1995 (7) TMI 163 - AT - Central Excise

Issues Involved:

1. Eligibility for exemption under Notification No. 175/86.
2. Refund claims for duty paid under protest.
3. Incidence of duty passed on to customers.
4. Applicability of Section 11B of the Central Excises and Salt Act, 1944.
5. Admissibility of trade discounts.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 175/86:

The appellants, manufacturers of medicaments, claimed exemption for Small Scale Industrial units under Notification No. 175/86. The excise authorities denied this exemption, arguing that the appellants' clearances should be clubbed with those of other appellants, which would exceed the exemption limit. The Tribunal had previously ruled in favor of the appellants, stating that the clearances should not be clubbed, and this decision was upheld by the Supreme Court.

2. Refund Claims for Duty Paid Under Protest:

Following the Tribunal's favorable ruling, the appellants filed for refunds of the duty paid under protest during 1989-90 and 1990-91. The amounts claimed were Rs. 8,08,172.68, Rs. 9,63,500.04, and Rs. 7,53,803.64 for three different appellant companies. The jurisdictional Assistant Collector issued Show Cause Notices to reject these refund claims, alleging that the incidence of excise duty had been passed on to the buyers.

3. Incidence of Duty Passed on to Customers:

The Assistant Collector argued that the appellants had not proven that the incidence of duty was not passed on to the customers. The appellants contended that their price lists were approved by the Department and that their selling prices remained constant before and after paying duty under protest. They provided Sale Invoices, Balance Sheets, and Profit and Loss accounts as evidence. However, the Assistant Collector rejected these contentions, noting that the appellants had made a profit during the relevant period, indicating that the duty burden was passed on to the buyers.

4. Applicability of Section 11B of the Central Excises and Salt Act, 1944:

The appellants argued that their refund claims fell outside the scope of Section 11B, as the duty paid under protest should be adjusted against the final duty amount determined after the Tribunal's decision. The Tribunal, however, held that the payment of duty under protest does not equate to provisional assessment and that Section 11B applies to all refund claims. The Supreme Court in the case of Union of India v. Jain Spinners had held that the amended provisions of Section 11B apply to all earlier orders and directions for refund.

5. Admissibility of Trade Discounts:

The Assistant Collector found that the appellants had not claimed trade discounts in their price lists filed during 1989-90 and 1990-91. The appellants argued that the discounts were reflected in their net prices in the invoices. The Tribunal noted that it is for the appropriate officer to determine the assessable value and that the appellants must declare all elements of price, including discounts, in the price list. The case was remanded to the Collector (Appeals) to verify whether the discounts were claimed and allowed in the price lists and to consider other evidence provided by the appellants.

Conclusion:

The Tribunal remanded the case to the Collector (Appeals) for a fresh decision, directing the appellants to furnish required invoices and other relevant documents to establish their claim of maintaining constant prices and not passing on the duty burden to customers. The Collector (Appeals) was also instructed to consider the appellants' evidence regarding the bridge loan and provisions in the profit and loss account. The appeals were disposed of by remand.

← Previous Next →