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TMI Blog2011 (4) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... representing duty collected by the respondent was paid by them to the Government and by the process of adjustment, it is not being refunded to the respondent. The process of adjustment of duty paid on CJK on which no duty is payable, towards duty liability in respect of the intermediate products, on which duty is payable, amounts to just changing the head under which the duty had been paid and so long as the duty is not being refunded to the respondent, there would not be any unjust enrichment - there is no bar on adjustment of the duty paid in respect of the non-excisable item, towards the duty liability in respect of the dutiable product and no unjust enrichment takes place as the amount paid by the respondent to the Government as excise duty on CJK, has remained with the Government - in favour of assessee. - E/479-480 of 2006-(SM) - - - Dated:- 28-4-2011 - Shri Rakesh Kumar, J. Appearance: Rep. by Shri S.R. Meena, DR for the appellants. Rep. by Shri A.R. Madhav Rao, Advocate for the respondent. Per Rakesh Kumar This matter had been heard by a Division Bench on 7.4.2010. Since there is difference of opinion between the Member (Technical) and Member (Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2003, the respondents were liable to pay the duty on the intermediate products manufactured by them, as no duty was chargeable on their finished products as CJK. The duty chargeable on the intermediate products manufactured during the period of dispute was Rs.47 Lakhs. It is in this background that a show cause notice dated 16.04.2004 issued to the respondent for (a) recovery of central excise duty amounting to Rs.47 Lakhs in respect of the clearances of intermediate products manufactured by the respondents and supplied along with other items as CJK along with interest on this duty on at the applicable rate under Section 11 A of the Central Excise Act, 1944; and (b) imposition of penalty on the respondent under Rule 25 of the Central Excise Rules, 2002 for non-discharge of duty liability on the intermediate products. 2.3 The department was of the view that since no duty was payable on CJK and as such, the assembly of various manufactured and bought-out items into CJK did not amount to manufacture, the respondent would not be eligible for Cenvat credit of duty on bought-out items and on this ground, second show cause notice dated 16.04.2004 was issued to the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent s plea that the Cenvat credit should be treated as having been reversed, as the respondent had paid duty on CJK by fully utilising the Cenvat credit in respect of the bought-out items. On appeal to the Commissioner (Appeals), the Commissioner (Appeals) vide Order-in-Appeal No.406/GRM/RTK/05 dated 21.11.2005 while upholding the Cenvat credit demand, ordered that the Cenvat credit demand may be adjusted from the amount of duty paid by the respondent on CJK. The Commissioner (Appeals) also waived the interest and penalty. Against this order of the Commissioner (Appeals), Revenue has filed appeal No.E/479 of 2009 Ex challenging the portion of the Commissioner (Appeals) s order permitting the adjustment of Cenvat credit demand from the duty on CKJ paid by the respondent. The respondent in respect of these appeals have filed cross objection registered as E/CO/168/2006. 3. Both these appeals were heard on 7.4.2010 while so far Appeal No.E/479 of 2006 is concerned, there is no difference of opinion and as such both the Members were of the view that the Commissioner (Appeals) s order permitting adjustment of Cenvat credit demand from the duty paid on CJK cannot be allowed as availm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 11B for refund of duty paid on CJK and since no such refund claim has been filed, there is no question of any adjustment for the duty paid on CJK towards their duty liability in respect of intermediate products, that the judgement of Hon ble Supreme Court in the case of Divya Enterprises (supra) , as is clear from the order, is applicable only for the period of the notification No.67/95-CE dated 1.3.95 and not for any other period and that the Commissioner (Appeals) has, therefore, wrongly relied upon the this judgement of the Apex Court. He also cited the judgement of the Apex Court in Sahkari Khand Udyog Ltd. Vs. CCE reported in 2005 (181) ELT 328 (SC) wherein it was held that doctrine of unjust enrichment is applicable to all the refunds. He, therefore, pleaded that the impugned order permitting the adjustment of duty paid on CJK towards the respondent s duty liability on intermediate products is not correct. 7. Shri A.R. Madhav Rao, Advocate, ld. Counsel for the respondent, pleaded that in this case during the period of dispute, total duty amounting to Rs.75,40,000/- had been paid on CJK, which in view of the judgment of the Hon ble Supreme Court was not liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealised by them in respect of CJK from the customers, I find that prior to the judgement of the Tribunal and the Apex Court, the respondents were paying duty on the CJK by treating the same as excisable as the department was of the view that the process of assembly of CJK amounts to manufacture. However, the respondent continued to pay the duty on CJK even after the decision of this matter in their favour by the Tribunal s order and upholding of the Tribunal s order by the Hon ble Supreme Court vide judgement dated 3.3.2001. So long as the respondent were paying duty on the CJK, they could always recover the same from their customers as central excise duty is an indirect tax and there is no prohibition in the Central Excise Act, 1944 or the Rules made thereunder in this regard. The only provision in this regard in the Central Excise Act, 1944 is Section 11 D, according to which, when a person is liable to pay duty under Central Excise Act, 1944 or the Rules made thereunder and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or Rules made thereunder, from the buyers of such goods in any manner as representing excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me head which was not payable, against tax liability under some other head, which is to be discharged. For such adjustment no application under Section 11 B is required. The unjust enrichment would take place only when after the adjustment of the duty paid on CJKs towards duty liability in respect of the intermediate products, some amount is still left and the same is refunded. But for this, there is no claim from the respondent. The refund would arise only when some amount paid as duty goes into the hands of the assessee, which has not happened in this case. The respondent had paid duty on CJK and recovered the same from their customers. In other words, the amount recovered from the customers towards duty was fully paid to the Government. If subsequently, the product on which the duty is paid is held to be as non-excisable and the intermediate product manufactured is treated as liable to duty and duty demand arises in respect of the same, in my view, there is no bar on adjustment of the duty paid in respect of the non-excisable item, towards the duty liability in respect of the dutiable product and no unjust enrichment takes place as the amount paid by the respondent to the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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