M/s. Modest Infrastructure Limited, Bhavnagar, the respondent in this tax appeal, filed a claim of refund of service tax of Rs.16,63,451/ deposited on 23.5.2007, in the prescribed Form R, with the Assistant Commissioner, Service Tax Division, Bhavnagar (for short the Assistant Commissioner) on the ground that the respondent/job worker cannot be held to be taxable service provider covered under the definition of Business Auxiliary Service as their activity amounts to manufacture in view of Section 2(f) of Central Excise Act, 1944 (for short, 'the Act'). Therefore, the respondent sought the refund of the aforesaid amount which was wrongly paid by them under Business Auxiliary Service. The respondent/assessee contended that the activity of manufacture from the raw materials supplied by M/s. Alcock Ashdown (Gujarat) Limited (for short the M/s. Alcock) was not a taxable service but it amounts to manufacture as defined under Section 2(f) of the Act. 2.0 The Assistant Commissioner issued deficiency memo on 16.5.2008 which was clarified by the respondent and the claim was resubmitted along with letter dated 23.5.2008, with the following documents:
“[i] Application for refund in prescribed form “FormR” duly signed on revenue stamp in triplicate.
[ii] Original TR6 Challan No.1/200708 dated 23.05.2007 for Rs.16,63,451/.
[iii] Ground of refund (Appeal)
[iv] Copy of C. Ex. Registration dated 22.04.2008
[v] Copy of Stage Invoice dated 21.02.2007 issued in the name of M/s. Alcock Ashdown Gujarat Ltd.
[vi] Copy of Contract for manufacture with AAGL.
3.0 The Assistant Commissioner after scrutiny of application and documents found that documentary evidence of unjust enrichment was not filed, therefore, he issued a show cause notice on 1.8.2008 to the respondent as to why the claim for refund may not be rejected under Section 11B of the Act.
4.0 In reply to the show cause notice the respondent asserted that he is a job worker and the incidence of service tax had not been passed on to anyone.
5.0 The respondent contended that the activity carried out by the assessee/job worker amounted to manufacture within the meaning of Section 2(f) of the Act. The assessee/job worker had already realized the amount of service tax from M/s. Alcock @ 12.24% by raising Bill No. MIPL / AAGL/ Y25102A dated 21.2.2007. The Commissioner (Appeals) further held that the assessee/job worker had passed on the duty burden to M/s. Alcock, therefore in terms of Section 11B(2) of the Act, the amount of refund be credited to consumer welfare fund. The Assistant Commissioner by his order dated 3.12.2008 accepted that the respondent is not covered under business auxiliary service as their activity amounted to manufacture and sanctioned the refund, but he transferred the refund to the consumer welfare fund on the ground that the appellant has realized the payment of their invoice dated 21.02.2007 under which they had shown Service Tax of Rs.16,63,451/. It was also held that since respondents have realized the service tax and the duty burden had been passed on, therefore, the refund was hit by bar of unjust enrichment.
6.0 The respondent filed an appeal before the Commissioner (Appeals), Central Excise and Customs, Rajkot. Before the Commissioner (Appeals) on 11.5.2009 the respondent filed the copy of the contract dated 14.2.2007 executed between the respondent and M/s. Alcock, a copy of certificate dated 12.5.2009 of the Chartered Accountant and a copy of ledger from their books of account for the period 1.4.2008 to 31.3.2009. The Commissioner (Appeals) on 19.5.2009 allowed the appeal after examining the relevant documents available on the records reversed the finding of Assistant Commissioner.
7.0 The appeal filed before the Tribunal by the Revenue on 27.1.2011 has been dismissed.
8.0 We have heard learned senior counsel Mr.R. J. Oza assisted by Ms.Mital Ukani, learned advocate for the appellant.
9.0 This tax appeal has been admitted on 13.01.2012 on the following substantial questions of law.
“{A} Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in confirming order passed by the appellate commissioner on the basis of the documents which were not produced by the respondent alongwith application for refund under Section 11B of the Central Excise Act, 1944 ?”
{B} Whether in the facts and circumstances of the case, the Tribunal committed error in law in holding that the respondentassessee had never collected tax from Messrs. Alcock Ashdown (Gujarat) Limited.”
10.0 Paragraphs 8 to 12 of the order of Commissioner (Appeals) dated 19.5.2009 is extracted below:
“8. Subsequently, the appellants have issued Credit Note No.: MIL/Y251/AAGL/01/20082009 dated 09.01.2009 for Rs. 16,63,451/ wherein the Service Tax wrongly collected vide Debit Note No.: MIPL / AAGL/ Y251 02A/2006 dated 21.02.2007 was credited into the books of account.
9. Further, on perusal of the Chartered Accountant Certificate and the documents submitted it projects that following entries must have been passed in the books of account of the appellants.
Thus, it is evident that the appellants have already credited the amount of the Service Tax wrongly charged for which they have sought refund into the account of M/s. Alcock Ashdown Gujarat Limited, Bhavnagar.
10. Apart from above, I also find that the contract entered between the appellants and M/s. Alcock Ashdown specifically stipulates that the price is inclusive of all the taxes, levies, etc. and; therefore even M/s. Alcock Ashdown Gujarat Limited will not give the said amount to the appellant at the end of the contract. Further, the rates were fixed and therefore any increase or decrease in the cost would have to be borne by the appellant and they cannot in any way pass on the said burden to its buyers.
11. The fact is further corroborated by the letter dated 14.06.2008 of M/s. Alcock Ashdown Gujarat Limited herein they have stated that they have not taken the credit of the said account as input credit. The Cenvat Credit Rules, 2004 clearly prohibits such credit for which no payment is made.
12. In view of above discussions and findings, I find the impugned order sanctioning the refund and transfer to Consumer Welfare Fund is not justified. The appellants have not attracted the bar of unjust enrichment and they are liable for refund of amount.”
11.0 Once the M/s. Alcock Ashdown (Gujarat) themselves issued certificate that the amount of service tax was not received by the respondent from their customers then there was no question of undue enrichment by the respondent. In our opinion the Commissioner (Appeals) as well as the Tribunal were correct in taking the view that the refund was liable to be paid to the present respondents as service tax was not passed on to the buyers/customers and there was no unjust enrichment. Therefore, we do not find any illegality in the impugned orders. We are in agreement with the view taken by the Tribunal and Commissioner (Appeals) that there was no unjust enrichment and the respondent is entitled for refund. Both the questions formulated are concluded by finding of fact and the appeal is liable to be dismissed. Both questions are answered against the Revenue in favour of the assessee on the facts of this case. Accordingly this tax appeal is dismissed.
[V. M. SAHAI, J. ] Amit [N. V. ANJARIA, J.]