Gail (India) Ltd. vs Commissioner
2023 Latest Caselaw 17060 MP

                                   1
 IN     THE       HIGH COURT OF MADHYA PRADESH
                        AT GWALIOR
                          BEFORE
             HON'BLE SHRI JUSTICE ROHIT ARYA
                             &
       HON'BLE SHRI JUSTICE AVANINDRA KUMAR SINGH
                    ON THE 13 th OF OCTOBER, 2023
                 CENTRAL EXCISE APPEAL No. 1 of 2011

BETWEEN:-
GAIL (INDIA) LTD. P.O.GAIL COMPLEX VAIJAYPUR-473
112 (MADHYA PRADESH)

                                                             .....APPELLANT
(BY SHRI sIDDHARTH SHARMA - ADVOCATE)

AND
COMMISSIONER CENTRAL EXCISE AND CUSTOMS,
MANIK BAGH PALACE, INDORE (MADHYA PRADESH)

                                                           .....RESPONDENT
(BY SHRI PRAVEEN SURANGE - ADVOCATE )

      This appeal coming on for orders this day, Justice Rohit Arya passed
the following:
                                    ORDER

This appeal under Section 35G of the Central Excise Act, 1944 by Assessee is directed against the order of the Customs, Excise and Service Tax Appellate Tribunal, at Delhi dated 5/10/2010.

This Court while admitting the appeal has framed the following substantial question of law:-

"Whether, in facts and circumstances of present case, impugned order passed by Customs, Excise and Service Tax Appellate Tribunal at New Delhi has correctly held that claim of appellant is hit by

unjust enrichment and appellant failed to prove that duty burden has not been passed ignoring the evidence of records in the form of Books of Accounts, certificate from Oil marketing PSUs, especially in the backdrop of presumptive statutory provisions under Section 12B of Central Excise Act, 1944?"

The entire controversy revolves around the mandate as contained under Section 12B of the Central Excise Act, 1944. For ready reference, Section 12B is quoted hereinbelow:-

"12B. Presumption that incidence of duty has been passed on to the buyer.- Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods."

The period in question is January, 1999 to March 1999 and September, 1999 to 28/10/1999 falling in two assessment years 1998-1999 and 1999 to 2000. Undisputedly, the Assessee, M/s GAIL (India) Limited, Vijaipur, District Guna, previously known as M/s Gas Authority of India Limited, has filed a refund claim for Rs. 32,65,057/- on 6/10/2003 consequential to finalisation of their provisional assessment of their product LPG for the period from November, 1996 onwards vide order dated 27/3/2003 passed by the Deputy Commissioner, Central Excise, Gwalior.

The first adjudicating Authority i.e. Assistant Commissioner, Central Excise, Division Gwalior vide its order dated 27/5/2004 finalized the assessment rejecting the claim of refund of amount as aforesaid.

The assessee then preferred an appeal before the Commissioner (Appeals) i.e. Lower Appellate Authority. The Lower Appellate Authority vide

order dated 28/10/2004 has dismissed the appeal.

Thereafter, the assessee has preferred second appeal before the Customs, Excise and Service Tax Appellate Tribunal, at Delhi, and the Tribunal by the impugned order dated 5/10/2010 has dismissed the appeal.From a bare reading of S.12B of the Act, it is evident that there is a presumption that every person who has paid the duty of excise on any goods, at the time of sale of such goods passed on the incidence of duty onto the buyer, unless contrary is proved by him. All the three forums below have reached the conclusion that nothing concrete had been submitted by the assessee that excess excise duty of Rs.32,65,057/- for the relevant period Jan. 1999 to October 1999, has not been recovered from the buyers.

The certificate dated 9/3/2004 issued by the Chartered Accountant with annexures indicates details of Basic Price & Excise Duty as per invoices, details of Basic Price & Excise duty received as payment and short recovery of duty. However, the assessee/party has not produced any certificate from their customers for the relevant period that excise duty amount has not been paid by them to the assessee/party. In other words, the assessee has shown duty element in the invoices as per the provisions of S.12-A of the Act. It is also stated that the same has not been recovered from their customers and the excess paid amount of Rs.32,65,057/- is shown as outstanding balance as

receivables in their balance-sheet.

Nonetheless, nothing concrete has been placed on record that the duty element shown in the invoices issued to customers has not been recovered from the customers. Under such circumstances, the concurrent finding of Tribunal that it is a case of unjust enrichment cannot be faulted with and the assessee has rightly been held not entitled to refund of Rs.32,65,057/- as excess amount of

excise duty.

The Tribunal has referred to identical matter of the assessee for refund of claim based on recoverable from the buyer, which was turned down and confirmed by the appellate Authority. For ready reference, paragraph 26 of the order dated 27/5/2004 passed by Assistant Commissioner is quoted below:

"26. I also notice that in a similar matter, the party had filed a refund claim for Rs.1,31,900/- which was rejected by the Assistant Commissioner, Central Excise Division- Gwalior vide O-I-O No. 116/Ref/CEX/AC/2001-02 dated 28.08.2001. The party had preferred an appeal against the said O-I-O. Now, the Commissioner (Appeals) Central Excise Gwalior vide his O-I-A No. GWL/137/2003 dated 12.12.2003 has rejected the appeal of the party mentioning that :-

"It is observed that the Appellants have filed refund claim of Rs.1,31,900/- on the grounds that excess excise duty was paid by them on the clearance of domestic packed LPG from 22.11.2000 to 23.11.2000 at the higher rate of price instead at revised price effective from 22.11.2000. The contention of the Appellants s that the price of LPG being fixed by the Oil Coordination Committee (OCC), neither they nor the buyer PSU had any authority to decide LPG prices and no one can collect more duty and no buyer will reimburse more duty then fixed by the Government. The facts on records clearly indicate that they had raised invoices in which duty was shown at higher level, the refund of which has been sought by them. The fact that the duty incidence had been initially passed on by them to the oil marketing PSUs is also evident from the certificate dated 07.08.2003 issued by their Chartered Accountants which states that the amount was outstanding in their books and had been included in separate account code i.e. Accounts recoverable - others. This by itself indicates that higher duty incident

had been passed on by them to their buyers and the right to recover duty amount has not been forgone by the Appellants. It is, thus, established that incidence of excess duty sought to be refunded has been passed on by them to their buyers.The Appellants have relied upon the decisions in the case of Karnataka Antibiotic & Pharmaceuticals Ltd. v. CCE - 1996(83)ELT 114(T), Thermon Heat Traders Ltc. v. CCE - 2001 (132) ELT 455 (T), Indo Flogates ltd. v. CCE - 1998 (102) ELT 463 (T) and Modern Syntex Ltd. v. CCE - 2001 (131) ELT 96 (T). It is observed that the question of applicability of bar of unjust enrichment in such cases where the duty incidence had initially been passed to buyers but later sought to be remedied through the mechanism of of issue of credit notes had come up before the Tribunal in the case of Sangam Processors (Bhilwara) Ltd. v. CCE - 1994 (71) ELT 989 (T). This decision was affirmed by the Hon'ble Supreme Court as reported in 1994 (70) ELT A182. The ratio of judgment in the Sangam Processors case (supra) was followed by the Hon'ble Tribunal in the case of Grasim Industries (Chemicals Division) v. CCE, Bhopal - 2003 (153) ELT 694 (Tribunal - LB) to hold that in such cases where duty incidence was initially passed on to buyers and credit notes were issued later, the bar of unjust enrichment was attracted. The decisions cited by the Appellants, therefore, are not applicable in their case. In the present Appeal, the Appellants do not appear even to have issued credit notes. The ratio of the judgments cover the matter against the Appellants inasmuch as initially they had invoiced the entire amount of duty to their buyers and the excess duty in respect of which refund claim was filed is being shown as recoverable. Accordingly, I hold that the refund claim has correctly been rejected by the Adjudicating Authority." "

Further, in none of the documents viz. Books of Accounts or certificate from Oil marketing PSUs, as mentioned in the substantial question framed, the

assessee has shown to have not actually recovered the excess excise duty from the buyers.

Accordingly, in view of the foregoing discussion, the substantial question of law is answered in the affirmative and in favour of the revenue.

The appeal fails and is, hereby, dismissed.

                      (ROHIT ARYA)                                                (AVANINDRA KUMAR SINGH)
                         JUDGE                                                             JUDGE
        JPS/-
JAI
        Digitally signed by JAI PRAKASH SOLANKI
        DN: c=IN, o=HIGH COURT OF MADHYA
        PRADESH BENCH GWALIOR, ou=HIGH
        COURT OF MADHYA PRADESH BENCH
        GWALIOR, postalCode=474001, st=Madhya



PRAKASH
        Pradesh,

2.5.4.20=287738d30aabaeda9b10cecdf179c ec865c7633f4cfb9e38ce14fcbb05b9522a, pseudonym=560BC50AD082B9BE54EE290E C8CB2193780D8357,

SOLANKI serialNumber=8D6BC1C9FCE36623D0BD6B 8072A2D8C01433EBD48AE4F609F108CA8F 8DE6B522, cn=JAI PRAKASH SOLANKI Date: 2023.10.16 17:43:30 +05'30'