1998 (10) TMI 238 - AT - Central Excise

Refund - Collector (Appeals) going beyond the scope of show cause notice to reject refund claim

Summary

Issues Involved:
1. Non-maintenance of separate accounts for MMSF manufactured from recycled waste.
2. Refund claim being barred by time.
3. Incidence of duty passed on to buyers/consumers (unjust enrichment).

Detailed Analysis:

1. Non-maintenance of Separate Accounts for MMSF Manufactured from Recycled Waste:
The show-cause notice dated 23-12-1991 proposed to reject the refund claim on the grounds that the appellants did not maintain any separate accounts for MMSF manufactured from recycled waste. The appellants argued that they used both virgin raw materials and recycled waste in manufacturing MMSF, and the process section maintained records showing the proportionate use of these materials. They claimed that the classification list was provisionally approved without the requirement for separate R.G.1 records. The Tribunal agreed with the appellants, noting that the notification did not stipulate that MMSF should be manufactured "wholly or entirely or exclusively" from waste. The Tribunal cited Apex Court rulings to support that the absence of such terms in the notification meant that the benefit could still be availed even if MMSF was manufactured from a mixture of waste and virgin materials. The Tribunal found the denial of the benefit due to non-maintenance of separate R.G.1 accounts untenable and remanded the matter to the Assistant Collector for verification of the records.

2. Refund Claim Being Barred by Time:
The show-cause notice also proposed that the refund claim was barred by time, having been submitted after six months of payment of duty. The appellants contended that the assessments were still provisional and not yet finalized, and they had staked a claim for a refund as early as 13-11-1990, with detailed documents submitted in August 1991. The Tribunal noted that the lower authorities did not rebut the appellants' contention regarding provisional approval of the classification list and execution of the B-13 bond. The Tribunal found that mere non-endorsement of A.R.1s with the word "provisional" was too technical a lapse to deny the refund claim on the grounds of time bar. The Tribunal remanded the matter for verification of the factual pleas regarding provisional approval and execution of the bond.

3. Incidence of Duty Passed on to Buyers/Consumers (Unjust Enrichment):
The show-cause notice further proposed that the incidence of duty had been passed on to buyers/consumers, and any refund should be credited to the Consumer Welfare Fund. The appellants argued that their selling price was a cum-duty price, and the price remained the same even after they started paying lower duty from 1-11-1990. They claimed that this indicated the higher duty element was absorbed by them and not passed on to customers. The Tribunal found the appellants' plea sound if the cum-duty price before and after 1-11-1990 remained the same and no separate charge of Central Excise duty was shown in the invoices. The Tribunal remanded the matter for verification of this factual plea.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal by remand for verifying the factual pleas of the appellants. If the factual pleas were found to be correct, the refund of duty should be given to the appellants. The appeal was disposed of in these terms.