EASTER INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) BRIEFLY stated facts of this case are as follows : - The appellants herein are manufacturers of polyester filament yarn. They were paying duty on a certain rate on 15 -12 -90. A Notification was issued enhancing the rate of duty on the said product. However, the said Notification came to the notice of the Revenue as well as the assessee on 19 -12 -90. As a result, the appellants herein had been paying the duty on clearance of the polyester filament yarn at the lower rate as it was hitherto prevalent prior to 15 -12 -90. On 19 -12 -90 and 21 -12 -90, the officers of Central Excise debited the enhanced differential duty which arose during the period 15 -12 -90 to 18 -2 -90 in two instalments. Later on the appellants herein filed a refund claim of the aforesaid amount of duty debited by the officers in the PLA account maintained by the appellants. A Show Cause Notice was issued by the Revenue proposing to reject the refund claim so filed by the appellants on two grounds; (i) that the duty has been correctly charged inasmuch as the enhanced rate of duty was in force during the period 15 -12 -90 to 18 -12 -90, (ii) the refund claim is also covered by the doctrine of unjust enrichment and they asked the appellants to show evidence that they have not passed on the burden of duty to their customers. The appellants have succeeded before the lower appellant authority on the first ground, that the Notification bringing the enhanced rate of duty would be effective only from 19 -12 -90 when that Notification was brought to the notice of the general public on that date. However, the refund claim has been rejected on the ground of unjust enrichment on a finding that the appellants have not been able to prove that the burden of duty has not been passed on in respect of the said goods to their customers. It is against the said finding of the lower appellate authority that the appellants have now come in appeal.

(2.) LD . Advocate Sh. R. Santhanam for the appellants submits that in the facts and circumstances as narrated above, there could be just no occasion for passing on the burden of duty at a higher rate to their customers. He submits that the goods were under physical control procedure which envisage that goods could be cleared on presentation of an AR 1 application and the goods had to be removed on physical examination by the Inspector concerned and on signing of the AR 1 and after debiting the duty in the PLA. It is not disputed by the Revenue that all the clearances of goods made during the period 15 -12 -90 to 18 -12 -90 were on payment of the lower rate of duty as was prevalent prior to 15 -12 -90. It is only subsequently that the duty was debited from the PLA account of the appellants. Since the goods had already been sold, there was no question of any recovery of duty from their customers. In the facts and circumstances of this case, ld. Advocate submits that it is clear and apparent that no higher burden of duty has been passed on by the appellants to their customers. Consequently, he submits that the appeal be allowed and refund directed to be paid to the appellants.

(3.) OPPOSING the contentions, ld. SDR, Sh. A.K. Prasad submits that Section 12B raises a presumption that the incidence of duty has been passed on to the buyer unless the contrary is proved by the assessee/appellants. He further submits that it is the common practice of trade that even when duty is demanded subsequently by the department and paid subsequently by the assessee, the assessee passes on the burden of duty to their customers by raising debit notes. He submits such a possibility could not be ruled out in the present case. Therefore, the appellants have to say that they have not passed on the burden of duty by raising such debit notes. He further submits that the appeal deserves to be dismissed for the reason that the burden cast on the appellants under Section 12B of the Central Excises Act has not been discharged by them.