), Central Excise, Lucknow]

For approval and signature:

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

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

2 Whether it should 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 Departmental authorities?

M/s. International Transformers (P) Ltd. Appellant

Vs.

CCE, Lucknow  Respondent

Present for the Appellant : Shri Vineet Kumar Singh, Advocate

Present for the Respondent: Shri M.S.Negi, DR

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 26.06.2015

Final ORDER NO. 53015/2015

PER: S.K. MOHANTY

1. Brief facts of the case, leading to this appeal, are as under:-

The appellant is engaged in the manufacture of electric transformers and parts thereof falling under chapter heading 85 of the Central Excise Tariff Act, 1985. For the disputed period, the appellant filed the refund claim before the Jurisdictional Central Excise Authorities on the ground that Central Excise Duty paid on the provisional price of goods was more than the finalization of price verification formula approved by Madhyanchal vidyut Vitran Nigam Ltd. (MVVNL). The refund application filed by the appellant was allowed by the Jurisdictional Assistant Commissioner, Central Excise vide order dated 02.07.2012. In the said order, it has been observed that after finalization of prices by MVVNL, the respondents issued credit notes for the principal amount and also for the differential duty. Hence, the doctrine of unjust enrichment will have no application for sanction of the refund claim. Feeling aggrieved with the said adjudication order, the Revenue preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) vide the impugned order dated 08.11.2013 has decided the appeal in favour of Revenue. The reasons assigned in the said order are that there is no concept of issuance of credit note/ debit note in section 11B of the Central Excise Act and thus, the doctrine of unjust enrichment shall be applicable for refund of the duty amount; that issuance of credit note with regard to the differential amount of duty at a later date after clearance of goods from the factory will not be available as refund to the appellant; that since the appellant has not applied for provisional assessment under Rule 7 of the Central Excise Rules, the refund is not admissible on the ground that provisional assessed price and finalisation thereof has no concurrence of the competent officer. Being aggrieved with the said impugned order, the appellant has preferred this appeal before the Tribunal.

2. Shri Vineet Kumar Singh, the ld. Advocate appearing for the appellant submits that since filing of refund application in the proper format, enclosing therewith the relevant documents and having been filed within the stipulated time frame, which has not been objected to by the authorities below, the refund application is in conformity with section 11B of the Act. It is his submission that issuance of credit notes at a later date will not disentitle the appellant to its statutory right for claiming refund of duty. He further submits that all the documentary evidences, proving the fact of non-passing of duty incidence to the buyer of the goods having been produced by the appellant, the refund application cannot be denied on the ground of doctrine of unjust enrichment. To substantiate his above stand, the ld. Advocate for the appellant has relied various authoritative judgements of the judicial forums.

3. Per contra, the ld. D.R. Shri M.S. Negi appearing for the respondent reiterates the findings recorded in the impugned order and relies on the judgment of Honble Madras High Court in the case of Fenner India Ltd. vs. CESTAT, Chennai reported in 2014 (305) ELT 524 (Mad.) to substantiate the stand of Revenue that though the appellant has produced the credit note to its buyer, but corresponding debit notes has not been issued by the buyers to the appellant to demonstrate that the benefit of excess paid excise duty has not been passed on.

4. I have heard the learned Counsel for both sides and perused the records.

5. It is an admitted fact that the appellant had paid higher Central Excise duty on the goods supplied to M/s. MBBNL due to non-finalization of the price. Since finalization of lesser price towards the supply of goods was settled at later date, the excess Central Excise duty paid by the appellant was claimed as refund in terms of Section 11B of the Central Excise Act, 1944. The said claim though was allowed by the original authority, but the Commissioner (Appeals) has denied the refund benefit on the ground that the appellant did not produce any evidence to show that the incidence of excess Central Excise Duty has not been passed on to the consumer or any other person. Section 11B read with section 11BB of the Act cast the responsibility on the assessee to prove that the incidence of duty has not been passed on to the buyer of the goods has to be satisfied by the person, who claims for the refund of duty. Since the credit notes issued by the appellant to its buyer and in turn debit notes were also issued by the buyer to the appellant showing that the excess duty has been borne by the appellant as well as the benefit of duty amount has not been claimed by the buyer, the presumption of not passing on the duty incidence has been satisfied in the circumstances of the present case and as such the responsibility of proving that the incidence has not been passed on, has been duly satisfied by the appellant.

Thus, in my view, the amount of refund, instead of crediting to the consumer welfare fund, be allowed to the appellant as refund. There is no prohibition/restriction in section 11B of the Act that credit note cannot be issued at a later date than the date of supply of the goods. In absence of any prohibition in the statute, denial of refund benefit to the appellant is contrary to the statutory mandates. I also find from the impugned order that the ld. Commissioner (A) has relied on the decision of this Tribunal in the case of Sangam Processors (Bhilwara) Ltd. vs. Collector of Central Excise, Jaipur reported in 1994 (71) ELT 989 (Tribunal) to disallow the benefit of refund on the ground of the applicability of section 11C of the Act. With regard to applicability of the provisions of Section 11C of the Act for refund of excess duty, the Honble Andhra Pradesh High Court in the case of AP Paper Mills Ltd. vs. CCE, Vishakhapatnam, reported in 2014 (306) ELT 344 (AP) has held that refund claim filed under Section 11B of the Act has no application to the provisions contained in section 11C and accordingly, it was held by the Honble High Court that Sangam Processors case (Supra) has no applicability with regard to the refund claim filed under section 11B of the Act.

6. In view of the facts and in the circumstances of the case, I am of the considered opinion that the incidence of excess paid Central Excise duty has not been passed on by the appellant to its buyer, and thus, the doctrine of unjust enrichment is not applicable, for denying the benefit of refund. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant with consequential benefit.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

Anita

1. Union of India vs. A.K. Spintex Ltd. reported in 2009 (234) ELT 41 (Raj.)

2. Sudhir Papers Ltd. vs. CCE, Bangalroe-I reported in 2012 (276) ELT 304 (Kar.)

3. CCE, Bhubaneswar-I vs. I.O.C.L. reported in 2014 (302) ELT 67 (Tri. Kolkata)

4. K.J.V. Alloys Conductors P. Ltd. vs. Commissioner of Central Excise, Hyderabad reported in 2012 (275) ELT 90 (Tri. Bang.)

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0 6 E/51417/2014 EX. [SM]