M/S. Gini Silk Mills Ltd. Vs. Commissioner of Central Excise, Mumbai-iv - Court Judgment

S.S. Kang

Common issues are involved, therefore, we take up them together and dispose of them by this common order.

2. Appellant filed these appeals against the impugned order whereby the refund claim of the appellants were rejected.

3. The appellants are engaged in the processing man made fabrics. During the period in dispute the annual capacity of the stenters were determined by the competent authority. Consequential to the determination of the annual capacity of two show cause notices were issued demanding duty. The adjudicating authority dropped the proceedings. In view of the decision of the Hon’ble Supreme Court in the case of Commissioner of Central Excise Vs. S.P.B.L. Ltd. reported in 2002 (146) ELT 254 (S.C.). Revenue had not challenged the adjudication order whereby the proceedings for demand of duty were dropped. Subsequently, the appellant filed refund claim in respect of the differential duty paid. The adjudicating authority rejected the refund claim and the rejection is upheld by the Commissioner (Appeals).

4. We find that the Commissioner (Appeals) rejected the refund claim on the ground that appellant had not challenged the order of fixation of their annual capacity by the competent authority.

5. The appellant relied upon the decision of Hon’ble Bombay High Court in the case of Om Textile Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur reported in 2006 (74) RLT 233 (Bom.) whereby the Hon’ble Court held that as decision of the Hon’ble Supreme Court in the case of Commissioner of Central Excise Vs. SPBL Limited reported in 2002 (53) RLT 644 (S.C.) are not taken into consideration while determining the annual capacity of the stenter. In view of the law laid down by the Hon’ble Supreme Court the demand can be challenged even the order of determination was not challenged.

6. Both the authorities below also held that the refund claim is subject to the principle of unjust enrichment and appellant failed to show that burden of duty has not been passed on.

7. The contention of appellant is that as the differential duty has been paid much after the clearance of the goods. Therefore there is no question of unjust enrichment.

8. Revenue submitted that the authorities below after taken into consideration the fact that in the balance sheet the appellant had not shown the amounts in question as receivable. Therefore, it shows that burden of duty has been passed on, has not burden by the appellant.

9. We find that the lower authorities held that the appellant had not challenged the order of determination of annual capacity therefore the refund is not admissible. The Hon’ble Bombay High Court in the case of Om Textile Pvt. Ltd. (supra) held as under:-

“In so far as the present case in concerned, as indicated above, though the appellant did not challenge the correctness of the order dated 12th July, 1999 in independent and substantive proceedings, in response to the show-cause notice, the appellant did raise objection to the correctness thereof. In our considered view, by the time the matter reached to the Tribunal, the law having been settled by the Supreme Court holding that the length of galleries having no fan or radiator attached to it cannot be taken into consideration while determining the numbers of chambers, the Tribunal was competent to consider and rather ought to have considered the applicability of law laid down by the Supreme Court in the case of SPBL Limited to the facts of the present case”.

10. In view of the above decision the rejection of refund claim on the ground that order of determination is not challenged are not sustainable hence set aside.

11. In respect of the unjust enrichment, we find onus is on the appellant to show that burden of duty has not been passed on. Therefore on the issue of unjust enrichment requires reconsideration by the adjudicating authority afresh the impugned order is set aside and the matter is remanded to adjudicating authority to consider the issue of unjust enrichment, after affording an opportunity of hearing to the appellant. Both sides are at liberty to produce the evidence in support of the claim.

11. The appeals are allowed by way of remand.