Case Law Details
Sun Metallics & Alloys Pvt. Ltd Vs Commissioner of CGST & Central Excise (CESTAT Mumbai)
CESTAT held that so far as the issue of unjust enrichment is concerned there is certificate of the Chartered Accountant as well as the affidavit of the appellant specifically mentioning therein that the burden towards Cenvat credit, interest and penalty was never passed on to the consumers. The Chartered accountant has issued the certificate on the basis of books of accounts and the other related relevant documents produced before them. Merely because the certificate is not as per the liking of the authorities below, it cannot be brushed aside as no specific format of certificate has been prescribed by the statute. If the department proves anything contrary to the statement mentioned in the certificate then certainly they have a valid ground to discard it, but this is not the case anywhere.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed challenging the order dated 25.10.2019 passed by the Commissioner (Appeals-Thane), GST&CX, Mumbai by which the learned Commissioner rejected by appeal filed by the appellant.
2. The issue herein is rejection of refund claim amounting Rs.10,50,329/- [Rs.5,87,444/- Cenvat credit+ Rs.3,16,024/- towards interest + Rs. 1,46,861/- towards penalty], which admittedly was paid by the appellant during investigation towards reversal of Cenvat credit, interest and penalty somewhere in the year 2010. Out of this amount, Rs.2,17,946/- (inclusive of interest & penalty) was rejected on account of beyond limitation, however refund was sanctioned to the extent of Rs.8,32,383/- but was transferred to the a/c of ‘Consumer Welfare Funds’ on the ground of principles of unjust enrichment for non-production of evidence in order to establish that the incidence of duty has not been passed on to the buyers or
3. The facts leading to the filing of the appeal are stated as In the year 2007 Preventive Staff visited the unit of the Appellant and observed that the appellant had availed Cenvat credit on various duty paid items which, according to the department, were not capital goods and asked the appellant to reverse the same. Immediately thereafter the appellant paid the amounts in cash along with interest and penalty @25% of Cenvat involved. After that a show cause notice dated 23.02.2010 was issued demanding the Cenvat credit under Rule 14, Cenvat Credit Rules, 2004 along with interest and penalty and also to appropriate the amount of amount of Rs.5,87,444/- along with interest of Rs.3,16,024/- and penalty of Rs.1,46,861/- already paid by the appellant. In the first round of litigation, when the matter landed before the Tribunal, this Tribunal vide order dated 7.12.2016 remanded the matter back to the Adjudicating Authority for de novo consideration. Thereafter in de novo proceedings the Adjudicating Authority vide Order-in-Original dated 17.5.2017 dropped the demand of Rs.1,21,898/- and confirmed the demand for the amount Rs.4,65,546/-. So far as demand of Rs.1,21,898/-, which has been dropped, the appellant filed refund claim. If interest and penalty as deposited by the Appellant is added to Rs.1,21,898/- then it comes to Rs.2,17,946/-. Therefore, according to the appellant, in the month of June, 2017 the refund claim was filed for the amount of Rs.2,17,946/-.
4. For the rejection of claim of Rs.4,65,546/- (without interest and penalty), the appellant filed appeal before the 1st Appellate Authority and the said Authority vide Order-in-Appeal dated 31.8.2018 allowed the refund claim for the balance amount of Rs.4,65,546/-. Thereafter the appellant on 25.2.2019 filed another application for refund with the concerned authority mentioning therein total refund claim of Rs.10,50,239/-.
5. A show cause notice dated 5.4.2019 was issued to the appellant as to why the refund claim to the extent of 2,17,946/- out of total claim of Rs.10,50,239/-should not be rejected as the claim has been filed beyond the prescribed period, which got adjudicated vide Order-in-Original dated 14.5.2019 by which the Adjudicating Authority rejected the refund claim to the extent of Rs.2,17,946/- on the ground of limitation u/s. 11B(1) ibid and although sanctioned the refund claim of the balance amount of Rs.8,32,383/- but transferred the same to Consumer Welfare Fund on the grounds of principles of unjust enrichment.
6. I have heard learned counsel for the Appellant and learned Authorised Representative for the Revenue and perused the case records including the synopsis placed on record. Firstly I am taking up the issue of rejection of refund claim of Rs.2,17,946/- which was rejected by the Adjudicating Authority on the ground of limitation and the said order was upheld by the 1st Appellate Authority. According to the appellant they have filed the aforesaid refund claim on 29.6.2017 and in support of their submission they produced on record the speed post receipt also along with its tracking but the aforesaid claim of the appellant about filing of refund claim in the year 2017 has been rejected by the authorities below merely on the ground that while filing the 2nd refund claim they lodged the claim for an amount of Rs.10,50,329/- on 26.2.2018 (although the correct date is 25.2.2019) without mentioning therein the fact of filing the claim earlier also in the year 2017 for part of the amount of total refund claim and also on the ground that in one of the speed post the pin code has been wrongly mentioned as 421310 in place of 421301. I have gone through the From-R [Application for consequential refund of amounts paid] which was filed by the appellant on 25.2.2019 and can be termed as 2nd refund claim. In the said refund application it has specifically been mentioned in Ground (vi)(b) that they had already filed the refund application regarding dropping demand of Rs.1,21,898/- plus interest and penalty as well as appeal before the Commissioner (Appeals) against the confirmation of the demand for the balance amount. Not only that, in the prayer of the said Form-R refund application a specific submission has been made that ‘earlier consequential refund application is still pending with the department’. In my opinion, had the authorities gone through the Form-R application properly rather than merely reading the covering letter only, they would have come across the proper facts. The rejection of the speed post on the ground of incorrect mentioning of pin code seems to be filmsy as the Track Order Status placed on record by the appellant in support of its submissions establishes the delivery/receipt of the aforesaid speed post on 30.6.2017 at 09.03 am at Dandekarwadi S.O. which is the address of the Range Officer, Central Excise, Kalyan on which the speed post was sent on 29.6.2017. Another copy of the said Refund claim was sent by speed post on the same day addressed to the Asstt. Dy. Commr., Central Excise, Kalyan, which as per the Track Order Status was also delivered/received at the said address on 30.6.2017 at 2.41 pm. Therefore the appellant has successfully established that they have filed the refund claim of the amount of Rs.2,17,946/- within limitation in the year 2017 itself and accordingly the said issue is decided in favour of the appellant.
7. So far as the refund of the balance amount of Rs.8,32,383/- is concerned although the authority below sanctioned the refund claim but transferred the same to Consumer Welfare Fund on the grounds of principles of unjust enrichment. According to learned Commissioner (Appeals) the appellants have failed to furnish the proof to establish that they have not passed the incidence of refund claim amount to any other person. Whereas as per the appellant the goods in question on which credit in issue was availed were raw materials/input for manufacture of capital goods, those were manufactured during the years 2004 to 2006 which were not sold and so the question of passing on burden of amounts deposited during investigation does not arise. According to learned counsel the amounts in question were deposited in the year 2010 during the course of investigation and there was neither sale of capital goods manufactured in situ nor any duty was leviable on the capital goods so manufactured in situ and hence the question of passing of burden to anyone can’t arise. I have gone through the show cause notice dated 5.4.2019 and find that the said notice is confined to the rejection of the amount of Rs.2,17,946/- only and there was no whisper about the balance amount of Rs.8,32,383/-, not even a passing reference. For the first time it was raised during adjudication proceedings by way of letter dated 3.5.2019 therefore this issue is beyond the show cause notice. It is not disputed that the goods in issue are capital goods and that’s why the credit has been held as admissible and the appellant has applied for refund. It is the case of the appellant that those capital goods were inputs for manufacturing of final products and since nothing contrary has been proved by revenue therefore the plea of the appellant merits acceptance. Both the authorities below rejected the plea of the appellant on the ground of unjust enrichment by invoking the provision of section 11B(2) Central Excise Act, 1944. But while invoking the aforesaid provision, the said authorities failed to take into consideration the proviso to Section 11B(2) ibid, despite the plea raised by the Appellant, which empowers the concerned Officer to pay the amount of excise duty and interest, if any paid on such duty, as may be determined, to the applicant, in the circumstances contemplated under clauses (a) to (f), instead of crediting the amount to the Fund. A bare perusal of this provision and particularly proviso to sub-section (2) would denote that instead of crediting the amount of refund to the fund, it can be paid to the applicant seeking refund, if such amount is relatable, inter alia, to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued under this Act. In my opinion the issue herein is squarely covered by this proviso and therefore the appellant is entitled for refund of duty and interest on this ground also. Now so far as the issue of unjust enrichment is concerned there is certificate of the Chartered Accountant as well as the affidavit of the appellant specifically mentioning therein that the burden towards Cenvat credit, interest and penalty was never passed on to the consumers. The Chartered accountant has issued the certificate on the basis of books of accounts and the other related relevant documents produced before them. Merely because the certificate is not as per the liking of the authorities below, it cannot be brushed aside as no specific format of certificate has been prescribed by the statute. If the department proves anything contrary to the statement mentioned in the certificate then certainly they have a valid ground to discard it, but this is not the case anywhere.
8. In view of the discussions made hereinabove, the appeal deserves to be allowed and the same is accordingly allowed and the impugned order is set aside.
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