MRF LTD. Vs. CCE

JUDGEMENT

(1.) THIS appeal filed by M/s MRF Ltd. is against the order in appeal No. 146/93(M) dated 31.12.1993 passed by the Collector (Appeals) by which the Collector (Appeals) has upheld the order in original D.O.R. No. 1/93 (C.No. IV/10.65/90 RF) dated 21.5.1993 passed by the Assistant Collector of Central Excise, Madras IX Division whereby the Assistant Collector has held that the appellants -assessee were not in a position to prove that they have not passed on the duty which was paid by them under protest in respect of the product Precured Tread Rubber (PCTR) to the ultimate buyers and therefore, in view of the provisions contained in Section 12B of the Central Excise & Customs Amendment Act 1991 (Act 40 of 1991), the presumption that full incidence of duty of excise paid under this Act shall be deemed to have been passed on to the buyers of such goods shall be applicable unless the contrary is proved by them. He therefore, held that the refund claims filed by the appellants -assessee on the differential duty paid by them under protest during the period from 1.3.1986 to 31.12.1986 stand hit by the amended Section 11B of the Central Excise & Customs Amendment Act, 1991 (Act 40 of 1991). He, therefore, held that the amount of Rs. 3,52,03,339.03 (Three Crores, Fifty two lakhs, three thousand three hundred thirty nine and paise three only) which was the differential duty involved on account of re -classification of the product PCTR and duty paid by them during the said period i.e. 1.3.1986 to 31.12.1989 was not refundable to them as the same was hit by the doctrine of unjust enrichment in terms of the Customs and Central Excise, Amendment Act, 1991 (Act 40 of 1991). He, therefore, ordered that the undisbursed amount of Rs. 3.52,03,339.03 which is covered under Sub -section (2) of the amended Section 11B shall be deemed to have been passed in full to the buyers of such goods in view of the presumption as contained in Section 12B and therefore, credited the same to the Consumer Welfare Fund in terms of Section 12C of the Central Excise Act, 1944 which were inserted with effect from 20.9.1991 vide Section 6 of Central Excises & Customs Laws (Amendment) Act, 1991 (40 of 1991).

(2.) THE brief facts of the case are that M/s Madras Rubber Factory, Itchiputhur, Arakonam (herein after referred to as M/s. MRF) are manufacturers of rubber products among others, they manufacture a product called PCTR for re -soling and retreading of tyres. They sought for classification of the said PCTR under TSH No. 4008.21 and claimed the duty exemption vide Notification No. 47/76 dated 9.3.1976 as amended by Notification No. 193/80 and 78/86 dated 10.2.1986 under their classification List No. 2.85.86 which was filed consequent upon the changes effected during the Budget 1986 with effect from 01.03.1986. The department had accepted the classification of the subject goods under Chapter heading No. 4008.21 and denied them the benefit of Notification No. 47/76 dated 9.3.1976 as amended, as claimed by them on the ground that that the stipulated conditions mentioned under this Notification have not been fulfilled by the assessee inasmuch as PCTR manufactured by them was found to be in the form of cured vulcanized rubber. Therefore, the assessees were instructed by the Supdt. of Central Excise, Arakonam Range vide his letter OC No. 1190/86 dated 27.6.1986 which is available at page No. 40 of the Additional Paper Book No. 1, to revise their classification list and to effect the clearances of the goods on payment of duty of 40% adv. which was applicable to heading 4008.21 at that time. This letter of the Supdt. of Central Excise dated 27.6.1986 is extracted herein below for ready reference:

(3.) IN the meanwhile classification of the product PCTR, was taken up by the department in order to maintain universal practice throughout the country under the harmonised Chapter heading No. 4008.21. During 11/89 the department decided to have classification of the PCTR under sub -heading 4016.99 on the ground that the goods in question emerge at the initial stages in the form of plate, sheets or strips as per the definition of plate, sheets, strips given under Note 9 of Chapter 40. Thereafter, the goods are moulded, edges are rounded and the shape of the cross section becomes trapezoid. As a result the goods do not finally remain plates, sheets or strips as defined in Chapter Note 9 of Chapter 40. The elaborate processes carried out on the goods by the appellants could not be called mere 'surface working' as per Note 9 of Chapter 40. As a result the goods could not be classified under sub -heading 4008.21 but it would merit classification under sub -heading 4016.99 and consequently, there would be no question of extending the benefit of Notification No. 47/76 dated 9.3.1996 as amended on such goods. This position was further confirmed by the Govt. of India by their clarification issued on 10.11.1989.