MODERN SYNTEX LTD. Vs. CCE, JAIPUR

JUDGEMENT

(1.) In this appeal filed by M/s Modern Syntex (I) Ltd, the issue involved is whether refund of excise duty paid in excess by them is hit by Principle of unjust enrichment.

(2.) Shri K.K.Anand, Ld. Advocate, mentioned that the Appellants had sold six machines, during period July 1998, to October 1998 to M/s Modern Threads (India) on payment of Central Excise Duty amounting to Rs. 14,32,376/ - which was equivalent to the modvat credit already taken by them at the time of purchase of these machines; that as per the provisions of Rule 57 S(2) (b) of the Central Excise Rules, the duty on the capital goods was to be calculated by deducting 2.5% of the credit taken for each quarter; that accordingly they requested the Assistant Commissioner for refund of Rs. 5,01,334/ - under their letter dt 22 -12 -98; that in the meantime the Assistant Commissioner, incharge of the factory of their customer, under Order -in -Original No. 106/98 dt. 16 -3 -99, disallowed excess Modvat credit amounting to Rs. 4,75,744/ - taken by them which was debited by Modern Threads in their PLA; that accordingly the Appellants re -imburssed the said amount to M/s Modern Threads by way of credit not dt. 27 -5 -99; that a cheque dt. 9 -6 -99 was also issued to M/s Modern Threads for the said amount; that the payment for the machines had not been received by them from M/s Modern Threads Ltd,; that the cheque issued by them was therefore cancelled; that they also revised their refund claim to Rs. 4,75,744/ - in place of Rs. 5,01344/ - The Ld. Advocate, further, mentioned that the Assistant Commissioner rejected the refund claim under Adjudication Order No. 22/99 dt. 22 -7 -99 on the ground of unjust enrichment by relying on the ground of unjust enrichment by relying on the decision in the case of CCE Madras Vs. Addison and Co. 1997(93) ELT 490 (T); that their appeal was also rejected by the Commissioner (Appeal) under the impugned Order. The Ld. Advocate submitted that M/s Modern Threads had never paid them the entire amount of duty paid by them and as such their claim for the refund of excise duty is not hit by the principle of unjust enrichment; that as per adjudication order Passed by Assistant Commissioner Bhilwara, M/s Modern Threads had deposited Rs. 4,75,744/ - and accordingly they had not taken the Modvat Credit of the entire duty paid by the Appellants; that M/s Modern Threads has never paid the entire amount of duty to them which is clear from the fact that even the cheque issued by them for reimbursement was cancelled subsequently; that it is also apparent from the ledger account maintained by them that Modern Threads has not paid the entire amount of duty and, therefore, it cannot be said that the incidence of duty was entirely passed by them to the customer. The ld. Advocate said that the decision of the Tribunal in the case of CCE Chandigarh Vs. Oswal Cotton Spg. Mills 1999 (108) ELT 841 is squarely applicable to the facts of the present matter; that the decision in the case of Addison and Company is not applicable as facts are different in both the matters; that in the said case the assessee has passed on the duty burden at the time of the clearance of the goods which is not so in the present matter as the customer had never paid the entire amount of duty to them.

(3.) Opposing the appeal, Shri A.K.Jain, ld. DR, submitted that the Assistant Commissioner has clearaly given his findings that the decision in the case of CCE vs Oswal Cotton Spinning Mill, is not applicable to the facts of the present matter; the said decision was in respect of the case where the assessee had not collected duty from the buyer but only adjustment was made by way of the credit notes, whereas in the present matter not only credit not was issued by the Appellant but also amount was actually collected from the buyer on 28 -5 -99, as mentioned in their ledger; that further, efforts were made by the Appellant to repay the amount by issuing cheque to their customer.