2004 (5) TMI 164 - AT - Central Excise

Refund claim - Limitation - eligibility for concessional rate of duty - unjust enrichment - HELD THAT -The application was made by the appellant consequent to the Commissioner (Appeals) allowing the claim that it was eligible for concessional rate of duty in respect of naphtha procured during the period 1996-97 to 1998-99. The period of limitation prescribed under Section 11B may not be as such applicable in the case of the appellant. It is also relevant to note that the authorities below were not computing the period of limitation from the date of payment by the appellant. Apart from the above the appellant is only justified in contending that it was under the bona fide belief that the application for refund has to be filed before the Assistant Commissioner Sitapur and therefore the date of the application namely 7-12-1998 should be taken into consideration for the purpose of computing the period of limitation even if the period of limitation prescribed under 11B is applicable in this case. The ratio of the decision of this Tribunal in Poulose Matthen v. Collector of Central Excise 1985 (6) TMI 159 - CEGAT NEW DELHI would support the appellant. The view taken by the Tribunal on the above issue was affirmed by the Supreme Court in Collector v. Poulose Matthen 1997 (1) TMI 538 - SC ORDER . Therefore we hold that the application for refund made by the appellant cannot be rejected. Urea fertilizers prices are controlled by the Ministry of Chemicals Fertilizers. While fixing the price Ministry takes into account only the concessional rate of duty on the naphtha. Since the prices are fixed by the Government the appellant can sell the fertilizer only at the prices fixed by the Government. Therefore it is not possible for the appellant to pass on the higher duty burden on the naphtha to its customers. This issue is covered by the ratio of the decision of the Supreme Court in State of Rajasthan v. Hindustan Copper Ltd. 1997 (11) TMI 516 - SUPREME COURT In the above case Rectified Spirit was imported for use in the manufacture of copper. Price of copper is fixed by MMTC on the basis of the prevailing price fixed by the London Metal Exchange. Only such price could be charged from the consumers and no part of the excise duty paid on rectified spirit captively consumed in the manufacture of copper could be added to the price of copper which was fixed on the basis of LME prices. Supreme Court held that there is therefore no question of unjust unrichment. Certificate issued by the Fertilizer Industry Co-ordination Committee would show that while fixing the price of fertilizer urea made from naphtha excise duty on naphtha is not taken into consideration. Under these circumstances we hold that the appellant cannot be denied refund on the ground of unjust enrichment. In the result we set aside the order impugned and allow the appeal.

Summary

Issues involved: Challenge against the order rejecting refund claim u/s 11B, eligibility for concessional rate of duty, unjust enrichment.

Eligibility for Concessional Rate of Duty: Appellant manufactured ammonia for captive use in urea production, procured duty-paid naphtha under concessional rate. Application for registration u/r 192 made on 12-1-1996, allowed by Commissioner (Appeals) on 30-10-1998. Refund claim filed for duty paid on naphtha during 1996-97 to 1998-99, rejected by Assistant Commissioner on various grounds. Commissioner (Appeals) upheld rejection citing absence of provision for buyers to pay duty under protest, limitation period, and unjust enrichment.

Refund Claim u/s 11B: Appellant argued that right to claim refund u/s 11B cannot be defeated due to absence of rule for duty payment under protest by buyers. Tribunal precedents supported appellant's contention. Alternatively, appellant claimed refund application filed within limitation period from first application date. Appellant's continuous pursuit of remedy and appeal filing considered as protest against duty payment.

Unjust Enrichment: Appellant contended that price of urea fixed by Government excluded excise duty, thus no passing on of duty burden. Certificates from FICC and Chartered Accountant supported claim of non-passing on of duty burden. Precedents cited where excess duty not considered unjust enrichment when prices fixed by external authorities.

Judgment: Tribunal held that refund application cannot be rejected based on absence of rule for duty payment under protest. Appellant's pursuit of remedy and appeal filing considered as protest. Limitation period computed from first application date. Price of urea fixed by Government excludes excise duty, no passing on of duty burden to customers. Refund granted, order set aside, and appeal allowed.