Mahanagar Gas Ltd vs Commissioner Of Central Excise, Mumbai ...

(Arising out Order-in-Appeal No. YDB/32/RGD/2011 dated 13.01.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai II)

For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial)

1. Whether Press Reporters may be allowed to see No 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 No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy Seen of the Order?

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

Mahanagar Gas Ltd. Appellant

Vs.

Commissioner of Central Excise, Mumbai II Respondent

Appearance:

Ms. Padmavati Patil, Advocate for the appellant Shri N.N. Prabhudesai, Supdt. (AR) for the respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial)

Date of hearing : 12-06-2015 Date of decision : 12-06-2015

O R D E R No:..

This appeal is directed against Order-in-Appeal No. YDB/32/RGD/2011 dated 13.01.2011.

2. Heard both sides and perused the record.

3. The issue involved in this case is regarding the refund claim of `4,69,244/- sanctioned to the appellant by the Adjudicating Authority but was reversed on an appeal filed by the revenue. It transpires from the records that the appellant generally issues monthly bills to their customers i.e. oil marketing companies (OMC) for specific period. The appellants claim is that they debited amount of the Central Excise duty payable on the CNG and subsequently issued the credit notes to OMCs based upon the commercial bills raised. Consequently, after reconciliation refund claims were filed. I find that the first appellate authority in the impugned order while reversing the Adjudicating Authoritys order of sanctioning of refund held as under:-

The law is settled that the lower authority to whom the matter is remanded by a higher appellate authority is bound by the directions contained in the remand order and he has to pass order strictly in accordance with the remand order. In the instant case, the assessee had contended before the CESTAT that 'Credit notes were issued on the very date on which invoices were issued and therefore, the net realization from the customers has been only to the extent of the duty subsequently charged by them. There has been no excess recovery of duty from the customer and this fact can be verified from their book of amounts'.

On verification, it was found that excise invoices were issued on different dates between 01.01.2006 to 30.01.2006 and a consolidated commercial invoice was also issued on 31-01-2006. The duty for the month of January, 2006 (including the excess duty element for which the subject refund claimed was filed) was paid on 03-02-2006 vide Challan No. 11/2005-06 dated 03.02.2006 In view of the said payment, the claim for issue of credit note on 31-01-2006 itself does not have any credibility. If the credit notes had been issued on 31-01-2006 then there was no need to pay the duty on 03.02.2006. Further it was reported by the Range Superintendent that the cheques were issued to the customers on 22/2/2006. This shows that not only the customers were invoiced for the full amount of duty, they had also paid the full amount of duty to the respondents.

4. The first appellate authority seems to have overlooked the fact that the entire exercise of the appellant has been certified by the Chartered Accountant by certificate dated 24.04.2008. This certificate was produced by the appellant before the Adjudicating Authority as well as before the first appellate authority, which explains the entire functioning of the appellant. I also find that this bench vide final order no. A/103/08 dated 11.01.2008 on the very same issue had held as under:-

2. I have considered the submissions. I find that though the Commissioner (Appeals) has rejected the claim only on the ground that the credit notes cannot be considered as evidence that the incidence of duty has not been passed on, he has not looked into other aspects whether the incidence of duty has really been passed on or not. It is the appellant's contention that credit notes were issued on the very date on which invoices were issued and therefore, the net realization from the customers has been only to the extent of the duty subsequently charged by them. There has been no excess recovery of duty from customer and this fact can be verified form their books of accounts. He also submits that the price of the goods remained the same for ultimate buyer and therefore the question of passing on incidence of duty from the customers to their buyers does not arise. These matters needs verification at the original authority's end and therefore, the matter is remanded back to the original authority to look into the aspect whether credit notes were issued on the same date on which the invoices were issued and there has been no excess recovery of duty from the customers. If credit notes have been issued on the same date when duty was debited from the customer's account, then refund cannot be denied on grounds of unjust enrichment.

5. It can be seen from the above reproduced findings of the Tribunal, that the entire dispute is regarding the issuance of credit notes as evidence but has been accepted by the bench as evidence of non-passing of incidence of duty. The only limited question which was remanded to the lower authorities was to look into whether credit notes were issued on the same day or not. On perusal of the records and credit notes which are annexed to the appeal memo, I find the credit notes were issued on last working day of the months towards adjustment of an amount due to revision in OMCs margin; duly certified by the CA. I find that the Hon'ble High Court of Rajasthan in UOI vs. A.K. Spintex Ltd. 2009 (234) ELT 41 (Raj) on an identical issue held that issuance of credit note can be considered as non-passing of incidence of excise duty and refund is to be allowed. The ratio of the said judgment has been followed by the Tribunal in various other decisions. In my considered view, the appellant have made out a case in their favour.

6. In view of the foregoing, and in facts and circumstances of this case, I have to hold that the impugned order is unsustainable and is liable to be set aside and I do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any.

(Operative part pronounced in Court)

(M.V. Ravindran) Member (Judicial)

//SR

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