CA Urvashi Porwal
Brief of the Case
In the case of Executive Engineer,Central Workshop Division, Chattisgarh State Electricity Board Vs. C.C.E., Raipur, it was held that the unjust enrichment can’t be proved by establishing the source of funds out of which the excise duty has been paid. Further it was held that in the case of State owned Undertakings which are funded, controlled and monitored by the State Government, the doctrine of unjust enrichment will not arise.
Facts of the Case
The appellants are having a central workshop at Bhilai where they cut the various duty paid angles, plates, channels etc. to required sizes and there after these are sent to various sites for erection of transmission towers. The work is carried out using these materials by their own employees or by contractors. The said tower after erection is used for putting up the aluminium wires for transmission of electricity. Though in the present appeal the appellants are contesting the applicability of unjust enrichment on the refund claim filed by them, the origin of the issue is very old. A dispute arose in 1976 regarding Central Excise Duty liability of the appellant on the activities undertaken by them- erection of transmission towers. After many stages of litigation up to Hon’ble Supreme Court, on 03.03.2006 the appellant filed a refund claim for Rs.2,78,57,023/-. The Jurisdictional Deputy Commissioner vide his order dated 11.10.2006 rejected the claim of the appellant on the ground of unjust enrichment and credited the sanctioned refund to the Consumer Welfare Fund of India.
Aggrieved by this order, the appellants filed appeal before the Commissioner (Appeals), Raipur. The ld. Commissioner (Appeals) set aside the Original Order and directed the Lower Authority to decide the matter afresh after the appellants produced all the required accounting records, documents, Cash Flaw Statements and all other material necessary to determine the source of funds from which excise duty was paid. Aggrieved by this order, the appellant is before this Tribunal.
Contentions of the Assessee
The appellant submitted that on the same set of facts, the Department after satisfying itself on the question of unjust enrichment, allowed the refunds for the later periods. The present claim was originally held to be time barred and claim relating to period within 6 months was allowed. Thus, an amount of Rs.12,14,074/- was sanctioned to them after satisfying the question of unjust enrichment. After the matter reached, the Hon’ble Supreme Court and it was held by the Hon’ble Court as not barred by limitation, the Department is raising the question of unjust enrichment. The ld. Counsel strongly contended that the examination of unjust enrichment on similar set of facts in respect of appellants themselves has attained finality. Hence, the Department again took a contrary view. It is admitted position that neither the transmission tower nor the transmission lines were sold to any other person and no consideration has been received for the use of towers or line from any customer. Even the question of passing the duty incidence, which in any case was paid under protest, indirectly through sale of electricity also will not arise. It is an admitted fact that the pricing of electricity is done according to the Government Policy and has no relevance on the various expenditure incurred by the appellants. In a similar situation in the case of PCC Poles, which were not sold to any other party the Tribunal held that there is no unjust enrichment vide final order No.A/544/02-NB (SM) dated 02.05.2002.
The appellant further relied on the decision of Hon’ble Madras High Court in CCE, Chennai-I vs. Superintending Engineer TNEB 2014 (300) ELT 45 (Mad.). The Hon’ble High Court held the concept of unjust enrichment is not applicable as far as State Undertakings are concerned and to the State. The Hon’ble High Court while confirming the order of the Tribunal affirmed the view that the electricity tariff rate has been arrived at much before the exemption notification and there was no material to suggest that the rate has been fixed taking into consideration the duty element.
Contentions of the Revenue
The Revenue submitted that it is the requirement on the part of the appellant to produce sufficient material evidence to establish that the duty element now claimed as refund has not been passed on to any person either directly or indirectly. This being a legal requirement, the burden is on the appellant to clearly establish such fact.
Held by Hon’ble CESTAT
The Hon’ble CESTAT stated that the only point for decision is whether the refund claim filed by the appellant is hit by the bar of unjust enrichment in terms of Section 11B of the Central Excise Act, 1944. It is necessary to note that the appellant was, during the relevant time, a State Government Organization (M.P. Electricity Board) funded, controlled and monitored by the State Government. The appellants are engaged in the distribution and sale of electricity as their main business. The admitted position is that the tariff for the electricity is different for different category of customers and decided and fixed by the State. It is also admitted fact that prior to and during the impugned period, there is no change in the tariff rate of the electricity. The appellants in a written affidavit dated 17.06.2003 categorically submitted the various details regarding their operations. It is clear that the tariff rates for electricity were fixed by the State as a matter of administrative policy keeping in view the various considerations. The points relevant to fix the tariff, which determines the income of the appellant organization will cover cross subsidy, Government subsidy, paying capacity of various category of consumers and rationalization. It is apparent that the payment of duty on the structurals which are erected and owned by the appellant themselves has no bearing or influence on these tariff rates. In such a situation, the observation of the ld. Commissioner regarding the requirement on the part of the appellant to produce records to show from which fund the Excise Duty has been discharged is irrelevant. In fact the ld. Commissioner (Appeals) further observed that if the source of Central Excise Duty is the funds out of sale of electricity or some form of subsidy by the Government, it would be the case, where element of duty has been passed on to another person. It is not clear as to how an identity of source fund can be established in an organization like appellants (State Electricity Board). It is apparently not possible to point out as to out of which exact fund the Central Excise Duty was paid to the Government. The appellants derived their income mainly from supply of electricity. They also apparently get subsidy from the Government. As already noted, these two funds/ income have no linkage to the excise duty paid under protest by the appellant. It was found that the ld. Commissioner (Appeals) observed the appellants would be deemed to have discharged the onus of absence of unjust enrichment, if excise duty payment was proved to be out of the appellant’s own fund. The duty has been paid by the appellants apparently from their fund. There is no identity of different funds and individual records for different receipts for a one to one co-relation as to which money has gone to which expenditure. Such stipulation will be impracticable.
The Hon’ble CESTAT found that the observation of the Hon’ble Supreme Court in Mafatlal Industries Ltd. 1997 (89) ELT 247 (SC) is relevant in this case. The Hon’ble Madras High Court relying on the said decision of the Apex Court held in C.C.E vs. Superintending Engineer, T.N.E.B. (supra) that unjust enrichment has no application in a situation like the present one.
The Hon’ble Madras High Court in Sescot Sheet Metal Works Ltd. vs. CESTAT, Chennai – 2015 (321) ELT 545 (Mad.) held in the case of State owned Undertakings which are funded, controlled and monitored by the State Government, the doctrine of unjust enrichment will not arise.
Based on the analysis and discussion as above, it was found that there is no case for unjust enrichment against the appellant both on the reason of the appellant being a State Organization and also on merit of not passing on the duty to another person. Accordingly, the appeal is allowed.