Full Judgment
2.1 Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants were originally registered as a 100% export-oriented undertaking (EOU); that they made an application for de-bonding of the unit to the Development Commissioner on 26-4-94 and they were finally de-bonded as per letter dated 1-3-95; that the Commissioner of Central Excise under letter dated 27-6-95 addressed to the Assistant Commissioner directed that a total sum of Rs. 76,83,195/- was required to be paid by them to achieve the status of a complete de-bonded unit; that based on the said communication the Assistant Commissioner issued a certificate dated 10-7-95 to the effect that the unit stood de-bonded with effect from 9-7-95; that on their protest the actual date of de-bonding was declared to be 15-5-95 and not 9-7-95.
2.2 They paid the total duty of Rs. 76,83,195/- vide TR6 Challan Nos.
36/628 and 36/629, dated 6-7-1995. Subsequently they filed three refund claims as under :- These three refund claims have been rejected by the Revenue and are the subject matter of present three appeals.
3.1 In this appeal, the Appellants have claimed refund of duty amounting to Rs. 1,68,502/- on the ground that during the period from 15-5-95 to 9-7-95, they had used duty paid inputs and packing materials for manufacture of the finished goods, and part of the finished goods were exported after 9-7-95 and since there is no duty on exports and products manufactured after de-bonding attracts Nil rate of duty, the duty paid inputs used in the manufacture are liable for claim of duty drawback on export. As they could not claim drawback, they had filed the refund claim. The Assistant Commissioner, under Order-in-Original No. 1/Ref/98, dated 28-9-98 rejected their refund claim observing that the claim of drawback cannot be sanctioned in the form of refund claim under Section 11B of the Central Excise Act; that rebate under Rule 12 of the Central Excise Rules, 1944 is also not available as the conditions specified in Notification No. 42/94-C.E. (N.T.), dated 22-9-94 has not been complied with; that the Customs duty refund cannot be considered and granted under Section 11B of the Central Excise Act.
The Assistant Commissioner has also held that the duty was paid on 6-7-95 and the claim has been filed on 18-3-96 which is beyond the period specified in Section 11B of the Act and as such claim is barred by limitation and the duty has not been paid under protest as there is no reference to duty paid under protest.
3.2 The Commissioner (Appeals) also under the Order-in-Appeal No.357/2001, dated 15-5-2001, has rejected the appeal filed by the Appellants on the ground that the Assistant Commissioner cannot consider the refund claim filed under Section 11B of the Central Excise Act under the provisions of Section 27 of the Customs Act in respect of customs duty component involved in the refund claim. The Commissioner (Appeals) has also upheld the finding of the Adjudicating Authority regarding non-following the conditions of Rule 12 and refund claim being time-barred.
4. The learned Advocate has submitted that the refund claim has arisen out of the revision of the date of debonding of the Appellants' unit; that since the date of debonding has been shifted, the duty payable by them had to be suitably altered; that in order to give effect to the actual date of debonding, refund has to be sanctioned to them; that the Department cannot take the advantage of its own error of treating 9-7-95 as the date of debonding instead of 15-5-95. He also mentioned that as the same Assistant Commissioner earlier recovered Customs duty he should have acted also as a Customs Officer for refunding the same.
He finally mentioned that as cause for refund has arisen after the decision of the Department to revise the debonding date the period of limitation shall have to be computed from the date of settlement of dispute regarding the actual date of debonding that is 19-1-96 when they received the communication from the Department; that as such refund claim is within the specified period of six months; that duty was paid under protest under their letter dated 7-7-1995.
5. Shri V. Valte, learned SDR, countered the arguments by reiterating the findings of both the lower authorities and emphasized the fact that in the present matter the Appellants cannot claim refund of duty; that they have to either claim duty drawback or rebate of duty paid on the inputs used for packing the finished goods exported. He also mentioned that the protest filed by them under their letter dated 7-7-95 was on an entirely different ground i.e. the duty on packing material cannot be demanded as the same has been used in the production of goods which are included in the finished stock; that in the present matter the duty is being claimed as refund as goods had been exported and accordingly the refund claim is hit by time-limit specified in Section 11B of the Act.
6. We have considered the submissions of both the sides. The refund claim has been made on the ground that the duty paid empty packing materials were used in production of finished goods which had been exported and they could not claim 'duty draw back' on the inputs. The contention of the learned SDR is correct that no refund of duty under Section 11B of the Act is involved as it is a case of export of finished goods in the manufacture of which duty paid packing material was used. For claiming such duty back the provisions are contained in Rule 12 of the Central Excise Rules, 1944 and Section 75 of the Customs Act. A claim for the rebate of duty paid on materials used in the manufacture of goods cannot be claimed as such under the provisions of Section 11B of the Central Excise Act or under Section 27 of the Customs Act as specific provisions have been made in this regard subject to the conditions stipulated in Rule 12 of the Central Excise Rules, 1944 and/or Section 75 of the Customs Act read with Customs and Central Excise Duties Drawback Rules, 1995. The fact that they could not claim drawback does not confer on them any right for filing the refund claim under Section 11B of the Central Excise Act. As they were themselves disputing the date of debonding of their unit they should have taken the step either to claim drawback or rebate. Accordingly there is no merit in the appeal filed by the Appellants and the same is rejected.
7.1 In this appeal, Appellants have claimed the refund of Rs. 2,58,184/-on the ground that during the period between 15-5-1995 and 9-7-95, they had manufactured goods and removed the same on payment of appropriate duty considering the date of debonding on 9-7-95; that once the debonding date is taken to be 15-5-95, no Central Excise duty is payable by them on the finished goods. The Assistant Commissioner, under Order-in-Original No. 10/Ref/98, dated 28-9-98 rejected the refund claim holding that the Appellants had not challenged the debonding Order and the duty had been paid according to the conditions of the debonding order. The Assistant Commissioner also found that the duty paid by them had been collected from their customers and as such the incidence of duty had not been borne by them. On appeal filed by them, the Commissioner (Appeals) also rejected their appeal, under Order-in-Appeal No. 291/2001, dated 24-4-2001, on the ground that they had failed to submit any documentary evidence to show that they had borne the incidence of duty.
7.2 We heard both the learned Advocate for the Appellants and learned SDR, for Revenue.
8. Section 11B of the Central Excise Act clearly provides that any person claiming refund of duty shall furnish documentary or other evidence to establish that the amount of duty of excise in relation to which refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person. No evidence has been brought on record to establish that the incidence of duty had not been passed on by them to any other person.
In fact it is mentioned in the Memorandum of Appeal filed by them that their buyer had on a number of occasion had demanded the refund of duty. This goes clearly to show that the incidence of duty had been passed on by them to their buyer. Accordingly the bar of unjust enrichment is applicable. We, therefore, reject the appeal.
9. Appeal No. E/1642/2001-B In this appeal, the Appellants have claimed refund of duty amounting to Rs. 8,76,731/- on the ground that duty separately was not payable on 'Packing material' since they were discharging full duty on the value of the finished products at the time of clearance in Domestic Tariff Area in terms of Notification No.2/95-C.E., dated 4-1-95. The Assistant Commissioner, under Order-in-Original No. 7/Ref/98, dated 5-10-98, rejected the refund claim on the grounds that in the debonding order dated 27-6-1995, it was specifically mentioned that they had to discharge duty liability, inter alia, on packing material and they had not challenged the said debonding order. The Assistant Commissioner had also held that when packing material was used captively in the manufacture of final products, the duty paid is passed on to the buyer of the final product.
The Commissioner (Appeals) also under, the Order-in-Appeal No.292/2001, dated 24-4-2001, rejected their appeal upholding the findings of the Adjudicating Authority to the effect that having failed to appeal against the debonding order, the said Order had become final and irrevocable.
10. The learned Advocate submitted that the debonding letter dated 27-6-95 is not an appealable order against which an appeal could have been filed by the Appellants; that the said letter is a communication issued by the Deputy Commissioner (Technical) addressed to the Assistant Commissioner informing that the Commissioner had allowed debonding of the unit subject to payment of duty amounting totally Rs. 76,83,195/-; that only a copy of the said communication was endorsed to the Appellant and accordingly it cannot be treated as an appealable order. He, further, submitted that it is a clear case of payment of duty twice in respect of the packing materials and accordingly duty is refundable to them; that the duty was paid under protest which is evident from their letter dated 7-7-1995 wherein they had clearly mentioned that the duties assessed, under letter dated 27-6-95 was on the higher side and unjustified and they were making the payment under protest; that they had mentioned in the said protest letter that "Duties assessed on packing material used in finished goods worth Rs. 8,76,731/- as it will amount to double duty payment. Finally the learned Advocate mentioned that bar of unjust enrichment does not apply as the duty has been paid twice and it is a deposit. Reliance has also been placed on the decision in the case of Sinkhai Synthetics & Chemicals Pvt. Ltd. v. CCE, Aumngqbad - 2002 (143) E.L.T. 17 (S.C.) wherein the Supreme Court has allowed the appeal filed by the Appellants against Tribunal's decision of rejecting their claim for refund of duty paid under protest.
11. Countering the arguments, the learned SDR, submitted that the Para 2 of debonding order made it very clear that all finished goods lying in stock as on date at the time of debonding were liable to appropriate duty and in case duty is not paid on the finished goods at the time of debonding the same were to be kept in bond and could be cleared on payment of appropriate duty and also could be exported under bond; that as the cost of packing material is included in the value of the finished goods, the incidence of duty has been passed on to others and bar of unjust enrichment will apply.
12. We have considered the submissions of both the sides. We agree with the learned Advocate that the letter dated 27-6-95 cannot be treated as an appealable order and the Appellants had paid the duty on packing material under protest. Their protest is very much evident from their letter dated 7-7-1995. The refund of the duty will be admissible to the Appellants as they have paid the duty on the finished goods for the packing of which packing material procured duty free has been utilised and they have also separately discharged the duty on the same quantity as packing material in terms of the debonding conditions. However, refund will be subject to the bar of unjust enrichment and the Appellants have to establish by furnishing documents/evidences that the incidence of the entire duty paid by them has been borne by them only and not passed on to other persons. We observe that this aspect of unjust enrichment has not at all been considered by the Commissioner (Appeals) in the impugned Order No. 292/2001, dated 24-4-2001. Even the Assistant Commissioner has gone by the deeming provisions of Section 12B of the Central Excise Act to the effect that unless the contrary is proved, the incidence of the duty of excise paid by any person would be deemed to have passed in full to the buyer of such goods. In view of this we set aside the impugned order and remand this matter to the jurisdictional Adjudicating Authority to decide as to whether the bar of unjust enrichment applies in this matter. The Appellants are at liberty to furnish the material whatever they wish to produce in support of their contention within one month of receipt of this order.
13. Accordingly, the Appeal Nos. 1639 and 1641/2001-B are rejected and Appeal No. E/1642/2001-B is allowed by way of remand.