M/S. Magnum Clothing Pvt. Ltd vs Commissioner Of Central Excise, ...
- CitationAppeal No.12, 13 & 14/2014 (M-IV), dated 07.02.2014 passed by the Commissioner of Central
Ratio decidendi
The rule this decision rests on
Where tax was paid on services used in exporting goods, the refund claim falls to be examined under Section 11B of the Central Excise Act, 1944 (applied to service tax through Section 83 of the Finance Act, 1994), because taxes are not exported and their retention would form part of the cost of exported goods; the mere fact that the exemption notification was not availed does not by itself bar the claim. Where a refund claim relates to a period after the notification granting the exemption came into force, the claim is not barred merely because the notification was not followed, and the question of entitlement under Section 11B must be considered on the pleadings and the law relating to refund; an authority deciding such a claim must have regard to the doctrine of unjust enrichment and afford the claimant a reasonable opportunity of hearing.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Orders-in-Appeal No.12, 13 & 14/2014 (M-IV), dated 07.02.2014 passed by the Commissioner of Central Excise (Appeals), Chennai]
M/s. MAGNUM CLOTHING PVT. LTD. APPELLANT
Versus
COMMISSIONER OF CENTRAL EXCISE, CHENNAI RESPONDENT
Appearance:
For the Appellant Shri M. Karthikeyan, Adv.
For the Respondent Shri K.P. Muralidharan, AC (AR)
CORAM:
Honble Shri D.N. Panda, Judicial Member
Date of hearing/decision 29-09-2015
FINAL ORDER NO. 41301 / 2015
41338-41339 / 2015
The simple case of the appellant is that it had not availed exemption granted by Notification No.18/2009, dated 07.07.2009 due to its ignorance. It paid service tax in respect of services availed from the commission agents engaged abroad for marketing its ready-made garments outside India. When it came to know, that service tax was not payable, it considered that the taxes erroneously paid is refundable under Section 11B of the Central Excise Act, 1944.
2. Revenue claimed on the other hand that when the appellant did not follow the route of the notification, its claim is barred by law.
3. Heard both sides and perused the records.
4. The basic principle of taxation is that taxes are not exported but goods are exported. If the taxes involved in export of goods due to reverse charge mechanism are not refunded that shall form part of the cost of the exported goods, which is prohibited since taxes are not expected to be exported. Therefore, appellant's claim of erroneous payment of tax made and it is an exporter, needs to be considered under section 11B of the Central Excise Act, 1944 since provision of Central Excise law are adopted by section 83 of the Finance Act, 1944 to give full effect and play to the scheme of taxation under Finance Act, 1994. Learned appellate authority should have examined the claim on the basis of pleading and law relating to refund under Section 11B of the Central Excise Act, 1944. That not being done, the matter needs re-examination in the light of that provision of law.
5. Learned departmental representative, at this stage, brings out that Hon'ble High Court of Allahabad as held in the case of Addi Industries Ltd. Vs Commissioner of Customs & Central Excise reported in 2014 (36) S.T.R. 27 (All.) that when the notification does not allow the benefit thereof to a claimant, no refund is permissible. It may be stated that the facts of that case was that the claim related to the period prior to the issue of the notification. But, in the present case, the exports have occurred in three spells. The first period was from 22.06.2009 to 27.03.2010, which is the date of notification of Notification No.18/2009. A small part of the period falls during the period when no notification was issued. The second spell of the export covered the period Apr.10 to Sept.11 and third spell was Oct.10 to Mar.11. The present claim of the appellant goes to the root of section 11B which deserves consideration. Reasoning state in this order as above is fortified from the principle laid down in para 9 of the judgment of the Hon'ble High Court of Allahabad. Hon'ble High Court noticed in that case that the taxable services being related to the export for the period Apr,'08 to Jun.'09, appellant was even not entitled to get the refund thereof under Section 11B. No doubt, once the period of claim relates to post notification period, appellant deserves consideration.
6. in view of the observations as above, the matter is remanded to the Adjudicating authority to re-examine the entire case in the light of the ratio laid down by Hon'ble High Court of Allahabad in the aforesaid judgment and the pleadings of appellant that its claim was not time-barred, for which, it is entitled to refund under Section 11B of the Central Excise Act, 1944 and pass appropriate order.
7. All the three appeals are disposed in the manner indicated above. Learned authority while passing order should have equal regard to Doctrine of Unjust Enrichment and afford reasonable opportunity of hearing to the appellant.
(Dictated and pronounced in open court)
(D.N. PANDA) JUDICIAL MEMBER
ksr 03-10-2015
DRAFT Remarks
I II III
Date of dictation 29.09.2015
Draft Order - Date of typing 03.10.2015
Fair Order Typing 03.10.2015
Date of number and date of dispatch 06.10.2015
4 ST/40915/2014
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