TaxTMI 
TaxTMI 
TaxTMI 
2011 (4) TMI 900
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....on CJKs and were availing Cenvat credit of duty paid on bought out items supplied with kits Duty paid on inputs used in the manufacture of components used captively for supply with bought out items as CJKs. In respect of components manufactured and used captively, full duty exemption under Notification No.67/95-CE was being availed. However, this matter was decided by the Tribunal in favour of the respondent vide Final Order No.408/2000-B dated 15.3.2000 by which the Tribunal held that CJK are not excisable commodity. The department filed an appeal before the Hon ble Supreme Court against the Tribunal s order and Hon ble Supreme Court vide Order dated 3.3.2001 upheld the Tribunal s order. The implication of this judgement was that while CJK is not excisable commodity, the intermediate products manufactured by the respondent, which were being supplied along with the bought-out items as CJK, would be chargeable to duty as the same would no longer be eligible for duty exemption under Notification No.67/95-CE. However, the respondent, in spite of Hon ble Supreme Court s judgment dated 3.3.2001 continued to pay duty on CJK till October, 2003 when they intimated the department that from ....
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....a) duty demand of Rs.47 Lakh in respect of the clearances for captive consumption of various components of CJK during April, 2003 to October, 2003 was confirmed along with interest under Section 11 AB and besides this, penalty of Rs.1 Lakh was imposed on the respondent under Rule 25 of the Central Excise Rules, 2002. 2.5 The respondent filed an appeal against this order of the Addl. Commissioner and the Commissioner (Appeals) vide order-in-appeal No.405/GRM/RTK/2005 dated 21.11.2005, while upholding the Addl. Commissioner s order regarding duty demand and penalty also ordered that the respondent have to be given adjustment of duty paid on the CJK, against their duty liability on the intermediate products and in this regard, the Commissioner (Appeals) relied upon the Hon ble Supreme Court s judgement in case of CCE Vs. Divya Enterprises Ltd. reported in 2003 (153) ELT 497 (SC). Earlier, the Addl. Commissioner, however in his order had not allowed this request of the respondent for adjustment. The department is in appeal before the Tribunal against the part of the Commissioner (Appeals) s order permitting adjustment of duty paid on CJK towards the respondent s duty liability ....
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....n CKJ by the respondent had been recovered by them from the customers and the adjustment amounts to giving refund which is not permissible. It is in view of this that the Bench requested the Registry to place this appeal before the Hon ble President for referring the following points of difference:- (1) Whether the Respondent have right to realise duty from buyers on CKJ when such goods were not manufactured and not dutiable as held by the Tribunal and affirmed by Apex Court? (2) Whether the Respondent shall not be called upon to deposit the duty realised by them on CJK which is not dutiable, into the treasury following the ratio laid down by Apex Court in Sahakari Khand Udyog Mandal Ltd. Vs. CCE reported in 2005 (181) ELT 328 (SC)? (3) Whether the Respondent is entitled to adjustment of duty payable on intermediate goods manufactured by it against the duty paid on CJK which was not a dutiable goods following decision of Apex Court in the case of Divya Enterprises Ltd. reported in 2003(153) ELT 497 (SC) and excess if any paid refundable? 4. The Hon ble President, CESTAT vide Order dated 16.11.2010 ordered the listing of the matter for decision on poi....
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.... of the inputs used in or in relation to manufacture of the intermediate products which can be used by them for discharging their duty liability, that since the duty paid on CJK through PLA and through Cenvat credit taken in respect of the inputs for intermediate products, used in manufacture of the intermediate products is about Rs.55 Lakhs ( Rs. 34 Lakhs credit on inputs used in intermediate products plus Rs.21 Lakhs paid through PLA) and since duty liability on the intermediate products is only Rs.47 Lakhs, the duty liability in respect of the intermediate products should be allowed to be adjusted from the duty paid on CJK, that this adjustment does not amount to unjust enrichment, that in this regard, he relies upon the judgement of the Larger Bench of the Tribunal in the case of Unison Metals Ltd. Vs. CCE, Ahmedabad reported in 2006 (204) ELT 323 (Tribunal-LB) and also the Board s Circular No.870/8/2008-CX dated 16.05.2008 and that since there is no unjust enrichment in permitting such adjustment, there is no infirmity in the impugned order. He emphasised that in this situation, the duty payable on the intermediate products can always be adjusted from the duty already paid on ....
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....t from the customers in respect of CJKs was paid to the Government. In view of this, while reply to the first point of different is in the affirmative, with regard to the second point of difference, my answer is that since the amount collected in respect of sale of CJKs as excise duty was paid by the respondent to the Government and, as such, there is no contravention of the provisions of Section 11 D, the question of asking them to pay this amount to the Government does not arise. 9. Coming to the third question whether the respondent are entitled to adjustment of the duty payable on the intermediate products manufactured by them against the duty paid on CJKs which were not dutiable, I find that the main objection of the department to this adjustment is that the same amounts to refund, which is not permissible as the same would result in unjust enrichment. Unjust enrichment takes place in a situation where some amount representing duty is collected by an assessee from his customer and the same is either not paid to the Government or having been paid, is refunded to him. In this case, neither of this has happened, as the amount representing duty collected by the respondent ....