Date of filing refund claim to be considered for computing time limit and not date of rectification.

Case:- BALMER LAWRIE & CO. LTD. Vs COMMISSIONER OF C. EX., KOLKATA-VI

Citation:-2015 (315) E.L.T. 100 (Tri. – Kolkata)

Brief Facts:- This is an Appeal filed against Order-in-Appeal No. 07/KOL-VI/2007, dated 28-3-2007 passed by Commissioner (Appeal-II), Central Excise, Kolkata.

Briefly stated facts of the case are that the Appellant are engaged in the manufacture of ‘Balmerol Aquaroll’ i.e. Synthetic Rolling Oil falling under Chapter 34 of the Central Excise Tariff Act, 1985. The Appellant had cleared the said goods on a provisional price of Rs. 80/- per litre against Order No. P10.0/M265/52056, dated 31-12-2001 to M/s. Bokaro Steel Plant. The price of the said product was later finalized/fixed through an amendment to the said Purchase Order on 24-5-2002. However, the deliveries from the factory of the Appellant to M/s. Bokaro Steel Plant, had been carried out by raising invoices on the clearance quantity, @ Rs. 80/- per litre during the period, 13-12-2001 to 30-4-2002. Since the price was revised finally at Rs. 62.79 per litre, the excess duty thus paid at the time of clearance of the said goods, applying the rate @ Rs. 80/- per litre, had been claimed as refund by the Appellant through a refund claim on 11-12-2002. Since there was some deficiency in the refund claim, the jurisdictional Assistant Commissioner directed the Appellant to remove the deficiency by addressing a letter dated 5-3-2003. Pursuant to the said letter of the Assistant Commissioner, the Appellant had furnished documents and further clarification to the issues raised in relation to the said refund claim on 12-6-2003. The Adjudicating Authority had rejected their refund claim on various counts. Aggrieved by the said Order, the Appellant filed an appeal before the ld. Commissioner (Appeals) who had upheld the Order of the lower authority and rejected the appeal filed by the Appellant. Hence, the present Appeal.

Appellant’s Contention:- Ld. Consultant appearing for the Appellant argued that pursuant to the finalization of provisional Price from Rs. 80/- to Rs. 62/-, that is on the lower side, the Appellant had filed the refund claim for the excess amount of duty paid at the time of clearance of goods. He has submitted that the price of Rs. 80/- per litre, at the time of clearance of the goods from the factory was provisional, which is evident from the respective purchase orders enclosed with the Appeal Paper book. He submits that on the basis of the conditions stipulated in the purchase orders, the selling price was finalized at Rs. 62.79 per litre in May, 2002.

The ld. Consultant further submits that even though the invoices were raised at the time of clearance of the goods from the factory mentioning the rate as Rs. 80/- per litre and paid Excise duty on the said value, however, no payment was received from M/s. Bokaro Steel Plant, till finalization of the provisional price. Further, he submits that on finalization of the price, a credit note was issued by the Appellant in favour of M/s. Bokaro Steel Plant for book-adjustment. It is his contention that at no point of time, they had received the amount, as shown in the respective excise invoices from M/s. Bokaro Steel Plant and later, refunded the amount by way of issuance of credit notes to M/s. Bokaro Steel Plant. In support of his contention, he placed a Chartered Accountant’s Certificate enclosed at page 72 of the Appeal Paper book. However, he fairly admits that the CA’s Certificate was not placed before the original authority for scrutiny, but submitted before the ld. Commissioner (Appeals). Further, he submits that the present refund is not barred by limitation, as the refund was filed on 11-12-2002, and in response to the queries raised by the Assistant Commissioner, vide his letter dated 5-3-2003, they had submitted further documents not enclosed with the original refund claim and removed the defects therein. Therefore, rectification of mistakes, in the original claim, cannot be construed as a fresh claim filed for the first time with the authorities on 12-6-2003. Hence, the demand is not barred by limitation. On the issue on non-admissibility of refund on the ground that there was no provisional assessment, the ld. Consultant submits that for filing the claim for refund of duty under Section 11B of CEA, 1944, it is not necessary that the assessment should always be provisional. Section 11B could be invoked in all such cases, where excess amount of duty has been erroneously paid. For the purpose of computation of the period of limitation, in filing claim for refund of duty, the period of provisional assessment becomes relevant. In support, he has referred to the judgment of the Bombay High Court in the case of CCE, Nagpurv. Oriental Explosives Pvt. Ltd. - 2008 (222)E.L.T. 205 (Bom.) and the decision of the Tribunal in the case of Telephone Cables Ltd.v. CCE, Chandigarh - 2003 (154)E.L.T. 237 (Tri.-Del.)

Respondent’s Contention:- Per contra, ld. AR for the Revenue submits that the ld. Commissioner (Appeals) has rightly concluded that the present demand is barred by limitation, as the Appellant had initially filed an incomplete refund claim, but along with all documents, the refund claim completed in all respects was filed only on 12-6-2003. Therefore, the first refund claim cannot be accepted as a refund claim under Section 11B of the CEA, 1944. In support, he refers to the decision of the Karnataka High Court in the case of Sudhir Papers Ltd.v. CCE, Bangalore-I - 2012 (276)E.L.T. 304 (Kar.). Further, ld. AR for the Revenue submits that the issuance of credit notes to regularize the amount already received, cannot come to the rescue of the Appellant in view of the judgment of the Tribunal in Sangam Processors (Bhilwara) Ltd.v. Collector of CE, Jaipur - 1994 (71)E.L.T. 989 (Tribunal). The ld. AR further submits that in absence of assessment being provisional, only on the basis of provisional price, the refund cannot be allowed to the assessee.

Reasoning of Judgment:- Heard both sides and perused the records. The refund claim has been filed by the Appellant on account of revision/final fixation of sale price. It was denied to them on various grounds viz. the assessment was not provisional, refund claim was filed beyond the time-limit prescribed under Section 11B of the Central Excise Act, 1944, and also the Appellant failed to establish that the burden of excess duty has not been passed on to the customers, as required under Section 11B of CEA, 1944. Before analyzing the issues in detail it is necessary to refer the relevant provisions of Section 11B of CEA, 1944, which reads as follows :-

“SECTION 11B. Claim for refund of duty.-(1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the (Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise) before the expiry of (one year) (from the relevant date) (in such form and manner) as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence, of such duty had not been passed on by him to any other person :

Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act :
Provided further that) the limitation of (one year) shall not apply where any duty has been paid under protest.

(2) If, on receipt of any such application, the (Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise) is satisfied that the whole or any part of the duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund :

(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).

Explanation.— For the purposes of this section, -

(A)    “refund” includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India;
(B)    “relevant date” means, -
(a)    in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, -
(i)     if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or
(ii)    if the goods are exported by land, the date on which such goods pass the frontier, or
(iii)   if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;
(b)    in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid;
(c)    in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory;
(d)    in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction;
(e)    in the case of a person, other than the manufacturer, the date of purchase of the goods by such person;
(ea) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of Section 5A, the date of issue of such order;
(eb) in case where duty of excise is paid provisionally under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof;
(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction;
(f)     in any other case, the date of payment of duty.”

Now, reverting to the dispute whether the refund claim is filed beyond the period of one year from the relevant date, we find that the Applicant had filed the refund claim initially on 11-12-2002, for an amount of Rs. 9,06,932/- involving the period, 13-2-2001 to 30-4-2002. The said refund claim was subsequently returned to the Appellant for removal of defects by the Assistant Commissioner on 5-3-2003. Accordingly, the defects were removed and the refund claim was again submitted on 12-6-2003. It is the contention of the Appellant that the date of refund claim be considered as 11th December, 2002, whereas the Revenue submits that it was complete in all respects, when filed on 12th June, 2003, hence that should be taken as the filing date. In rejecting the refund claim as time-barred, both the authorities below had observed that the date on which refund claim was filed only after removal of defects, be considered as the date of filing of the refund claim. We do not find force in the observation/reasoning of the Department, inasmuch as the refund of duty was sought, after having been paid in excess at the time of removal/clearance of the goods from the factory and the same was filed on 11th Dec., 2012. The cause of action arose on the date of payment of duty, and the claim had been filed within the time stipulated under Section 11B of the CEA, 1944, as prescribed on 11-12-2002. The mandate of sub-section (2) of Section 11B of CEA, 1944 is that the Asst. Commissioner should accept it in full or in part or may reject it. However, instead of rejection of the claim, it was directed by the Department on 5-3-2003, to file more documents/removal of defects, which the Appellant had carried out the said direction by removing the defects. In such circumstances, it cannot be said that the refund claim was filed for the first time on 12th June, 2003 and hence, barred by limitation. In our view, the date of claiming the refund of duty paid in excess, be the date when the claim was launched with the department i.e. on 11th December, 2002.

The ld. Consultant, in support of his argument that refund claim cannot be rejected on the ground that the assessment was not provisional, but the price on which the goods were sold, were provisional, referred to the judgment of the Hon’ble Bombay High Court in the case of CCE, Nagpurv. Oriental Explosives (P) Ltd. - 2008 (222)E.L.T. 205 (Bom.). In that case, the assessee had entered into an agreement with M/s. Coal India Ltd. for supply of explosives for the period from 1-4-2000 to 31-3-2001. The price of explosives was fixed initially at higher rates prevailing during the period, 2001-2002, on which the goods were cleared on payment of duty. Later, the rates were reduced and consequently, refund claim was filed on the basis of credit notes issued by M/s. Coal India Ltd. After referring to the case laws on the subject, Their Lordships on the subject, at Para 12, had observed as follows :-

“12. Having carefully considered the submissions made by learned Counsel and having perused the judgments relied upon by the revenue and assessee, we are of the considered opinion that the ratio laid down in two judgments relied upon by the assessee which have been referred to above is clearly attracted in the cases before us. It is not disputed by the revenue that at the time of payment of Excise duty the assessees had made it clear to the Department that they were paying the Excise duty on the basis of the provisional price applicable for the period 1-4-2000 to 31-3-2001 and the price was not fixed. Although the assessment was not provisional, that by itself, could not dis-entitle the assessees from claiming refund. Section 11B of the Central Excise Act, 1944 also provides for refund of duty in any other case. Moreover, the fact that the price of the goods supplied by the assessees to M/s. Coal India Limited was fixed by valid agreement entered into between the assessees and M/s. Coal India Limited after 31-3-2001 has not been disputed by the revenue.”

We find that the situation in the present case is more or less similar to the one referred to, in the case of Oriental Explosives (P) Ltd.’s case (supra). Their Lordships had observed that even though the assessment was not provisional, that by itself would not disentitle the assessee from claiming the refund. Following the said principle, we are of the considered opinion that merely because the assessment is not provisional, it would not deprive the Appellant in claiming the refund claim of the excess paid earlier. Also, in Tribunal’s view the relevance of assessment either provisional or otherwise comes into play only for the purpose of computation of the time-limit from the relevant date, in filing the refund claim under Section 11B of CEA, 1944. It has nothing to do with the eligibility of refund. In the present case, the refund claim was filed within one year from the date of clearance of goods, which is the date of payment of duty, hence, the criterion of provisional assessment is irrelevant.

On the question that the Appellant had failed to satisfy the Department that the excess duty paid by them at the time of clearance of the goods, had not been recovered from the customers, or in other words, the burden of duty has not been passed by the Appellant on to the customers, the contention of the assessee is that initially, the price of excisable product namely, synthetic oil, cleared to M/s. Bokaro Steel Plant, was provisionally fixed at Rs. 80/- per litre, but later it was reduced to Rs. 62.79 per litre. It is their submission that even though in the respective invoices, the price was reflected as Rs. 80/- per litre, the amount had not been collected by the Appellant from its customer, M/s. Bokaro Steel Plant. Later, the price had been reduced to Rs. 62.79 per litre, and the Appellant had accordingly received the amount from M/s. Bokaro Steel Plant Ltd. @ Rs. 62.79 per litre. The credit notes issued by the Appellant, were only for the purpose of adjustment of books of accounts and not to re-credit the amount already paid by the customers to the Appellant. The contention of the Revenue, on the other hand, is that once the credit notes were issued to regularize the amount already received, therefore, in view of the decision in the case of Sangam Processors (Bhilwara) Ltd. (supra), it cannot be said that the duty burden had not been passed on to the customers. We find that the basic fact of collection of the amounts shown in the respective invoices raised at the time of clearance of the goods, is disputed by the Appellant. The Appellant have placed a Chartered Accountant’s Certificate certifying that the Appellant had not collected the amounts shown in the invoices at the time of clearance of the goods. Therefore, it is in dispute whether the amounts which are mentioned in the invoices, had either been collected or otherwise, before pressing into service the ratio of the said judgment. The ld. Consultant for the Appellant fairly accepts that the CA’s Certificate was not placed before the lower authorities, and both sides agree that the issue be examined in the light of the CA’s Certificate now placed before the Tribunal.

Thus, the fact whether the Appellant had passed on the burden of duty to the customers, needs verification/scrutiny in the light of the said CA’s Certificate and other evidences on record. Consequently, the impugned Order is set aside and the matter is remitted to the Original Adjudicating Authority, as consented by both sides, only for the limited purpose of examination/scrutiny of the issue whether the burden of duty has been passed on to the customers or otherwise.

The Appeal is disposed off on above terms.

Decision:- Appeals disposed off.

Comment:- The gist of this case is that the date of filing original refund claim is to be considered for the purpose of computing the time limit and not the date of rectification of the refund claim on account of non-submission of certain documents. Moreover, the refund claim arising on account of reduction in price of goods sold is admissible under section 11B and the refund claim is not dependent on the fact whether the assessment is provisional or not. Therefore, the appeal was allowed by way of remand to examine and verify the clause of unjust enrichment.

Prepared By:Meet Jain

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