CCE Vs. SIV INDUSTRIES

JUDGEMENT

(1.) This is a Revenue appeal alongwith cross appeal of the assessee against common Order -in -Appeal No. 278/2001 (CBE) GVN dated 20.11.2001 passed by the Commissioner (Appeals) Trichy. By this order, the Commissioner has allowed refund of Rs. 88,26,360. The Revenue is aggrieved with this grant of refund on the ground that it is hit by unjust enrichment and hence grant of refund is not sustainable. The Commissioner by the same order has rejected the refund of Rs. 16,19,602 on the ground that assessee did not produce any duty paid document for proof of payment of duty. This has been challenged by the assessee by a cross appeal. There is two days delay in filing the cross appeal which has been explained and therefore the application for COD is allowed.

(2.) The short facts of the case are that appellants are manufacturers of viscose staple fibre and rayon filament yarn. They filed refund application dated 17.11.94 for Rs. 1,04,81,884. They claimed the above refund as a result of order of Commissioner (Appeals) Trichy in Appeal No. 92/94 (TRY) dated 11.10.94. The refund was claimed on the ground that they had paid duty of Rs. 5,48,02,096 whereas duty payable was Rs. 4,43,20,212 only and there is excess amount of Rs. 1,04,81,884. The assessees were granted permission to set up a 100% EOU vide letter indent dated 19.12.91 by Secretariat for Industrial Approvals, Ministry of Industry, Govt. of India. On 8.9.93, they made an application to the Secretary, Ministry of Commerce, Govt. of India and sought debonding of its unit from 100% EOU; i.e. withdrawal from 100% EOU scheme and the debonding was permitted with effect from 15.11.93. At the time of debonding the dispute has arisen as to whether duty on the finished goods lying in stock is to be paid under main Section 3(1) of CESA, 1944 or under proviso to Section 3(1) of CESA 1944. The appellant have contended that they had to pay duty at the time of debonding under main Section 3(1) of CESA, 1944 on the finished goods. The department issued show cause notice on this issue and the same was confirmed by the AC vide his Order -in -Original No. 5/94 dated 31.3.94 in favour of the department. Against the said order, the assessee went on appeal to CCE Trichy who by his Order -in -Appeal No. 92/94 dated 11.10.94 decided that duty is to be paid under main Section 3(1) at the time of debonding. The department went on appeal against the Order -in -Appeal to CEGAT which had upheld the department's plea and confirmed the OIO of the AC Coonoor Division. Against CEGAT's order, the assessee went on appeal to the Apex Court and the Apex Court vide its order dated 16.3.2000 in Civil Appeal No. 1737 of 1998 dated 16.3.98 set aside the impugned order of CEGAT and restored the order dated 11.10.94 of Commissioner (Appeals) Trichy. The assessee worked out the refund and claimed the same. However, the department issued the show cause notice dated 15.2.2001 through the AC asking the assessee to explain as to why their claim of Rs. 1,04,81,884 should not be rejected as hit by limitation and why the presumption of law as per Section 12B that incidence of duty had been passed on to the consumers should not be confirmed and why the amount involved should not be credited to the Consumer Welfare Fund as per Section 11B of CEA, 1944. The AC after due consideration rejected the refund, holding it as time barred and hit by limitation and principles of natural justice.

(3.) On appeal, the Commissioner (Appeals) noted the documents which clearly indicated the assessments to be provisional and that the same had been paid under protest. He had also noted that payment pertained to duty paid under Section 3(1) of CEA by which the element of customs duty was not payable and recovered in terms of Apex Court's judgment, After due consideration of the entire material on record, he held that the claim for refund pertained only to amounts paid in respect of clearances which had been much earlier to the date of payment and duty had been paid from the funds of the assessee and they were not hit by unjust enrichment and element of duty had not been passed on to the consumers. The findings recorded by the Commissioner in paras 3 and 4 are reproduced herein below :