TaxTMI 
TaxTMI 
2026 (5) TMI 1162
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 1.3.1987 (for short, "Rebate Notification, granted rebate of Excise Duty to cement manufactured in factory which commenced production on or after 1.4.1986. Effectively, a rebate of Rs. 50 per metric tonne (for short "PMT") was granted to such manufacturers. 3. The Rebate Notification was followed by a Press Note dated 30.4.1987 issued by Ministry of Industry, Department of Industrial Development, which stipulated that the rebate of Excise Duty and reduction of levy quota of cement were meant to suitably compensate the concerned cement units for increase in setting up of cement plants and for growth of cement industry. 4. Further, Cement Control Order, 1967 specified the retention price (ex-factory price) of cement in Clause 8, which when read with Explanation I(ii) thereof, entitled the manufacturers to collect Excise Duty including the exemption or rebate in Excise Duty of Rs. 50 PMT granted by Central Government vide the Rebate Notification. 5. In view of the above, the Appellant (which at the relevant time was a unit of J.K. Synthetics Ltd.) applied for and was granted a license dated 3.11.1987 for substantial expansion of installed capacity of its existing cement ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....00 OIO No. 22/2000-CE (Refund) dated 16.2.2000 passed by the Ld. Assistant Commissioner, Central Excise & Customs Division, Chittorgarh held that refund claim is not time barred and sanctioned the amount, however, directed to be deposited in Consumer Welfare Fund u/s 12C of Excise Act, on account of unjust enrichment. 8.5.2001 OIA No. 268(KDT) CE/JPRII(128)/2001, passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur and rejected the appeal filed by the Appellant. Aggrieved with the same, Appellant filed an appeal against the said OIA before the Hon'ble CEGAT, New Delhi 5.12.2002 The Hon'ble CEGAT, New Delhi, in the case of Birla Corporation Limited & New JK Cement Limited v. CCE, Jaipur, Final Order No. 263-64/2002-C dated 5.12.2002, allowed the appeal filed by Appellant on the ground that duty has been paid under protest and therefore the bar of unjust enrichment is not applicable in light of the judgement of the Hon'ble Supreme Court in Sinkhai Synthetics & Chemicals Ltd. v. CCE, Aurangabad, 2002 (143) ELT 17 (SC), and directed the department to refund the amounts with utmost expedition ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... SCN bearing C. No. V(25)15/Off/Adj- II/59/05/5898-5900 dated 9.11.2005 was issued by the Ld. Commissioner, Central Excise Commissionerate, Jaipur-II, proposing recovery of interest of Rs. 1,91,16,117 sanctioned on the refunded amount of Rs. 1,85,96,463 u/s 11A(1) Excise Act, along with interest u/s 11AB ibid. 22.2.2006 SCN bearing C. No. V(25)15/Off/Adj- II/60/05/722-23 dated 22.2.2006 was issued by the Ld. Commissioner, Central Excise Commissionerate, Jaipur-II, proposing recovery of interest of Rs. 21,26,049 sanctioned on the refunded amount of Rs. 20,29,894 u/s 11A(1) Excise Act, along with interest u/s 11AB ibid. 25.1.2007 The judgment of the Hon'ble Supreme Court in the case of Sinkhai Synthetics (supra) was reversed by the Larger Bench judgment of the Hon'ble Supreme Court in the case of CCE v. Allied Photographics India Ltd., 2004 (166) ELT 3 (SC). Consequently, department challenged CESTAT's Final Order dated 5.12.2002 before the Hon'ble Supreme Court vide Civil Appeal No. 1983-1984/2004. The appeal was disposed off by Hon'ble Supreme Court in the case of Commissioner of Central Excise, Jaipur v. Birla Corporation Ltd. & Anr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad passed on the burden of duty element to the customers and thus, the refund claim is hit by the bar of unjust enrichment. It is pertinent to note that the Ld. Commissioner, Central Excise (Appeals), Jaipur-II did not consider the cross objections filed by the Appellant. 8.4.2011 Being aggrieved by the aforesaid OIAs dated 30.4.2010, the Appellant filed Appeal No. E/2717-2718/2010 before Hon'ble CESTAT, New Delhi, which was disposed off in J.K. Cement Works v. Commissioner of Central Excise, Jaipur-II, 2016 (335) E.L.T. 727 (Tri. - Del.) ("CESTAT Order dated 8.4.2011"), wherein it was held as under: * Principle of unjust enrichment is applicable to refund claim filed by Appellant; * The matter is remanded to Commissioner (Appeals) to consider whether duty element has been passed on by the Appellant; and * Commissioner (Appeals) was directed to consider cross objections filed by Appellant. 10.10.2011 The aforesaid CESTAT Order dated 8.4.2011 was challenged by the Appellant before Hon'ble Supreme Court vide Civil Appeal No. 7541-7542/2011, which were dismissed by Hon'ble Supreme Court in 2016 (335) E.L.T. A210 (S.C.). &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cidence to its buyers. A.2. It is submitted that during the relevant period, the Appellant had been incurring heavy losses and costs due to setting up of a new manufacturing unit and thus, the price at which the cement was sold was below the cost of production. As a result, the excise duty element was absorbed by the Appellant and was accounted for as an expenditure in their Balance Sheet. A.3. During the period from 01.05.1988 to 31.03.1989, the cost of production of cement in the new manufacturing unit was Rs. 5,337.42 lakhs. After taking into account excise duty (Rs. 1,172.18 lakhs) paid on dispatches of cement from factory and sales tax paid thereon (Rs. 627.69 lakhs), the Appellant expected a profit of approximately Rs. 864.91 lakhs (worked out on the basis of a 12% return on fixed asset). Therefore, the total price expected by the Appellant was approximately Rs. 8,202.20 lakhs. A.4. However, due to stiff competition in the market, the Appellant was able to make actual sales realization of only Rs. 6,762.93 lakhs. Thus, on the expected price, the Appellant suffered a loss of Rs. 1439.27 lakhs. Therefore, the Appellant incurred a loss of Rs. 553.02 la....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y amount is shown as expenditure in the profit and loss account of the Appellant. B.2. In this regard, it is humbly submitted that it is humbly submitted that mere accounting treatment in the Books of Accounts of the Appellant does not prove or establish that incidence of duty was actually passed on to some other person by the Appellant. Rather, in the presence of documentary evidence in the form of Affidavit as well as a Chartered Accountant Certificate to show that the burden of duty was borne by the Appellant alone, mere accounting treatment cannot be made a sole basis for reaching an adverse conclusion. Hence, findings in the OIA dated 29.8.2018are erroneous and unsustainable. B.3. The aforesaid submission is strengthened by the decision of Hon'ble Tribunal in Allied Chemicals & Pharmaceuticals Private Limited vs. CCE & ST, Final Order No. 50146-50163/2019 dated 1.2.2019 - CESTAT, New Delhi, wherein it was held that the bar of unjust enrichment would not apply merely on basis of the statements contained in the Profit & Loss A/c while there are documentary evidences in the nature of invoices, ER-1 returns, Accounting Standards, CA certificate, in support of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the presumption created under Section 12B of the Excise Act, which states that "every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods", was introduced w.e.f. 20.9.1991 and hence, is not applicable to the relevant period in the present case. B.8. In view of the above, rejection of refund on the ground of unjust enrichment is not sustainable and is liable to be set aside. C. EXPERT'S OPINION IN THE FORM OF CHARTERED ACCOUNTANT CERTIFICATE MUST BE GIVEN DUE IMPORTANCE AND THE SAME CANNOT BE BRUSHED ASIDE UNLESS CONTROVERTED WITH DOCUMENTARY EVIDENCE. C.1. In the present case, the Appellant duly furnished a Chartered Accountant Certificate (which was based on detailed scrutiny of the financial statements of the Appellant) before the Ld. Commissioner (Appeals)to show that the burden of excise duty was in fact borne by the Appellant alone and was not passed on to the customers. Despite this, the Ld. Commissioner (Appeals) concluded that the burden of excise duty was passed on by the Appellant to its customers.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t and the modality for the same was by way of retention of Excise Duty. D.2. Further, Clause 8 of the Cement Control Order, 1967 read with the Rebate Notification makes it clear that the intention of the Rebate Notification was to incentivise the domestic cement manufacture by allowing retention of Rs. 50 PMT of Excise Duty collected by manufacturers from their customers to cover the initial setting up cost of manufacturing unit. D.3. In view of the above, since it was a definitive policy of the Government that the Cement manufacturers are entitled to retain the rebate portion as an incentive, then invocation of principle of unjust enrichment is inequitable in as much as this is against the principle of promissory estoppels and the Government is required to honour its promise by not collecting the amount of such excess duty paid by the Appellant. D.4. In the instant case, during the relevant period from 1.5.1988 to 21.11.1988, since the department did not approve the classification declarations, the Appellant started clearances on payment of total duty, including Rs. 50 PMT allowed to be retained by the Notification. The said payment of Rs. 50 PMT was mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aced on the following decisions which have held that interest on interest not payable under excise: * Vindhyachal Air Products Pvt. Ltd. v. CCE, Bhopal, 2016 (339) E.L.T. 120 (Tri. - Del.) * CIT, Gujarat v. Gujarat Fluoro Chemicals, 2013 (296) ELT 433 (SC) E.4. In view of above submissions, it is humbly submitted that the denial of the refunded amounts and also recovery of the refunded amount and interest already sanctioned, alleged as erroneously sanctioned vide the impugned OIA dated 29.8.2018 and OIA dated 24.10.2019 are liable to be set aside and all the appeals filed by the Appellants are liable to be allowed in full. 3. Learned authorized representative oppose the contention of the learned counsel for the appellant and submits that the authorities below has rightly held that the bar of unjust enrichment has not been passed by the appellant. Therefore, refund claims are wrongly sanctioned to them and same are recoverable along with interest. 4. Heard the parties. Considered submissions. 5. We find that in this case the refund claims of duty paid by the appellant under protest have been initially sanctioned but later on sought to be recovered....