1. Being aggrieved by the appellate order dated 20^th September, 2004, the appellant came before this forum in appeal. The appellants grievance in this appeal is that when sale price of its product is fixed and controlled by Govt. of India and such sale price did not include higher amount of Excise duty paid to M/s. SAIL w.e.f. 8/3/1991, the appellant cannot be said to have been unjustly enriched in respect of its refund claim arose due to reduction in duty by virtue of change in classification of the raw material sold to it by SAIL. In view of such reduction, the high rate of duty paid on purchase of raw material during the impugned period 9/3/1991 to 30/10/1992 was refundable to the Appellant for which it preferred claim. Such claim of the appellant having been denied by both the authorities below observing that the excise duty paid by the appellants to M/s. SAIL having been charged to cost of production and included in the cost of final product and the amount of duty did not appear in the balance sheet as recoverable or receivable, the appellant was not entitled to refund. Secondly, the authorities also denied the claim holding that the judgment of the Hon'ble Supreme Court in the case of Union of India v. Solar Pesticide Pvt. Ltd. Reported in was applicable to the case of the appellant.
2. The Appellant therefore strenuously challenged that both the authorities below without appreciating that price of the appellant is fixed and controlled by Govt. of India irrespective of its cost of production and it had not passed on the incidence of duty to the buyers of final products denied its legitimate claim. Further, without shifting incidence of case, the Appellant is not covered by the judgment of the Hon'ble Supreme Court in the Solar Pesticides case (supra). The Ld. Counsel for the appellant also submitted that the purchase of goods made during 9/3/1991 to 30^th October, 1992 had undisputedly suffered higher rate of Excise Duty charged by M/s. SAIL.
Change in classification of the goods finally being determined by Excise Appellate Authorities in respect of sale and that reached finality, the higher amount of duty paid was required to be refunded.
Such reduction only enabled the appellants to seek refund before the jurisdictional authority. That authority denied the claim even though certificate from Chartered Accountant was produced. Without appreciating relevant facts the authority misconstrued the Certificate.
3.1 During the impugned period, the appellant was governed by price fixation control by Govt. of India. The price fixed w.e.f. 6/11/1990 to 11/7/1991 and the price fixed from 11/7/1991 to 19/12/1991 governed the sale price of finished goods of the Appellant. According to him, the alluminium metal price fixed on 6/11/1990 by Govt. of India remained in force till 10/7/1991. The price revision made w.e.f. 11/7/1991 remained in force till 18/12/1991. With effect from 19/12/1991, there was another price revision and such revision was downward. Price fixed by Govt. being unalterable by the appellant, its cost of production was immaterial for the purpose of charging of the higher rate of duty. Also the Appellant is a Public Sector of Govt. of India and operates on public norms and public policy. Therefore, the Chartered Accountant's certificate which only indicated that higher rate of excise duty paid was charged to cost of production without showing that such cost was basis for pricing of final product, there cannot be presumption of shifting of incidence of duty. Therefore, it was baseless to hold that incidence of duty was passed to the buyers of final product. In such view of the matter the judgment of Hon'ble Supreme Court in the case of Solar Pesticides (Supra) does not apply to the case of the appellant.
3.2 The Ld. SDR appearing for Revenue submitted that the orders of the authorities below was proper and submitted that when the higher amount of excise duty was charged to cost of production that was absorbed by the sale price charged by the appellant. Nothing could be proved by the appellant that the sale price was not inclusive of the higher rate of excise duty paid. Rather the Chartered Accountant's certificate furnished by the appellant clearly proved that the appellant passed duty burden to the buyers of the finished product. Therefore, no interference to the first appellate order is warranted.
5.1 Refund claim was by buyer of goods sold by SAIL. Such refund arose out of reduction of duty liability by virtue of change of classification of goods sold by M/s. SAIL to the Appellant. Both the authorities below relied on Chartered Accountant's Certificate and without examining whether the price of final product fixed by Govt. of India as claimed by the appellant was below the cost of the goods produced by the appellant during the impugned period or above that, concluded the matter against the Appellant. If the price fixed was below the cost of production of the goods during the impugned period, there is no scope to hold that the incidence of duty was absorbed by the sale price and duty burden was passed on to the buyers. If the price fixed is higher than the cost of the goods, during the impugned period, there may be scope to hold that the incidence of duty was absorbed by the sale price for passing on the same to the buyers of the final product.
5.2 The appellant having claimed that the price which was fixed and remained effective from 6/11/1990 was in force till 10/7/1991 and the price fixed from 11/7/1991 remained in force till 18/12/1991 and thereafter, the price fixed w.e.f. 19/12/1991, covered the rest of the impugned period that (SIC). When Three sorts of prices were fixed on the finished products, it was necessary to demonstrate by the impugned order that the prevailing price of three different periods covering the impugned period, whether were less than the cost of production of the goods or higher than that. But no such situation was apparent from order. Had such exercise been made ascertaining whether averment of the appellant that it was subject to price control by Govt. of India, the conclusion could have met scrutiny by us. No doubt, the appellant is a public sector and governed by public norms and public policy, it is left open to the Excise Authorities to ascertain pricing policy of the appellant from the appropriate quarter.
6. It was observed from the contents of the Chartered Accountant's certificate reproduced by the Ld. Adjudicating Authority at page 7 of the order of Adjudication, that the said certificate indicates that excise Excise duty was charged to cost of production and treated as expenses of the appellant. It also reveals that the excess Excise Duty having been treated as Revenue expenditure by the appellant the amount recoverable or receivable towards excise duty due to change in classification of the goods sold was not considered. But such aspect was dealt by Authorities below contrary to the normally accepted accounting principles without calling for further clarification from Chartered Accountant who certified the statement and without examining the nature of treatment in the accounts, decision was taken. Normally, when a concern is not hopeful of recovery of its claim, the amount recoverable is not exhibited in the Balance Sheet either as recoverable or receivable. Rather the concern prefers to charge the amount to its Profit & Loss Account treating that to be Revenue expenditure of the concerned Financial Year. A detailed examination to the nature of the certification is, therefore, warranted and if so required, further clarification may be sought from the Chartered Accountant concerned with reference to the documents, he relied upon for certification as well as the consequence of such certification may be ascertained.
7. If the impact of the price fixation as discussed above and the nature of certification by Chartered Accountant is ascertained, the matter can be concluded with a clear observation demonstrating whether incidence of duty was passed on to the buyers including the higher rate of duty in the price of the final product.
8. In view of the aforesaid observations and finding, it would be appropriate to remand back the matter to the Ld. Adjudicating Authority to re-examine the issue on the proper context and averments of the appellants made as aforesaid. However, while readjudicating the matter, the appellant should be granted reasonable opportunity of hearing. In the result, the appeal is allowed by way of Remand.(Chittaranjan Satapathy) (D.N. Panda)Technical Member Judicial Member 1. The case requires to be remanded also for the reason that there is no finding in the impugned Order as to whether or not, M/s. NALCO have taken credit of the higher amount of duty initially paid by M/s.
S.A.I.L. on the impugned inputs.