M/S. Jindal Steel & Power Ltd vs C.C.E. & S.T. Raipur

[Arising out of Order-In-Appeal No. 167/RPR-I/2013 dated: 25.06.2013 passed by CCE (Appeals) Raipur]

For approval and signature:

Hon'ble 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. Jindal Steel & Power Ltd. ...Appellant

Vs.

C.C.E. & S.T. Raipur Respondent

Appearance:

Mr. H V Ghirnikar, (Chartered Accountant) for the Appellant

Mr. R K Gupta, DR for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing/ Decision. 20.08.2015

Final Order No. 54181 /2015_

Per S K Mohanty:

This appeal filed by the appellant, is directed against the impugned order dated 25.06.2013 passed by the Commissioner (Appeals), Central Excise and Customs, Raipur, upholding rejection of refund claim in the Adjudication Order.

2. Brief facts of the case are that during the disputed period, the appellant had cleared excisable goods i.e. structural steel on payment of Central Excise duty to its customers M/s Mineral Management Services (P) Ltd., New Delhi, under the cover of Central Excise invoices. However, due to error in the SAP Package, instead of the agreed upon price of 82,000/- Per MT indicated in the purchase order, the invoices were generated showing the price of 2,61,097/-, on the basis of which, the Central Excise duty liability was discharged by the appellant. Upon detection of the mistake regarding the problem in the computer system and deposit of excess duty amount in the Government account, the appellant filed the application before the Jurisdictional Central Excise Authorities in terms of Section 11B of the Central Excise Act, 1944, claiming refund of excess Central Excise duty, paid towards the supply of goods to the above named buyer. Upon receipt of the refund application, the Assistant Commissioner has referred the matter to the Jurisdictional Range Superintendent for verification of the refund application, with reference to the documents maintained by the appellant, and for confirmation, whether the refund claim is maintainable or not.

Consequently, upon verification of the records maintained by the appellant, the Jurisdictional Range Superintendent vide his letter dated 26.06.2012 submitted the verification report, certifying the fact that the refund claim was filed within the period of one year from the relevant date; that the claimant (appellant herein) has paid the excess amount of duty on account of wrong filling of unit price, instead of the price quoted in the purchase order; that the consignee vide their trade certificate dated 01.05.2012 has certified that they have not availed cenvat credit of excise duty paid by the appellant. On the basis of the above, the Range Superintendent finally concluded that the excess charged duty has not been passed on to the consignee, and as such, the question of unjust enrichment does not arise. However, without considering the verification report submitted by the Range Superintendent, the Assistant Commissioner of Central Excise passed the Adjudication Order dated 06.09.2012, rejecting the refund claim, mainly on the ground of doctrine of unjust enrichment. In appeal, the ld.

Commissioner (Appeals) has upheld the Adjudication Order. Hence, the present appeal is before this Tribunal.

3. Mr. H V Ghirnikar, the Ld. Consultant appearing for the appellant submits that proper accounting entries have been passed by the appellant in their books of accounts, showing that the excess paid excise duty has not been passed on to the buyer of the goods and the incidence of such duty amount has been borne by the appellant itself, for which the doctrine of unjust enrichment will have no application. To substantiate his above stand, the Ld. Chartered Accountant explains the accounting entries passed by the appellant which are as under:

a) At the time of raising invoice, buyer's account has been debited with the amount indicated in the Central Excise invoice.

b) On payment of the price by the buyer, the amount indicated in the purchase order has been credited to the partys account and the remaining differential amount has again been credited to the buyers account and to that effect the credit note have been issued to the buyer.

4. In this context, the Ld. Consultant has referred to the certificate issued by the buyer which is to the effect that the excess charged excise duty has not been paid to the supplier of the goods and that no cenvat credit of such amount has been taken in the books of accounts. Further, he also referred to the certificate issued by the Chartered Accountant at the appellants end, as well as the certificate prepared at the buyers end, which are to the effect that the appellant has not received the excess charged Central Excise duty from its customer, and as such, the excess duty paid is eligible for refund. To justify his stand that the appellant is entitled for refund of excess paid Central Excise duty and the same cannot be transferred to the Consumer Welfare Fund on the ground of unjust enrichment, the ld. Consultant has relied on the judgement of Honble Punjab & Haryana High Court in the case of CCE Ludhiana vs Bharat Box Factory Ltd. reported in 2007 (218) ELT 355 (P&H) and the judgment of Honble Karnataka High Court in the case of Sudhir Paper Ltd. vs CCE Bangalore-I reported in 2012 (276) ELT 304 (kar.).

5. Sh. R K Gupta, the Ld. DR appearing for the respondent, besides reiterating the findings recorded in the impugned order, further submits that the certificate dated 29.05.2013 issued by the Chartered Accountant does not have any evidentially value, which is evident from the fact that the period indicated in the said certificate is different from the period, involved in the present dispute. He further submits that the said certificate has referred to the ST-3 returns, which is relevant for the service tax purpose and not for the Central Excise. Thus, according to the Ld. DR since the Certificate have not been issued upon proper verification of the books of accounts, the same cannot be accepted for determination of the fact that the incidence of duty has not been passed on to the buyer. To substantiate his stand the Ld. DR relies on the decision of this Tribunal in the case of CCE Raipur vs Blastech (India) Pvt. Ltd. reported in 2011 (274) ELT 210 (Tri. Del.), CCE, Hyderabad vs TFL Quinn India Pvt. Ltd. reported in 2013 (294) ELT 421 (Tri.  Bang.), CCE- Ludhiana vs Oriental Textile Processing Co. (P) Ltd. reported in 2012 (276) ELT 257 (Tri.- Del.), Orion Steel Corporation vs CCE Vodadara reported in 2008 (231) ELT 332 (Tri.  Ahmd.) and CCE Bangalore-I vs Mulder (India) Pvt. Ltd. reported in 2003 (158) ELT 388 (Tri. Bang).

6. I have heard the Ld. Counsel for both the sides and perused the records.

7. I find that in the impugned order, the Commissioner (Appeals) has denied the refund benefit on the ground that the price charged at the time of clearance of the goods was final, in absence of any option exercised by the appellant for provisional assessment under Rule 7 of the Central Excise Rules, 2002; that fluctuation in prices subsequent to clearance of goods is not affected the liability to payment of excise duty; that reduction of prices subsequent to clearance of goods on payment of duty, for whatever reason, not to affect the liability to payment of Central Excise duty. Thus according to the Ld. Commissioner (Appeals) once the duty has been passed on at the time of clearance of the finished goods from the factory, subsequent issue of credit note have no bearing on the initial passing of incidence of duty to the customers. On the basis of such findings, the Commissioner (Appeals) in the impugned order has held that claim for refund is hit by the doctrine of unjust enrichment.

8. I find that the Range Superintendent vide his letter dated 26.06.2012 has submitted the verification report, upon verification of the documents maintained by the appellant, wherein it has been specifically stated that the excess amount of Central Excise duty has been paid on account of error in the computer package; that the buyer of the goods had confirmed that no cenvat credit of such excess payment of excise duty has been taken. Upon proper verification of the books of accounts, the Jurisdictional Range Superintendent has certified that the doctrine of unjust enrichment is not applicable to the subject refund claim. I am of the prima facie view that the refund cannot be denied on the sole ground that issuance of credit note subsequent to clearance of goods, cannot be considered as the documentary proof that the incidence of duty has not been passed on.

9. I find that the books of accounts maintained by the appellant clearly demonstrate that the incidence of excess paid excise duty has not been passed on to the buyer of the goods and such incidence has been borne by the appellant itself. The accounting method adopted by the appellant as explained by the Ld. Consultant, in my opinion, is in consonance with the accounting principles. The higher amounts initially charged in the invoices have been debited to the buyers account, which was subsequently adjusted by making necessary credit entry, reflecting the actual payments received from the buyer and for the remaining amount credit note has been issued by the appellant to its buyer for accounting adjustment. Further, the certificate furnished by the Chartered Accountant at the suppliers, as well as, at the buyer's end, proves beyond any shadow of doubt that the incidence of excess paid Central Excise duty has not been passed on and also no cenvat credit has been taken by the buyer, in respect of excess paid central excise duty. Subsequent issue of credit note, after clearance of goods under invoice paying excess duty, is a standard accounting practice and the refund cannot be denied on the ground that the credit note has been issued subsequent to conclusion of the transaction.

In this context, I rely on the judgment of Honble Karnataka High Court in the case of Sudhir Papers Ltd. (supra) and Bharat Box Factory Ltd. (supra) wherein, it has been held that subsequent issuance of credit note cannot disentitle the assessee for the refund of excess excise duty paid at the time of initial clearance of the goods. The above referred decisions cited by the Ld. DR are distinguishable from the facts of the present case. In the case of Blastech (India) Pvt. Ltd. the issue was with regard to clearance of finished goods on the basis of provisional price which was reduced upon finalization of the price subsequently. In the case in hand, the issue does not relate to provisional price as because the agreed price for supply of the goods had been clearly mentioned in the purchase order issued by the buyer of the goods and the difference in price is only due to unavoidable circumstances i.e. error in the computer package. In the case of TFL Quinn India Pvt. Ltd. and Oriental Textile Processing Co. (P) Ltd. (supra) the issue relates to no reciprocity between the credit note issued by the assessee and the debit notes issued by the dealer of the goods.

In the present case, there was no scope for issuance of any debit note by the buyer of the goods, for the reason that though excess duty was shown in the invoices due to computer package error, the buyer has settled the account based on the agreed price indicated in the purchase orders issued by them. Since the excess charged duty has not been considered by the buyer in its account, there was no scope for issuance of any debit note. The credit entries made by the appellant in its books and subsequent issuance of the credit notes in favour of its buyers, proves the matter beyond any doubt that the appellant has received only that price for the goods, which was stipulated in the purchase order, and paid due to system error, has been borne by the appellant, for which the refund claim has been lodged. The other cases cited by the Ld. DR are clearly distinguishable from the facts of the present case, because the facts such as; credit entries made and subsequent issuance of credit note by the appellant, read with the certificates issued by the Chartered Accountant, proving the fact that the incidence of excess paid duty has not been passed on to the buyers, were not subject matter of dispute in those decided cases.

10. In view of above, I am of the considered opinion that excess amount of central excise duty, for which the refund application has been filed by the appellant, is not hit by doctrine of unjust enrichment and the appellant will be eligible for the refund of the same, since the incidence of such excess paid duty has been borne by the appellant itself. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant with consequential benefits.

(Operative portion of the order pronounced in open court)

(S. K. Mohanty) Member(Judicial)

Neha

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