TaxTMI 
TaxTMI 
2003 (4) TMI 187
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.... GP-1 No. 32, dated 16-9-1992. The aforesaid refund was claimed by the respondent purchaser on the ground that the goods were partially exempted under Notification No. 78/90, dated 20-3-1990 and were chargeable to concessional rate of duty at 5% ad valorem, if the same were intended for pollution control a certificate to that effect was made by an officer not below in rank of Deputy Secretary in the Ministry of Environment and Forests certifying in each case to the effect that the goods manufactured were intended for pollution purposes. 3.When the matter came before the Assistant Collector on 11-3-1992 he rejected the refund claim by his order dated 23-3-1993 on the ground that the manufacturer of the said goods, viz. M/s. Penwalt India Ltd. had not fulfilled the conditions contained in the Notification No. 78/90. The respondent filed an Appeal before the Collector (Appeals), Mumbai against the order passed by the Assistant Collector, who, by the impugned order reversed the order passed by the Assistant Collector on the ground inter alia that it is on record that the respondent had installed and were using the machinery in question for pollution control purpose and had produced ....
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....Excise if it is borne by the buyer if he has not passed on the incidence of such duty to any another person, he could claim the refund. He stated that after 1991 namely after passing of Act 40 of 1991 by the Parliament concept of unjust enrichment has been enshrined in the Act. He suggests that prior to such an amendment namely by the Central Excise and Customs Laws (Amendment) Act, 1991 it is only the manufacturer under the Central Excise Act and the importer under the Customs Act the buyer could not file the refund claim. That concept has made a drastic change in the amendment to the Central Excise Act by Act 40 of 1991. In terms of proviso to sub-section (2) of Section 11B and clause (e) thereof the buyer of the excisable goods if he had not passed on such incidence of duty to any other person is entitled to file a refund claim. He further emphasizes the fact that if the grounds of appeal of the department has to be accepted then the provisions of clause (e) in the proviso to sub-section (2) of Section 11B will be a dead letter and nugatory. He in fact invited our attention to sub-clause (e) of clause (B) to Explanation to Section 11B where it is provided that in case of a perso....
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....3-90, this is to certify that the goods mentioned below manufactured by M/s. Pennwalt India Ltd., Bombay and purchased by M/s. Indian Rayon and Industries Ltd., Veraval, Gujarat against their Purchase Order No. L/06/0598, dated 23-5-90 are intended for the purpose of pollution control. Hence it may be exempted from Excise Duty leviable in excess of 5% ad valorem as per the notification under reference. Sl.No. Name of the Item Qty 1. D-Canter Centrifugal Machine along with Star Delta Starter 1 No. Yours faithfully." 7.The manufacturer by his communication dated 9-1-1995 has indicated that he has no objection for refund being given to Indian Rayon and Industries Ltd. - the respondent before us. The question is whether under the circumstances the purchaser-respondent can claim the refund. 8.When we go through the arguments of learned Counsel and the grounds of appeal both go under diametrically opposite directions. In the grounds of appeal the department takes a plea as follows :- "Therefore, in terms of provision of section 11B as enumerated above, only the manufacturer is entitled to make such a claim. It is another matter that the incidence is conseque....
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.... to clause (B) in the Explanation to Section 11B. 11.The case should be viewed from another angle also. It can be argued that the exemption Notification No. 78/90 mentioned about certificate has to be procured from an officer not below in rank of Deputy Secretary in the Ministry of Environment and Forests. Notification does not contain any specific words that only the manufacturer should obtain the certificate from the Environment and Forests Ministry. It also does not provide for time at which it has to be procured. The idea of the notification appears to be that there will be a partial exemption in respect of the goods enumerated in the said notification provided it is certified by an official of the Environment and Forests Ministry that the same will be used for anti-pollution purposes. Incidentally here the certificate has been procured both manufacturer as well as the respondent before us. The letter dated 9-1-1995 given by the manufacturer clearly states that he has no objection. 12.In this case one more point needs to be mentioned. The show cause notice mentions following grounds :- "M/s. Indian Rayon & Industries Ltd., Bombay, have filed the refund claim on 13-2-92....
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....otification it will be clear that the Environment and Forests Ministry officer has to only certify that the goods manufactured are "intended for pollution control purposes". The question of manufacturer mentioning that the goods would be used for pollution control as mentioned in the show cause notice does not arise. The case of the department as mentioned in the grounds of appeal when we compare the same with the show cause notice did not tally with each other at all. New grounds appear to have been made. Moreover when the Assistant Collector has passed order on 18-11-1996 granting refund it has been rightly contended by the learned Counsel Shri Patel that there should be a show cause notice under Section 11A in terms of the judgment of the Tribunal in 1998 (99) E.L.T. 502 within six months of the refund. Here the refund was ordered in 1996. No such show cause notice has been issued till date. The entire appeal is therefore devoid of merits. 14.One more point needs to be mentioned in view of the fact that we have agreed with the contentions raised by Shri Patel, we feel it is not necessary to deal with other points raised by him, namely judgment of the Madras High Court in the ....
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....ot be removed from the place where they are manufactured unless the rules relating to their removal are followed and unless the duty is paid thereupon. The quantum of duty is determined by the rates set forth in the Schedule in the Central Excise Tariff Act, 1985 read with exemption notifications, if any, issued under Section 5A of the Act. The benefit of a notification had to be claimed by the manufacturer through the mechanism of filing of classification lists or price lists under Rules 173B and 173C. Although by later amendments the classification lists were replaced by declarations, the requirement of the rate of duty leviable is still embodied in Rule 173B. As far as the present appeal is concerned these lists had to be filed. It is not obligatory on an assessee to claim benefit of an exemption notification. He has the choice to pay duty at the rate otherwise applicable also (Tirupati Cigarette Pvt. Ltd. v. C.C.E. [1997 (94) E.L.T. 585 (T)]. 22.In 1986, the Modvat Scheme was introduced by incorporation of Chapter AA in the Central Excise Rules, 1944. Initially the scheme was limited to transaction between a manufacturer making inputs and another manufacturer utilising that ....
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....its judgment in the case of Hico Products Ltd. v. C.C.E. [1983 (14) E.L.T. (24)] held that the burden of proof for exemption was on the person claiming exemption. The same view was held in the later judgments. 28.Therefore, where a manufacturer had not claimed an exemption and had paid a higher quantum of duty at a later date when claiming the refund of excess duty paid, the burden is upon him to prove that he was entitled to and was eligible for the benefit of the exemption notification. 29.It is not that for such refund to be claimed, a re-approval is required of the classification, etc., under which the rate of duty was fixed. It has been so held by the Tribunal. But it is only the manufacturer who can file a claim for refund of duty paid in excess. 30.The Notification No. 78/90, dated 20-3-1990 relating to the proceedings before us exempt Pollution Control Equipments. The Schedule annexed to the notification described the goods. The goods described in the entry at Sr. No. 16 read as follows : "16. Centrifuge and Vacuum Filters for Dewatering Sludge." Given the description in the certificate dated 7th February, 1992, by the Ministry of Environment and Forests, thi....
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....the buyer is eligible and entitled to claim the benefit. In the situation as it exists before us the buyer was not entitled to claim the benefit. 34.I find that the Commissioner had erred in his order. The appeal from the Revenue succeeds and is allowed. Sd/- J.H. Joglekar Member (Technical) DIFFERENCE OF OPINION In view of the difference of opinion between the two Members, the following question is referred to the Third Member : "Whether the appeal merits dismissal as held by Member (Judicial) or whether the appeal succeeds as held by Member (Technical)? Sd/- G.N. Srinivasan Member (Judicial) Sd/- J.H. Joglekar Member (Technical) The papers may now be sent to the Hon'ble President for the nomination of the Third Member. Sd/- G.N. Srinivasan Member (Judicial) Sd/- J.H. Joglekar Member (Technical) 35. [Order per : Gowri Shankar, Member (T)]. - Having heard both sides on the difference of opinion of two members, I proceed to record my view as below. 36. One of the two grounds on which the Member (Judicial) has based ....
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....re in terms of Section 11B as enumerate above, only the manufacturer is entitled to make such a claim." 39. The departmental representative attempts with great vigour to say that this ground should be read in the context of the show cause notice and therefore should be limited to mean that on the facts of the case before me, the buyer is not entitled to refund. I must concede the appeal is limited to the facts of the case. Even so doing, it is not possible to accept this claim that there is in substance identity between the ground proposed in the notice for rejection of the claim and the ground in the appeal. This is clearly wrong. To repeat what I have said earlier, the ground in the show cause notice does not even cite the provision of Section 11B. It only relies on the fact that the manufacturer had any time made a claim and shows compliance of the benefit or shows compliance with the condition subject to which the exemption was available. The appeal before the Tribunal does not even relate to the exemption notification and is limited to the words of Section 11B of the Act. On this ground alone, I will necessarily have to hold that the view of Member (Judicial), [which is inc....
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....ly. Therefore, "the validity of the certificate as an instrument ceased even before it is issued." He sums up that buyer can claim refund where there is no dispute of classification of the rate of duty but only in case where the duty has been paid in excess by arithmetical error or in case where the presumable deduction had not been taken into account. "Where a manufacturer has performed all his functions and where the duty paid by him is in excess of what should have been charged the buyer is eligible and entitled to claim the benefit. In the situation as it exists before us, the buyer was not entitled to claim the benefit." 42. The provisions of sub-section (2) of Section 11B did not contain any condition circumscribing of a person other than a manufacturer to claim the refund. The departmental representative paraphrases these conclusions when he says that the real issue is whether the person other than the manufacturer could claim the benefit of the exemption contained in the notification. 43. Let us now consider the notification. It provides exemption to various goods specified in the Schedule thereof in excess of duty of 5% ad valorem subject to the condition that an off....
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....to whom the incidence of duty has been transferred. Sub-section (2) of Section 11B has granted to the buyer a right to claim refund. Therefore, when the buyer claims a refund, he steps into the shoes of the manufacturer, who, prior to the amendment in 1991 was entitled to claim refund. Except in a few cases, buyer of excisable goods could not claim refund of the duty paid prior to 1991. It would in my view defeat the intention behind the amount to restrict the claim of the buyer only to cases of arithmetical mistake or failure to claim deduction. 44. It is settled law that the claim for an exemption contained in a notification cannot be defeated only on the ground that it was not made at the time of clearance of the goods and decisions of the Tribunal and Courts have recognised a right of a manufacturer to claim an exemption contained in the notification even at the appellate stage. Now if a manufacturer can claim the benefit of the exemption subsequently, in the absence of a provision to the contrary, so can a buyer of these goods. As the Member (Judicial) has noted, neither Section 11B of the Act nor Notification No. 78/98 contained any restriction on the right of a buyer to c....