Gillette India Ltd. Vs Commissioner of Central Excise (CESTAT Chandigarh)
CESTAT Chandigarh held that Cost Accountant certificate certifying incidence of duty has not been passed on cannot be disregarded unless it is proved to be blatantly wrong.
Facts- The appellants are engaged in manufacture and clearance of twin type shaving system razor, twin type shaving system cartridge, razor for double edge blades and razor blades (double edge); the appellants were supplying goods from his factory to the various depots availing exemption under Notification No. 50/2003-CE dated 10.06.2003 having filed a declaration dated 21.11.2006. The goods are sold to the customers from the said depots; meanwhile Notification No.50/2003 was amended by Notification No.01/2008-CE dated 18.01.2008 to provide that the exemption contained shall not apply to such goods which have been subjected to only one or more of the processes viz., preservation during storage, cleaning operations, packing or re-packing of such goods in unit container or labelling/ re-labelling of container, sorting, declaration or alteration of RSP and have not been subjected to any other process or processes; pursuant to the amendment, the appellants have registered themselves on 08.02.2008 and cleared the goods, on payment of duty u/s. 4A of the Central Excise Act, 1944,under Protest, to their depots; the appellant issued commercial invoices to customers on further clearance from depots; there was no change in the MRP after or prior to January 2008 to March 2008 or after that.
Meanwhile, the appellants vide Writ Petition challenged the validity of the Notification No.01/2008. Hon’ble High Court of Himachal Pradesh, Shimla allowed the said Writ Petition. Accordingly, the appellant filed refund claim of Rs.1,40,33,307/- of the Excise duty paid under Protest during January 2008 to March 2008. Adjudicating authority vide OIO upheld the SCN on the ground that the refund is hit by unjust enrichment.
Conclusion- In the instant case, Revenue has lost sight of the fact that the said MRP was fixed by the appellants during the no-duty regime. Therefore, the very fact of non-upgrading the MRP when the taxes were paid would in itself constitute evidence that the incidence of duty has not been passed on.
The Cost Accountant in his certificate dated 13.08.2009 has been categorical in his assertion that this amount has been accounted under the head “receivables” and the duty paid by them has not been recovered from their customers. We find that neither the OIO nor the impugned order have contradicted the certificate given by the Cost Accountant. It is not open for Revenue to arrive at a conclusion in disregard of the certificate without challenging or controverting the same with cogent evidence and reasoning.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
M/s Gillette India Limited challenged the impugned order dated 15.11.2012 wherein the rejection of the refund claim filed by the appellants was upheld on the ground that the appellants have passed on the incidence of duty to their customers.
2. Brief facts of the case are that the appellants are engaged in manufacture and clearance of twin type shaving system razor, twin type shaving system cartridge, razor for double edge blades and razor blades (double edge); the appellants were supplying goods from his factory to the various depots availing exemption under Notification No. 50/2003-CE dated 10.06.2003 having filed a declaration dated 21.11.2006; the goods are sold to the customers from the said depots; meanwhile Notification No.50/2003 was amended by Notification No.01/2008-CE dated 18.01.2008 to provide that the exemption contained shall not apply to such goods which have been subjected to only one or more of the processes viz., preservation during storage, cleaning operations, packing or re-packing of such goods in unit container or labelling/ re-labelling of container, sorting, declaration or alteration of RSP and have not been subjected to any other process or processes; pursuant to the amendment, the appellants have registered themselves on 08.02.2008 and cleared the goods, on payment of duty under Section 4A of the Central Excise Act, 1944,under Protest, to their depots; the appellant issued commercial invoices to customers on further clearance from depots; there was no change in the MRP after or prior to January 2008 to March 2008 or after that.
2.1. Meanwhile, the appellants vide Writ Petition No.589/2008 challenged the validity of the Notification No.01/2008 on the grounds that the said notification was arbitrary and the appellants were eligible for exemption under Notification No.50/2003; the Hon’ble High Court of Himachal Pradesh, Shimla allowed the said Writ Petition; accordingly, the appellant filed refund claim of Rs.1,40,33,307/- of the Excise duty paid under Protest during January 2008 to March 2008. The appellants submitted various documents including the Cost Accountant Certificate and balance sheet for the year 2007-2008; a show-cause notice dated 08.01.2010 seeking rejection of the refund claim; adjudicating authority vide OIO dated 11.02.2011 upheld the SCN on the ground that the refund is hit by unjust enrichment; on an appeal filed by the appellants, the appellate authority upheld the OIO. Hence, this appeal.
3. Shri Sanjeev Nair, learned Counsel for the appellant submits that the impugned order has not given any specific findings regarding the correctness and genuineness of the Cost Accountant Certificate; it is trite in law that the Cost Accountant Certificate is one of the sufficient conditions to substantiate that the incidence of duty has not been passed on to the customers; the onus to disprove the Cost Accountant Certificate is with the Department and the same has not been discharged; the appellants have further submitted proof in the form of balance sheet to confirm that the amount has been accounted under the Head “Claims Recoverable” under “Current Assets, Loans and Advances”.
4. Learned Counsel further submits that the impugned order relies upon the decision of CESTAT in the case of Philips Electronics India Limited- 2010 (257) ELT 257; the said decision has been challenged before Hon’ble Bombay High Court who have admitted the petition; the appeal being admitted on substantial question of law puts the judgment of the Tribunal in jeopardy; he further submits that in the above case, the appellants therein were paying duty @ 10 % and the Department issued show-cause notice seeking duty @ 20%; the excess duty was held not payable; Tribunal held that the refund was hit by the bar of unjust enrichment as the appellants contended that the price declared by the appellants was always a cum-duty price; moreover, the appellants therein produced the CA Certificate showing that the amount was booked under profit & loss account; under these circumstances, the Tribunal held that the case was hit by bar of unjust enrichment. He submits that the facts of the case before us are different from the above case; in the instant case, the appellants were all along contending that exemption under Notification No.50/2003 was admissible to them; only on the insistence by the Department, duty was paid during the impugned period i.e. January to March 2008 under Protest; Hon’ble High Court of Himachal Pradesh upheld the contention of the appellants; it is pertinent to note that appellants have been discharging duty on MRP basis which was not changed during the impugned period.
5. Learned Counsel further submits that the Cost Accountant Certificate cannot be brushed aside lightly; it was held in Automotive Marketing Private Limited- 2021 (53) GSTL 393 (Tri. Bang.) that CA Certificate needs to be given due credence. He further submits that the appellants are exempted in terms of Notification No.50/2003 and as such, no Excise duty is payable; as the goods were exempted, they have not issued any tax invoice in respect of clearances from the factory to the depots. Learned Counsel for the appellant demonstrates that MRP price for the product M3T Razor plus Gel 513 INR (product code 75052112), was Rs.315/- by showing invoices i.e. No.610001715 dated 31.12.2007; similarly, he demonstrates that the MRP price of the product M3T Crt 4 335 (product code 13283640), was Rs.405/- Invoice No. Temp. 0001 dated 18.01.2008 and Invoice No. Temp. 0020 dated 25.01.2008. Learned Counsel also submits that a Chart to prove that the rate of goods sold to customers prior to and during the disputed period is same and submits that it can be inferred from the same that the incidence of duty has not been passed on.
6. Shri Rajiv Gupta, assisted by Shri Narinder Singh, learned Authorized Representative for the Department, reiterates the findings of the impugned OIO and OIA and submits that the goods were assessed by the appellant under Section 4A at the declared MRP less the permitted deduction; MRP or RSP of any goods is the aggregate of various costs, expenses, duties and taxes borne by the manufacturer also the freight, buyers’ margin and selling expenses incurred downstream; such cost, expenses, duties/ taxes and margins determine the MRP/ RSP; unless it is shown that the manufacturer’s depot, after clearance from the factory, lowered the MRP, not only in the sale invoices but also on the retail packages as well, it has to be presumed that the duty shown as payable in the manufacturer’s invoices has to be presumed to have been collected; when such price is collected along with the duty, if any, which is included in the invoice price, it means that the duty was collected from the customer.
7. Learned Authorized Representative further submits that account receivables are considered as current assets; an asset is something of value that a company owns or controls; account receivables are considered valuables because they represent money that is contractually owed to a company by the customers; account receivables in the balance sheet are the proceeds or payment which the company will receive from its customers who have purchased its goods on credit. He submits that, therefore, assessee’s contention on the classification of the refund amount in account receivables is of no help. Learned AR submits that on both counts, the appellant has failed to substantiate their claim that the incidence of duty has not been passed on to the customers and therefore, the appeal is liable to be rejected. He relies on the following cases:
