Case Law Details
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:
- Shree Baidyanath Ayurved Bhawan Ltd.- 2009 (238) ELT 680 (Tri. Mumbai).
- Interach Building Products (P) Ltd.- 2005 (184) ELT 154 (Tri. Del.).
- SRF Ltd.- 2006 (193) ELT 186 (Tri. LB).
- Cement Corpn. Of India Ltd.- 2007 (219) ELT 329 (Tri. Del.)
- Cement Corpn. Of India Ltd.- 2008 (232) ELT A107 (party’s appeal dismissed by the Hon’ble Supreme Court).
- Philips Electronics India Ltd.- 2010 (257) ELT 257 (Tri. Mumbai).
- Sahakari Khand Udyog Mandal Ltd.- 2005 (181) ELT 328(SC).
8. Heard both sides and perused the records of the case. The brief issue for consideration in the instant case is whether the refund claim filed by the appellants is hit by the bar of unjust enrichment. The appellants have succeeded before the Hon’ble High Court of Himachal Pradesh, in Writ Petition No.589 of 2008, regarding the applicability of amendment to the Notification No.50/2003-CE dated 10.06.2003, by virtue of Notification No.01/2008-CE dated 18.01.2008. Hon’ble High Court held that the amending Notification is prospective and affects those industrial units involved in the manufacturing process of packing, re-packing, labelling, re-labelling etc., referred to therein, which came into operation on and after the date of its issue and not the industrial units, like that of the petitioners, which came into operation before the date of issuance i.e., 18.01.2008.Accordingly, they filed the impugned refund claim for Rs.1,40,33,307/- of the duty paid, under Protest, by them, during the period January to March 2008. Revenue vide letter dated 01.06.2009 requested the appellant to justify their claim that the incidence of duties has been borne by them and not passed on to the buyers. The appellant vide reply dated 21.08.2009 submitted copies of sample invoices of prior/ post period and claimed that the sale price of goods manufactured from their factory remained the same throughout the period and it is evident from the same that Excise duties were not passed on to the buyers; the show-cause notice dated 08.01.2010 issued seeks to reject the refund claim on the ground that the same is hit by the doctrine of unjust enrichment.
9. The main arguments of the appellant, before the Original Authority, to substantiate their claim, are as follows:
> The goods manufactured are sold by them on MRP basis; the MRP of the products sold by them remained the same before or after the impugned period; the MRP prices were determined at the time when there was no levy of Excise duty.
> It was held in the case of Girish Foods and Beverages Pvt. Ltd. – 2007 (211) ELT 388 that when the product is leviable to duty in terms of MRP, it cannot be concluded that the value of final product fluctuated on account of payment of differential duty.
> It was held in the case of Swaroop Fibre Industries Ltd. – 2000 (120) ELT 510 (Tri.) that where no change has taken place in the rate of duty, it cannot be said that the incidence of higher rate of duty has been passed on to the customers.
> Cost Accountant vide Certificate dated 13.08.2009 stated that an amount of Rs.1,40,19,099/- has been accounted as receivables and has not been recovered by the company from the customers.
> It has been held in a number of cases that when the balance sheet shows the amount as recoverable and when the Chartered Accountant certificate confirms the same, it can be taken as evidence that the burden of incidence of duty has not been passed on.
> Mentioning the words “the duty was paid under Protest” is not a statutory requirement.
10. The Original Authority relies on the invoices issued by the appellants from the factory to their depot and finds that the appellant had paid the duty and also collected the same from the buyers and therefore, the claim is hit by unjust enrichment. He relies on the Hon’ble Apex Court’s decision in the case of Sahakari Khand Udyog Mandal Ltd. (supra) and Philips Electronics (India) Ltd. (supra) and holds that the uniformity of the prices is not evidence itself to prove that the incidence of duty has not been passed on. Learned Commissioner (Appeals) relies on the same and upholds the OIO. We find that the OIO and OIA considered only the invoices raised by the appellants from their factory to their depot to conclude that the incidence of duty has been passed on to the ultimate buyers. The appellants claim that they have not passed on the incidence of duty on further sale from their depots. The impugned order finds that it goes without saying that the MRP of any manufactured goods is the aggregate of various costs, expenses, duties and taxes borne by the manufacturer as also the freight, buyer’s margin and selling expenses incurred downstream; the amount of such costs, expenses, duties/ taxes and margins determines the amount of MRP/ RSP that the eventual buyer will have to pay; therefore, if an invoice issued by the manufacturer indicates, apart from MRP/ RSP of the goods and their assessable value, the duty payable thereon it obviously means that this is the amount of duty that he intends to collect on those goods from the buyers; it does not matter whether this invoice covers the removal of goods to manufacturers on depot or to an unrelated buyer, for in either case, MRP remains unchanged.
11. On going through the records of the case and having considered the rival contentions, we find that Revenue claims that the refund is hit by the doctrine of unjust enrichment i.e. the presumption that the incidence of duty has been passed on by the appellant unless the appellant establishes with documentary proof that the said incidence of duty has been actually borne by him and has not been passed on to the ultimate customers. We find that the presumption contained in the provisions pertaining to refund of Central Excise duty are rebuttable. Hon’ble Apex Court in the case of M/s. Mafatlal Industries Ltd. v. Union of India reported in 1997 (89) E.L.T 247 (SC) held that
Since the presumption created by Section 12B is a rebuttable presumption of law – and not a conclusive presumption – there is no basis for impugning its validity on the ground of procedural unreasonableness or otherwise. This presumption is consistent with the general pattern of commercial life. It indeed gives effect to the very essence of an indirect tax like the excise duty/customs duty. In this connection, it is repeatedly pointed out by the learned Counsel for the petitioners-appellants that the levy of duty is upon the manufacturer/assessee and that he cannot disclaim his liability on the ground that he has not passed on the duty. This is undoubtedly true but this again does not affect the validity of Section 12A or 12B. A manufacturer who has not passed on the duty can always prove that fact and if it is found that duty was not leviable on the transaction, he will get back the duty paid. Ordinarily speaking, no manufacturer would take the risk of not passing on the burden of duty. It would not be an exaggeration to say that whenever a manufacturer entertains a doubt, he would pass on the duty rather than not passing it on. It must be remembered that manufacturer as a class are knowledgeable persons and more often than not have the benefit of legal advice. And until about 1992, at any rate, Indian market was by and large a sellers’ market.”
12. The Hon’ble Supreme Court rendered the above judgment in a different context. However, the observations of the Apex Court throw light on the fact that the presumption vis-à-vis doctrine of unjust enrichment is a rebuttable presumption. The appellants have submitted the evidence and argument in their favour. To that extent, we find that the presumption has been rebutted by the appellants. As a result, it is for the Department to negate the evidence submitted by the appellants. We find that while doing so, the Revenue has relied on the presumption that MRP value though it is not changed before and after the incidence of duty, all the elements like cost, labour, taxes, duties, expenses, margin etc. are built into the fixing of MRP and therefore, the appellant’s contention is not acceptable. We find that once the presumption under the doctrine of unjust enrichment is rebutted with documentary evidence, it cannot be negated by another presumption. It can only be negated by producing evidence contrary to the rebuttal of the appellant. Mere stating that the fact of price remaining same will not be an inevitable conclusion to establish that incidence of duty has not been passed on, is not enough.
13. The following are the undisputed facts of the case and Revenue do not dispute the same although they did not accept the contentions based on the same:
> The appellant paid the duty under Protest.
> The goods sold by the appellants are on MRP basis; the submission of the appellants that the MRP did not change prior or after the impugned period.
> The Cost Accountant has issued a certificate to the effect that the amount claimed as refund is shown as “receivables” in the balance sheet and that the duty has not been passed on to the customers.
14. The appellants contend that the goods being sold on MRP basis and the MRP being constant is proof enough to show that the incidence of duty has not been passed on. On the other hand, Revenue contends that MRP as such takes into account all the costs, expenditure and profit margin of the manufacturer. However, in the instant case, it is on record that the MRP at which the goods manufactured by the appellants are sold, was fixed well before the incidence of duty and the same remained constant during the impugned period when the appellants have paid duty and when they did not pay the duty after the verdict of the Hon’ble High Court of Himachal Pradesh. As the MRP of the products was fixed during the period when the appellants did not have any idea, whatsoever, that their goods would be chargeable to duty by a Notification amending the Notification No.50/2003. Therefore, the presumption entertained in the impugned order, that all duties and taxes are taken into account while computing the MRP is not correct as far as the facts of this case is concerned. As regards the presumption on the basis of the price remaining same, Tribunal has gone into the issue in a number of cases. Tribunal in the case of Girish Foods & Beverages (P) Ltd.-2007 (211) E.L.T. 388 (Tri. – Mumbai) held that:
8. As regards the Revenue’s appeal in respect of unjust enrichment, I find that the appellants were manufacturing drinking water as a franchisees of M/s. Dhariwal Industries Ltd. The goods attracted to duty in terms of Section 4A of Central Excise duty on the basis of MRP, which is being fixed by M/s. Dhariwal Industries Ltd. and the appellants are not free to challenge or alter the MRP so fixed. MRP of the product during the period when normal rate of duty was paid and after 24-8-04 remained the same. It has also been noticed by the appellate authority that some of the other franchisee also availed exemption under Notification No. 9/02 dt. 1-3-2002 but the MRP of all of them remained unchanged during the entire period. This clearly indicate that duty burden has not been passed on to their customers. Commissioner (Appeals) has relied upon the Trbunal’s decision in the case of Swarup Fibre v. CCE,2000 (120) E.L.T. 510 (T) and ITC Bhadrachalam Paper v. CCE,2002 (146) E.L.T. 582 (T). He also referred to a copy of the affidavit dated 2nd September, 2005 duly notarized and solemnly affirming that they have not passed on the burden of duty involved to another person and have also submitted documentary evidence to show that MRP of goods remained constant before and after payment of excess duty.
15. Tribunal in the case of Swarup Fibre Industries Ltd. – 2000 (120) E.L.T. 510 (Tribunal) held that:
4. We have carefully considered the submissions of both the sides. We fully agree with ld. Advocate that as no change has taken place in the price structure of the product after increase in the rate of duty, it cannot be said that the incidence of higher rate of duty has been passed on to the customer. The Tribunal has been taking consistently the same view as reported in the decisions relied upon by the ld. Advocate. As the incidence of duty has not been passed on to the customers, the refund of the excess duty is admissible to the appellants and accordingly the appeal is allowed.
16. In the case of Organan (India) Ltd. -2008 (231) E.L.T. 201 (S.C.), Tribunal held that:
3. Assessee thereafter filed an application claiming refund of the customs duty paid by it. The authority-in-original rejected the claim on the ground that the assessee had passed on the burden of the customs duty to its customers and refund of the customs duty would amount to unjust enrichment as provided under Sections 27, 28(C) and (D) of the Act. Assessee challenged the orderin-original before the Commissioner of Customs (Appeals). Commissioner of Customs (Appeals) upheld the order-in-original. Assessee thereafter filed appeal before the Tribunal. Initially, there was a difference of opinion between the Member (Technical) and Member (Judicial) regarding the refund of the customs duty. It was held by the Member (Technical) that the incident of duty has not been passed on to the customers and therefore the assessee is eligible to claim the refund of custom duty whereas Member (Judicial) held it otherwise. The matter was referred to a third Member who agreed with the Member (Technical) holding that the incident of duty had not been passed on to the customers and therefore the assessee is eligible to refund of the customs duty. It is an admitted position that the burden to prove that the customs duty was not passed on to the customers is on the assessee. The Member (Technical) and the third Member on the basis of the following facts:
(i) in the invoices, it was clearly mentioned that the sale price did not include the customs duty.
(ii) that there was no change in price post-levying of the duty. Assessee had filed its price list and the customs duty was imposed thereafter. The goods were sold to the customers at the same price which was stated in the price list.
(iii) That there was an auditor’s certificate certifying that assessee had not passed on the customs duty to the customers.
came to the conclusion that the assessee had not passed on the burden of the customs duty to its customers. This finding is a finding of fact based on evidence which does not call for any interference.
Accordingly, this appeal is dismissed. No costs.
17. It was held in Infar (India) Ltd.- 2002 (150) E.L.T. 411 (Tri. –Del.) that:
9. Now let us examine the facts of the present case in the light of the above proposition laid by the Apex Court. The appellants apart from pleading that they have not increased the sale price of their product even after increase in the rate of duty, have also pleaded that their sale invoices clearly mentioned that the price does not include customs duty. They pleaded that when the same invoice bears the endorsement that the sale price does not include customs duty, it is evident that no customer would have paid the duty to them. It is difficult to figure out as to what more a seller could do to make his intention clear to the buyer that he is not passing the duty element in the sale price of the goods to him than to make a mention of this in the invoice for the sale of the goods? The Tribunal in its decision in J.C.L. International Ltd. v. C.C.E., Ghaziabad, 2001 (127) E.L.T 527 (Tri. – Del.) with reference to the sale invoice of the product in that case observed that invoice is the best evidence regarding passing of burden of duty as envisaged under Section 12A of the Central Excise Act, 1944 (Sec. 28C of the Customs Act, 1962 in the present case) and that is why it has been stipulated that it should be mentioned in the sale invoice as to what part of the price, excise duty in respect of such goods is going to form. Since in that case, the sale invoice very clearly specified that the rate per cylinder was inclusive of the central excise duty, the contention of the appellants that the same was not passed on to the buyer was not accepted and their appeal against the denial of the refund claim on the grounds of unjust enrichment was rejected. The facts in the present case though in reverse, are identical to those in the cited decision of M/s. JCL International. In that case, the appellant had mentioned in the invoice that the sale price was inclusive of excise duty whereas in the case under consideration, the appellants have clearly mentioned in their invoice that the sale price does not include the customs duty. Therefore, the ratio of the cited decision will apply to these facts. The same view is held in the decision of the Tribunal in Xerox Modi Corporation Ltd. v. CCE, Meerut,2001 (134) E.L.T. 523 (Tri. – Del). On appeal by the party against this decision, the same is dismissed by the Hon’ble Supreme Court as reported in Court Room Highlights – 2002 (142) E.L.T. A173-174. In this case the Tribunal has observed, “Since in this case; it is not disputed that the excise duty element which is paid to the department is reflected in the sale invoice of the party, the same is therefore realised from the buyers”. Apart from the above, the appellants are also pleading that their product is sold strictly as per the Drug laws including selling at the pre-determined prices according to the Price Lists prescribed by law which are filed with the Ministry. The appellants have filed the certificates from the Chartered Accountant certifying that the customs duty element is not passed on to the customers. None of the authorities below have found anything wanting in these certificates. The observation of the lower authorities that the company in their balance sheet for the years 1995- 96 did not indicate Rs. 94,86,522/-as outstanding recoverable from customs on account of excess duty as they were contesting the same with the department and therefore it can safely be concluded that they have included the said excess duty amount in their costing and passed on the burden of said duty to third party is subjective, arbitrary and unreasonable. At that time, the company was still contesting the levy of customs duty on the product imported by them in an appeal before the CEGAT. They therefore would not have known whether they would succeed in their appeal and if successful, consequently how much amount they would get from the department as refund. It, therefore, would have been highly presumtuous on their part to reflect an amount in their books of account as due from the customs department, the receipt and the quantum of which was still in limbo.
10. In view of the above analysis, I am of the view that the appellants – on the given evidence – have successfully rebutted statutory presumption held against them under Sec. 28D of the Customs Act, 1962. I, therefore, hold that the incidence of duty has not been passed on to the customers and the appeal is to be allowed as held by the ld. Member (T).
18. Tribunal held in the case of ITC Bhadrachalam Paperboards Ltd- 2002 (146) E.L.T. 582 (Tri. – Bang.) that:
10. We have carefully considered the matter. As can be seen from the records since the Department did not allow that the goods cleared at the concessional rate of 50% in respect of those clearances which were made from 19-8-84 to 8-11-84, the party made the payment under protest. In view of the clarificatory Notification No. 214/84, they filed refund claim in respect of the Excise duty which has been paid from the 19-8-84 to 08-11-84. It is clear from the evidence that the Authorities below have accepted that the invoices were cum duty price. When the assessee’s invoices show a composite price and duty was not indicated separately and the sale price of the goods remained the same, it can be concluded that incidence of duty was not passed on to the consumer. Precisely, this was the view of the Tribunal in the case of Collector of Central Excise v. Metro Tyres Ltd. reported in 1995 (80) E.L.T. 410 (T) as well as in the case reported in 1996 (82) E.L.T. 95 (T). In these cases, it is clearly held that the burden to prove that incidence of duty was passed on the customers was discharged by assessee when assessee’s invoices during the material period were showing a composite price and duty not indicated separately. Furthermore, this view of the Tribunal was upheld by the Supreme Court. Since the party has discharged the burden to prove that the incidence of duty was passed on to the customers when invoices were showing a composite price and duty not indicated separately, there is no justification to reject refund claim as prayed for. Since the appellants succeed on this issue, we do not feel it is necessary to go into other issues raised by both sides. In the result, the appellants succeed on merits and accordingly the appeal is allowed with consequential relief.
19. In the instant case, as discussed above, the appellants claimed that the MRP was fixed when the duty was not expected to be paid and remained constant throughout before during and after payment of duty. Therefore, we are of the considered opinion that, looking into the facts of the case and other evidence produced by the appellants, the fact of MRP being constant goes in favour of the appellants. Revenue did not rebut this submission by documentary data or evidence, except making a general statement that all taxes and duties would have been considered while fixing the MRP. 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. This being so, Department cannot come to the conclusion on the basis of the invoices issued from factory to their own depot. It cannot be said that they have recovered duty from themselves. The ultimate test of passing on the incidence of duty lies in the transaction of the appellants with the ultimate customers i.e. in the transaction between their depot and the The MRP being constant as discussed above, the test of presumption, that duty must have been inbuilt in MRP and must have been passed on, fails the test of reasonable fairness.
20. In addition to the appellant’s claim that their prices were constant, they have submitted that the said duty paid by them has been accounted as receivables in their records. 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. It was held in Sipani Automobiles Ltd.- 2004 (176) ELT 807 (Tri. Del.) that:
7. It is settled law that the presumption is that the incidence of duty paid on raw material must have been passed on by the manufacturer to the customers of its final product and it is to be proved by the manufacturer that the incidence of duty had not been passed on. This presumption is a rebuttable one. The Appellants in the present matter has produced a Certificate dated 24-12-96 from the Chartered Accountant wherein the cost structured of a montego car was given and it included “selling, general and other overheads” also. Except alleging that the overhead, is on the higher side, Revenue has not brought on record any material in support of that contention and to falsify the Certificate given by the Chartered Accountant. The Chartered Accountant has given the Certificate after verifying the books of accounts produced and information furnished to them. The Revenue has to controvert the Certificate by adducing material or evidence based on records. It can not simply brush aside the Certificate by observing that the details of overheads were not furnished. The Revenue can not arbitrarily fix the percentage of overhead. The learned Advocate has also produced a copy of the audited balance sheet along with schedules and notes of 31-3-1996 according to which the amount of refund claimed by them has been shown as Customs Deposits under the Head “Loans and Advances” and has contended that this goes to show that the incidence of duty was not passed on to their customers. In the case of Jaipur Syntex Ltd. v. CCE, Jaipur, supra, the Tribunal has held that the Appellants are entitled to receive the refund amount for having not passed on the incidence of duty to the customers as “the Appellants have produced all the balance sheets… .Wherein the disputed amount has been shown as claim receivable,” and “all the figures had been duly certified by the Chartered Accountant.” Following the said decision, we hold that the Appellants are entitled to get the amount of refund sanctioned to them by the Adjudicating Authority.
21. It was also held in the case of Elgi Tyres& Tubes Pvt.2009 (248) ELT 574 (Tri. Bang.) that:
8. Learned Commissioner (Appeals) while arriving at the above reproduced conclusion has relied upon the decision of this bench in the case of ATS India [(2006 (199) E.L.T. 123)] Sipani Automobiles [(2004 (176) E.L.T. 807)] and ITC Bhadrachalam Paper Boards [(2002 (146) E.L.T. 582)]. We find that the leaned Commissioner (Appeals) findings in paragraphs 7 are very clear. We also concur with the view expressed by the learned Commissioner (appeals) that if the adjudicating Authority is not able to arrive at conclusion based upon the Cost Accountant’s Certificate, he could have ordered the inspection of the records, by resorting the provisions in the CEA 1944. Having not done so, plainly inferring that the Cost Accountant’s certificate is not backed with corroborative evidences is not sufficient reason for rejecting the refund claim. On perusal of the cost Accountant’s certificate, we find that the Cost Accountant has clearly indicated in his certificate that he had gone through all the accounts/records of the Company and then only, he has come to the conclusion that the amount of refund claim by the respondents has not been passed on to the customers at any stage, against this certificate. There is no contrary evidence adduced by revenue. Accordingly in view of the above reasoning we find that the order of learned Commissioner (Appeals), is legal and correct. It does not require any interference. The appeal filed by the revenue is rejected.
22. The Tribunal held in the case of Supreme Industries – 2017 (358) ELT 318 (Tri. Mum.) that:
5.1 It is a fact that the appellant had filed price list along with Chartered Accountant’s certificate and the same were approved. The assessments were finalised and the RT-12were also approved. In the show cause notice it has been alleged that certain expenses viz., depreciation and financial expenses have not been considered in the assessable value. The appellants have vehemently sought the basis of this assertion by the Revenue. They have also sought the data on the basis of which the said expenses have been quantified, in the second round of litigation also. Revenue has not only failed to provide the same but also refused to provide the same. If a Chartered Accountant’s certificate needs to be rejected then there has to be some concrete basis for rejection of the same. Similarly, if any amount needs to be included in assessable value that revenue has to be some concrete basis for quantification of such amount. The same also needs to be communicated to the appellant to enable them to defend their case. In the instant case, revenue has failed to do so. In the absence of any reasonable ground for rejection of the Chartered Accountant’s certificate, the same cannot be rejected.
23. As discussed in the instant case, Revenue has not even considered the Cost Accountant certificate leave alone countering the same with valid reasons. Cost Accountant has issued the certificate after going through the accounts of the appellants and after satisfying himself about the truthfulness of the same. A certificate given by a professional cannot be dis-regarded unless it is proved to be blatantly wrong and contrary to the facts and evidence available on the hand. Thus, the certificate given by the Cost Accountant has an evidentiary value and cannot be rejected in a half-handed manner. We find that there is merit in the argument of the appellants 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 impugned order having been issued despite the evidence in the form of the certificate and without giving reasons as to why the same has not been taken into account cannot be held to be legally sustainable.
24. Revenue relies on the cases of Shree Baidyanath Ayurved Bhawan Ltd., Interach Building Products Pvt. Ltd., SRG Ltd., Cement Corporation of India Ltd. Philips Electronics (India) Ltd., SahakariKhand Udyog Mandal Ltd., Makson Healthcare Pvt. Ltd. and Allied Photographics India Ltd. (all supra). We find that, though, it was held that goods being sold at MRP does not lead to an inevitable conclusion that incidence of duty has not passed on, in that case the invoices issued by the company indicated that the price was inclusive of all duty and taxes but does not include Central Excise duty; there was no discussion whether a CA certificate was available. In the case of Interarch Building Products (supra), there was no mention of CA certificate. In the case of SRG Ltd. (supra), the issue was about the duty paid on imported capital goods captively consumed by the appellant therein. In the case of Cement Corporation of India (supra), the issue involved was the claim of sale of goods at a loss. In the case of Philips Electronic (India) Ltd. (supra) is distinguishable as submitted by the learned Counsel for the appellants. In the case of Sahakari Khand Udyog (supra), the Hon’ble Apex Court has only upheld the principle of unjust enrichment and moreover, the case pertains to rebate of duty on the sugar cleared. Thus, we find that the facts of the cases relied upon by the Revenue do not bear any similarity with the impugned case except that the cases pertain to the issue of refund.Weare of the considered opinion that unless the facts are identical, two cases cannot be compared; a slight difference in the material facts can change the entire scenario of the case.
25. In view of the above, the appeal is allowed.
(Pronounced on 02/11/2023)
Author Bio
