Take notes as you read a judgment using our Virtual Legal Assistant and get email alerts whenever a new judgment matches your query (Query Alert Service). Try out our Premium Member services -- Free for one month.\n\nCustom, Excise & Service Tax Tribunal\nEma Lubes Pvt Ltd vs Commisioner Central Excise And Service ... on 14 December, 2023\nCUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL\n                     MUMBAI\n                              REGIONAL BENCH\n                   Excise Appeal No. 86293 of 2019\n(Arising out of Order-in-Appeal No. PUN-EXCUS-001-APP-489/2018-19 dated\n17.12.2018 passed by the Commissioner of Commissioner of Central Tax (Appeals-I),\nPune)\n\nM/s. Ema Lubes Pvt. Ltd.\n305, 'THE MELANGE',                                          ........Appellant\n3rd Floor, Opp-Sandvik Asia,\nOld Mumbai-Pune Road,\nFugewadi, Pune-411 012\n\n                                    VERSUS\n                                                             ........Respondent\nCommissioner of Central Excise\nAnd Service Tax, Pune-I\n41-A, Ice House, Sassoon Road,\nOpp. Wadia College,\nPune-411 001\n\nAPPERANCE:\nShri R. S. Paranjape, Chartered Accountant for the Appellant.\n\nShri P. K. Acharya, Superintendent, Authorised Representative, for the\nRespondent.\n\nCORAM:\nHON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)\n\n      FINAL ORDER NO. 87232/2023\n\n\n                                               Date of Hearing: 22.11.2023\n                                               Date of Decision: 14.12.2023\n\n\nPER: DR. SUVENDU KUMAR PATI\n\n\n\n      Rejection of refund on the ground of unjust enrichment by the\n\nAdjudicating Authority that finds approval of the Commissioner\n\n(Appeals) by way of rejection of the appeal of assesse Appellant is\n\nassailed in this appeal.\n\n\n2.    Facts of the case, in a nutshell, is that Appellant manufacturers\n\nunit was raided by DGCI in which they discovered availment of\n                                         2.\n\n                                                             E/86293/2019\n\n\n\n\ninadmissible CENVAT Credit. It had resulted in deposit of Rs.18,22,495/-\n\nin two phases during investigation and payment of 25% of penalty\n\nconsequent upon adjudication of the Show-cause cum Demand Notice\n\nissued in consequence to the investigation. Appellant preferred appeal\n\nbefore the Commissioner (Appeals) who vide his Order-in-Appeal dated\n\n25.01.2017 set aside the demand, interest and penalty and modified the\n\nOrder-in-Original   accordingly.   A   refund   claim   of   Rs.22,78,119/-\n\ncomprising of the deposit made on 30.07.2014 during investigation and\n\npenalty paid in compliance to Order-in-Original was filed by the\n\nAppellant which was allowed but amount was not paid to the Appellant\n\nas being directed to be paid to the Consumer Welfare Funds on the\n\nground that Appellant failed to discharge the burden of unjust\n\nenrichment. The same order finds approval of the Commissioner\n\n(Appeals) on dated 30.05.2017, the legality of which is assailed here by\n\nthe Appellant, who also had succeeded before the CESTAT in an appeal\n\nfiled by the Respondent-Department challenging legality of the order of\n\nCommissioner (Appeals) setting aside the conformation of demand etc.\n\nmade against allegedly inadmissible credit.\n\n\n3.    Both sides led arguments with reference to Judicial decisions\n\navailable in their respective support. While Learned Counsel for the\n\nAppellant, Shri R. S. Paranjape Chartered Accountant, with reference to\n\ndecision of this Tribunal passed in the case of Lorenzo Bestonso Vs.\n\nCommissioner of Customs (Import) Nhava Sheva reported in 2015 (315)\n\nELT 478 (Tri. Mumbai), argued that it was incumbent upon revenue to\n\nrefund the amount deposited during investigation after appeal was\n                                        3.\n\n                                                           E/86293/2019\n\n\n\n\nallowed with consequential relief and there was no need to file even a\n\nrefund application, Learned Authorised Representative            Shri P.K.\n\nAcharya, in citing decision of this Tribunal Reported in Mahindra Engg.\n\n& Chemical Products Ltd. Vs. Commissioner of Central Excise, Pune-\n\nReported in 2019 (368) ELT 84 (Tri. Mumbai), Hindustan Petroleum\n\nCorporation Ltd. Vs. Commissioner of Central Excise, Mumbai-II\n\nReported in 2015 (317) ELT 379 (Tri. Mumbai), Tetra Pak India Pvt. Ltd.\n\nVs. Commissioner of Customs, Nhava Sheva, Mumbai-II Reported in\n\n2019 (370) ELT 449 (Tri. Mumbai) and other cases argued that amount\n\nshown in Profit & Loss account as expenditure and not as receivable\n\namount takes with it the presumption that 'incident of duty has been\n\npassed on to other person' in which case doctrine of unjust enrichment\n\nwould apply, even contrary of the findings of this Tribunal in the case of\n\nM/s Elantas Beck India Ltd. Vs. Commissioner of Central Excise And\n\nService Tax, LTU Reported in 2016 (339) ELT 325 (Tri. Mumbai) on\n\nwhich heavy reliance is placed by the Learned Counsel for the Appellant,\n\nthat showing such amount as receivable in the Account Book and\n\nshowing the same as expenditure would not mean that the incident of\n\nduty has been shifted as otherwise assesse might have slashed his profit\n\nmargin by keeping same sale price. Having gone through such contrary\n\nobservations, it will be worthwhile to look into the background of\n\nmaintenance of such Accounting Principle and the justification offered\n\nthrough    Judicial   pronouncement   that   reflection   of   amount     as\n\n'Receivables' or 'Expenditure' would justify unjust enrichment or its\n\nabsence.\n                                        4.\n                                                        E/86293/2019\n\n\n\n\n4.    Going through the available literature produced by advisories\n\nmainly the study papers on unjust enrichment published by the Institute\n\nof Chartered Accountant and submitted by the Learned Counsel for the\n\nAppellant. It is noticeable that in the case of Commissioner of Customs,\n\nAir Cargo Unit, New Delhi Vs. Maruti Udyog Ltd. reported in 2003 (155)\n\nELT 523 (Tri-Del) there was observations by the Delhi Bench of this\n\nTribunal that duty incident was held not to have been passed to\n\nconsumers if\na) Duty that was paid was disclosed as amount receivable under all other\n\nCurrent Assets in the Balance Sheet;\n\nb) A Chartered Accountant certificate is produced to the effect that\n\nincidence of duty was not passed on to the customer;\n\nc) Invoices for relevant period would show that there was no change in\n\nprice of goods.\n\n\n\n4.1   Apparently, basing on this judgment, Adjudicating Authorities\n\nhave blindly refused to credit the refund amount to the assesse's\n\naccount, if the amount was not shown as 'recoverable' in the Balance\n\nSheet or in the Profit/Loss Account. After going through the Study\n\nPapers on unjust enrichment released by the Institute of Chartered\n\nAccountants of India vis-à-vis Compendium on Accounting Standard of\n\nInstitute of Chartered Accountant of India released in 2017, it is\n\nmanifestly clear as to under what circumstances any amount is to be\n\nshown in the Financial Statement of any Company as 'receivable' or\n\n'expenses'. To begin with, the Accounting Standard prescribed by the\n\nInstitute, which is a Government of India concern set up by an Act of\n                                        5.\n\n                                                           E/86293/2019\n\n\n\n\nParliament, amount receivable in future is normally termed as\n\n'Contingent Asset' since the availability of such asset would be\n\nContingent/ conditional to availability of certain other conditions. In the\n\ndefinition chapter called Provisions, Contingent Liability and Contingent\n\nAssets, under Para 10.5 it has been clearly mentioned that a Contingent\n\nasset is a possible asset that arises from past event the existence of\n\nwhich will be confirmed only by the occurrence or non-occurrence of one\n\nor more uncertain future event not wholly within the control of the\n\nenterprise. Similarly, under Para 30 of the said chapter, it is mentioned\n\nthat an Enterprise should not recognize a Contingent asset and\n\nPara 33 states that it should not disclose it in the Financial\n\nStatement. This being the Accounting Principal there is a requirement\n\nto examine as to how the Appellant had maintained its Financial\n\nStatement during the relevant period to find out, if exclusively alone\n\nfrom this statement, unjust enrichment is established or bypassed.\n\n\n\n5.    In a written note, Appellant has submitted a chronology of dates\n\nand events in which under serial no. 9 it has mentioned that after Order-\n\nin-Original was passed on 30.03.2015 conforming the demand and\n\nappropriating the amount, Appellant had written off the conformed duty\n\namount on 31.03.2015 showing it as 'expenses' in its balance sheet.\n\nAgain upon submission of refund claim consequent upon its acceptance\n\nof appeal by the Commissioner setting aside the Order-in-Original in\n\n2017 and the said order attaining finality by rejection of appeal of\n\nDepartment by the CESTAT on 29.12.2017, it had brought back the said\n\namount by reversing the entry and shown the same as refund receivable\n                                        6.\n\n                                                           E/86293/2019\n\n\n\n\nthat was written off as expenses in 2014-15. Therefore, entry in relation\n\nwith account book was flawless though it is no way offering any\n\njustification that the doctrine in unjust enrichment is established/not\n\nestablished thereby. The contention of Learned Counsel for the\n\nAppellant is well accepted for the reason that maintenance of Accounts\n\nStatement, as per the Accounting Standard prescribed by the Institute\n\nChartered Accountant and proof of recovery of duty paid by the\n\nAppellant are altogether different from each other. In this connection, I\n\nwould be tempted to reproduce a portion of my observation made in the\n\norder passed in respect of M/s Ring Plus Aqua Ltd. Vs. Commissioner\n\nof Central Excise & Customs, Nasik reported in 2019 (370) ELT 1364\n\n(Tri.-Mumbai) to justify that unjust enrichment would not automatically\n\nget established by showing amount as 'receivable' in the Financial\n\nStatement or as 'expenditure'. Relevant portion of Para 5 of the said\n\norder reads\n\n      ...It is beyond once capability to tress out after laps\n      of a decade as to if such amount could be/was\n      absorbed in the exact cost of manufacturing of final\n      product since price of a product can't remain static in\n      all those years. Moreover, as has been observed in\n      the case of M/s Pandurang SSK Ltd. (supra), it is not\n      invariably true that when any amount is shown as\n      expenditure or any expenditure is required to be\n      made, the same has to be absorbed in costing of final\n      product unless there is a proof that pricing of the final\n      product has specifically increased on that score, since\n      there are various mechanisms available before the\n      manufacturer to absorb the cost say by way of\n      reducing profit margin of its sale, overhead\n      expenditures of the company etc...\n                                         7.\n                                                           E/86293/2019\n\n\n\n\n6.    Before parting with the issue, it is imperative to have a look at the\n\nprovision of unjust enrichment as reflected in Provisio d and e of Sub\n\nSection(2) of Section 11B of the Central Excise Act, 1994. It reads;\n\n       d) the duty of excise and interest, if any, paid on such\n       duty paid by the manufacturer, if he had not\n       passed on the incidence of such duty and\n       interest, if any, paid on such duty to any other\n       person;\n\n      (e) The duty of excise and interest, if any, paid on\n       such duty borne by the buyer, if he had not passed\n       on the incidence of such duty and interest, if\n       any, paid on such duty to any other person;\n\n\n7.    This Provision has not stated anywhere that any document is\n\nrequired to be produced before the Assistant Commissioner or Deputy\n\nCommissioner of the Central Excise to pass the burden of unjust\n\nenrichment but to his satisfaction he call for and examine documents to\n\narrive at a finding that such incident of duty was not passed on to any\n\nother person. Therefore, the general perception that burden of proof is\n\non the assesse to establish that incidence of duty was not passed on to\n\nany other person is true to the extent that and in the case where\n\nallegation is made concerning passing of such duty incidence to any\n\nother persons, then only he would be in a position to falsify the same\n\nthrough related documents. For example, when a person is accused of\n\ncommitting murder of another person Named 'B' then at least 'B' should\n\nhave been dead so as to allege 'A' of culpable homicide. Therefore, the\n\nfinding of the Refund Sanctioning Authority at para 21 of the Order-in-\n\nOriginal that Appellant failed to produced documentary proof for not\n\nhaving passed on the incidence of duty of Excise to any other person, is\n\nill founded till there is an allegation based on record that duty has/might\n                                         8.\n\n                                                            E/86293/2019\n\n\n\n\nhave passed to another person or any other person. It would also be\n\nerroneous on the part of Commissioner (Appeals) to refer to Para 17 of\n\nthe Judgment of Hon'ble Supreme Court passed in the case of Union Of\n\nIndia Vs. Solar Pesticides Pvt. Ltd.-2000 (116) ELT 401 (SC) where there\n\nis only reference of indirect passing of duty incidence and not burden of\n\nproof. Further straight away arriving at a conclusion that because of the\n\namount fact that the amount is shown in the Balance Sheet as Excise\n\nDuty paid, incidence of duty was transferred and thereby Appellant\n\nwould be unjustly enriched if amount is refunded to him/it is not\n\nsustainable in law and facts. Hence the order,\n\n\n\n                               THE ORDER\n8.      The appeal is allowed and the order passed by the Commissioner\n\n(Appeals) in Order-in-Appeal No. PUN-EXCUS-001-APP-489/2018-19\n\ndated 17.12.2018 is hereby set aside. Appellant is entitled to get refund\n\nof Rs.22,78,119/-, with applicable interest as per Section 11B of the\n\nCentral Excise Act, 1994 and the Respondent-Department is directed to\n\npay the same within three months of receipt of this order.\n\n\n\n              (Order pronounced in the open court on 14.12.2023)\n\n\n\n\n                                                   (Dr. Suvendu Kumar Pati)\n                                                           Member (Judicial)\n\n\n\n\nKajal