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PJ/Case Laws/2012-13/1226

The amount paid during investigation is a deposit and not duty. The unjust enrichment and limitation does not apply.


Case: Kodak India Ltd. V/s Commissioner of Customs, C. Ex., Indore (MP)
 
Citation: 2012 (282) E. L. T. 478 (Tri. – Del.)
 

 
Brief Facts: - The brief facts of the case are that the appellant is engaged in the manufacture of various photographic chemicals. They used to clear empty MS. Drums/HDPE/PP/LDPE bags/PVC drums and cans, in which the raw materials were received by them without payment of duty. No duty was paid by them on such clearances for the period 1993-94 and 1996-97. However, on the insistence of the department that such duty was re­quired to be paid by them on the sold empty containers, appellant deposited an amount of Rs. 51,483/- vide PLA entry No. 74 dated 24-6-1997. Subsequently, they addressed a letter dated 1-7-1997 to the Assistant Commissioner intimating that the said duty was being paid by them under protest.
 
The duty demands were being raised against the appellant on the sale of empty containers by issue of various show cause notices. Some of the show cause notices were adjudicated by the Deputy Commissioner vide his order dated 1-7-2003, dropping the demand against them, relying upon the Board's Circular No. 721/37/2003-CX., dated 6-6-2003. On receipt of the said order-in-original, the appellant vide their letter dated 1-7-2003 requested the de­partment to refund the amount of Rs. 53,483/- earlier deposited by them on 24-6-1997. As the said refund claim was not in prescribed form, the papers were returned to the appellant with the direction to file all the relevant documents. Subsequently, the refund claim was filed on 8-7-2007.
 
The original adjudicating authority dealt with the said refund claim and vide order-in-original dated 1-4-2008 sanctioned/allowed the same. While dropping the show cause notice issued to the appellant for denial of refund claim, the original adjudicating authority observed as under:
                      "1 find in this case the refund application dated 18-7-2003 filed by the no­ticee was within one year of passing the Order-in-original date 1-7-2003. Mere not filing it in a proper format is only procedural and condonable omission which cannot vitiate the legitimate claim of the noticee. Further since the amount deposited by the noticee was before the confirmation of the demand end that too on the persuasion of the department, therefore, it was in the nature of deposit and not duty. Besides this, while intimating the payment particulars the noticee has also clearly mentioned that the deposits has beenmade under protest Being so the time prescribed under Section 11B of the CentralExcise Act is not attracted in this case."
 
 
 
Being aggrieved with the said order of Deputy Commissioner, Revenue filed an appeal before Commissioner (Appeals). The appellate authority held that in as much as the deposit was made by appellant on 24-6-1997 and the protest letter was filed on 1-7-1997, the said deposit cannot be considered to be having been made under protest. He accordingly, accepted the appeal filed by the Revenue and set aside the impugned order of the Deputy Commissioner granting refund.
 
Reasoning of Judgement: - After hearing both sides, The Appellate authority found that admittedly, the payment of Rs. 51,483/- was made by the appellant on 24-6-1997 in respect of clearances effected during the period 1993-94 to 1996-97. As such, it is not the case of refund of duty paid at the time of clearances of goods itself. The fact that originally the clear­ances were being made without payment of duty and a lump sum duty was de­posited later on is indicative of the fact that said deposits were made at the insis­tence of the Revenue. In any case within a period of six days from making the said payment, the appellants wrote a letter to the Revenue on 1-7-1997 itself lodging its protest. As such, the reliance by the Commissioner (Appeals) on the provisions of Rule 233(B) of Central Excise Rules, 1944 laying down the detailed procedure for payment of duty under protest in respect of routine clearances are not directly applicable to the issue in dispute. The appellants have admittedly lodged their protest and there is no dispute about the same. The procedural law is always subservient to and is in aid to justice delivery. Interpretation of the same so as to deny the substantial benefit of law to the assessee cannot be held to be aim of such procedural laws. As such, apart from holding that provisions of Rule 233(B) were not directly applicable to the present situation, I find that de­posit having been made under protest, the period of limitation would not apply.
 
Even when viewed from other angle, the appellants had deposited the said payment, when there was no confirmation of demand. Even subsequent to the said deposit, no show cause notice stand issued to the appellants propos­ing appropriation of the said deposit made by them. The other show cause notice issued for confirmation of demand, stands vacated by the adjudicating authority and were accepted by the Revenue. The law is clear that the empty containers of modvatable raw materials do not attract duty at the time of their sale. When the appellants has made a lump sum deposit at the instance of the Revenue officer, it was equally obligatory and mandatory for the proper officer to issue the show cause notice for appropriation of the same. The said show cause notice having not been issued, the deposits made by the appellant cannot take the colour of the 'duty' so as to invite the limitation provisions. The appellants were admittedly not required to pay the said duty and the refund claim does not pertain to the routine payment of duty in the ordinary course of the business where such re­fund claim requires scrutiny from the angle of limitation as also from unjust en­richment angle. The order of the Commissioner (Appeals) denying the refund claim on the point of limitation cannot be upheld. The same is accordingly set aside and the appeal allowed with consequential relief to the appellants.
 
Decision: - Appeal allowed.

Comment:- This case law has raised very interesting points. Firstly, the sale of empty containers of inputs is not liable to Central excise duty. Secondly, when the amount is paid when investigation is going on, then the amount cannot be treated as duty. It is a deposit only unless and until the same is appropriated towards duty. The concept of unjustenrichment as well as limitation period does not apply to such deposit. It will apply only in cases of payment of duty.  
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