M/s Kerala Electrical and Allied Engineering Company Ltd. v. Commissioner of Central Excise, Customs and Service Tax, Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 2[ND] DAY OF NOVEMBER 2021 / 11TH KARTHIKA, 1943 ## C.E.APPEAL NO. 4 OF 2018 AGAINST THE FINAL ORDER IN 20778/2017 OF CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE ## APPELLANT/S: M/S KERALA ELECTRICAL AND ALLIED ENGINEERING COMPANY LTD. MAMALA P.O., KOCHI, COCHIN-682 305. BY ADVS. SRI.GEORGE VARGHESE(PERUMPALLIKUTTIYIL) SRI.A.R.DILEEP SRI.P.J.JOE PAUL SRI.MANU SEBASTIAN SRI.MATHEW JOHN PUTHUPARAMPIL SRI.RAJAN G. GEORGE ## RESPONDENT/S: 1 THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX COCHIN, CR BUILDING, I S PRESS ROAD, ERNAKULAM COCHIN 682 018. 2 DEPUTY COMMISSIONER OF CENTRAL EXCISE, MUVATTUPUZHA DIVISION, KPC TOWERS, T B JUNCTION, MUVATTUPUZHA 686 661 BY ADV SRI.P.R.SREEJITH, SC, CENTRAL BOARD OF EXCISE AND CUSTOMS THIS CENTRAL EXICISE APPEAL HAVING COME UP FOR ADMISSION ON 02.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **CE Appeal No. 04/2018** **-2-** ## **J U D G M E N T** S.V. Bhatti, J. Heard learned counsel Mr George Varghese Perumpallikuttiyil for appellant and learned Standing Counsel Mr P R Sreejith for respondents. 2. M/s. Kerala Electrical and Allied Engineering Company Limited/appellant being aggrieved by the Final Order No.20778/2017 dated 25.05.2017 of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore in Appeal No.E/21827/2015-E has filed the instant appeal. The Commissioner of Central Excise Ernakulam is the respondent. 3. The dispute in the subject Central Excise Appeal relates to the rejection of claim of the appellant for refund of a **CE Appeal No. 04/2018** **-3-** sum of Rs.18,19,717/- made on 09.02.2012. The circumstances relevant for disposing of the appeal are in a very narrow compass and the learned counsel appearing for the appellant invited our attention to the following circumstances: 3.1 The appellant is a manufacturer of transformers and selling the product to Electricity Boards and other customers. In the sale and purchase contracts entered into by the appellant with its buyers, price variation clause had been incorporated to take care of the variation of price for raw materials constituting the final finished product. The basis for fixation of price of raw materials is as suggested by Indian Electronics and Electrical Manufacturers Association (for short 'IEEMA') from time-totime. The appellant states that, prior to 2009 the prices of transformers were subjected to upward revision as compared to the initial price indicated in the contract or the price indicated at the time of raising the invoices. In such a situation, the **CE Appeal No. 04/2018** **-4-** appellant was getting additional consideration from its buyers on account of the price variation clause and appellant has been crediting differential excise duty on such differential amount to the Department. In the instant circumstances, on 05.03.2011 the price has been revised downwards by the Kerala State Electricity Board (KSEB). The appellant, due to downward revision of price, on 09.02.2012 claimed refund of Rs.18,19,717/from the 1[st] respondent. The 1[st] respondent, through the order in Annexure-13 dated 11.05.2012, rejected the claim of the appellant for refund, substantially on the ground that the claim of appellant for refund is beyond the period of limitation prescribed under Section 11B of the Central Excise Act 1944 (for short 'the Act'). The appellant aggrieved by the said decision filed appeal before the Tribunal and the Tribunal through its Final Order impugned in the appeal, marked as Annexure-16, dismissed the appeal. Hence, the second appeal under Section **CE Appeal No. 04/2018** **-5-** 35G of the Act. 3.2 The appellant has raised the following substantial questions of law: “(A) In the facts and circumstances of the case what is the relevant date for counting the period of limitation for filing refund claim - whether it is the date on which the final price was communicated by KSEB to the appellant or the different dates on which duties were paid under provisional prices? (B) Whether the fact that the department was aware that the prices were not final but had a price variation clause is a fact that can be ignored for the purpose of determining the relevant date? (C) Whether the department can retain the excess amount of duty when it is not legitimately due to them as revenue? (D) The Honourable Court may formulate any other points of law that stands in the way of sanctioning this excess amount of excise duty paid in circumstances beyond the control of the appellant so as to grant justice based on principles of equity.” 4. Mr George Varghese contends that rejecting the claim of appellant by referring to Section 11B read with **CE Appeal No. 04/2018** **-6-** Explanation (f) of Section 11B is completely illegal and unsustainable. According to him, the case of appellant ought to have been considered under Explanation (eb) to Section 11B of the Act. The starting point, according to him, would arise only when the final assessment has been made by the authority. He fairly states that, in the case on hand, there is no final assessment and as long as there is no final assessment, according to his argument, the starting point has not commenced. Therefore, the findings recorded both by the Tribunal and the primary authority suffer from basic error and warrant interference of this Court under Section 35G of the Act. He relies on a few judgments in this behalf, _Metal Forgings v. Union of India_[1] ; unreported judgment in _Commissioner of Central Excise v. M/s.Keltech Energies Ltd_[2] ; _Commissioner of Central Excise,_ > 1 2003 KHC 805 > 2 Judgment dated 06.08.2010 in CEA 85/2006 **CE Appeal No. 04/2018** **-7-** _Nagpur v. Oriental Explosives (P) Ltd_[3] ; _Keltch Engergies Ltd v. Commissioner of Central Excise, Mangalore_[4] ; and _MRF Ltd. Collector of Central Excise, Madras_[5] , to convince the Court that the starting point depends upon the circumstances of each case and as long as the supply has been made under an ongoing contract, the starting point shall not be the date on which the payment of duty has been made by the appellant. 5. Mr P R Sreejith invites our attention to the findings recorded both by the Tribunal and the primary authority, and argues that Section 11B deals with refund of excise duty and/or interest paid on the excise duty by a dealer registered under the Act. Section 11B stipulates the period of limitation for various contingencies in which the starting point of limitation has to be fixed and determined by the authorities. The application of > 3 2008 (222) ELT 205 (Bom.) > 4 2006 (196) ELT 282 (Tri.Bang.) > 5 1997 KHC 3605 **CE Appeal No. 04/2018** **-8-** each one of the circumstances contemplated by one or the other explanation, by definite reference to a fact relatable to that explanation is a _sine qua non_ for determining the starting point of limitation. In the case on hand, the effort of appellant is to bring its case within the fold of Explanation (eb) to Section 11B of the Act. According to him, Explanation (eb) has no application inasmuch as there is no final assessment made by the Department for the subject period. According to him, the argument of the appellant if is accepted, then, in the absence of a final assessment, the limitation is infinitely or indefinitely extended. He argues that Explanation (f) is applicable inasmuch as it is the date of payment of duty that is attracted for claiming refund of excess duty paid by the appellant. 6. We have taken note of the arguments addressed by both the counsel. Firstly, we are of the view that the arguments now put forward by the appellant are substantially **CE Appeal No. 04/2018** **-9-** same and similar to the contentions canvassed by the appellant before the Tribunal. In the appeal before us we are not only concerned with the substantial questions raised but also the findings recorded by the Tribunal while dismissing the appeal filed by the appellant. It is not in dispute that, in the case on hand, the claim for refund is made beyond one year from the date of payment of duty by the appellant as stipulated by Explanation (f). As rightly held in the orders under appeal, explanation (eb) is not attracted to the facts and circumstances of this case. The period of limitation since being a mixed question of law and fact, we are of the view that the decisions which have been rendered in different circumstances are not applicable to the issue involved in this case and are clearly distinguishable. On the point of limitation the submissions are made, we are satisfied and convinced that the claim of refund of appellant is rejected for valid and available grounds. The **CE Appeal No. 04/2018** **-10-** questions are answered against the appellant and in favour of respondent. The appeal fails and is accordingly dismissed. No order as to costs. **==> picture [80 x 137] intentionally omitted <==** **----- Start of picture text -----**<br> Sd/-<br>S.V.BHATTI<br>JUDGE<br>Sd/-<br>BASANT BALAJI<br>JUDGE<br>**----- End of picture text -----**<br> jjj **CE Appeal No. 04/2018** **-11-** ## **APPENDIX OF C E.APPEAL 4/2018** PETITIONER ANNEXURE - ANNEXURE 1 A TRUE COPY OF CONTRACT/PURCHASE ORDER ENTERED ON 02.02.2005 BETWEEN THE APPELLANT AND TNEB - ANNEXURE 2 A TRUE COPY OF ORDER ORIGINAL NO.10/2008 DATED 13.03.2008 OF THE JT.COMMISSIONER OF CENTRAL EXCISE ALONG WITH DETAILS OF THE SUPPLEMENTARY INVOICES COVERED BY THE DEMAND - ANNEXURE 3 A TRUE COPY OF LETTER NO.CE/ED/3358/07-08 DATED 17.08.2007 - ANNEXURE 4 A TRUE COPY OF PURCHASE ORDERS EXCLUDING THE TECHNICAL CONDITIONS - ANNEXURE 5 A TRUE COPY OF INVOICE NO.346 DATED 26.10.2009 - ANNEXURE 6 A TRUE COPY OF LETTER NO.TA 32/TCM 24/201011/7727-1 DATED 05.03.2011 AND OTHER SERIES OF INTIMATIONS SENT BY KSEB - ANNEXURE 7 A TRUE COPY OF CONSOLIDATED STATEMENT OF PRICE REFIXATION AND PRICE VARIATION ISSUED BY THE DY.ENGINEER, ELECTRICAL CIRCLE, KSEB, SHORANUR ALONGWITH THE CERTIFICATES - ANNEXURE 8 A TRUE COPY OF APPLICATION DATED 09.02.2012 SEEKING REFUND OF EXCESS EXCISE DUTY PAID - ANNEXURE 9 A TRUE COPY OF RELEVANT PAGE OF THE CENTRAL EXCISE MANUAL SHOWING RULE 9B OF CENTRAL EXCISE RULES, 1944 **-12-** ## **CE Appeal No. 04/2018** ANNEXURE 10 A TRUE COPY OF CIRCULAR NO.266/100/96-CX.6, DATED 12.11.1996 ANNEXURE 11 A TRUE COPY OF CIRCULAR NO.288/4/97-CX DATED 14.01.1997 ANNEXURE 12 A TRUE COPY OF CIRCULAR NO.715/31/2003-CX DTED 19.05.2003 - ANNEXURE 13 A TRUE COPY OF ORDER IN ORIGINAL NO.67/2012 ® DATED 11.05.2012 REJECTING CLAIM FOR REFUND - ANNEXURE 14 A TRUE COPY OF ORDER A.NO.29/CE/CHN/2012(R) DATED 15.07.2015 OF COMMISSIONER (APPEAL) - ANNEXURE 15 A TRUE COPY OF MEMORANDUM OF APPEAL NO.E/21827/2015-SM - ANNEXURE 16 A TRUE COPY OF ORDER NO.20778/2017 DATED 25.05.2017 IN APPEAL NO.E/21827/2015-SM