No Unjust enrichment if assessee not received the amount from buyers

Steel Authority of India Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)

CESTAT find from the records that it is undisputed that the Appellant had erroneously paid Central Excise duty @10.3% instead of discharging duty @12.36% while issuing the original invoice dated 28.03.2012. On realizing the mistake the Appellant issued supplementary invoices on 30.04.2012 with an objective to recover duty @ 2.06% (12.36% – 10.3%). However, the Appellant once again paid the entire excise duty @ 12.36% instead of discharging the differential duty @ 2.06%, resulting in excess deposit of Central Excise duty amounting to Rs.5,06,393/-.

The contentions of the Appellant that they have not received the amount from their buyer and that the buyer has not availed Modvat credit needs consideration. +

The Appellant also filed Chartered Accountant’s Certificate.

I find from the records that the Revenue has not controverted the above said Certificate of the Chartered Accountant. It is settled law that if the assessee has not received the amount from the buyers, it cannot be held, that the Appellant will be unjustly enriched.

FULL TEXT OF THE CESTAT KOLKATA ORDER

The facts of the case in brief are that the Appellant had sold goods (blooms) to its customers, Rail Wheel Factory, Yelanhanka, Bangalore in the month of April 2012 amounting to Rs.24,85,746/- against two invoices dated 28.03.2018 whereby the Appellant erroneously calculated Central Excise duty @ 10.30% instead of 12.36% which was discharged as excise duty in the month of March 2012. On realizing the bona fide mistake, the Appellant issued two supplementary invoices on 30.04.2012 with an objective to recover the vdifferential duty @ 2.06% (i.e. 12.36 % less 10.30%), however, inadvertently the Appellant once again paid the entire amount of excise duty @ 12.36% vide debit from Cenvat Credit Register as excise duty for the month of April 2012. Therefore, instead of discharging differential duty @2.06% the Appellant made excess deposit of Central Excise duty amounting to Rs.5,04,393/. The Appellant filed application for refund of excise duty on 24.04.2013 supported by documentary evidences inclosing the copies of the original invoices, supplementary invoices, payment proofs, Cenvat Credit Register and Certificate issued by Deputy Chief Material Manager, Rail Wheel Factory stating that Rail Wheel Factory did not avail Modvat benefits for purchase of blooms. The range Superintendent on verification of Form-ER-1 Returns confirmed that the Appellant had paid the excise duty twice on sales made to Rail Wheel Factory, however, the benefit of refund of such erroneously paid Central Excise duty is being denied on the presumption that the incidence of duty has been passed on by the Appellant to the buyer (Rail Wheel Factory) in terms of Section 12B of Central Excise Act, 1944. The fact apropos double payment of duty has not been disputed either by the Adjudicating authority or by the Ld.Commissioner(Appeals). Show Cause Notice dated 05.07.2013 was issued alleging that : (i) Appellant did not comply with the conditions laid down under Sub-Section 2(d) of the Section 11B of the Act and did not discharge the burden of proving contrary to presumption under Section 12B of the Act, (ii) such amount is proposed to be credited to Consumer Welfare Fund under Section 11B(2) of the Act. The Appellant supported its reply to the Show Cause Notice with a Certificate dated 15.07.2013 issued by the Chartered Accountant certifying that the incidence of duty had not been passed on to the buyer, though the factum of excess payment as well as its non-recovery is reflected from the original as well as supplementary invoices per se. Accordingly it was submitted by the Appellant that the refund claim should be granted to the Appellant instead of crediting the same to Consumer Welfare Fund.

2. The matter was adjudicated by Order-in-Original dated 17.01.2014 whereby the Ld.Adjudicating authority observed as under:-

“12. In view of the above findings and keeping in view of spirit of Section 11B of the C.E. Act, 1944, and Hon’ble Apex Court’s judgment mentioned supra I conclude my findings as follows:-

i. the refund claim to tune of Rs.5,04,393/- is barred for sanction and payment to the said assessee in as much as the said assessee has failed to discharge the burden of proving contrary to the statutory presumption as envisaged under Section 12B of the Central Excise Act, 1944;

ii. the refund claim amounting to Rs.5,04,393/-, is refundable and the same should be credited to Consumer Welfare Fund in terms of Sub-Section (2) of Sec 11B of the Central Excise Act, 1944 for failure of compliance of the provisions of Section 12B of the Central Excise Act, 1944 by the said assessee;

iii. the duty has been paid on both Original and Supplementary Invoices.

Accordingly, I pass the following order:-

O R D E R

I reject the Refund claim of excise duty including education cess amounting to Rs.5,04,393/- (Five Lakhs Four Thousands Three Hundreds and Ninty Three) Only to M/s. Alloys Steels Plant (A unit of SAIL) and allow the amount of Rs.5,04,393/- (Five Lakhs Four Thousands Three Hundres and Ninty Three) Only to be credited to the Consumer Welfare Fund in terms of proviso to sub Section – (2) of Section 11B of the Central Excise Act, 1944.”

3. The Ld.Commissioner(Appeals) passed the impugned order confirming the denial of refund on following grounds :-

a. The Appellant could not produce any material proof in order to prove that the amount of duty has been borne by the Appellant and not passed on to the buyer (Rail Wheel Factory)

b. The certificate issued by Rail Wheel Factory was not relevant as it was in connection with the availment of MODVAT credit.

c. Refund claim is liable to be rejected in terms of Section 12B of CEA, 1944 and credited to Consumer Welfare Fund under sub-section (2) of Section 11B of Central Excise Act, 1944.

Hence the present Appeal before the Tribunal.

4. The Ld.Counsel appearing on behalf of the Appellant submitted that the refund claim is not hit by the principle of unjust enrichment as the incidence of excess Central Excise duty amounting to Rs.5,04,393/- has not been passed on to the buyers and has been borne by the Appellant themselves. The Ld.Counsel made the Bench go through the supplementary invoices wherein the differential Central Excise duty component (12.36 – 10.3) = 2.06has been collected by the Appellant from Rail Wheel Factory and credit of amount earlier paid vide original invoice was provided by the Appellant to buyer under the head “invoice value already raised”. In other words, amounts pertaining to original invoice was not required to be re-paid by the customers. It is the case of the Appellant that the refund claim is not hit by bar of unjust enrichment as the excess Central Excise duty paid by mistake by the Appellant continues to be borne by the Appellant and has not been passed on to the buyer. It is the submission of the Appellant that once there is no case of unjust enrichment the refund claim ought to be allowed to the Appellant. In support of his submissions, he relied upon the decision of the Tribunal in the case of Mhatre Engineering Pvt.Ltd. Commissioner of C.Ex., Belapur [2008 (230) E.L.T. 459 (Tri.- Mumbai).

5. The Ld.Authorized Representative, appearing on behalf of the Department, justified the impugned orders.

6. Heard both sides and perused the appeal records.

7. I find from the records that it is undisputed that the Appellant had erroneously paid Central Excise duty @10.3% instead of discharging duty @12.36% while issuing the original invoice dated 28.03.2012. On realizing the mistake the Appellant issued supplementary invoices on 30.04.2012 with an objective to recover duty @ 2.06% (12.36% – 10.3%). However, the Appellant once again paid the entire excise duty @ 12.36% instead of discharging the differential duty @ 2.06%, resulting in excess deposit of Central Excise duty amounting to Rs.5,06,393/-.

8. The contentions of the Appellant that they have not received the amount from their buyer and that the buyer has not availed Modvat credit needs consideration. I find from the records that the buyer M/s.Rail Wheel Factory (Ministry of Railways), Yalanhanka, Bangalore vide a letter dated 19.02.2011 has communicated as under:-

“TO WHOM SO EVER IT MAY CONCERN

Sub: Regarding Modvat

R WF is purchasing Steel Blooms from M/s. SAIL regularly. It is to declare that RWF is not getting Modvat benefits for the purchase of Blooms from M/s. SAIL.

1. GOVINDARAJU

DEPUTY CHIEF MATERIALS MANAGER/D”

9. The Appellant also filed Chartered Accountant’s Certificate before the authorities below which reads as under:-

“This is to certify that-

i) The incidence of duty of Rs.5,04,393/- (Rupees Five Lakh four thousand three hundred ninety three only), for which refund has been claimed by Steel Authority of India Ltd./Alloy Steels Plant vide reference no : ASP/Excise/Refund/003 dated 24.04.2013, has not been passed on to anybody directly or indirectly.

ii) The amount of Rs.5,04,393/- has not been realized from anybody.”

10. I find from the records that the Revenue has not controverted the above said Certificate of the Chartered Accountant. It is settled law that if the assessee has not received the amount from the buyers, it cannot be held, that the Appellant will be unjustly enriched. I find that the decision of the Tribunal in the case of Mhatre Engineering Pvt. Ltd. Vs. Commissioner of C.Ex., Belapur (supra) and the judgement of the Hon’ble High Court of Madras in the case of Commissioner of Central Excise, Pondicherry Vs. Southern Agrifurne Industries Ltd. [2006 (205) ELT 39 (Mad.)] are very much on the point. By respectfully following these judgements it has to be held that the impugned order is not sustainable. Accordingly, the impugned order is set aside and the Appeal is allowed with consequential relief as per law.