TaxTMI 
TaxTMI 
2023 (8) TMI 355
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....d by the appellant for the amounts as indicated in the Column 4 for the periods as indicated in Column 5. S.No Appeal No. Order-in-Appeal Amount (Rs.) Period 1 E/103/10 PII/PAP/193-195/09 dated 14-09-09 2,68,644/- Aug. to Nov. 2007 2 E/104/10 PII/PAP/193-195/09 dated 14-09-09 11,45,919/- Feb. To June 2008 3 E/2181/10 PI/RKS/158-162/10 dated 28-09-10 1.08,198/- October 2008 4 E/689/11 PI/RKS/158-162/10 dated 28-09-10 1,10,607/- November 2008 5 E/690/11 PI/RKS/158-162/10 dated 28-09-10 4,16,449/- February 2009 6 E/691/11 PI/RKS/158-162/10 dated 28-09-10 95,213/- December 2008 7 E/692/11 PI/RKS/158-162/10 dated 28-09-10 1,01,615/- January 2009 8 E/275/11 PI/RKS/234-236/10 dated 16-11-10 2,06,333/- April 2009 9 E/687/11 PI/RKS/234-236/10 dated 16-11-10 2,09,143/- May 2009 10 E/688/11 PI/RKS/234-236/10 dated 16-11-10 2,02,934/- June 2009 11 E/458/11 PI/RKS/06-08/11 dated 18-01-11 1,52,160/- July 2009 12 E/459/11 PI/RKS/06-08/11 dated 18-01-11 1,72,079/- August 2009 13 E/559/11 PI/RKS/06-08/11 dated 18-01-11 2,44,653/- September 2009 14 E/587/11 PI/RKS/32-33/11 dated 16-03-11 3,04,047/- ....
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....lants submissions with regard to the CA certificate in support of its claim? 3. The appeal is admitted on the above substantial question of law. 4. At the request of parties, the appeal is taken up for final disposal at this stage as the dispute is within a very narrow compass. 5. The only grievance of the Appellant before us is that the impugned order dated 7 June 2016 is that its claim for refund is rejected on account of unjust enrichment in breach of principles of natural justice. It is submitted that its submissions and reliance upon the Chartered Accountant certificate to establish that the burden of duty has not been passed on by the Appellant's to its customers, though recorded has not been dealt with. Ms. Patil very fairly states that mere passing of credit notes would not amount to discharge of burden to establish that the duty has not been passed on customers and invites our attention to the decision of the Supreme Court in the case of Commissioner of Central Excise, Madras Vs. Addison & Co. Ltd.[2016 (339) ELT 177 SC.]. However, she points out while holding so, the Apex Court has observed in paragraph 35 and 36 of its order (in respect of one of the Appeal fro....
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....nal and remanded the matter back to the tribunal for reconsideration on the basisof Chartered Accountant Certificate. 3.1 We have heard Shri Mayur Shroff, Advocate for the Appellant Assessee and Shri Sunil Kumar Katiyar, Assistant Commissioner, Authorized representative for the revenue. 3.2 Arguing for the appellant learned Counsel submits: * The Appellants had issued credit notes (which included the duty element) to their customers. Thus the duty element involved has been borne by the Appellants and not the customers. The Appellants have also shown the refund claimed as receivable in the books of account and not charged the same to profit and loss account. In the course of the proceedings before the lower authorities the Appellants have also produced Chartered Accountants certificate to that effect. It is thus manifest that there is no Unjust Enrichment of the Appellants. * As per the prevalent legal position at the time the impugned orders were passed the evidence simpliciter in the form of issue of credit notes to the immediate buyer was sufficient to discharge the burden regarding not passing on of incidence of duty under Section 12B of the Act and it was also laid down b....
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....ioner of Central Excise, Madras Vs. Addison & Co. Ltd. - 2016 (339) E.L.T. 177 (S.C.) (Rel 3 & 3% of the said judgment), in one of the Appeal which has been disposed of by the common order, the Hon'ble Apex Court has observed that where the Chartered Acco's certificate has been produced in support of a claim and its genuineness has been accepted by the Tribunal then in such a case the burden of not having passed the duty stood discharged. The Hon'ble Bombay High Court, in its order EIB TIL dated 24th September 2018 (EXB.H) has relied on the same to answer the substantial question of law in favour of the Appellants and against the Revenue. The amount claimed as refund has also been shown as receivable in the books of accounts and not charged to profit and loss accounts and the Appellants have also produced Chartered Accountant's certificates before the lower authorities to the above effect. As submitted in the previous submissions; the Appellants thus crave for an opportunity to establish that the incidence of duty has not been originally passed on to their customers and thus they would be entitled to the refund. * The subject Show Cause Notices sought to reject th....
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....n to the buyers. From the said para it is also manifest that the respondents had produced certificates from the customers certifying that they received credit notes representing excess excise duty. After considering the above evidence and after considering the Chartered Accountant's certificate produced by the Respondents the learned Commissioner (Appeals) has held in favour of the respondents. The facts noted in para 3 of the Order-in-Appeal and the findings based on factual evidence have not been assailed by the Department. The ground in the Departmental Appeal to the effect that the duty element is not mentioned in the credit notes and this indicates that the assessee has passed on the duty element to the buyers and accordingly the doctrine of unjust enrichment is applicable is thus not sustainable. The Departmental Appeals deserve to be dismissed on the ground of Government's litigation policy instruction F. No. 390/Misc/116/2017-JC, dated 22-8-2019 (Copy enclosed and marked EXB. IV) as the amounts involved are below 50 Lakhs. In fact, one of the Appeals against the aforesaid Order-in-Appeal No. PII/PAP/193-195/09 dated 14-9-2009, being Appeal No. 102/10 - Mum, has alre....
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....ts own volition and assessment. In view of the decision of the Hon'ble Supreme Court in case of Priya Blue industries and Hon'ble Bombay High Court in case of Maharastra Cylinders Pvt Ltd., the orders of assessment and refund cannot co-exist simultaneously, therefore for the refund claim to be filed and processed the assessment order needs to be varied. * Following decisions are also relied upon: o JSW Dharamatar Port Pvt Ltd. [2019 (20) GSTL 721 (Bom)] o Mafatlal Industries Ltd. [1997 (89) ELT 247 (SC)] o ALD automotive Pvt Ltd. [2018 (364) ELT 3 (SC)] 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 It is submission of the appellant assessee that Appeal No. E/64/12 against Order-in-Appeal No. PII/VGSRAO/106/2011 dated 10/10/2011 rejecting the Appeal against Order- in-Original No. ADJ/33/ KOP-I/201112 dated 6-6-2011has become infructuous hence the same is dismissed as infructuous. 4.3 On the issue whether the bar of unjust enrichment will not apply to refund claims filed by the manufacturer, if he issues the credit notes subsequent to clearance of the goods from the place of clearance, refunding th....
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.... prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, (40 of 1991), such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act :] [Provided further that] the limitation of [one year] shall not apply where any duty has been paid under protest. * * * * (2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited....
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....he case may be, but without prejudice to the validity of anything previously done thereunder. 5. For the removal of doubts, it is hereby declared that any notification issued under clause f of the first proviso to sub-section (2), including any such notification approved or modified under subsection (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.] [Explanation. - For the purposes of this section, - (A) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (B) "relevant date" means, - (a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, - (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, Or (ii) if the goods are exported by land, the date on which such goods pass the frontier, Or (iii) if the goods are exported by post, the date of dispatch of goods by....
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....elfare Fund. (2) There shall be credited to the Fund, in such manner as may be prescribed, - (a) the amount of duty of excise referred to in sub-section (2) of section 11B or sub-section (2) of section 11C or sub-section (2) of section 11D; (b) the amount of duty of customs referred to in sub-section (2) of section 27 or sub-section (2) of section 28A, or sub-section (2) of section 28B of the Customs Act, 1962 (52 of 1962); (c) any income from investment of the amount credited to the Fund and any other monies received by the Central Government for the purposes of this Fund. SECTION 12D. Utilisation of the Fund. - (1) Any money credited to the Fund shall be utilised by the Central Government for the welfare of the consumers in accordance with such rules as that Government may make in this behalf. (2) The Central Government shall maintain or, if it thinks fit, specify the authority which shall maintain, proper and separate account and other relevant records in relation to the Fund in such form as may be prescribed in consultation with the Comptroller and Auditor-General of India". 16. In the instant case, the Assessee has admitted that the incidence of duty was origin....
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....e same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched". 17. Section 11B(2) of the Act contemplates that the amount of refund determined by the Authorities shall be credited to the fund. The Proviso to Section 11B(2) permits the refund to be paid to the applicant instead of being credited to the fund if such amount is relatable to the manufacturer, the buyer or any other such class of applicants as notified by the Central Government. 18. Mr. Venkatraman interpreted the said provision to mean that the only persons who were entitled for claim of refund are the manufacturer, his buyer and any other class of persons as notified by the Central Government. There is no dispute about the fact that no notification has been issued by the Central Government as contemplated in Clause (f) to proviso to Section 11B(2) of the Act. He contested that the claim for refund can be made only by the manufact....
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....isions on the ground that real purpose behind them was not to benefit the consumers by refusing refund to manufacturers (on the ground of passing on the burden) but only to enable the Government to retain the illegally collected taxes. It is suggested that the creation of the Consumer Welfare Fund is a mere pretence and not an honest exercise. By reading the Rules framed under Section 12D, it is pointed out, even a consumer, who has really borne the burden of tax and is in a position to establish that fact, is yet not entitled to apply for refund of the duty since the Rules do not provide for such a situation. The Rules contemplate only grants being made to Consumer Welfare Societies. Even in the matter of making grants, it is submitted, the Rules are so framed as to make it highly difficult for any consumer organization to get the grant. There is no provision in the Act, Shri Nariman submitted, to locate the person really entitled to refund and to make over the money to him. "We expect a sensitive Government not to bluff but to hand back the amounts to those entitled thereto", intoned Shri Nariman. It is a colourable device - declaimed Shri Sorabjee - "a dirty trick" and "a shabby....
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.... appended to Section 11B. It is, therefore, not correct to contend that the impugned provisions do not provide for refunding the tax collected contrary to law to the person really entitled thereto. A practical difficulty is pointed out in this behalf by the learned counsel for appellants-petitioners: It is pointed out that the manufacturer would have paid the duty at the place of "removal" or "clearance" of the said goods but the sale may have taken place elsewhere; if the purchaser wants to apply for refund - it is submitted - he has to go to the place where the duty has been paid by the manufacturer and apply there. It is also pointed out that purchasers may be spread all over India and it is not convenient or practicable for all of them to go to the place of "removal" of goods and apply for refund. True it is that there is this practical inconvenience but it must also be remembered that such claims will be filed only by purchasers of high-priced goods where the duty component is large and not by all and sundry/small purchasers. This practical inconvenience or hardship, as it is called, cannot be a ground for holding that the provisions introduced by the 1991 (Amendment) Act are ....
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....hequer. Thus the burden of the duty is always on the customer and that forms the basis of the principles of unjust enrichment enshrined in section 11B of the Central Excise Act, 1944. This principle of unjust enrichment has been held by the Hon'ble Apex Court, in case of Mafatlal Industries Ltd. 1997 (89) ELT 247 (SC)] as constitutional. This decision has been referred by the Hon'ble Apex Court in the case of Addisson & Co referred above. 4.5 Section 12D creates a statutory presumption to the effect that the burden of the duty reflected on the invoice has been passed on to the consumer of the goods. It is also interesting to note that "credit notes" which form the basis of the refund claim filed are the documents which have no statutory recognition under any of the provision of the Central Excise Act, 1944. These documents have been used widely, under the principles of accounting for adjustment of the books of account. However these documents are not recognized as a mean for the refund of Central Excise Duty by the seller to the buyer of the goods. Further the seller is not having any authority to refund any excise duty the burden of which has been passed on by him to the buyer of....
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....ning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder. Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasize in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil cou....
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....has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty. (vi) .... (vii) While examining the claims for refund, the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the petitioner-plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the affairs of the State. (viii) .... (ix) The amendments made and the provisions inserted by the Central Excises and Customs Law (Amendment) Act, 1991 in the Central Excises and Salt Act and Customs Act are constitutionally valid and are unexceptionable. (x) By virtue of sub-section (3) to Section 11B of the Central Excises and Salt Act, as amended by the aforesaid Amendment Act, and by virtue of the provisions contained in sub-section (3) of Section 27 of the Customs Act, 1962, as amended by the said Amendment Act, all claims for refund (excepting....
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....rred to para 35 and 36 of the decision of the Hon'ble Apex Court in case of Addisson & Co. The said paragraphs are reproduced below: 35. The respondent-Assessee is a 100 per cent Export Oriented Unit (EOU) manufacturing cotton yarn. The respondent filed an application for refund of an amount of Rs. 2,00,827/- on 14-8-2002 on the ground that it had paid excess excise duty at the rate of 18.11 per cent instead of 9.20 per cent. The Assessee initially passed on the duty incidence to its customers. Later the Assessee returned the excess duty amount to its buyers which was evidenced by a certificate issued by the Chartered Accountant on 2-8-2002. The refund claim was rejected by the Deputy Commissioner of Central Excise, Kolhapur Division vide an order dated 24-9-2002 on the ground that the Assessee did not submit either the credit notes or the Chartered Accountant's certificate at the time of filing the refund application. Not satisfied with the genuineness of the documents the Deputy Commissioner rejected the refund claim. The Commissioner (Appeals), Central Excise, Pune allowed the appeal filed by the Assessee by taking note of the certificate issued by the Chartered Accountant and....
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....al No 100 of 2008 referred in the para 35 of the order of Hon'ble Supreme Court in case of Addisson) Hon'ble Bombay High Court had observed as follows: "Heard the learned Counsel for appellant. The appellate authority has recorded a finding of fact that the CA certificate which was produced in support of the claim shows that the benefit has not been transferred to the customers mentioning not only the credit notes but also cheques issued to the customers. In this view of the matter, we see no reason to interfere. Appeal is therefore rejected." Hon'ble Supreme Court has dismissed the appeal against this order by referring to the Chartered Accountant certificate which clearly contained the details of credit notes and the cheques issued. We do not find such details in the CA Certificate produced, hence it cannot be said that this CA Certificate establishes that the burden of the duty claimed as refund has not been passed on to the customers. Thus we do not find any merits in the submission made to remand the matter for consideration of the issue in light of the CA Certificate. 4.8 On the issue whether the Appellant could have filed the refund claim without the self assessment made....
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....uld only be made after an Appeal was filed by the party, then the provisions regarding filing of a claim within 1 year or 6 months would become redundant as the Appeal proceedings would never be over within that period. It was submitted that in the claim for refund the party could take up the contention that the Order of Assessment was not correct and could claim refund on that basis even without filing an Appeal. 6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India)'s case (supra). Once an Order of Assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an Appeal that Order stands. So long as the Order of Assessment stands the duty would be payable as per that Order of Assessment. A refund claim is not an Appeal proceeding: The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. The Officer considering the refund claim cannot also review an assessment order. Flock India 10. Coming to the question that is raised there is little scope for doubt that in a case where an a....
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....further Board's Letter vide F. No. 55/98/70-Cus-IV, dated 25-8-1970, 249/70 provides that if an assessment was made by appraiser, which is merely countersigned by the Assistant Collector, the refund can be claimed under Section 27 itself whereas if assessment is changed by the Assistant Collector, refund cannot be claimed under Section 27 without challenging the assessment itself. In view of the circulars, it was submitted that same are binding on the revenue as per Apex Court decision in the case of Collector of Central Excise, Vadodara v. Dhiren Chemical Industries - 2002 (139) E.L.T. 3 (S.C.) and Arviva Industries (I) Ltd. v. U.O.I. - 2007 (209) E.L.T. 5 (S.C.) and therefore the refund claims which are filed in pursuance of these circulars cannot be rejected. We however find that the Board has issued a Circular No. 24/2004, dated 18-3-2004 vide F. No. 438/18/2003-Cus-IV, bringing to the notice of the field formations the Apex Court decision in the case of Flock India and other cases holding that a refund claim is not maintainable when the assessees do not challenge assessment order and directed them to follow the decision of the Supreme Court and since this circular was issued a....
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.... refund procedure. Any person could claim a refund of duty and interest if any paid on such duty. Refund of duty and interest if any paid pursuant to the order of assessment or borne by him, may make an application for refund of such duty to the Assistant Commissioner of Customs or Deputy Commissioner of Customs within one year in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital. In any other case before the expiry of six months from the date of payment of duty and interest. He has to further satisfy that he has not passed on such liability to any other person. The limitation of one year or six months shall not apply where any duty and interest has been paid under protest. It is made clear by the second proviso to Section 27 that in case of refund becomes necessary as a consequence of judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year or six months shall commence from the date of such judgment, decree, order or direction. 36. Section 27 of the Customs Act as amended by Finance Act, 2011 provides that any....
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....came up for consideration before this Court was non-challenge of an appealable order where the adjudicating authority had passed an order which is appealable under the statute, and the party aggrieved did not choose to file an appeal. This Court held that it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing the order. The provisions of the Central Excise Act, 1944 came up for consideration. The Court has observed : "10. Coming to the question that is raised, there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing its order. If this position is accepted then the provisions for adjudication in the Act and the Rules, the provision ....
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....n the contention that provision for a period of limitation indicates that a refund claim could be filed without filing an appeal. Even under Section 11 under the Excise Act, the claim for refund had to be filed within a period of six months. It was still held, in Flock (India)'s case (supra), that in the absence of an appeal having been filed no refund claim could be made. 8. The words "in pursuance of an order of assessment" only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an order of assessment to claim the refund. These words do not lead to the conclusion that without the order of assessment having been modified in appeal or reviewed a claim for refund can be maintained." (emphasis supplied) 41. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. 42. It was contended that no appeal lies against the order of self-assessment. The provisions of Section 128 deal with appeals to the....
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....e High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra). 44. The provisions under Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or re-assessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, re-assessment is not permitted nor conditions of exemption can be adjudicated. Re-assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will....
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....ped availing the exemption and started payment of duty on waste paper/broke. 9. The relevant period involved in the appeal i.e. July 2001 to March 2002. The Appellant's assessments for this period were provisional and these entries were finalized on 30-1-2003. The provisional assessment order was passed on 1-3-2002. The appellant has claimed that at the time of the said final assessment order dated 30-1-2003, it was not aware of the Notification No. 10/96-C.E. or the said Circular dated 1-32001 and as such, no claim thereunder was made by it till that time nor was any such claim so considered or decided in the said final assessment order. 10. On July 18, 2003, the appellant filed a refund claim for an amount of Rs. 28,73,120/- in respect of the duty paid on the said waste paper/broke during the period from July 2001 to March 2002. The said refund claim was filed under Section 11(B) of the Central Excise Act, 1944 (for short, referred to as "the 1944 Act") and within the statutory period of limitation." 4.10 In the present cases nothing has been produced before us to hold that the assessment orders made by the appellants have ever been modified by any authority in appellate pro....
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....10 which is pending. In the Grounds of Appeal before CESTAT, the Department has stated that "The Commissioner (Appeals) erred in appreciating the fact that the assessee have issued the credit notes to their buyers wherein only the amount of CST VAT is shown separately and the duty element does not find mention at all. This indicates that the assessee has already passed on the duty element to the buyers and accordingly the doctrine of 'unjust enrichment" is applicable." Therefore, the reliance by Assistant Commissioner on the Commissioner (Appeal)'s order, particularly when Order-In-Original is appealed against is not correct and hence the Order-In-Original Is not legal, not proper. 3. The assessee has not produced any contract or other document to evidence that the rate difference was due to some contract already existing before the sale of goods to the dealers.. Therefore, the credit notes which are devoid of any clarification on rate difference prove that the amount of credit given by the assessee to the dealer does not include any element of Central Excise Duty. The Order-In-Original did not have any findings in this aspect at all. Therefore the Order-In-Original of sa....