TaxTMI 
TaxTMI 
2000 (12) TMI 801
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....and Customs (Amendment) Act, 1991 (Act 40 of 1991), the presumption that full incidence of duty of excise paid under this Act shall be deemed to have been passed on to the buyers of such goods shall be applicable unless the contrary is proved by them. He therefore, held that the refund claims filed by the appellants-assessee on the differential duty paid by them under protest during the period from 1-3-1986 to 31-12-1986 stand hit by the amended Section 11B of the Central Excises and Customs (Amendment) Act, 1991 (Act 40 of 1991). He, therefore, held that the amount of Rs. 3,52,03,339.03 (Three Crores, Fifty two lakhs, three thousand three hundred thirty nine and paise three only) which was the differential duty involved on account of re-classification of the product PCTR and duty paid by them during the said period i.e. 1-3-1986 to 31-12-1989 was not refundable to them as the same was hit by the doctrine of unjust enrichment in terms of the Customs and Central Excises (Amendment) Act, 1991 (Act 40 of 1991). He, therefore, ordered that the undisbursed amount of Rs. 3,52,03,339.03 which is covered under sub-section (2) of the amended Section 11B shall be deemed to have been passed i....
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....by the exemption is allowed to vulcanized rubber products, non-curing for tyres as per the Notification said above. In this regard please refer to your letter No. E/A/1.04/KJ, dated 29-10-1984 in which you have stated while giving write-up of pre-tread in price 1........" Rubber Compound is extruded in the shape of long flat strip and cut into the right length. These extruded strips are then moulded and cured to right di­mensions with bottom plain and top with pattern. As such, the Pre-Tread manufactured in your factory is a cured, vulcanised rubber products and so you are not entitled to avail exemption as per Notification No. 47/86 accordingly. It is seen that you have been claiming the said Pre-Tread under NIL rate of duty. Hence you are hereby requested to clear the Pre-tread on payment of duty at the rate of 40% ad valorem with immediate effect. The above-said classification list are also returned herewith for making necessary correction to this effect and return the same to this office. Even if you are not agreeable to this reference, you are requested to pay duty under Protest until the matter is finalised by the Asst. Collector of Central Excise. It is relevant....
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....ead under Chapter 40-Rule 233B" and they informed the Assistant Collector that they desired to pay duty under protest on pre-tread under Chapter 40 under main heading 40.08 and sub-heading 4008.21 on the following grounds : (a) They had filed Classification list 2/85-86 for pre-tread, claiming exemption from duty under Notification No. 47/76, dated 9-3-1976 as amended by Notification Nos. 193/80 and 78/86, dated 10-2-1986. (b) The Supdt. of Central Excise, Arkonam Range vide his letter OC No. 1190/86, dated 27-6-1986 has returned their Classification List stating that they were not entitled to avail exemptions as per Notifications cited. He has also requested them to pay duty under protest if they were not agreeable to his decision. (c) As they were not agreeable to his reference they have decided to pay duty under protest. They also informed that they shall be making endorsement on all the copies of gate passes. PLA and RT-12 returns in terms of sub-rule (4) of Rule 233B of the CE Rules, 1944. The protest letter dated 1-7-1986 filed by M/s. MRF Ltd. is extracted herein below: MRF....
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....d by the Supdt. they decided to pay duty under protest from 1-7-1986 on the pre-tread following the procedure of protest as contained in sub-rule (4) of Rule 233B of the C.E. Rules, 1944. 4. In the meanwhile classification of the product PCTR, was taken up by the department in order to maintain universal practice throughout the country under the harmonised Chapter heading No. 4008.21. During 11/89 the department decided to have classification of the PCTR under sub-heading 4016.99 on the ground that the goods in question emerge at the initial stages in the form of plate, sheets or strips as per the definition of plate, sheets, strips given under Note 9 of Chapter 40. Thereafter, the goods are moulded, edges are rounded and the shape of the cross-section becomes trapezoid. As a result the goods do not finally re­main plates, sheets or strips as defined in Chapter Note 9 of Chapter 40. The elaborate processes carried out on the goods by the appellants could not be called mere 'surface working' as per Note 9 of Chapter 40. As a result the goods could not be classified under sub-heading 4008.21 but it would merit classification under sub-heading 4016.99 and conse­quently....
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....period on account of re-classification decided by the department and accordingly re-submitted their claim on 9-1-1992 for a sum of Rs. 3,52,03,339.93. It is also observed from the records that M/s. MRF Ltd. have not preferred any appeal against the order-in-original dated 7-10-1991 passed by the Assistant Collector and therefore as per the then Assistant Collector vide his order dated 7-10-1991 they claimed only the differential duty involved on account of re-classification by the department and the present refund claim represents only Rs. 3.52 crores. Furthermore, it was ascertained that the percentage of Modvat credit taken/availed by M/s. MRF Ltd. on the said product worked out above was only 30% of the total duty payable. Thereby this percentage would have automatically merged in the duty apportioned by the appellants-assessee while re-working their claim towards payment of duty under Chapter 4017.00/4016.99. The appellants-assessee did not claim refund of full duty on the PCTR under chapter 4008.21 since they had worked out the duty liability involved on the subject PCTR for the period from 1-3-1986 to 31-2-1989 under chapters 4017.00 and 4016.99 as per the direction given by ....
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....uty claiming exemption vide above Notifications from the commencement of Central Excise Tariff Act, 1985 with effect from 1-3-1986 onwards and they were denied by the Supdt. the benefit of the above Notification and they started paying duty under protest with effect from 1-7-1986 after following the procedure prescribed under Rule 233B of the CE Rules, 1944. 8. As regards the time limit, since the duty was paid under protest with effect from 1-7-1986 in terms of Rule 233B of the CE Rules, 1944 vide their protest letter dated 1-7-1986 which was acknowledged by the department on 1-7-1986 itself. Therefore, the question of time-limit ap­plicability did not arise in their case. 9. The correctness of the claim was also duly verified at all levels and found to agree with the figures in the refund claim. Therefore the refund claim of Rs. 3,52,03,339.93 (Rupees Three Crores, fifty two lakhs, three thousand, three hundred thirty-nine and paise ninety-three only), passed this scrutiny both on merits as well as on time bar and there was no dispute on these two points. 10. In order to verify whether the said refund claim would attract the provisions of amended Secti....
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....so filed a brief explanatory Affidavit of Shri PR Anantharaman, Controller which is reproduced below : I, P. R. ANANTHARAMAN, Controller, MRF Limited, aged 45 years, son of Shri P.V. Ramakrishnan, residing at No. 2A, Buddha Street, Rangarajapuram, Madras 600 024, hereby solemnly and sincerely take oath and state as follows : I was on leave from 27th May, 1992 and rejoined a few days back. With reference to the intimation C. No. IV/10/65/90 RF (PF), dt. 5-6-1992, fixing the hearing on 16-6-1992, received in the office of MRF Ltd. on 10-6-1992, I produce and affirm as correct the relevant PCTR cost sheet for March, 1986 actuals, and will produce the supporting papers which are all available at the office/unit and are being gathered. The practice of MRF has been and is to prepare at each unit including the Arkonam unit, Budget cost and actual cost for each product under each product group. Material for this is also available and will be produced. Since the new tariff was to be introduced from 1-3-1986, actual cost for each product including PCTR inter alia for Arkonam unit had to be determined and prepared. As will be apparent from the cost sheet for the Arkonam unit (marked ....
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....s IX Division, fixed the personal hearing on 6-7-1992 and they were required to produce all the evidence on which they wanted to rely upon in support of their defence at the time of personal hearing. In reply, the appellants-assessee vide their letter No. 03/DF-19/SI, dated 2-7-1992 in continuation of the Affidavit dated 15-6-1992 filed by Shri P. R. Anantharaman, enclosed a detailed Affidavit dated 2-7-1992 which is extracted herein below : BEFORE THE ASST. COLLECTOR OF CENTRAL EXCISE, MADRAS IX DIVISION, MADRAS 600 006 Further to my Affidavit dated 15th June, 1992, I produce copies of the following documents to support MRF's claim that excise duty was not passed on to consumers or any other person, namely : - (2) Consequent upon the Budget of 1986 revised classification lists were forwarded by MRF under cover of its letter dated 5-3-1986. The classification list No. 2/85-86, dated 5-3-1986 for the Arkonam factory showed inter alia "Pre Tread" (i.e. PCTR) under Chapter heading 40 and sub-heading 4008.21 - but claiming that it was exempted from duty vide Notification No. 47/76, dated 9-3-1976 as amended by Sl. No. 127 of Notification No.....
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.... per Kg. (6) The following documents will show that the price at which PCTR was sold, i.e. Rs. 38/- per Kg., was the same even during the period 1-3-1986 to 27-6-1986 (first clearance during March, 1986 being effected on 15-3-1986) when PCTR was being cleared at NIL rate of duty. The documents are :- (a) Gate Passes showing NIL duty for the period 1-3-1986 to 27-6-1986. Photocopies of first and last Gate Passes as specimens are annexed as Annexure 'G'. The total number of Gate Passes for clearance of PCTR during the period was thirty and they will be shown during the hearing. (b) Transfer Memos for the same period for transfer of PCTR from Arkonam factory to outside the factory. Photocopies of first and last such transfer memos for and during the period 1-3-1986 to 27-6-1986, as specimens, are annexed as Annexure 'H'. Thirty nos. of transfer memos which are in between will be produced at the time of hearing. (c) Invoices for clearances during the same period 1-3-1986 to 27-6-1986 als....
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.... at Rs. 12/- per kg. and the duty finally assessed at 15% ad valorem. The Order dt. 7-10-1991 is annexed as Annexure 'N'. It is submitted that the refund claim is admissible and permissible in law as no part of the refund claim has been passed on to any consumer or any other person. (10) Thus, it is clear that the presumtion raised under Section 12B is fully rebutted based on the documents produced herewith along with the documents produced with the Affidavit dated 15-6-1992. The incidence of Excise Duty claimed and charged during the relevant period (without payment of which PCTR was not permitted to be cleared and hence was paid under protest) was not passed on to any other person/consumer. 13. In the meanwhile the Assistant Collector deputed few officers led by her Supdt. (Technical) to verify the genuineness of the Affidavit sub­mitted by the appellants-assessee and the appellants informed the de­partment that they have replied to all the queries during the two days of verification i.e. 20-7-1992 and 27-7-1992 and requested the department to send them refund Cheque for Rs. 3.52 crores as per their letter dated 3rd August, 1992 as the d....
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....for the periods 1-10-1985/9-3-1987/10-9-1990/11-1-1991/30-7-1991/1-10-1991/1-3-1991 in respect of finished rubber products and produced to this office for verification, it is found at the bottom of Price List pertaining to 1-10-1985, there is an endorsement to the extent that "THIS LIST SUPERSEDES ALL PREVIOUS LISTS. THE ABOVE PRICES ARE SUBJECT TO CHANGE WITHOUT NOTICE. SALES TAX, OCTROI AND ANY OTHER TAX APPLICABLE WILL BE EXTRA." Therefore, it is proved to the fact that the Net Billing price quoted in those price list relating to all rubber products is cum-duty price only. The PCTR figured therein, is one among them. From the above it implies, without saying that the Management uniformly maintains a standard in built price for all the products irrespective of the duty aspect throughout the period wherein, the provision for all elements has been provided at the time of forming the price structure of a product. Of course, all the products are sold uniformly at standard rates without bearing a significant entry on the excise duty element in the sale documents. Wherever the duty is imposed on the product by the Government, the Management is apportioning and accommodating the duty el....
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.... Sales tax, Octroi and Income Tax not acknowledged Rs. 944 lakhs. 1985-86 22 -do- 9 Excise Duty includes Rs. 673 lakhs relating to prior years. 1986-87 23 -do- 6 Relates to payments made under protest for which appeals are pending before the Appellate Authorities. 5. As all the above points are required to be scrutinised in terms of the amended Section 11B of Central Excises and Salt Act, 40 of 1991, the Man-agement is hereby requested to pay a personal attention on the above para-graphs and furnish a reply immediately so as to enable this Office to proceed further on the subject issue. Yours faithfully Sd/-(Parvathi Kailasam)Assistant CollectorMadras IX Division 14. Since all the above points were required to be scrutinised in terms of the amended Section 11B of the Central Excise Act, 1944, which was inserted with effect from 20-9-1991, vide Section 3 of the Central Excise and Customs Laws (Amendment) Act, 1991 (Act 40 of 1991), the management was therefore, requested to furnish reply immediately on all the paras to enable the Assistant Collector to proceed further on their refund claim for Rs. 3.52 crores. This letter dated 4-8....
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....in the first Affidavit dt. 15-6-1992). (ii) Price of PCTR per Kg., which was Rs. 38/- during the period when PCTR was cleared by MRF without payment of any excise duty, viz. 1-3-1986 to 27-6-1986, remained the same even thereafter, i.e. during 1-7-1986 to 8-3-1987 in spite of duty being paid by MRF. This further evidences the fact that excise duty was not at all considered in the computation of price of PCTR. (iii) Further price increases on 9-3-1987, 15-9-1987, 1-10-1988, 4-3-1989 and 24-7-1989 were on account of cost escalations and not on account of excise duty. This fact was also affirmed by Shri Anantharaman in his second Affidavit dt. 2-7-1992 and also proved by means of PCTR Cost Sheet Actuals for March, 1987, October, 1988, March, 1989 and July, 1989, marked as Annexure "M" Collectively. 3. After the hearing on 6-7-1992, you were convinced with the case presented by our Counsel and you directed MRF representatives to be ready for physi­cal verification by your officers, of the complete series of invoices, gate passes and transfer memos, to confirm that the selling price of Rs. 3....
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....7). (ii) Trial Balance prepared from Arkonam unit during the relevant period. Since the practice of the company is to account the sales without split-up towards excise duty, if any, the Company's trial balance would not be relevant to ascertain whether excise duty is collected or not. The Arkonam unit's trial balance being a unit level document, and entries therein being made before sales are effected, their trial balance also will not be relevant to ascertain whether excise duty is collected or not. In para 3 of your letter dt. 4-8-1992, you have assumed that the amount claimed by MRF stands to be a liability to the Company and therefore, you have enquired whether the same is specified anywhere in the Balance Sheet. We would like to clarify that the amount claimed by MRF is not a liability to the Company; on the contrary, it is a refund receivable from the Govern­ment. If it is a liability "acknowledged by the company", we would have certainly provided for it. However, as already pointed out by us, vide our letter dt. 20-7-1....
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....thfully, for MRF Limited. Sd/- (S. Ignatius) Corporate Manager Indirect Taxes Enc: a/a. Cc: EDF Cc: CNT/CNTA CC: GMAP : With copy of Asst. Collector's letter dt. 4-8-1992. 15. They also furnished details of Modvat credit by their letter dated 6-1-1993. In the meanwhile it appeared that the Assistant Collector received report from the AD (Cost) and the same was sent by the Assistant Collector to the appellants-assessee vide her letter C. No. IV/10/65/90-RF (PF-II), dated 9-2-1993 which reads as under : OFFICE OF THE ASSISTANT COLLECTOR OF CENTRAL EXCISE : MADRAS IX DVN. III FLOOR : SIRE MANSION : 621, MOUNT ROAD : MADRAS : 600 006 C. No. IV/10/65/90-RF (PF. II) February 9th, 1993 M/s. MRF Ltd. Greams Road, Madras - 6. (Attn. Shri S. Ignatius, Corporate Mgr.) Sirs Sub : Refund claim for Rs. 3,52,03,339.93 - reg. - - Further to the Personal Hearing on the subject issue, a study was conducted by Assistant Director (Cost) of this Collectorate. Gist of the report is reproduced ....
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.... necessity to have one-to-one correlation, the information is very vital to know the actual raw material cost. Finally, the assessee agreed orally on 17-12-1992 to furnish the total Modvat Credit availed by the company as a whole and also Modvat Element considered in their cost construction statement. But such details were not received till date. Under the above situation, we used the Annual Reports of the Company as a whole and certain other details furnished by the assessee and re-worked the cost construction statement as tabulated below : Mar '86 Mar '87 Sept '87 Oct '88 Mar '89 July'89 (1) Raw Material Cost 19.57 20.22 20.72 20.72 21.50 22.28 (2) Expen-ses Production Overhead + Admn Overhead + Selling and Distribution overhead Interest etc. 7.10 7.61 7.65 7.75 7.71 8.32 (3) Total expenses 26.67 27.83 28.37 28.47 29.21 30.60 (4) Excise duty 12.00 12.00 12.00 12.60 12.60 13.23 38.67 39.83 40.37 41.07 41.81 43.83 (5) Sale Price 38.00 40.00 41.00 42.00 42.65 45.65 ....
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....while the appellants-assessee requested the Assistant Collector vide their letter dated 24-2-1993 to furnish the detailed working of PCTR which was arrived at by the AD (Cost) and the same was furnished which is reproduced below : OFFICE OF THE ASSISTANT COLLECTOR OF CENTRAL EXCISE: MADRAS IX DIVISION: III FLOOR: SIRE MANSION: 621, MOUNT ROAD: MADRAS C. No. IV/10/65/90-RF (PF-II) March 24th, 1993 To M/s. MRF Limited Greams Road Madras - 600 006 K/Attn : Shri S. Ignatius, Corporate Manager, Indirect Taxes. Sirs, Sub : Central Excise - Refund Claim of MRF Ltd., Itchiputhur for Rs. 3,52,03,339.93 Precured Tread Rubber. Ref : Your letter No. 03/DF-19/SI, dated 24th Feb. '93 Please refer to your letter cited above requesting to furnish the detailed cost working of PCTR which was arrived at by the Assistant Director (Cost). In this connection, attention is invited to paras 1 to 3 of the gist of Asst. Director (Cost)'s report furnished in this Office....
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....ct product. But the assessee has expressed their inability to furnish all the relevant information as the Company has no definite production schedule for PCTR. It was also informed that depending upon the requirement of various items like Tyres, Tubes, PCTR, the production programme is altered on the same day. The Management was also not in a position to furnish the profit and loss account of the Arkonam Plant as Statement of Accounts are prepared for MRF Ltd., as a whole. Under the above circumstances, the Management cannot expect the Department to give a detailed Cost Sheet for PCTR. However, in order to maintain the principle of natural justice, the Department has estimated the cost of PCTR as on various dates with the available information on the following basis:- (a) Material Cost :- Average price of materials during relevant periods as per ratio indicated by the assessee. (Refer Para I for details) (b) Labour & Other Expenses: Total labour and other expenses as a percentage on net sales. The entire total expenses of the Company during relevant periods barring few items like Bad Debts, ST absorbed by Company, Divisional Trading Expenses, Royalty was ....
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....ort of the Asstt. Director (Cost). Orally requested the Asstt. Director (Cost) to visit our factory to have a first hand knowledge of the operation for better appreciation of the cost workings adopted. However, the Asstt. Director (Cost) has arrived at a certain cost, based on the broad information provided in the balance sheet. 3. Now we find that the Asstt. Director (Cost) has arrived at some cost based on the general information provided by us. We find that the working is hypothetical and far from the actuals. As you will agree that cost can be worked out only based on technical specifications. While providing the cost sheet along with the affidavit filed on 15-6-1992, we had stated that technical specifications used for cost working shall be made available for your inspection at any time. However, we are surprised that the Asstt. Director (Cost), instead of reckoning the specification contained in the cost sheet, has relied on the general information provided at your request. Similarly, the raw material rates applied are average rates taken from the balance sheet. 4. Ours, is a process ind....
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....y get major quantum of inputs as WI from their Kottayam, Goa and other factories and hence such details and registers are maintained by the other factories. At last the AD (Cost) requested them to produce some job cards maintained at Arkonam Plant or any other day-to-day register or documents maintained to verify the actual consumption of raw material or WIP in producing their pre-cured tread rubber. The appellants-assessee again expressed their inability to produce the said documents on the ground that as the factory uses the same raw material and WIP for pre-cured tread rubber and various products like tyres, tubes etc. they were not able to produce any record. 19. To verify whether the incidence of duty has been passed on to the actual customer or not, the AD (Cost) finally decided to adopt the same ratio of raw material as worked out by the assessee for calculating the cost of the product with necessary and suitable adjustments. Appellants-assessee was also advised by the AD (Cost) to intimate the quantum of Modvat credit availed by them on the PCTR and he was informed that since the raw material and WIP are received from other factories only such other factories take M....
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....ailable for verification." Lot of correspondence took place between the Assistant Collector and the appellants-assessee. Record of the same is mentioned from paras 15 to 27 of her order dated 21-5-1993 which are extracted herein below : "15. A personal hearing was granted to the assessee on 16-6-1992 and on the assessee's specific request it was postponed to 6-7-1992. In the meantime, Shri P.R. Anantharaman, Controller of the Company filed two affidavits one on 15-6-1992 and another on 2-7-1992 on the subject issue. In the first affidavit filed by the said Controller, it was stressed upon that the cost price of PCTR maintained during the subject period did not include the element of duty suffered on the product. To establish the above fact, he had stated the following : "I produce and affirm as correct the relevant PCTR cost sheet for March, 1986 actuals and will produce the supporting papers which are all available at the Office/Unit and are being gathered. The practice of MRF has been and is to prepare at each Unit including the Arkonam Unit, Budget Cost and actual cost for each product under each product group. Material for this is also available and will be produced.....
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....while the product under exempted category) and from 1-7-1986 to 8-3-1987 (when the product was charged to duty) he had furnished first and last copies of Gate Passes/Transfer Memos/Invoices raised during the said period, as an exhibit, wherein the Cost price of PCTR was maintained as Rs. 38/- per kg throughout the period. It was also admitted by him that selling price of PCTR was subsequently revised due to increases in the prices of raw materials and overhead cost effected during the period from 1-3-1987 to 31-12-1989 and its break up were furnished as under : Period Cost Price of PCTR per kg reported to be as (Rs.) March, 1987 40 September, 1987 41 October, 1988 &nbs....
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....n 31-5-1990). This was disputed by MRF - contending that an amendment to a Chapter Note would not get the benefit of the Provisional Collection of Taxes Act, 1931. This dispute is pending before the Tribunal, New Delhi. On 23-12-1991, in Appeal No. E/3153/91-C, the Special Bench "C" of CEGAT, Delhi granted stay of the demand of the Assistant Collector to the extent of 50%. The 50% of the demand amount, namely Rs. 25,87,067/- was paid on 17-2-1992." As the subject-matter discussed above is not relevant to this issue, it is decided not to include the above in this Order-in-Original. During the personal hearing, I had raised another query on the following : Query: MRF reportedly has 5 factories, the present refund claim relates to one factory at Arkonam. Is MRF manufacturing and clearing PCTR in any other factory? Reply : No. PCTR was manufactured and cleared during the relevant period only at Arkonam factory. 18. On 8-7-1992, M/s. MRF Ltd. had produced the relevant sample invoices raised by their Depots situated at Madras/Coimbatore/ Bangalore/Cuttack as called for during the personal hearing held on 6-7-1992. As regards the invoices raised by other Depot....
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....oyed by him) only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him." This should answer your query." 20. As requested by the assessee a team of 5 Officers led by Superintendent (Prev.) of this Division was deputed to verify all the invoices raised by the various Depots of the assessee in respect of the subject product at their Greams Road Office. On 20-7-1992 and 27-7-1992, the said Officers had scrutinised the documents produced by the assessee at their office in order to ascertain the correctness of the statement furnished by the representatives in their earlier submissions and as well during the personal hearing with reference to the maintenance of uniform selling price on the product PCTR and also to know whether any other information given in the relevant invoices in relation to the duty element. During such verification conducted by the Officers, no disparity in the price was found other than certain minor variations noticed and subsequently clarified by the assessee during the period from 1-3-1986 to 8-3-1987, uniformly. 21. However, while they scrutinised some of the price circulars maintain....
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....where it figures. How and what manner the said amount was borne by the Management during the subject period? As the said amount stands to be a liability portion to the Company whether the same is specified anywhere in the balance sheet/or in the Articles or Memorandum of the Company. 23. On a further perusal of the Balance Sheet produced by the Company for the period pertaining to 1984-85/1985-86/1986-87/1987-89 the undersigned has noticed the following entries. The full details/break up for the same were to be furnished by the assessee. Year Page No. Heading Sl. No. Description 1984-85 25 Notes on the balance sheet and profit and loss account. 5 Disputed excise duty, sales tax, octroi and income-tax not acknowledged-Rs. 944 lakhs 1985-86 22 -do- 9 Excise Duty includes Rs. 673 lakhs relating to prior years. 1986-87 23 -do- 6 Relates to payments made under protest for which appeals are pending before the Appellate Authorities. As all the above points were required to be scrutinised in terms of the amended Section 11B of Central Excises and Salt Act and Act 40 of 1991, the Management has been issued a letter on 4-....
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....wledged Rs. 944 lakhs. Reply :- This liability is not provided for in the books of account since this is not acknowledged by the Company as a debt. Hence as a note. Year Page No. Heading Sl. No. Description 1985-86 22 Notes on the balance sheet and Profit and loss account 9 Excise duty including Rs. 673 lakhs relating to prior years. Reply :- Note No. 9 at page 22 of the balance sheet relates to the total excise duty paid by the Company as found at page 13 of the profit and loss account. Note 9 was necessitated only since the total excise duty included the amount relating to previous years paid during the current year. Year Page No. Heading Sl. No. Description 1986-87 25 Notes on the balance sheet and profit and loss account 6 Relates to payments made under protest for which appeals are pending before the Appellate Authorities. Reply :- Note No. 6 at page 23 of the balance sheet relating to the year 1986-87 has to be read with "Advances for Sales Tax" under the Heading "Loans and Advances" appearing at page 17 of the balance sheet. This will clearly show that Note No. 6 mentioned in para 4 of your letter ....
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....ly, a reference was made to the assessee on 9-2-1993. 21. When the materials supplied by the appellants-assessee on the cost structure arrived at on the said product which was based on some annual balance sheet and was purely on the costing aspect, it was decided to seek expert opinion on the costing of the product arrived at by the assessee in order to satisfy whether the duty element was involved in the net billing price maintained by them on the product PCTR during the period in question and how and whether this lumpsum amount claimed by them was figuring in their account, if otherwise considered. Accordingly the issue involved was referred to AD (Cost) of the Central Excise Department for his opinion. The AD (Cost) furnished his final report on 31-12-1992 stating that the contention of the assessee that there was no transfer of burden of duty to the customers, is not acceptable. Since the opinion by the AD (Cost) on the subject issue, controverted the arguments of the appellants-assessee the gist of his report was furnished to the appellants-assessee so as to enable them to offer their further views/documentary evidence in support of their case. Accordingly reference wa....
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....he product reclassifi­cation, the assessee has some justification in preferring the differential duty involved during the relevant period. 31. While looking into the time-limit aspect, during the subject period, the payment of duty effected by the assessee was duly covered "under protest" in terms of Rule 233B to which they had already lodged a protest letter as early during July, 1986 and obtained a dated acknowledgement. Hence, the present claim is not hit by limitation of time. 32. In the process of scrutiny of the claim the aspect to be examined is application of the Doctrine of Unjust Enrichment concept to the impugned claims. As seen from the records on hand, this is a case involving with de­batable points on the costing of the product. On an indepth analysis of the in­formation gathered by this Office and the submissions in turn made by the assessee, in my considered view, the assessees' contention with regard to non-inclusion of duty dement in the Net Billing Price of the product PCTR is based only on presumption. In fact, they are unable to produce a clear documentary evidence in support of their claim. 33. This is further confirmed whil....
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....7 (+) 0.63 0.93 (+) (+) 0.84 (+) 1.82 Add : Modvat credit (+) 2.06 (+) 2.21 (+) 2.35 (+) 2.54 (+) 2.71 (+) 2.90 PROFIT (+) 1.39 (+) 2.38 (+) 2.98 (+) 3.47 (+) 3.55 (+) 4.72 It is noted that the profit margin has increased gradually during the relevant periods after taking into consideration the Modvat credit availed. 34. The main contention of the assessee is that during the subject periods, the price was not adjusted or there was not much variation to accommodate the excise duty levy and if the excise duty was included the price would be on much higher side. I differ with this view as the pricing of a product, particularly in a multi-product Company depends upon various factors. A Company may even sell a product at a loss and compensate the loss in some other produce by making additional profit. Pricing depends upon factors like demand for the product, supply of the Competitor and pricing of competitors etc. There are companies in Automobile Industries and Heavy Engineering Industries which sells the vehicles at a loss and make up the loss in spare parts. Hence, the contention of the assessee, 'as there was not much ....
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....o the Arakonam Plant has no relevance here, when he has worked the cost-estimation based on the same ratio of raw material submitted by the assessee and other information available with the Department. 37. The assessee has submitted that the Assistant Director (Cost) has taken the average material cost based on the balance sheet which will distort the picture. The argument does not hold water and in fact the basis adopted is appropriate as it will give more clear basis to arrive at the material cost. 38. When cost estimation is done for over a period of time, the weighted average cost of the relevant raw materials is the well accepted cost accounting principle rather than adopting a price on a specific data as claimed by the assessee. The weighted average fully takes care of the deviations in the prices over a period of time. Further, the assessee himself submitted that it is not possible to split work-in-process for Modvat purposes as the same raw materials and work-in-process are used for manufacture of tyres, tubes, tread PCTR etc. The assessee has stated that imported materials includes duty free imports for export obligations. Duty free imports need not neces&s....
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.... to be considered for deciding the refund eligibility. A stable pricing pattern followed by a Company does not form the basis for refund claim under Section 11B of Central Excises and Salt Act, 1944. It clearly shows the assessee has no other grounds including cost statement to argue that the duty burden was not passed on to the customers. 43. Proof of non-transfer of excise duty burden on customer lies in es­tablishing that the total cost of the product plus profit margin is equal to sell­ing price realised from customers and it does not lie on the argument that sale price was stable over a period of time. The cost estimation done by the Assistant Director (Cost) is based on authoritative documents and generally accepted accounting principles and not hypothetical. 44. It is submitted by the assessee that the detailed working of labour and overheads were not furnished by Assistant Director (Cost) and hence the figures could not be agreed. On this aspect, the Assistant Director (Cost) has explained in very simple terms, how the labour and overheads were apportioned to the subject product vide this office C. No. IV/10/65/90-RF (PF-II), dated 24th March, 1993 c....
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....ision. 22. Aggrieved by this order of the Assistant Collector, the appellants filed appeal before the Collector (Appeals) by which he has rejected the appeal of the appellants being devoid of merits. His findings in paras 5.1 to 7 of the impugned order are reproduced below : "5.1. I have carefully considered the appeal records and the grounds urged by the appellant in their appeal as well during the personal hearing. 5.2. The short point that falls for consideration and decision in this ap­peal is whether under the facts and circumstances of the case, the appellant can be said to have passed on the incidence of duty to any other person at­tracting the principles of 'unjust enrichment'. 5.3. The main plea of the appellants that during the entire impugned period the price was not adjusted/enhanced or there was not much variation to accommodate the excise duty. According to them, if the element of excise duty was included, the price should have been much higher. In support of this, they rely upon various documents such as gate passes, transfer memos, invoices, price lists, etc. 5.4. The Assistant Collector in his impugned order has given....
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....g price structure of a product, has considerable force. Further, excise duty, being an indirect taxation, all as-sessees paying it, normally will pass on the duty incidence to the buyers. In this case, no reason has been forthcoming from the appellant as to why they did not pass on the incidence of duty to the buyers as claimed by them. The findings given by the Assistant Collector at para 43 of the impugned order, reproduced below, are very relevant and legally tenable. Para 43 : Proof of non-transfer of excise duty burden on customer lies in establishing that the total cost of the product plus profit mar­gin is equal to selling price realised from customers and it does not lie on the argument that sale price was stable over a period of time. The cost estimation done by the Assistant Director (Cost) is based on authoritative documents and gener­ally accepted accounting principles and not hypothetical. 5.6. The representative of the appellant would further contend, during the course of the personal hearing, that following introduction of Section 12A to the Central Excises and Salt Act, 1944 w.e.f. 20-9-1991, indication of the amount of excise duty paid on t....
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.... learned Asstt. Collector of Central Excise, Madras IX Division failed to appreciate the meaning of the word, "proved", occurring in Section 12B of the Central Excise Act and therefore erroneously concluded that the appellants did not rebut the presumption laid down in the law. The last sentence of para 45 of the Order-in-Original, dt. 21-5-1993 stating: "...... they are not in a position to prove the above aspect with clear documentary evidence to the Department", is totally erroneous and discloses inadequate appreciation of the meaning of the word "prove". A fact is said to be "proved" in law : "when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists." - - Section 3 of the Indian Evidence Act. "Proof" means the estimate of a prudent man as to probabilities. 2. The statement in para 32 of the order dt. 21-5-1993, that "the assessees' contention with regard to non-inclusion of duty element in the Net Billing Price of the product PCTR is based onl....
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....correctness of contention so probable that a prudent person ought to act on the supposition that it exists. The statement in the order that the assessees' con­tention "is based only on presumption" shows a misguided ap­proach to the law-even where it is not shown to the satisfac­tion of a court that a fact exists, that fact can still be said to be proved in law when its existence is so probable that a prudent man ought to act on the "supposition" that it exists. Hence, for the authority to conclude that MRF "are unable to produce clear documentary evidence in support of believing that MRF are unable to produce clear documentary evidence in support of their claim : the question that was to be asked by the documents tendered and the facts established clearly showed that it was obligatory on the authority to act on the basis of the supposition that the duty of excise by MRF on PCTR had not been passed on to any other person but had been borne by itself. 3. The learned Asstt. Collector was apparently satisfied with the ar­guments and evidences produced during the hearing to the effect that MRF had not passed on the burden of excise duty paid by them on the produ....
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....re was no levy of excise duty on PCTR and the selling price remained the same even thereafter when the appellants commenced to pay excise duty on PCTR, under protest. This fact has not been disputed by the lower authority but on the other hand, has been reconfirmed by the investigative report of the of­ficers of Central Excise, deputed by the learned Asstt. Collector to the office premises of the appellants, after going through all the gate passes, delivery memos and invoices (3 sets of documents) and credit notes and delivery notes in respect of the period from 1-3-1986 to 11-12-1989. The learned Asstt. Collector erroneously adopted a hypothetical basis in preference to the established fact of the selling price remaining constant during the 2 periods, namely, the period when no duty was levied and the period when duty was levied. 8. The learned Asstt. Collector erred in not appreciating that the cost structure was given by the appellants only to re-establish the fact already proved by them with reference to the selling price and ....... 9. The learned Asstt. Collector arbitrarily referred the matter to the Asstt. Director (Cost) without examining the documentar....
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....... 13. In para 33 of the order dt. 21-5-1993, the learned Asstt. Collector has reproduced all the figures worked out by the Asstt. Director (Cost) of her Department, to attempt to prove that, on the basis of the cost of the product worked out from the figures in the balance sheet, it shows that there is a profit for the company in respect of the product, PCTR. However, in para 34 of the order dt. 21-5-1993, it has been stated that in a multi-product company, pricing of a product depends upon various factors, once product may sell at a loss and can be compensated by the sale of some other product-pricing also depends on factors like demand for the product, supply of the competitor and pricing of competitor etc. It was erroneous to hold that the contention of the appellants that there was no variation in the price of the product during the period when there was no levy of excise duty and in respect of the period when there was levy of excise duty, could not be accepted. The learned Asstt. Collector, has created a contradiction by stating two views - namely, in para 33 it is stated that the company makes a profit in respect of PCTR and in para 34, it is stated that even if....
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....canising solution, curing bags, tyre paint, mould lubricant etc. and it is impossible and impractical to "maintain raw material account final productwise because all the inputs are common to all the final products and an intermediary product called compounded rubber is produced, which in turn is converted to final product; besides, RT5 Returns and Form IV Register are required to be maintained only in respect of principal raw materials under Rule 173D. The learned Asstt. Collector also erroneously did not take into consideration that no such register has been (or had been) prescribed in respect of the final products manufactured by the appellants in their Arakonam factory in terms of Rule 173D. The learned Asstt. Collector ought to have held that the appellants could not forcibly produce non existent returns and registers not required to be maintained by law. In the same para 36, the learned Asstt. Collector held that the cost estimation applying the ratio of raw materials submitted by the assessee themselves, made by the Asstt. Director (Cost), was correct. This is factually wrong because the ratio submitted by the appellants was a broad ratio which did not contain gradewise sp....
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....llector did not examine or find out that selling price fixation and revision thereafter has to be based on current level of input price (and not on past average given for over a period of time), especially where inputs are such that prices are steady over a period of time. In the present case, except for natural rubber, all other input prices remained constant over a period of time. Since the selling price so revised is to absorb the cost incurred subsequent to the selling price revision, the Appellants took only the current price application which is the only correct method to do, in fixing price of future supplies, and not based on past average. 17. The fallacy committed by the learned. Asstt. Collector is further evident from para 39, where she has mentioned that, "when the cost is averaged, inclusion of duty free imported material cost may not have any significant impact on the material cost." It is respectfully submitted that the learned Asstt. Collector did not at all examine the fundamentals of the scheme of DEEC (Duty Exemption Entitlement Certificate). Under the scheme, the Government permits import of inputs at International prices without payment of duty. The dut....
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.... all, i.e. worksheets have not been provided in support of the figure of overheads, assumed, though called for by the appellants. 20. In para 46 of the order dt. 21-5-1993, the learned Asstt. Collector has erroneously come to the conclusion that the issue cannot be decided in the appellants' favour because the presumption men­tioned in Section 12B is against them. The learned Asstt. Collector failed to note that the presumption contained in Section 12B is a rebuttable presumption and that the Appellants have in fact rebutted the presumption. 21. The learned Collector (Appeals), Madras vide his Order-in-Appeal No. 146/93 (M), dt. 31-12-1993, erred in fact and law by holding that there is no force in the Appellants' plea that they have fixed a very low price for the product which does not include excise duty. The learned Collector (Appeals), committed an error of fact because the split-up of the price furnished by the Appellants was not even verified by the learned Asstt. Collector or the learned Collector (Appeals). 22. The learned Collector (Appeals) came to a wrong conclusion, namely the price did not change both prior to and after levy of duty only for....
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....ies of these two Paper Books, the appellants crave leave to file the same within 30 days from the date of filing this appeal. 26. The Appellants therefore pray and submit that the appeal may be allowed and consequential refund ordered to be granted to them. In any case, the appellants request that they may be granted a personal hearing before the appeal is disposed of. For MRF Limited   Sd/- (S. Ignatius) Corporate Manager Indirect Taxes Appellants have also filed miscellaneous application for filing additional documents vide their communication dated 15th May, 2001 consequent to the mention made by the learned Sr. Counsel Shri F.S. Nariman, when the matter was heard on 14th May, 2001. The application was allowed. 24. Shri F.S. Nariman, learned Sr. Counsel assisted by Shri S. Ignatius, learned Counsel, apart from the grounds taken by the appellants in their grounds of appeal (extracted above) also submitted that from 1-3-1986 to 31-12-1989 there was classification dispute about pre-cured tread rubber (PCTR for short) whether it would fall under Tariff heading 4008.21 or under 4016.99. The learned Counsel pointed out that in the Collectors' c....
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....earned Sr. Counsel tried to emphasis that raw material cost is only 1% of the goods. He further pointed out that the AD (Cost) has not looked into all the factors. The assessee had also filed affidavits and the affidavits have not been considered. He further stated that the assessment was provisional and after 7-10-1991 only it had become final and thereafter they had filed refund claim. The learned Sr. Counsel also invited our attention to para 95 of the Hon'ble Supreme Court judgment in the case of Mafatlal Industries Ltd. v. UOI reported 1997 (89) E.L.T. 247 (S.C.) in which it was held that if the assessments were provisional, the doctrine of unjust enrichment would not be applicable. He also invited our attention to the decision of the Single Member Bench in the case of Needle Industries v. CCE reported in 1998 (101) E.L.T. 286 wherein it has been held that refund claimed by appellant consequent upon adjustment on finalisation of provisional assessment under Rule 9B(5) of the CE Rules, 1944 not governed by Section 11A or Section 11B of the CE Act, and excess amount paid by appellant not to be credited to the Consumer Welfare Fund and to be restored to the appellant as credit in....
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....ts that no duty was payable on PCTR and refund amount was required to be paid to them either in cash or by way of deposit in the PLA. 25. Shri K. Veeraraghavan, learned Additional Central Govt. Standing Counsel appearing for the Revenue submitted written submission which is reproduced below : WRITTEN SUBMISSIONS FILED ON BEHALF OF THE RESPONDENT The Respondent begs to submit as follows : 1. The respondent submits that in the grounds of appeal the appellant has contended that Section 3 of the Evidence Act is to be considered while applying Section 12B of the Central Excise Act, 1944 as well as Section 12C which is a fallacious submission contrary to the set principles of law. The respondent submit that Section 12B of Central Excise Act, 1944 is very clear in its expression without giving room for any doubt in regard to the purpose for which the said Section was introduced in the statute. To appreci­ate the said fact it is relevant to reproduce Sec. 12B of the Central Excise Act, 1944. 12B Presumption that incidence of duty has been passed on to the buyer "Every person who has paid the duty of excise on any goods under this Act shall, unless the contra....
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....by the appellant has no force in law. 3. The appellant's contention that affidavit filed by Shri P.R. Anantharaman, Controller, MRF Ltd. affirmed that excise duty was not taken into computation for determining the price of Procured Tread Rubber (PCTR) is an evidence acceptable is incorrect in law since mere affidavits of the interested persons may not carry any weight unless there is verifiable supporting maintained documents. 4. The appellants submission that the original authority was apparently satisfied with the argument and evidence produced during the hearing and hence in para 5 of the order-in-original it was recorded as follows : "Shri Anantharaman Controller has proved with the supportive, documents, namely..........is a statement not acceptable in law since the order of the original authority if read as a whole would give a clear picture and picking words and reading in isolation would be unacceptable in law and the word "proved" could have been only 'produced' when the entire para is read as a whole and in fact English language being an alien language, while considering cases the real import of the order as a whole alone is to be seen. 5. The resp....
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....into account, where a clearance documents indicates a selling price, it is built up based on the above cost, profit and tax elements. By mere statements that the sale price was static over a period of time need not necessarily mean that the excise duty element was not collected from the buyers. The price of a commodity may not change due to competitive conditions in the market and also due to alteration or reductions in the price of various inputs or rates of labour and overheads. Further a cost sheet could be disproved by the appellant only by submitting very basic documentary evidences like Bin Cards, Stores Ledger, Production Slips, Stores Requisition Slips, Material issues slips etc., which alone could furnish the ratio in which the inputs were used in the manufacturer of a specified products. The appellants informed the department that no such documents were maintained to prove that in a specific ratio the inputs were used in the manufacture of Procured Tread Rubber (PCTR). In the absence of such documentary evidence, the claim of the appellant that they have proved that the duty burden was not passed on as intended under Sec. 12B of the Central Excise Act, 1944 is incorrect a....
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....t study' is a relevant fact to prove whether duty was passed on to the buyer or not. 12. The further averments of the appellant that they would have maintained the relevant record if Section 12A, 12B, 12C, 12D were in the statute during the relevant period is not acceptable in law due to the fact that the appellant company is a public Ltd. company incorporated under the provisions of Companies Act, 1956, and as per the said Act, they are expected to maintain various records for purchase, sales, receipts, issues, assets, liabilities etc. Also Procured Tread Rubber (PCTR) is one of the final products of the ap­pellant's for which all the stores documents and other documents are neces­sarily to be maintained without which no control could be exercised on con­sumption of such materials. The appellant has stated that the product PCTR is not covered by cost audit provision and hence the records were not main­tained. The said argument is unacceptable for the reason that maintenance of stores records is nothing to do with cost audit provisions. It is a part of mate­rial control exercise of any manufacture. Further as per Rule 173G(5) of Central Excise Rules, 194....
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....ng to the expert opinion and instead of appreciating such a fairness of the original authority the appellants are making complaints on it which is contrary to the principles of law. 15. The appellant have falsely claimed that they have proved with documentary evidences that the duty burden was not passed on to the buyers. The fact is that the appellant merely submitted a sample cost sheet to prove their case. Under cost accounting principles one can prepare as many cost sheets as a person wants to meet the requirements. It is quite possible to ar­rive at the sale price by taking into account various elements of cost. Hence any cost sheet could be verified for its authenticity only by verification of supporting documentary evidences to ensure that the claim of the appellant was in order. In the absence of necessary supporting documentary evidences, the department has satisfied fully the requirements of Section 12B of the Central Excise Act, 1944. However to make the decision more justifiable, it has proved the cost sheet of the appellant was incorrect. The working pro­vided by the department for the relevant financial years, has established the fact that even after t....
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....to account a manufacturer considers the Modvat availments on inputs to determine the price of the product. Hence mere claim that the excise duty works out to 40% has no meaning unless the Modvat component is also taken into account and the cost sheet establishes that the sale price is exclusive of net excise duty liability. 19. The contention of the appellant's that the expert, Assistant Director (Cost) did not even attempt to verify the evidence based on the authoritative documents submitted by the appellants themselves is a mere misquoting of facts since no authoritative documents were submitted by the appellants and when authoritative documents were sought the appellant clearly stated that they are not maintaining such record and made a request to the Assistant Director (Cost) to have a physical visit of the factory for which the expert declined since physically visiting the factory is not going to serve any purpose in the absence of authenticative documents as required by the department. 20. The appellant has stated that it is impossible and impracticable to maintain raw material accounts final productwise because all the inputs are common to final product and a....
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....where the appellant has not produced required documents to prove that duty was not passed on to the buyers and the department has incidentally taken the pains of looking into the submitted documents and made an exer­cise which also establishes that the appellant has not proved the non passing of duty to the buyers and hence the deeming presumption as found in Section 12B of the Central Excise Act, 1944 was rightly invoked and an order was passed in accordance with the statute Central Excise Act, 1944 and the appellant's contention regarding Section 3 of the Evidence Act, and the interpretation of the words "proved", "fact" are all totally extraneous to the point in issue and as such the appeal deserves to be dismissed by this Hon'ble Tribunal. 23. The respondent submits that had the appellants had not collected the excise duty liability, having paid the amount to the department would have made a provision in Annual Report for the relevant financial year by way of a note stating that a specified amount has been paid to the department but not collected from the buyers and in the event of the refund is not being sanctioned by the excise department it would have its implica....
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....(Cost). He also referred to Rule 9B and Hon'ble Supreme Court judgment in the case of Mafatlal Industries as contained in para 95. He also invited our attention to para 99 of that judgment and submitted that the doctrine of unjust enrichment covers even provisional assessment cases until and unless it is proved with evidence that incidence of duty has not been passed on to the customers and the learned ACGSC prayed for dismissal of the appeal as the appellants have failed to prove that incidence of duty has not been passed on to the customers. 27. Shri F.S. Nariman, the learned Sr. Counsel countered the arguments of Shri K. Veeraraghavan, learned ACGSC and submitted that working sheet of the AD (Cost) was not given to the appellants in spite of the fact that they had asked for the same. The material cost as arrived at by the AD (Cost) was Rs. 19.5 per Kg whereas as per the assessee's cost sheet, it was Rs. 24.03 per Kg. He also invited our attention to page 104 to 110 of the Additional Paper book No. 1. He also submitted that they requested vide their letter dated 24-2-1993 to provide them the working sheet to enable them to give the reply, but no reply to this letter dated....
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....OC No. 1190/86 dated 27-6-1986 which is available at page No. 40 of the Additional Paper Book No. 1, to revise their classification list and to effect the clearances of the goods on payment of duty of 40% ad valorem which was applicable to heading 4008.21 at that time. 29. From the above letter of the Supdt. extracted at page 4 above under Para 2, it would be seen that in their classification list No. 2/85-86 dated 17-5-1986 they had claimed nil rate of duty for Pretread rubber as per Notification No. 47/76-C.E., dated 9-3-1976 as amended. The Supdt. pointed out that exemption was available to vulcanised rubber products non curing for tyres as per the above Notification. The Supdt. invited reference to their letter dated 29-9-1984 in which they had stated that, while giving write-up for the pre-tread rubber and from the write-up, it was observed by the Supdt of Central Excise Arakonam Range that pre-tread manufactured in their factory was cured vulcanised rubber products and so they are not entitled to avail the exemption as per Notification No. 47/76 as amended. The Supdt. also informed them that they have been seeking the said pre-tread rubber under nil rate of duty. Henc....
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.... of this order. 31. It would be seen from the correspondence between the Supdt. of Central Excise and the Appellants-assessee and the Assessee-appellants and the Assistant Collector that they were not paying any duty on the pre-tread and were claiming exemption under Notification No. 47/76 dated 9-3-1976 as amended by Notification No. 193/80 and 78/86 dated 10-2-1986 during the period 1-3-1986 to 1-7-1986. They had also informed that since the Supdt. has requested them to pay duty under protest if they are not agreeable to his decision and since they were not agreeable to the action proposed by the Supdt. they decided to pay duty under protest from 1-7-1986 on the pre-tread following the procedure of protest as contained in sub-rule (4) of Rule 233B of the CE Rules, 1944. 32. We also find that the Assistant Collector vide his order No. 4/91 dated 7-10-1991 also vacated the payment of duty under protest made from 1-7-1986 onwards. He also finalised the classification list under various sub-heading under the main heading 40 of the Central Excise Tariff, because of clarification by the Central Board of Excise & Customs from time to time. 32.1 We observe that th....
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.... 23-5-1992. 36. This revised refund claim for Rs. 3.52 crores was submitted vide their letter No. E/A/ Refund/KJ/99 dated 9-11-1992 in reference to the letter C. No. IV/10/2/90 RF dated 25-11-1991 of the Assistant Collector Ranipet Division, Ranipet. They also enclosed with this letter dated 9-1-1992 a statement showing particulars of duty paid, duty payable and the amount to be refunded in respect of PCTR cleared during the period 1-3-1986 to 31-12-1986. The Assistant Collector, Madras IX Division, vide her letter dated 29-5-1992 informed the appellants that their revised claim for Rs. 3.52 crores has been transferred from Ranipet Division to Madras IX Division and she requested them to submit evidence to prove that they have not passed on the duty burden to their customers who have purchased the PCTR in question. 37. It would therefore be evident that appellants had started paying duty under protest vide their protest letter dated 1-7-1986 which was as a result of the direction given by the Supdt. of Central Excise. Since duty was paid under protest there was no question of payment of duty provisionally and the assessments were finalised as a result of payment of ....
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....tailed representation to the [Assistant Commissioner of Central Excise]. (6) In cases where the remedy of an appeal or revision is available to the assessee against an order or decision which necessitated him to deposit the duty under protest, he may file an appeal or revision within the period specified for filing such appeal or revision, as the case may be. (7) On service of the decision on the representation referred to in sub-rule (5) or of the appeal or revision referred to in sub-rule (6) the assessee shall have no right to deposit the duty under protest : Provided that an assessee shall be allowed to deposit the duty under protest during the period available to him for filing an appeal or revision, as the case may be, and during the pendency of such appeal or revision, as the case may be. (8) If any of the provisions of this rule has not been observed, it shall be deemed that the assessee has paid the duty without protest. NOTE : - A letter of protest or a representation under this rule shall not constitute a claim for refund. The assessees had observed the provisions of Rule 233B and duty was treated as paid under protest. We, therefore, obs....
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....he bond is inadequate, the Commissioner may, in his discretion, demand a fresh bond and may, if the security furnished for a bond is not adequate, demand additional security. (4) The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are not so assessed. (5) When the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. (6) Notwithstanding the provisions of self-assessment in this rule, in cases of provisional assessment, the final assessment shall be made by the proper officer. It will be seen from the above rule that the assessee may request the proper officer giving reasons for provisional assessment to duty under Rule 9B of the Rules ibid and the proper officer may direct, after such enquiry as he deems fit, that the duty leviable on such goods shall be assessed ....
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....han the cost price plus duty and if he does so he cannot survive in business. Only in case of distress sale such a thing is understandable. Distress sales are not normal feature and cannot therefore constitute a basis for judging the validity or reasonableness of a provision. Similarly no one will ordinarily pass on less excise duty than what is exigible and payable. It was further observed that a manufacturer may dip into his profits but would not further dip into the excise duty component. And he will do so only in case of distress sale. The Hon'ble Apex Court in para 95 has observed "that Rule 9B provides for provisional assessment in a situation specified in clauses (a), (b) & (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that when the duty payable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed and if duty provisionally assessed falls short of or is in excess of the duty finally assessed the assessee shall p....
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....rred to the order passed by the Assistant Collector and the Assistant Collector in her order gave cost construction of the impugned product at each point of time during the subject period as to how the margin of profit had shown an increasing trend after taking into account the benefit of Modvat Credit enjoyed by the appellants. He has also observed that it was a common knowledge that the market price of any product was determined by various factors such as demand, quality, competition and price structure etc. Therefore, in a case where a manufacturer cannot push his product into the market, when identical product is available at a cheaper price he would naturally cut down his margin of profit and fix the price on par with the market price of identical product. Obviously in the present case, even after taking into account the element of excise duty, the appellants had clearly made profits consistently. Considering the nature of the product, which is manufactured in large scale by Small Scale manufacturers enjoying exemption and also taking into account that tread rubber whether pre-cured or un-cured is used for the same purpose of re-treading of worn out/bald tyres, there is every ....
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....ng a fresh levy of duty. Therefore, mere non increasing of price at that time particularly of the tyres cannot be a reason sufficient to take a view that incidence of duty has not been passed on to the consumers as claimed by the appellants. On the other hand the incidence of duty can be deemed to have been passed on to the consumers in the facts and circumstances of the this case. Following the land mark judgment rendered by the Hon'ble Supreme Court in the case of M/s. Jain Spinners Ltd. reported in 1992 (61) E.L.T. 321 (S.C.) not only the constitutional validity of the amendment to Section 11B of the CE Act, 1944 has been upheld, but also a law has been laid down to the effect that the amended provisions have retrospective effect and are applicable not only to all pending applications for refund but also to all earlier orders and direction given by any court on such refund. The judgment of the Tribunal in the case of Cimmco Co. v. CCE, Jaipur, reported in 1999 (107) E.L.T. 246 (Tribunal) is also not applicable to the facts of this case since there was no condition in the work order that the rates are inclusive of the duties and taxes. On the contrary it is on record that the pri....
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.... Sr. Counsel Shri F.S. Nariman that the assessments were provisional and his reliance on para 95 of the Hon'ble Supreme Court judgment in the case of Mafatlal Industries Ltd. v. UOI (supra) and the decision of the Single Member Bench in the case of Needle Industries case reported in 1998 (101) E.L.T. 286 wherein it had been held that refund claimed by the appellants consequent upon adjustment on finalization of the provisional assessments under rule 9B(5) of the CE Rules, 1944 is not governed by Section 11A or Section 11B of the CE Act, 1944 and excess amount paid by the appellants not to be credited to the Consumer Welfare Fund and be restored to the appellant as credit in their PLA, is not acceptable in view of the fact that the assessments were not provisional and were not finalised under Rule 9B(5) of the Rules ibid. Shri F.S. Nariman has also relied upon the judgment of the Hon'ble Supreme Court in the case of Coastal Gases and Chemicals Pvt. Ltd. v. Asstt. CCE, Visakhapatnam reported in 1997 (92) E.L.T. 460 (S.C.). In this case also the claim of the assessee was not one of adjustment under Rule 9B(5) of the Rules ibid as the assessments were not provisional. Only the classifi....
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.... spirit of Section 12B ibid. The department attempted to deter­mine the break-ups of sales price based on the annual report of the company during the relevant financial year for the simple reason to follow the principles of natural justice to see whether the duty was passed on or not, even though the burden of proving the fact was entirely on the appellants to prove with documentary evidence that the burden of duty was not passed on as envisaged under Section 12B ibid. Excise duty being an indirect tax, always the burden could be passed on to the buyer unlike direct taxes like Income Tax. In the absence of any break up of the sale price to indicate the excise duty element, it is proved beyond doubt that the incidence of duty has been passed on to the customers. We also observe that the appellants failed to provide the ratio in which the input materials were consumed in the manufacture of PCTR, a vital basic information since material cost could be determined only on (i) quantity of inputs consumed and (ii) price per unit and when the appellants failed to maintain even the basic records pertaining to the product PCTR, the claim that the material was consumed in a particular rati....
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....t based on facts. The appellants did not submit any of the authoritative documents cited by the AD (Cost). Appellants clearly stated that they are not maintaining such records and made request to the AD (Cost) to have physical visit of the factory for which the expert declined since physical visit was not going to serve any purpose in the absence of authoritative documents as requested by the department. On the contrary, appellants had submitted that it was impossible and impractical to maintain raw material account of the final product wise because all the inputs are common to final product and intermediary product called compounded rubber is produced which in turn is converted into final product. They also submitted that specifications are different for every product even though the raw materials may be common and even if intermediary product emerges, a manufacturer does not maintain raw material account for every final product. In fact the appellants manufacture and clear exempted products like animal drawn vehicle tyres and tubes and reversing Modvat credit taken as per Modvat Rules. Such exercise is possible only by maintaining records for input consumption on exempted product....
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....uty @ 15% and 11D would not also apply and is therefore, not invocable. This plea of the appellants is not acceptable since duty has been paid under protest under chapter heading 40 (main heading 40.08 sub-heading 4008.21) @ 40% adv. vide their protest letter dated 1-7-1986 and the same has been passed on fully to the consumers. The plea that only duty payable @ 15% under tariff sub-heading 4008.91 should be treated as having been passed on and not the whole duty @ 40% ad valorem is also not acceptable because it is on record that they had paid duty @ 40% under protest and the same was passed on to the customers. The appellants have not been able to produce any documentary evidence or any correspondence with the customers that full incidence of duty has not been passed on to the customers. Therefore, the provisions of Section 12B would be applicable in full force. Similarly the provisions of Section 11D would have also been fully applicable to them had they collected the whole duty unauthorisedly without the knowledge of the department and they were supposed to pay the whole duty even under Section 11D. Though Section 11D was not relevant in view of the fact of this case, where dut....
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....the buyers. This Section nowhere mentions about the Evidence Act, and therefore, such co-relation of the provisions of Evidence Act with Section 12B of the CE Act, 1944 and Section 12A of the Act ibid is against the law and is not acceptable. The appellants' contention that even where it is not shown to the satisfaction of a Court that a fact exists, that fact can still be said to be proved in law when its existence is so probable that a prudent man ought to act on the "supposition" that it exists, is negatived by the very admission of the appellants in Ground No. 15 of the grounds of appeal wherein it has been categorically stated that it is impossible and impractical to maintain raw material account final product-wise and thus the supposition of a fact exists in law vanishes on the clear admission of appellants. Therefore, this plea of the appellants also fails and is not acceptable to us. The further plea of the appellants that the provisions of Sections 12A, 12B, 12C, 12D of the CE Act, 1944 are not to be applied retrospectively when there is no retro­spective effect given in the said provision, is unacceptable, since the provision of Sections 12A, 12B, 12C, 12D constitutes....