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TMI Blog2019 (2) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... ord, namely, copies of the invoices indicating that the incidence of duty had not been passed on, the certificates given by the Chartered Accountant and the ER-1 returns filed by the Appellant, the Commissioner (Appeals) could not have held that the incidence of duty had been passed on to the customers merely on account of the statements contained in the Profit & Loss A/c. The finding, therefore, that the claim for refund was hit by doctrine of unjust enrichment cannot be sustained. The accounting disclosure contained in the Profit & Loss A/c, cannot conclusively prove that the incidence of duty had been passed on to the customer. The learned Representative for the Department has, however, placed reliance upon the decision of the Principal Bench of the Tribunal at New Delhi in the case of Ranbaxy Laboratories Ltd. vs CCE, Chandigarh, [2010 (4) TMI 390 - CESTAT, NEW DELHI], to contend that the Cenvat Credit scheme is available only if the final product suffers the excise duty. This decision is clearly distinguishable and in any view was reversed by the Himachal Pradesh High Court in Ranbaxy Laboratories Ltd. vs CCE, Chandigarh, [2012 (4) TMI 369 - HIMACHAL PRADESH HIGH COURT]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of duty paid from PLA was allowed, alleging that there was unjust enrichment. The learned Commissioner (Appeals) decided the appeals by order dated 27 April, 2018. The appeals filed by the appellant were dismissed, while those filed by the Department were allowed. Thus, the entire refund claim of ₹ 9,35,97,502/- stood denied to the appellant. These 18 appeals have, accordingly, been filed against the common order dated 27 April 2018 passed by the Commissioner (Appeals) seeking refund of the entire amount of duty paid under protest. 2. The appellant, M/s Allied Chemicals Pharmaceuticals Pvt. Limited is engaged in the manufacture of Phenotil which is said to a pharmaceutical product with formulation of Diphenoxylate Hydrochloride with Atropine Sulphate. According to the appellant, formulation of Diphenoxylate Hydrochloride with Atropine Sulphate was covered by the exemption Notification No. 4/2006-CE dated 01 March, 2006 at Sl. No.59. This entry relates to formulations manufactured from the bulk drugs specified in list 1 . List 1 of the Notification mentions various bulk drugs including Atropine. The view of the Department was that Diphenoxylate Hydrochloride being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Commissioner (Appeals) also observed that since the product was exempted from payment of duty by the Tribunal by order dated 29 May, 2006, then in view of Rule 6 of the Cenvat Credit Rules, 2004, the appellant could not have claimed cenvat credit on inputs/ input service used therein. The Commissioner (Appeals) rejected the plea of the appellant that the admissibility of cenvat credit was never challenged by the Department and that cenvat credit cannot be denied at the stage of deciding the refund claims since each refund claim had to be examined on merits and there was no requirement for the Department to raise any issue about inadmissibility of credit at the time when it was taken since the assessee was paying excise duty on the goods. 7. In regard to the appeals filed by the Department, the learned Commissioner (Appeals) observed that even though the show cause notices were issued by the Department only to deny partial refund of claims on duty paid by utilisation of cenvat credit, but the Department was justified in raising an issue about unjust enrichment in regard to duty paid through PLA in the appeals filed by the Department. Learned Commissioner also observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by exemption Notification dated 01 March, 2006 which inter alia mentions various bulk drugs, including Atropine. The view of the Department was that the major constituent of PHENOTIL was Diphenoxylate Hydrochloride and since this bulk drug was not mentioned in the exemption Notification, the Appellant was not entitled to claim exemption from payment of excise duty. Accordingly, show cause notice dated 07 April, 2006 was issued and the Adjudicating Authority denied the benefit of the exemption Notification. The Appellant filed an appeal before the Commissioner (Appeals), who by order dated 29 May, 2006 held that the bulk drug was eligible for exemption under the aforesaid Notification dated 01 March, 2006. Feeling aggrieved, the Department filed an appeal before the Tribunal. At the same time, it also issued further show cause notices to the Appellant demanding payment of duty on the bulk drug containing Atropine failing which it was stated penalty would be imposed. It is for this reason, the Appellant addressed a letter dated 31 January, 2007 to the Central Excise Division intimating them that it was depositing the Central Excise duty on the goods henceforth under protest w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise duty by the Appellant even after the Commissioner (Appeals) had decided the matter in favour of the Appellant by order dated 29 May, 2006, was voluntary. The show cause notices issued by the Department resulted in payment of duty under protest with a further rider that the Appellant would claim refund of excise duty when the matter was finally decided by the Tribunal. It needs to be noted that against the order dated 29 May 2006 passed by the Commissioner (Appeals), the Department had filed an Appeal before this Tribunal which Appeal was finally dismissed on 06 January, 2015. 15. What also needs to be stated at this stage, is that in response to the applications filed by the Appellant for refund of excise duty paid through PLA and Cenvat Credit, the Department issued a show cause notice dated 07 April, 2016 only with regard to the claim of the Appellant for refund of excise duty paid through Cenvat Credit. It was, therefore, stated in the show cause notice that the refund claimed to the extent of Central Excise duty paid through Cenvat Credit amounting to ₹ 4,24,41,226/- was not admissible. The Adjudicating Authority by order dated 13 April, 2004 reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any evidence to the contrary. 17. It is not in dispute that the invoices raised by the Appellant clearly mention that the duty applicable was NIL‟ as the goods were exempted under Notification dated 01 March, 2006. It is also not in dispute that the Appellate had filed certificates issued by a Chartered Accountant that the incidence of duty had not been passed to the customers. The ER-1 returns filed by the Appellate also showed that the goods were exempted from payment of duty and duty was being paid under protest. An affidavit of the Manager of the Appellant firm was also filed stating that the duty was borne by the Appellant. 18. In Indian Metals Ferro Alloys vs CCE, Bhubaneswar, reported in 2000 (125) ELT 943 (Tribunal), a Division Bench of this Tribunal had held that invoices are normally the best evidence to show whether the burden of duty had been passed on or not by a manufacturer to the customers and if the invoices do not show any element of duty having been recovered from the customers, it has to be assumed, in the absence of any evidence to the contrary produced by the Department, that the burden of duty had not been passed on to the customers. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less : Excise Duty XX Turnover (Net) XX The amount of excise duty to be deducted from the turnover should be the total excise duty for the year except the excise duty related to the difference between the closing stock and opening stock. The excise duty related to the difference between the closing stock and opening stock should be recognised separately in the statement of profit and loss, with an explanatory note in the notes to accounts to explain the nature of the two amounts of excise duty. The revised Accounting Standards Interpretation (ASI) replaces ASI -14 issued have also been brought on record and the same are reproduced below : ISSUE 1. What should be the manner of disclosure of excise duty in the presentation of revenue from sales transactions (turnover) in the statement of profit and loss. CONSENSUS 2. The amount of turnover should be disclosed in the following manner on the face of the statement of profit and loss: Turnover (Gross) XX Less: Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 347 (Guj.). 23. The accounting disclosure contained in the Profit Loss A/c, therefore, cannot conclusively prove that the incidence of duty had been passed on to the customer, as was also observed by the Bombay High Court in CCE, Pune-I vs Sandvik Asia Ltd., reported in 2015 (323) ELT 431 (Bom.). The relevant paragraph 4 is reproduced below : 4. On perusal of the impugned order and considering the arguments of both learned counsel, we are unable to agree with Mr. Kantharia. The Tribunal was not concerned with the treatment given to the amount and as deposited in the Assessee s profit and loss account. It is immaterial and irrelevant for the Tribunal and equally for us as to what the Assessee terms this amount in his Books of Account. Even if it is shown on the expense side that does not mean that the presumption that the burden has been passed to the consumer can be raised. 24. The certificates given by the Chartered Accountant to the effect that the incidence of duty had not been passed on also could not have been ignored. These certificates were issued on the basis of detailed scrutiny of the books of accounts and could not have been ignored in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was upheld by the Tribunal in the Appeal filed by the Department. The appeal filed by the Department was dismissed by the Tribunal and it is for this reason that the Appellant claimed refund of the excise duty. The claim of the Appellant for refund of excise duty paid through Cenvat Credit has been denied both by the Adjudicating Authority and the Appellate Authority for the reason that Cenvat Credit could not have been availed of if the goods were exempted. 27. The Appellant contended that the Appellant had been emphasizing before the Department that it was not required to pay excise duty as duty was exempted, but as the Department kept on issuing notices for payment of excise duty failing which it was stated that action would be taken against the Appellant, the Appellant was compelled to deposit the excise duty under protest with a condition that refund would be sought if the claim of the Appellant was upheld. The learned Counsel for the Appellant also contended that the Department never raised any objection to the availing of Cenvat Credit for payment of the excise duty and, therefore, it cannot deny the refund merely because the mode of payment of duty was by Cenvat Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissionerate, Noida vs M/s HCL Comnnet System Services Ltd., Noida), decided on 21 December, 2017. The High Court examined the provisions of Rule 14 of the Cenvat Credit Rules, 2004 and observed that in the absence of a notice under Rule 14, action taken to reject the claim is bad in law and the observations are : One of the stipulations in the said Rules is that a recovery of CENVAT credit may be made from the manufacturer if it had wrongly been taken and utilized or had been erroneously refunded to him. The Rules, therefore, contemplate that if such a situation arises, a notice to that effect must be given to the assessee for recovery. In the absence of such a notice for recovery, as is contemplated under Rules 14 of the Rules, any action taken or order passed to reject refund claimed would become bad. The Tribunal has come to the conclusion that in the present case compliance of the Rule 14 had not been made. There is no challenge to the correctness of that finding of the Tribunal. Also, it is seen that the total amount of refund claimed is only about ₹ 2.5 lacs. 32. Thus, for all the reasons stated above, the claim of the Appellant for refund of excise du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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