Pradeep Jain - Chartered Accountant

Case: - Commissioner of C. Ex., Coimbatore v/s M.S.Samuel & Sons

Citation: - 2009(238) E.L.T.696 (Tri.-Chennai)

Issue: - Non imposition of penalty on bona fide belief of assessee.

Brief Facts: -

The appellant has cleared RCC Poles to M/s TNEB without payment of duty during the period 1998-99. There was along pending issue about who was the manufacturer of RCC Poles which was finally settled by the Apex Court in the case of Collector vs. KSEB [1990(47) ELT A52 (SC)]. Original Authority imposed penalty and interest on duty demanded. In appeal, Commissioner (Appeals) found that there was no willful suppression by the assessee. It was also held that the assessee had bona fide belief that they were not liable to pay duty. The Commissioner vacated the penalty by following the judgment of Apex Court in Hindustan Steel Ltd vs State of Orissa [1978(2) ELT J159 (SC)]. The department has filed appeal against that order.

Appellant’s Contention:

Appellant argued that the penalty was rightly imposed by the original authority as the assessee had not registered themselves, when they had crossed the value of clearance of Rs. 50 lakhs.

Respondent’s Contention:

Nobody represented the respondent-assessee.

Reasoning of Judgment:-

Tribunal held that the finding of Commissioner (Appeal) that there was no willful suppression by assessee was not challenged in the appeal before them. Also, there was a long dispute about who was the manufacturer of the impugned goods. The finding of Commissioner about the bona fide belief of assessee was correct. Therefore, no penalty can be imposed in such circumstances and when there was no mens rea.

Decision: - Appeal dismissed.

Case: - South India Paper Mills Ltd. vs Commr. of Cus. & C. Ex., Tuticorin

Citation: - 2009 (238) E.L.T. 651 (Tri. - Chennai)

Issue:

Whether refund of CVD (in cash) claimed by assessee who had erroneously deposited it, was hit by the principle of unjust enrichment? Whether assessee could claim interest for delay in grant of refund?

Brief Facts:

Appellant imported 7 consignment of waste paper and cleared the same on payment of duty in 2004-05. Later they found that vide Notification No. 21/02-Cus, dated 01.03.02 the exemption from payment of CVD was granted to imported waste paper when it was used in manufacture of newsprint under heading 4801. Appellant filed for refund of CVD paid erroneously by them as they were eligible for exemption. The Assistant Commissioner sanctioned the refund but credited the same to the Consumer Welfare Fund. In appeal, Commissioner (A) rejected the same on the ground that the appellants had not established that the amount claimed as refund had not passed in to its customers. The Cost Accountant’s certificate submitted by the appellant was rejected by saying that it was not adequate evidence to support the claim that the duty incidence had not been passed on. The party has gone in appeal against that order.

Appellant’s Contention:

The appellants claimed that there was no unjust enrichment in granting the refund of erroneously paid CVD to them. Appellant’s had submitted a certificate obtained from a cost accountant to the effect that the amount of CVD in question had not been taken into account for costing of the newsprint manufactured using the impugned waste paper. It was also certified that the amount of CVD erroneously paid in respect of the imported consignments had been shown under the heading “Loans & Advances” as duty refund receivable from customs. In the Cenvat account register, the Cenvat credit of CVD initially availed was subsequently reversed.

Respondent’s Contention:

The respondent had reiterated the findings contained in the impugned order.

Reasoning of Judgment:-

The evidence submitted by the appellant in the form of certificates of the Cost accountant as well as the Input credit Register clearly establish that the appellant were eligible for cash refund of erroneously paid CVD and that there was no unjust enrichment if the refund was granted to them. The ratio of Apex Court judgment in CC, New Delhi vs M/s Organan (I) Ltd [2008 (231) E.L.T. 201 (S.C.)] and the judgment of Tribunal in Kudremukh Iron & Steel Co. Ltd. vs CC, Bangalore [2007 (217) E.L.T. 286 (Tribunal)] was followed.

Further, it was held that appellants were entitled to claim interest for delay of 3 months after filing of claim for refund by appellant.

Decision: - Appeal allowed.

Case: - Shree Rama Multi – Tech Ltd. Vs. Commissioner of C. Ex. Ahmedabad - III

Citation: - 2009 (238) E.L.T. 699 (Tri – Ahmd.)

Issue:

1. Treatment of product as capital goods in Balance Sheet will not hold good under Central Excise.

2. Eligibility of inputs used in trial run production.

3. Notice after two years from audit para is barred by limitation

Brief Facts:

The Commissioner (Appeal) has disallowed the Cenvat credit to the appellants on all three above referred grounds. The assessee has filed the appeal against the order-in-appeal.

Appellant’s Contention:

The appellant has pleaded against the contentions of order. It was argued that the capitalization of raw materials in Balance Sheet is not to be treated as capital goods for Central Excise purpose. The demand is barred by limitation as audit para was raised in December 2005 and was replied in the same month. However SCN was issued in the year 2007.

Respondent’s Contention:

They reiterated the grounds of order-in-appeal.

Reasoning of Judgment:

The raw material used in trial production has resulted into the final products which were cleared on payment of duty. The case of M/s Reliance Industries Ltd. vs Commissioner [2004 (173) E.L.T. 106 (Tribunal)] was not fully applicable.

The revenue had not contended that any depreciation was claimed in respect of the said capitalized raw materials. Even though they were capitalized in Balance Sheet, they would still remain as inputs and cannot be considered to be Capital Goods for the purposes of Central Excise Law. The Raw materials were not covered by the definition of Capital Goods.

The audit objection raised regarding the payment of duty on inputs used during trial runs of the new machineries was raised in December 2005 and was replied in the same month. However SCN was issued in the year 2007. The demand raised was beyond the normal period of limitation on the basis of audit objections. Prima facie demand is barred by limitation. It is a fit case for grant of stay.

Decision: Stay application allowed

Case: - CCE, Thiruvanthapuram vs. Gadco software international Pvt. Ltd.

Citation: - 2009 (92) RLT 47 (Cestat – Ban.)

Issue:

Whether the air conditioners imported by the 100% EOU in his factory were eligible for grant of benefit under Notification No. 1/95-CE dated 04.01.95?

Brief Facts:

The respondent- EOU is engaged in the manufacture and development of computer software. They applied for de–bonding of 7 Nos. of Air conditioners and 12 sets of computer peripherals. They availed 90% depreciation computer peripherals and 60% depreciation on air conditioners. The respondent paid excise duty on the depreciated value after claiming depreciation on the air conditioner. A SCN was issued to the respondent demanding Excise Duty on short representation of assessable value.

Appellant’s Contention:

Appellant has contended that as per Annexure I to Notification No. 1/95- CE, air conditioners are not declared as capital goods and hence not eligible for depreciation of value on de-bonding as per Para 6.20 (a) of the EXIM Policy 2002-2007.

Respondent’s Contention:

Before the original authority, the assessee had contended that the said air conditioners were used by them for creating environmentally controlled conditions essential for development of software. Therefore, they were fulfilling all the conditions prescribed in Notification No. 1/95. However, nobody appeared on their behalf in the Tribunal.

Judgment:-

The Tribunal held that the use of air conditioners was to create an environment for software development. Reliance was placed upon Circular No. 289/5/97-CX dated 17.01.97 in which it was clarified that where the air conditioners are required and necessary for the manufacture or production of goods by 100% EOU, they will be treated as capital goods and allowed duty free clearance under the relevant notifications issued in this regard. The said Circular was issued with regard to Notification No. 1/95-C.E.

Decision: Impugned order is upheld. Appeal rejected.

Case: - Madura Coats Private Limited Versus CCE, Tirunelveli

Citation: - 2009 (92) RLT 368 (Cestat – Che.)

Issue:

Whether the charge of clandestine clearance of yarn in excess quantity covered by invoices issued by appellant was proved on the basis of Monthly Manufacturing Reports (MMRs) in absence of any other evidence?

Brief Facts:

The demand of duty against the appellant - EOU was based on the MMRs maintained by them. It was alleged that the appellant had clandestinely cleared grey and processed fabrics in excess of the quantity covered by invoices issued by them.

Appellant’s Contention:

The appellant claimed that the MMRs were internal reports prepared by the manager in charge of the EOU to appraise divisional heads of the performance of the unit with regards to production, clearance, utilization, efficiency etc. and that these reports were not meant to satisfy any statutory requirement. The data in these reports were only estimates. The quantities in MMRs and P&L A/c of the DTA did not tally.

Respondent’s Contention:

The department has alleged that the appellant-EOU had clandestinely removed goods in excess quantity covered by invoices issued by the EOU in respect of DTA clearances to DTA unit (sister concern) and other parties. The case of department is based on the said MMRs.

Judgment:

The findings of the original authority that “the statements of appellant regarding MMRs being their internal statements”, was not rebutted by the revenue. From the observation of the original authority that the entries made in private records of the manufacturer are not sufficient to establish the charge of clandestine removal of excisable goods has been upheld. In its earlier decision the Tribunal had held that the case of the department is required to be based on other factual details along with MMRs and not solely on the basis of MMRs. Therefore the charge of clandestine removal is not sustainable as there is no other evidence against them.

Decision: The impugned order was set aside and appeal allowed.

Case: - CCE, Raipur vs. Hira Steel Ltd.

Citation: - 2009 (92) RLT 30 (Cestat – Del.)

Issue:

This application is filed by the Revenue for condonation of delay in filling of appeal.

Brief Facts:

The impugned order–in–appeal was passed on 15.05.08 and had been received in the Commissioner’s office on 16.05.08. The appeal has been filed by the department on 16.10.08 after delay of 60 days.

Appellant’s Contention:

The Committee of Commissioners for authorizing appeal against the impugned order consisted of Commissioner of Central Excise, Raipur and Nagpur. The two commissioners constituting the committee were located at different places. They could not meet in time for taking the decision. Hence there was delay.

Respondent’s Contention:

It was contended that other than the Commissioners being located at two different places, no other reason has been given by the Revenue for delay in filling the appeal against the impugned order. This is not the case of condonation of delay and the appeal must be dismissed at this stage itself.

Reasoning of Judgment:

The places at which the Commissioners where located were not far away from each other that the both of them could not have met in time for such as important function. Therefore, the reason for delay given by the Revenue is not sustainable.

Decision: The revenue’s application for condonation of delay along with the appeal is dismissed.

Case: - RPG Cables Ltd. Versus CCE, Mysore

Citation: - 2009 (92) RLT 351 (Ceatat – Che.)

Issue:

Where the excess price and duty had been returned to the customers by way of credit notes, whether refund of excess duty in cash result in unjust enrichment?

Brief Facts:

Appellant supplied 10.058 kms of cable to BSNL at a provisional price. Later the price rate was finalized by BSNL. Thereupon, appellant issued a credit note to BSNL and claimed refund of the excess duty including the differential amount for which they had issued credit note to BSNL. Refund of the excess duty paid was sanctioned by the original authority but was credited in the Customer Welfare Fund. The Commissioner(A) also affirmed the order of original authority by relying on the decision given in Sangam Processors (sic Rajasthan Processors) and held that case law was against granting of refund to the appellants although they had issued credit note to the buyers and had then absorbed the duty burden.

Appellant’s Contention:

Appellant submitted that the case law cited did not cover the cases where the sale price was finalized after clearance of goods. At the time of clearance of goods, the price adopted was provisional as per the purchase order. The purchase price was finalized after clearance of goods. The excess realisation of value and duty arose due to these circumstances. The same was paid back to BSNL. It was argued that there was no unjust enrichment involved in grant of refund in cash of the excess duty paid to the appellants.

Respondent’s Contention:

The Counsel for Department reiterated the stand taken before the lower authorities.

Reasoning of Judgment:

The Tribunal held that as the sale price was agreed between the parties after clearance of goods and that resulted in realisation of excess price and which was finalized in the amendment. In such circumstances when the excess amount comprising the differential value and differential duty was returned to the buyer, the appellant had absorbed the excess duty paid. The case law relied upon the lower authorities do not lay down that unjust enrichment is involved in granting refund of excess duty paid in such circumstances. The case law of Birla Ericsson Opticals Ltd. vs CCE, Bhopal [2003 (157) ELT 97 (Tri. Del)] and in Union of India vs A.K. Spintex Ltd. & Anr [2009-TIOL-12-HC-Raj-CX] relied upon by the appellant also support their claim that cash refund of impugned amount would not involve unjust enrichment of the appellants.

Decision: - Impugned order set aside and appeal allowed.

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