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TMI Blog2023 (6) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... id on the impugned goods had been absorbed by the assessee and had been shown as expenditure in profit and loss account and had not been passed on to the customer. The issue involved in the present case is squarely covered by the above referred decision of Hon ble Madras High Court. Following the above decision there are no merits in the impugned order - appeal allowed. - Excise Miscellaneous Application No. 85320 of 2023 (On behalf of Appellant) Excise Appeal No 87035 of 2013 - Final Order No 85734/2023 - Dated:- 28-4-2023 - HON BLE SHRI SANJIV SRIVASTAVA , MEMBER ( TECHNICAL ) HON BLE DR. SUVENDU KUMAR PATI , MEMBER ( JUDICIAL ) Shri A B Nawal , Chartered Accountant for the Appellant Shri Sunil Kumar Katiyar , Assistant Commissioner , Authorized Representative for the revenue ORDER PER : SANJIV SRIVASTAVA This appeal has been filed by the appellant against order in appeal No RPS/50/NSK2013 dated 22/02/2013 of the Commissioner (Appeals), Central Excise, Nashik. By the impugned order the order of original authority rejecting the refund claims filed by the appellant has been upheld. 2.1 Appellant are engaged in manufacture and clearance of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations, we set aside the impugned orders and remand the matter back to the adjudicating authority to examine the issue afresh after supplying the copy of the report of A.D. (COST) to the assessee and also after considering the decision of Flow Tech Power (supra). 7. We also direct, as the revenue involved in this matter is more than Rs.1 crore, the adjudicating authority shall pass the order within three months of the receipt of this order. It is pertinent to mention that the assessee shall be given an opportunity to present their case. The report of A.D. (COST) shall not be binding the subject matter in Appeal No. E/534/04. Appeals are allowed by way of remand. Cross objections also disposed of in the above manner. 2.3 Commissioner (Appeal) has by the impugned order upheld the order of original authority rejecting the refund claim filed by the appellant on the ground of unjust enrichment. Hence this appeal. 3.1 We have heard Shri A B Nawal, Chartered Accountant for the appellant and Shri Sunil Kumar Katiyar, Assistant Commissioner, Authorized Representative for the revenue. 4.1 We have considered the impugned order along with the submissions made in the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the copy of AD (Cost) to the assessee and also after considering the decision of Flow Tech Power , it is absolutely clear that the CESTAT's directions to the adjudicating authority was to examine the issue afresh and there was no restriction on the adjudicating authority whatsoever. Hence, I do not subscribe to the objection of the appellant that adjudicating authority has committed any error by issuing the show cause notice and traveled beyond the direction given by the Hon'ble CESTAT. 7. As regards the maintainability of the refund claims, the sanctioning authority has rejected all the claims mainly on the grounds that the appellant has failed to prove that they did not pass on the duty paid by them to their buyers and they also did not file the refund claims after reversal or adjustment of full modvat credit in respect of the raw materials used in their HDPE and LDPE products before or after filing of the refund claims in respect of which refund of duty was claimed. The appellant has challenged these two grounds of rejection in their appeal by claiming that they did not pass on duty burden to their customers in any manner and had adjusted the modvat amount attrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of production on the basis of CAS-4 for the intermediate products consumed captively on which duty was paid under protest and he has wrongly stated that excise duty paid under protest was charged to profit and loss account as expenditure without going through the fact that cost of production does not include excise duty. The pricing structure of the goods after they started paying duty under protest remained unchanged and the independent Cost Accountant has verified and has issued a certificate in this regard. Since they did not charge any excise duty in the invoices raised for clearance of DIS and SIS, being exempted from payment of duty, no further evidence was required to establish non-collection of duty by them. Further they have also enclosed sample invoices of DIS and SIS for examination. Independent Cost Accountant's certificate and affidavit of Head- Finance and Accounts are also furnished which clearly specify that they have not passed on the incidence of central excise duty paid under protest on intermediate goods to the customers. 9. On meticulous examination of the findings of the adjudicating authority and the appellant's contentions on the point of unj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only as it was included in the cost of production in this case also. The appellant has also not given any plausible explanation on the finding of AD (Cost) in his report dated 26.12.2003 that on account of payment of duty by the appellant under protest on the intermediary goods, the cost of production increased by Rs.2/- per kg. after adjustment of modvat credit available to the appellant in respect of the inputs used for manufacture of the said quantity. Their accountal of payment of such duty in their manufacturing expenditure and increase in their cost of production does not leave any doubt that the appellant had incorporated the element of duty burden in the sale of the goods and thereby recovered the same from its end customers by fetching the sale price. The appellant has also failed to establish that there was no change in their price of the final goods after they started paying duty under protest. This point could be proved only by producing the invoices relating to the period prior to 1994 when they did not pay any duty on the intermediary goods and the invoices relating to the period after 1992-93 when the appellant paid duty under protest on the intermediary goods. But t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above discussed facts and is rather negated by their own Profit and Loss accounts as per which they absorbed the duty amount in their cost of production only and thereby recovered duty amount indirectly from the customers in the garb of sale price of their goods. The fact that they did not reduce the price of their final goods despite of substantial reduction of raw material price in the last 3 years of the disputed period, as pointed out in the AD(Cost)'s report, also fully corroborate that duty amount paid by them under protest was not absorbed by them in their profit. No positive evidence to establish their above plea is ever adduced by the appellant in this case. As regards their own testimony that they have not passed on duty burden, the truth of having passed the duty burden by the appellant towards buyers is so manifest from their profit and loss account of the relevant period and other facts as discussed above that it does not require any certification from the cost accountant Shri A.B.Nawal and the Head of Finance and Accounts of the appellant. No credibility can be given to the certificate of Shri A.B.Nawal as he is also the appellant's consultant for all the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt to the extent that in the case of Flow Tech Power no element of unjust enrichment was found by the Commissioner (Appeals) and the Tribunal like in the present case. Since the appellant's case is found clearly hit by principal of unjust enrichment, I do not find any error in the Assistant Commissioner's finding that the decision in the case of Flow Tech Power is not applicable to this case. 11. The third main grounds of appeal is that despite the CESTAT's order that AD (Cost) report shall not be binding on the department, the Assistant Commissioner while deciding the matter has just made comparison of AD(Cost) report with certificate submitted by the appellant and not considered the submission made by the appellant on each point. Appellant has again prayed not to consider AD(Cost) report for the reasons mentioned in their appeal. On intensive and impirical study of the matter it is found that the service of AD(Cost) was taken by the Commissioner (Appeals) in 2004 to determine the amount of Cenvat credit involved in the raw material used in the manufacture of intermediate goods which was required to be reversed or adjusted in their refund amount. This had become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AD(Cost) has also analysed the case from the angle of unjust enrichment and reported that the assessee had passed on the incidence of the duty burden indirectly to its customers first by charging the same as expenditure to the profit and loss account and by loading to the cost of final product and secondly by not reducing the cost of final product inspite of substantial reduction in cost of raw material during the relevant period. Thus the report of AD(Cost) on various issues, which is based on objective consideration of the appellant's reports only is directly relevant to the subject under consideration and it certainly provided a valuable guidance to the adjudicating officer in this matter even if it was not binding on her in accordance with the directions of the CESTAT. The appellant may disagree with the AD(Cost) report for the obvious reasons but it cannot be considered as baseless or irrelevant. In fact I find that the AD(Cost) report is very fair, objective and very useful to consider the whole issue regarding the maintainability of their different refund claims pertaining to long and old period and it would not have been possible for the adjudicating and appellate aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Act. The respondent assessee cleared the goods without payment of duty claiming benefit of exemption under Notification No.46/94 dated 01.03.94 with the Commissioner of Central Excise. The Departmental Officers visited the factory on 08.03.1995 and found that PVC / HDPE / LDPE pipes manufactured by them were also cleared by them in the guise of parts of Drips / Sprinkler Irrigation System, on which they availed the benefit of the said notification claiming classification under Chapter Heading 84.24 of the erstwhile Central Excise Tariff Act, 1944. Therefore, an offence was registered against the assessee and after due process of law, the Commissioner of Central Excise passed an order vide Sl.No.136/96 dated 26.08.96 holding that the pipes removed from the factory could not be treated as an input for the network that was fabricated outside the factory, i.e. Drip / Sprinkler Irrigation System, as the pipe itself is an excisable product classifiable under Specific Heading 3917.00 of the erstwhile Central Excise Tariff Act, 1944 and are dutiable. So, the exemption under Notification Nos.46/94 and 52/95 are available only if the goods were classifiable under Chapter Heading 3917 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Act, 1944 which is pending before the Commissioner (Appeals), Coimbatore. Thus the question of unjust enrichment is yet to be decided by the Commissioner (Appeals), Coimbatore in the Appeal filed by the Department. iv) Meanwhile, aggrieved by the rejection of refund order in Order No.207/2003 dated 21.08.2003 passed by the Assistant Commissioner of Central Excise, Coimbatore II Division, the respondent filed an appeal before the Commissioner (Appeals), Trichy, who allowed the respondent's appeal vide Order No.88/2004 dated 31.03.2004 by holding that the respondent is eligible for refund of duty paid as it was under protest. He further held that the respondent had discharged the burden of proving that the incidence of duty in respect of the impugned goods was not passed on to their customers. Aggrieved by the decision of Commissioner (Appeals), the appellant filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal, Chennai. The Customs, Excise and Service Tax Appellate Tribunal, by their Final Order No.302/2005 dated 03.03.2005 upheld the order of the Commissioner ( Appeals), Trichy and held that the duty was paid under protest and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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