Shreyas Intermediates Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. P-II/VSGRAO/58& 59/2011 26/7/2011 passed by the Commissioner of Central Excise (Appeals), Pune-II]

For approval and signature:

Honble Mr Ramesh Nair, Member (Judicial)

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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 : 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? =======================================================

Shreyas Intermediates Ltd. : Appellants

VS

Commissioner of Central Excise, Pune-II : Respondent

Appearance

Shri. Bharat Raichandani, Advocate for the Appellants Shri. Sanjay Hasija, Superintendent (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 30/6/2015 Date of decision: 30/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in-Appeal No. P-II/VSGRAO/58& 59/2011 26/7/2011 passed by the Commissioner of Central Excise (Appeals), Pune-II, wherein Ld. Commissioner (Appeals) allowed appeal of the Revenue.

2. The facts of the present case is that the appellant filed refund claim for an amount of Rs. 1,29,676/- and Rs. 77,788/- with the Jurisdictional Asstt. Commissioner, Central Excise, under Section 11B. The adjudicating Authority allowed the refund claim considering facts that there is excess payment of duty and also verified aspect of unjust enrichment. Aggrieved by the said order, Revenue filed appeal before the Commissioner (Appeals), who vide impugned order held that the appellant has not discharged their burden of principle of unjust enrichment and accordingly they are not eligible for refund. Hence the Revenues appeal was allowed, therefore appellant is before me.

3. Shri. Bharat Raichandani, Ld. Counsel for the appellant submits that before the Ld. Commissioner (Appeals), revenues appeal was only on the ground that aspect of unjust enrichment has not been verified by the Original authority. He submits that during the process of claim, appellant submitted C.A. certificate alongwith their balance sheet wherein amount of refund clearly shown as receivable account under the head loan and advances in the assets side of the Balance Sheet and considering this fact the original authority has observed that incidence of refund amount has not been passed on to any other persons. He submits that Ld. Commissioner (Appeals) allowed the Revenues appeal only on the ground that C.A. Certificate submitted by the appellant is not proper as he contended that the basis of certificate is not understood. It is his submission that the Ld. Commissioner has not discussed anything on the basic records i.e. books of account which was produced before original authority and same was considered for dealing with the aspect of unjust enrichment. Therefore order of the original authority is just and proper and impugned order is without any proper consideration of balance sheet and other documents.

4. Shri Sanjay Hasija, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that Ld. Commissioner has observed that appellant during the process of refund the appellant have submitted documents such as credit note etc. to establish that the duty so charged in the invoices has not been collected from buyer therefore he could not prove that incidence of refund amount has not been passed on to any other person. He submits that since at the time of the clearing of the goods appellant have charged excise duty in the invoices the incidence of duty shown in the invoices deemed to have been passed on to the buyer therefore unjust enrichment is applicable. Refund was not payable to the appellant. Ld. Commissioner (Appeals) has rightly held that refund is hit by the unjust enrichment.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find that from the original order that appellant have submitted C.A. Certificate as well as their balance sheet. The original authority has verified the said documents and came to the conclusion that the amount of refund has been shown as receivable under the head of loans and advances, the same has been certified by the Chartered Accountant. From the said records, I do not find any reason that what else is required to establish that incidence of duty has not been passed on to any other person. As regard the unjust enrichment the original authority has given findings which is extracted below:

As regards point No. (b), I find that the claimant has submitted a copy of their statement of accounts for the relevant period. The claimants submission is that, the goods cleared on payment of excess duty no payment has been received for the duty involved and the same is being shown as recoverable from the department in the books of accounts of the company and a Certificate issued by Chartered Accountant is produced to that effect. I find that the amount of Rs. 21,25,253/- has been shown as a loans and advances & deposits in their Schedule I of the Balance Sheet. Upto 30.9.2009. A certificate dtd. 4.10.2010 from the Chartered Accountants certifying that the said amount of refund has been shown under the schedule LOANS & ADVANCES and the said amount is not recovered by the company from any party. Relying on the same, I find that the clause of unjust enrichment cannot be made applicable. Further I rely on the case law CC, Cochin Vs. Rajesh Chemicals, 2006 (196) ELT 064 (T) Unjust enrichment  Excess payment of duty due to arithmetical error cannot be considered as duty  Unjust enrichment provisions not applicable to it  Assessee entitled to refund  Section 27 of Customs Act, 1962. [para 3]

On this point of unjust enrichment, the Commissioner (Appeals) given findings which is reproduced below:

12.1 I do not want to verify the quantum of excess duty paid or refund amount eligible as both the department and the assessee have not disputed the quantification. The only issue that has to be decided in these two refund claims is relating to compliance of the provisions on the principle of unjust enrichment. The above Chartered Accountants certificates merely say that their assessee have provided for these two refund claims in their financial statements i.e. they have shown these amounts as recoverable from the department. However, it is not clearly understood on what basis they have certified that the excess duty paid has not been recovered from their parties. At the end of the certificates, they have also cautioned that these certificates are also given on the basis of explanations by the management of the respondent.

13. Samples of invoices clearly indicate that not only applicable duty but the excess duty paid would have been recovered by the respondent from their buyers as it is the commercial practice to realize the amount indicated in the bills/ invoices/ gate passes from the buyers of these goods. Neither the respondent nor their Chartered Accountant has not produced copies of any credit notes issued to their buyers in proof that the excess duty paid has not been recovered by them. Further, the Assistant Commissioners letter informs that the amounts in refund claims have been reduced to the extent of availment of Cenvat Credit by the Respondent. Customs and Central Excise duties are indirect taxes and duty incidence is presumed always to have been passed to the ultimate buyer. It is the final consumer who bears the burden of duty incidence.

From the above findings of the original authority, I find that he has verified and dealt with C.A. Certificate and balance sheet of the appellant and did not find any discrepancy in such documents and relying the same held that incident of duty has not been passed on to any other person, whereas in the findings of the Commissioner (Appeals), he stated that C.A. Certificate was not understood whereas C.A. Certificate is clearly based on the balance sheet. Moreover Ld. Commissioner has not discussed anything as regard amount shown receivable under the head of loan and advances which is conclusive evidence of proof of not passing of incidence of duty. Therefore the Commissioner (Appeals) has made serious error in not considering the C.A. certificate as well as balance sheet in proper perspective. Therefore impugned order suffers with serious infirmity. I set aside the impugned order and allow the appeal of the appellant.

(Dictated in court)

Ramesh Nair Member (Judicial)

sk

7 APPEAL NO. E/1571, 1572/11-MUM