Tamilnadu Asbestos vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No.365/2003-TRY-(ADK) dt. 10.12.2003 passed by the Commissioner of Central Excise (Appeals), Tiruchirapalli]

Tamilnadu Asbestos Appellant

Versus

Commissioner of Central Excise, Tiruchirapalli Respondent

Appearance:

Shri S.Murugappan, Advocate For the Appellant Shri B. Balamurugan, AC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing :22.5.2015 Date of Pronouncement :31.07.2015

FINAL ORDER No.40909/2015

The appeal is filed against the order-in-appeal dt.10.12.2003 passed by Commissioner (Appeals), Trichy.

2. The issue relates to refund claim filed by the appellant who is a State Public Sector Undertaking is registered with Central Excise and paying Central Excise duty on their final product PCC pipes. The appellant filed a refund claim of Rs.15,89,304/- on the ground that they have supplied Asbestos pipes to Tamil Nadu Water Supply and Drainage Board (TWAD Board) during the period 28.3.1998 to 31.8.1998 as per the contract price of the year 1997-98 pending receipt of the rate contract for the year 1998-99. Since TWAD subsequently reduced the contract price with retrospective effect from 28.3.1998, they filed refund claim as excess duty paid as per the revised rate contract for the said period. The adjudicating authority rejected the claim on limitation and on merits and the same was upheld by Commissioner (Appeals) in the impugned order.

3. Heard both sides. Ld. Advocate appearing for the appellant submits that they filed refund claim under Section 11B of refund of excise duty paid in excess. He submits that appellant supplied PCC pipes to Tamil Nadu Government. As per the terms of TWAD Board every year TWAD Board fixes the contract for the revision of price based on which purchase orders are issued. After the end of financial year 1997-98 and pending receipt of the contract rate for 1998-99, they paid excise duty and cleared the goods based on the previous year's contract price. He submits that the Asst. Commissioner has rejected the refund claim on the ground of unjust enrichment as well as on time bar and also on merit. He submits that the claim period is 28.3.98 to 27.5.98. They have filed the claim on 27.11.98. He submits that duty paid after 26.5.98 is not hit by limitation. He further submits that if the date of receipt of rate contract i.e 28.10.98 is taken, all the claims are within time. He relied on Tribunal's decision in the case of CCE Bhubaneswar Vs Jayshree Chemicals Ltd. - 1997 (96) ELT 625 (Tribunal).

3.1 On the unjust enrichment, he submits that there is no unjust enrichment as the goods were supplied to TWAD Board and the buyer have not paid any excise duty on the higher value. The amount collected is only as per the rate contract price. He further submits that TWAD Board letter is applicable to all clearances.

4. On the other hand, Ld. A.R for the Revenue reiterated the findings of the order. He submits that if there is a price variation for every contract they should have opted for provisional assessment and it is not done by the appellant. Each clearance was based on the invoice and there is no mention of any price variation either in the invoice or in the purchase orders. Since there was no change in the sale price quoted in the invoice it should be treated as transaction value. He also submits that refund claim is also hit by unjust enrichment.

5. Considered the submissions of both sides and examined the records. The short issue is whether refund is hit by limitation and doctrine of unjust enrichment would apply and whether appellants are eligible for refund as per the rate contract issued by TWAD Board w.e.f. 28.3.98. On perusal of the worksheet, I find that the appellant cleared the goods on payment of duty from March 98 to August 98 whereas the claim was filed on 27.11.98. Therefore refund claim pertaining to excise duty paid for the period March 98 and April 98 and partly May98 are hit by limitation as time-barred for the reason that as per Section 11B of Central Excise Act, the relevant date is the date of payment of excise duty and the claim has to be filed within a period of 6 months from the date of payment of duty. Therefore, the refund claim for the period 28.3.98 to 27.5.98 is time barred and the refund for the period 28.5.98 to 31.8.98 is not hit by limitation.

6. On merits, I find that appellant supplied PCC pipes to TN Government and it is a government body which is governed by the rate contract issued by TWAD Board every year. Prima facie, the refund claim relates to duty paid for the intervening period after the end of the financial year 1997-98 and pending receipt of revised rate contract from TWAD Board for the year 1998-99 and the appellant had cleared the goods as per the rate contract price of the previous year 1997-98. This fact has been clearly seen from the letter dt. 28.10.98 issued by Joint Chief Engineer, TWAD Board to the appellant. As per the conditions of the said letter, the revised rate was fixed for 1998-99 but issued only on 28.10.98. The above letter also indicates that the price payable on all the materials manufactured and cleared, rate contract is applicable for the goods on or after 28.3.1998. Both the adjudicating authority and the appellate authority have taken a view that appellant could have opted for provisional assessment. In the present case, since the rates are fixed by TWAD Board which is applicable for full year, there is no variation in the price and the supplier fixes the rate contract every financial year, clearances cannot be stopped and the appellant has to clear on a higher price till receipt of the fresh rate contract.

7. We find that on an identical issue, the Tribunal in the case of CCE Bhubaneswar Vs Jayshree Chemicals Ltd. (supra) has allowed the appeal in favour of assessee. Further, I find the Hon'ble Supreme Court in the case of M/s.HPL SOCOMAC Ltd. Vs CCE Gurgaon  2015-tiol-117-SC-CX has allowed the appeal on identical of refund issue related to reduction in contract price after clearance and ordered for consequential refund to the appellant. The relevant paragraphs of Supreme Court order is reproduced as under :-

"12. We have heard learned counsel for the parties. It is clear that by their letter dated 15.4.2005 the original purchase order dated 31.10.2001 was novated insofar as price was concerned. The novation turned out to be that a price of Rs.600/- per meter had been charged. Rs.600/- per meter being less than 5% of Rs.700/- per meter if the penal rate of 5% was to be applied therefore became the price without reference to any penal rate.

13. This price had been fixed before removal from the factory premises in May, 2002. The Commissioner (Appeals) order dated 18.6.2004 though correct in principle is wrong on facts as he does not refer to the letter dated 15.4.2005 of the appellant at all. The CESTAT is wrong in turn because on facts there was no imposition of penalty for the delayed period.

14. In the aforesaid premises, the impugned order of CESTAT and the Commissioner (Appeals) are set aside.

15. Since duty has been paid on the basis of the original price in the purchase order, the difference between the said rate and the reduced rate of Rs.600/- per meter for 35000 meters which came to Rs.21,24,920/- would have to be repaid to the appellant. This amount had been claimed by the appellant on 20.11.2002 and had been turned down by the impugned orders. The said amount will now as a consequence of the setting aside of these orders be ordered to be repaid to the appellant together with interest at 9% per annum from November, 2002 till the date of payment."

8. The ratio of the Apex Court's decision is squarely applicable to the present appeal. When appellant had paid excise duty at higher price for the intervening period based on the previous year rate pending the receipt of the rate contract for the year 1998-99. Therefore, the appellants are eligible for refund of excise duty paid for the period 28.5.98 to 31.8.98.

9. By respectfully following the Apex Court's above decision, I hold that appellants are eligible for refund for the period from 28.5.98 to 31.8.98. As regards on the question of unjust enrichment, I find that unjust enrichment clause is not applicable in the present case as the TWAD Board has not paid any excess excise duty to the appellant and appellant had collected only the price as per the rate contract for the year 1998-99.

10. In view of above discussions, (i) I hold that refund is time barred for the period from 28.3.1998 to 27.5.1998 (ii) the appellant is eligible for refund for the period 28.5.98 to 31.8.98. Appeal is partly allowed.

(Pronounced in open court on 31.7.2015)

(R. PERIASAMI) TECHNICAL MEMBER

gs

6