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2011 DIGILAW 276 (KAR)

Commissioner of Central Excise v. ITC Limited

2011-03-07

N.KUMAR, RAVI MALIMATH

body2011
JUDGMENT N. Kumar, J.— This appeal is by the revenue challenging the order passed by the Tribunal 2010 (262) E.L.T. 949 (Tribunal), which has upheld the order of the appellate authority, which directed for refund of the excess duty paid to the Assessee. 2. The Assessee M/s. ITC Limited, Bangalore are manufacturers of cigarettes falling under Chapter 24 of CETA, 1985. A provisional order came to be passed permitting the Assessee to pay duty as per the price lists from time to time under the erstwhile Rule 173C of the Central Excise Rules, 1944. Subsequently, an order-in-original No. 22/2001 dated 26-7-2001 finalized the provisional assessment for the period from 1-10-1975 to 28-2-2003 and demanded a differential duty of Rs. 583.19 crores approximately, from the Assessee. Aggrieved by the said order, the Assessee preferred an appeal to the Commissioner of Central Excise (Appeals). The order-in-original was set aside and the matter was remanded to the Assessing Authority for re-determination of the assessable value of the cigarettes for the period in question after allowing the deductions allowable in law. After such re-determination, the Assessing Authority held that a sum of Rs. 3,76,29,657.53 has been paid in excess by the Assessee for the aforesaid period. In order to refund the aforesaid excess amount, the Assessing Authority called upon the Assessee to produce documents to substantiate the deductions claimed. The documents were produced. However, instead of refunding the said amount, by an order dater" 31-8-2004 after sanctioning of the refund, he credited the same to the Consumer Welfare Fund invoking the provisions of unjust enrichment based on the Hon'ble Supreme Court's judgment in the case of Mafatlal Industries Ltd. and Others Vs. Union of India and Others, JT (1996) 11 SC 283 Aggrieved by the said order, Assessee preferred an appeal to the Commissioner (Appeals), Bangalore. The Commissioner of Appeals set aside the said order and held that the Assessee is eligible for refund and the case is not hit by the provisions of unjust enrichment. However, the Assessee had requested for adjustment of the aforesaid amount which was sanctioned for refund of the amount which are determined to be due by the Assessee to the department. Accordingly, the said adjustment was done and after such adjustment, the amount which was actually due to the Assessee was Rs. 1,26,66,595/- only. The said amount was ordered to be refunded to the Assessee. Accordingly, the said adjustment was done and after such adjustment, the amount which was actually due to the Assessee was Rs. 1,26,66,595/- only. The said amount was ordered to be refunded to the Assessee. Aggrieved by the said order, the revenue preferred an appeal to the Tribunal. The Tribunal held that the doctrine of unjust enrichment applies to the facts of the case. It also held that the burden of proving of the liability is not passed on to the customer squarely falls on the Assessee. However, it held that it is for the adjudicating authority to decide finally whether any such burden is passed on to the customer. However, relying on a judgment of the Punjab and Haryana High Court in the case of Commissioner of C. Ex. Vs. Modi Oil and General Mills, (2007) 210 ELT 342 (P and H) the Tribunal upheld the order of the Appellate Authority. Aggrieved by the same, the revenue is in appeal before this Court. 3. The learned Counsel appearing for the Appellant assailing the impugned order contended that in view of the constitution bench judgment of the Supreme Court in the case of Mafatlal Industries Ltd. and Others Vs. Union of India and Others, JT (1996) 11 SC 283 the doctrine of unjust enrichment will not apply to the case on hand. As the burden of showing that the duty is not passed to the customer is not discharged by the Assessee, the Assessing Authority was justified in directing crediting of the amount refundable to the Welfare Fund. The Appellate Authority was in error in interfering with the said order. Even though the tribunal has accepted the case of the revenue in all aspects, while the granting the final relief, it has followed by the judgment of the Punjab and Haryana High Court and upheld the order of the Appellate Authority, which is expressly illegal and calls for interference. 4. Per contra, the learned Counsel for the Assessee supported the impugned order. 5. From the aforesaid material on record, it is clear that the Appellate Authority, the Tribunal and the department proceeds on the assumption that this is a case of claim for refund by the Assessee under Section 11B of the Excise Act, 1944 and therefore, the burden of unjust enrichment applies. 5. From the aforesaid material on record, it is clear that the Appellate Authority, the Tribunal and the department proceeds on the assumption that this is a case of claim for refund by the Assessee under Section 11B of the Excise Act, 1944 and therefore, the burden of unjust enrichment applies. However, the material on record, which is not in dispute, discloses that the duty was paid in pursuance of a provisional assessment whereas in the final order of assessment, the Assessing Authority directed the Assessee to pay the differential duty. The said order was challenged before the Appellate Authority. The Appellate Authority set aside the said order and directed for re-determination of the duty payable by the Assessee. After said re-determination of the duty payable, the Assessing Authority found that the duty paid by the Assessee is in excess of what is liable to be paid under the Act. The amount was quantified. The Assessee was called upon to furnish the documents to substantiate his case. The Assessee produced the documents. Refund was sanctioned. In fact, the Assessee specifically pleaded that he is due certain amounts to the department under various other heads, which is not the subject matter of the case on hand. He wanted that the excess amount to be adjusted towards dues from him and that he be paid the balance amount of Rs. 1,26,66,595/-. The said adjustment was accepted and acted upon and it was held that only the aforesaid amount is liable to be refunded and the said amount was handed over to the Assessee. Now, the question is whether this amount which is already refunded to the Assessee is liable to be reclaimed and credited to the Welfare Fund account. The Apex Court at Para 104 of the judgment in the case of Mafatlal Industries Ltd. vs. Union of India, has clearly laid down under what circumstances a claim for refund arises under the Act, i.e. when the levy is unconstitutional or when the levy is illegal or when on the basis of the calculation made if it is found that an excess amount has been paid. It is only in those circumstances, Section 11A is attracted. The subsequent judgment of the Apex Court in the case of Commissioner of Central Excise, Mumbai-II Vs. It is only in those circumstances, Section 11A is attracted. The subsequent judgment of the Apex Court in the case of Commissioner of Central Excise, Mumbai-II Vs. Allied Photographics India Ltd., JT (2004) 4 SC 105 at paragraph 14 held that "Para 104 of the judgment in the case Mafatlal Industries Ltd. (supra) states that if refund arises upon finalisation of provisional assessment, Section 11B will not apply." Similarly, the judgment of the Apex Court in the case of Commissioner of Central Excise, Chennai Vs. T.V.S. Suzuki Limited, Hosur, 2003 (6) SCALE 123 held that the refund claims consequent upon finalization of the provisional assessment does not attract the bar of unjust enrichment. Even subsequent to 1989 to the amendment to Section 113(2), the case of unjust enrichment is not attracted. 6. In the instant case, the relevant period is from 1-10-1975 to 28-2-1983 before the amendment to Section 11B(2) of the Act. This is not a case arising out of Section 11B of the Act. The refund is paid in pursuance of the finalization of the provisional assessment order and in fact, the Assessing Authority was right in holding that the doctrine of unjust enrichment does not apply in the facts of the case relying on the judgment of the Constitution Bench as well as subsequent decisions. 7. We are satisfied that the case on hand does not attract the doctrine of unjust enrichment and the entire claim of the department is not proper as their entire claim is based on the assumption that the refund is made in pursuance of a claim made under Section 11B of the Act. Therefore, we do not see any substantial question of law that arises for consideration, which merits admission. No substantial question of law arises for consideration. The facts are clear and therefore, there is no merit in this appeal. Accordingly, the appeal is dismissed.