INDRA PROCESSORS Vs. COMMISSIONER OF CENTRAL EXCISE, JALANDHAR

JUDGEMENT

(1.) These are two appeals bearing Nos. 67 and 68 of 2007, filed under Section 35G of the Central Excise Act, 1944 (for brevity "the Act"), which are directed against composite order dated 23- 11-2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi in Excise Appeals Nos. 5787-5788 of 2004. The Tribunal has dismissed the appeals filed by the appellants sustaining a preliminary objection that after omission of Section 3A of the Central Excise Act, 1944 read with Rules framed thereunder, no proceedings could continue as there is no saving clause made by the Finance Act, 2001, which omitted Section 3A of the Act.

(2.) Brief facts of the case are that the appellants are engaged in the process of man-made fabrics with the aid of power and steam. During the period from December 1998 to November 1999, the appellants were working under the Compounded Levy Scheme which was framed under Section 3A of the Act and Rule 96ZQ of the Central Excise Rules, 1944 (for brevity "the Rules"). Accordingly, the capacity of the appellants was determined and duty liability was fixed on the basis of size of stenter machine. The revenue had consistently taken the view that the Pollution Control Equipment attached to the stenter machine i.e. galleries is treated as part of the stenter and the duty used to be demanded on that basis. The appellants applied for the abatement of duty for the period from 16-12- 1998 to 31-1-1999 claiming that their factory remained closed for a period of more than seven days. The abatement claim was sanctioned vide abatement order dated 22-2-2000. However, in the order, the Commissioner imposed a condition that the amount to be adjusted towards duty and penalty imposed vide orders-in-original Nos. 131- 153/AC/D/99 and 233/D/AC/2000. The appellants filed an appeal against the orders-in-original before the Commissioner (Appeals). The appeal was allowed vide order dated 30-8-2001. On further appeal preferred by the revenue, the Tribunal upheld the order of the Commissioner (Appeals). As a consequence, the order demanding duty on galleries was set aside and the appellants became entitled to refund. Accordingly, they applied for the refund of an amount of Rs. 3,36,606/- for the period from June, 1999 to November, 1999 on the amount of duty paid under protest on galleries. However, appellants received two show cause notices from the revenue proposing to reject the refund claim made by the appellants solely on the ground that the revenue did not accept the decision of the Tribunal holding that the length of galleries was not includible for the purpose of determining the annual capacity of production (Annexures R-1 and R-2). Thereafter, additional show cause notices incorporating the ground of recovering the duty from the custom were served and it was proposed to be rejected on the ground of unjust enrichment (Annexure R-3 and R-4).

(3.) The appellants filed their replies to the show cause notices and took the plea that no ground for rejection of their claim for refund was available as the decision delivered by the Tribunal holding that the length of galleries is not includible for determining annual capacity had already attained finality up to Supreme Court. They had not recovered the excise duty amount from their customer and therefore, the principles of unjust enrichment was not applicable. The adjudicating authority vide order 30-12-2003 sanctioned both the refund claims but held that the claim suffered from unjust enrichment. Accordingly, it was ordered that the amount be credited to the consumer welfare fund (Annexure R-5). On further appeal before the Commissioner (Appeals), Central Excise, Jalandhar upheld the order passed in original holding that the appellants could not prove that they had borne the duty element and has not passed on the same to the buyers of goods (Annexure R-6). On further appeal before the Tribunal, the appellants again lost and the Tribunal took the view that once Section 3A of the Act has been omitted from the Act, no proceedings would survive for adjudication and in that regard the Tribunal placed reliance on an earlier order passed by the Tribunal in the case of M/s. Shree Ambay Forgings Pvt. Limited V/s. CCE, 2006 205 ELT 804.