2004 (97) ECC 758 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB-A

Shri S.S. Kang, Vice President and Shri V.K. Agrawal, Member (T)

Jalan Steel Works (P) Ltd.

Versus

CCE, Allahabad

Appeal No. E/2270/2004-NB-A

[Arising out of Order-in-Appeal No. 537/CE/ALLD/2004 dt. 20.2.2004 passed by the Commissioner (Appeals) Customs & Central Excise, Allahabad]

Final Order No. 946/2004-NB-A, dt. 15.9.2004, Certified on 23.9.2004

Refund (C. Excise)

Contractual Price -- As per the provisions of Section 11B of the Central Excise Act, the burden is on the assessees to prove that the incidence of duty has not been passed on to any other person. The assessees have not brought on record any material/evidence to show that the duty actually paid by them was not taken into consideration while fixing the contract prices -- Refund disallowed -- Section 11B of CEA.

Appeal rejected

PRESENT :

Shri Lajja Ram, Advocate for the appellant.

Shri S.C. Pushkarna, JDR for the respondent.

Cases Cited :

1. Mafatlal Industries Limited v. UOI, 2002 (83) ECC 85 (SC)......................... [Paras 3 & 5]

2. Mc Nally Bharat Engineering Co. Ltd. v. Commissioner of Central Excise, Ranchi, 2004 (93) ECC 62 [Para 5]

3. Saroj Textiles Limited v. CCE Kanpur, 2004 (95) ECC 513 (Tri).......................... [Para 2]

4. Virat Ispat Ltd. v. CCE, Mumbai, 2003 (89) ECC 218 (Mum.)............................. [Para 5]

Per : V.K. Agrawal

In this appeal filed by M/s Jalan Steel Works (P) Limited, the issue involved in whether the bar of unjust enrichment is applicable to the refund of Central Excise duty sought by them.

2. Shri Lajja Ram, learned Advocate, submitted that the appellants manufacture re-rolled products of non-alloy steel in respect of which duty was discharged during the relevant period under Section 3A of the Central Excise Act; that they had changed the value of "d" (the pinion center distance of the pinion stand in millimetre), after the initial determination of their capacity by the Commissioner; that their request to redetermine the annual capacity of production on account of change in the value of the "d" was rejected by the Commissioner under Order-in-Original dated 24.5.2000; that on appeal filed by them the Tribunal, vide final Order No. A/129/133/2001-NB(D) dated 14.2.2001, allowed their appeal with consequential relied, if any; that consequently they had filed refund claim on 22.8.2002 for Rs. 1029694 which has been sanctioned by the Assistant Commissioner under Order-in-Original dated 14.11.2000; that the Assistant Commissioner however, ordered that the refund amount would be deposited in the Consumer Welfare Fund as they had passed on the incidence of the duty to their purchasers; that the Commissioner (Appeals) also, under the impugned Order, has rejected their appeal. The learned Advocate further submitted that they were charging a consolidated contract price without any reference to the compounded levy duty burden on the invoiced consignment; that they had taken the change in the parameters "d" into consideration while fixing their consolidated contract price to be charged from their customers; that the incidence of duty paid by them in excess has been borne by them as they had cut down their profit instead of passing on the incidence of duty to their customers. Finally he submitted that the provisions of unjust enrichment are not applicable to the compounded levy scheme under which consolidated monthly duty liability determined in advance is paid prior to the clearance of the product of the Hot Re-rolling Steel Mill; that under Section 3A of the Central Excise Act there is no correlation between the duty paid in advance and the individual clearances effected finally. The learned Advocate relied upon the decision of the Tribunal in the case of Saroj Textiles Limited v. Commissioner of Central Excise, Kanpur, 2004 (95) ECC 513 (Tri) vide Final Order No. 352/04-B dated 27.4.2004, wherein it has been held that under the compounded levy scheme the duty liability of the manufacturer is wholly unconnected with the quantity of the goods cleared by them; that "under the compounded levy scheme under which they were required to pay duty in lampsum, determined on the basis of their production capacity under Section 3A of the Act irrespective of the fact whether they were able to recover that much duty from their customer or not.

3. Countering the arguments Shri S.C. Pushkarna, Ld. JDR, submitted that the provisions of Section 11B of the Central Excise Act under which refund of Central Excise duty is granted clearly provides that the claimant of the refund has to establish that the amount of duty of excise was paid by him and the incidence of such duty has not been passed on by him to any other person; that merely because Central Excise duty is paid on the basis of annual capacity of production will not take away the fact that the incidence of duty, being indirect in nature, is passed on to the customers as held by the Constitution Bench of the Supreme Court in the case of Mafatlal Industries Limited v. Union of India, 2002 (83) ECC 85 (SC) : 1997 (89) ELT 247 (SC).

4. We have considered the submissions of both the sides. As per the provisions of Section 11B of the Central Excise Act, any person claiming refund of any duty of Excise, has to establish that the incidence of duty, in relation to which refund is claimed, has not been passed on by him to any other person. In the present matter the appellants were discharging the duty liability on the basis of Annual Capacity of Production determined by the Commissioner. The Commissioner had determined their duty liability as per the various parameters submitted by them. The capacity was determined by the Commissioner under letter dated 30.9.97. Subsequently the appellants have changed the value of factor "d" and as a result of which they sought re-determination of their Annual Capacity which was not permitted by the Commissioner. Till the matter regarding re-determination of the annual capacity was decided by the Tribunal, the appellant continued to pay Central Excise duty on the basis of the Annual Capacity of Production as determined by the Commissioner under letter dated 30.9.97. It is well settled that the incidence of Excise duty, being an indirect tax, is passed on to the customers.

5. The Supreme Court has observed in Mafatlal Industries case that presumption in Section 12B of the Central Excise Act that "until the contrary is proved, every person who has paid the duty on any goods shall be deemed to have passed on the full incidence of such duty to the buyer of such goods". The Supreme Court has held that "this presumption is consistent with the general pattern of commercial life. It indeed gives effect to the very essence of an indirect tax like the excise duty/customs duty.......Ordinarily speaking, no manufacturer would take the risk of not passing on the burden of duty". The duty liability as determined by the competent authority was known to the appellants during the relevant period. It is but natural that the duty burden suffered by them has to be taken into consideration while entering into contract for the sale of their finished products. Nothing has been brought on record by the appellants in support of their contention that they had taken the change in the parameters "d" into consideration while fixing their consolidated contract price. As per the provisions of Section 11B of the Central Excise Act, the burden is on the appellants to prove that the incidence of duty has not been passed on to any other person. They have not succeeded in discharging the said burden. The decision in the case of Saroj Textiles Limited is not applicable as facts were different inasmuch as the department had directed them to deposit the amount of duty collected by them from their customers under Section 11D of the Central Excise Act. The Tribunal has held therein that by mentioning the rate of the duty separately in invoices, it is difficult to conclude that they are charging the duty extra from the buyer since they had charged only the contract price from the buyers in spite of mentioning the notional rate of duty separately in the invoices by splitting the consolidated monthly advance paid by them. In Saroj Textiles Limited case the Tribunal was not considering the issue whether the bar of unjust enrichment is applicable to the refund of the duty discharged under Section 3A of the Central Excise Act. The learned Advocate has also relied upon the decision in the case of Mc Nally Bharat Engineering Co. Ltd. v. Commissioner of Central Excise Ranchi, 2004 (93) ECC 62, wherein it has been held that as the buyers paid the appellants the contracted price, it cannot be said that the extra duty has been recovered by them from their customer again. The said decision is not applicable as the facts are entirely different. In Mc Nally Bharat Engineering Co. Ltd. case the appellants had paid the duty on the entire contract value instead of treating the said contract value as cum duty price. In the light of these facts the Tribunal has held that the customers had only paid the contracted price and not anything in excess. In the present matter, as observed by us earlier, the appellants have not brought on record any material/evidence to show that the duty actually paid by them was not taken into consideration while fixing the contract prices. The decision as reported in Virat Ispat Ltd. v. CCE, Mumbai, 2003 (89) ECC 218 (Mum.) is also not applicable to the facts of the present matter. Accordingly, we do not find any merit in the appeal which is rejected.

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