PSL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants manufacture MS Pipes in their factory at Nanichirai. The bare pipes are then sent to their units at Gandhinagar and Varsana for coating. The coated pipes are thereafter sent to the customers from the coating units.

(2.) 1 Prior to 1.7.2000, duty was being paid on bare pipes only. No Duty was being on coating value. Section 4 of the Central Excise Act 1944 introduced the concept of 'transaction value' w.e.f 1.7.2000. with the introduction of 'transaction value', the appellants on a belief that coating value is also includable in the transaction value of bare pipes, on 5.9.2000, paid Excise Duty on coating value on the clearance effected during the period 1.7.2000 to 31.8.2000 as also in respect of bare pipes lying in stock as on 31.8.2000. This amount worked out to Rs. 35,03,023/ -.

(3.) 1 They submit that refund of Rs. 41,60,106 is not hit by unjust enrichment. All dispatches of coated pipes made during the period July 2000 to October 2000 are claimed to pertain to contracts entered prior to 1.7.2000. In all contracts entered prior to 1.7.2000. they did not take into account duty on coating charges, in view of the settled legal position that no duty was actually payable by them on coating charges. The customers were also fully aware of the fact that no duty in payable on coating charges. For an illustration they refer page No. 75 in the paper book where the contract for coating mentions that "presently no duties and taxes are applicable on coating", CBEC in their circular dated 1.6.1988 had clearly held that guniting does not amount to manufacture. In view of the above, there could be no intention on the part of the appellants to collect duty on 'coating -charges' from their customers. The customers in turn did not intend to pay the duty on coating charges. All the contracts entered prior to 1.7.2000 would be exclusive of any duty on coating charges. Therefore, duty paid by the appellants on coating charges has been paid by the appellants out of their own pocket and not collected from their customers and would not be thus hit by bar of unjust enrichment.