LAWS(CE)-2004-9-189

INTERNATIONAL CONVEYORS LTD. Vs. CCE AND C

Decided On September 06, 2004
International Conveyors Ltd. Appellant
V/S
Cce And C Respondents

JUDGEMENT

(1.) The brief facts of the case are that the appellants are engaged in the manufacture of conveyor belts falling under Chapter 39, for the manufacture of which they had imported Industrial Nylon Yarn during the period 7.2.1987 to 18.2.1988 availing concessional rate of duty in terms of Notification No. 38/1978 -Cus., which was disputed by the department as the goods imported were Nylon Tyre Cord. As a result, the importers paid higher rate of Customs duty under protest. The importers succeeded before the Tribunal vide its order No. C/180/91 dated 5.4.1991, held that the concessional rate under the notification above mentioned was available to the imported goods. Subsequent to the decision of the tribunal, a claim for refund of Rs. 17,33,119/ - being the duty paid in excess i.e., without the benefit of notification, was availed by the appellants. The Deputy Commissioner allowed the refund claim vide order No. 1/95 dated 5.4.1995, with the condition attached thereto, namely, that the appellants furnished an undertaking to the effect that they would pay back the amount refunded to them, if the Supreme Court reversed the decision of the Bombay High Court in the case of Solar Pesticides, holding that bar of unjust enrichment would not apply when the cases of captive consumption. Such an undertaking was given but the appellants also filed an appeal before the Commissioner (Appeals), who vide his order -in -appeal No. 380/95 dated 23.8.1995 held that since there was no finding on the question, whether the incidence of duty had been passed on by the appellants to their customers, the question of applying the decision in the case of Solar Pesticides will not arise. The Commissioner (Appeals) remanded the matter of the Deputy Commissioner for arriving at a finding on this question before finalising the refund. In February 2000, the Supreme Court delivered its verdict in the Solar Pesticides case reversing the judgment of the Hon'ble Bombay High Court by holding that the unjust enrichment bar would also apply in the case of captive consumption of goods. On this basis, the Assistant Commissioner issued show cause notice proposing recoveries of erroneous refund; the notice was adjudicated by the Assistant Commissioner, who vide his Order No. 32/2003 dated 14.7.2003, dropped the proceedings by relying upon the adjudication order dated 4.4.1995. The revenue went up in appeal against this order to the Commissioner (Appeals), who vide his present impugned order, held that the refund claim was hit by the unjust enrichment clause of Sec. 11B and, therefore, directed the refund sanctioned to the company to be credited to the Consumer Welfare Fund. Hence, this appeal.

(2.) We heard both sides. The preliminary objection of the Ld. Counsel for the appellants that the show cause notice dated July 2003 proposing recovery of refund erroneously granted is barred by limitation as the refund was sanctioned in 1985, is over Rule d in the light of the Supreme Court's decision in the case of Commissioner of Central Excise, Shillong v/s. Woodcraft Products Ltd. holding that the bar of limitation is not applicable when subsequently the law changes as a result of subsequent judgement. We not proceed to decide on the merit of the issue namely, as to whether the refund is hit by the doctrine of unjust enrichment. We find that the Commissioner (Appeals) has given a clear finding in para 11 of his order that "if it is assumed that the selling price of the goods manufactured by the appellants, which were sold to the different buyers like M/s. Singarani Collieries Co. Ltd., and M/s. Coal India were fixed price; under a fixed price contract without any escalation clause, it cannot be presumed that the incidence of duty paid on the material used in the manufacture of such finished goods had not been passed on to the buyers as the manufacturer/appellants nowhere established with reference to any documentary evidence that the element of the Customs duty had not been included in the case of said finished goods, and that it is possible for a manufacturer to maintain the same selling price before and after imposition of duty on its products and but pass on the duty burden to its buyers even before the appellants have not proved by any material on record that the element of extra Customs duty had not been included in the cost of their finished goods". Therefore, the lower appellate authority has rightly held that the appellants have not discharged the burden of proving that the duty incidence had not been passed on which burden has to be discharged in all cases of claim for refund as per Sec. 11B of the Central Excise Act. We, therefore, see no reason to interfere with the impugned order and accordingly, uphold the same and reject the appeal.