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2015 (9) TMI 727 - SC - Central ExciseScope of Section 11B - Refund claim - Whether Section 11B of the Central Excise Act, as amended, applies to cases where though an order has been passed directing refund, implementation of the order is pending - Held that - applications for refund of excise which were preferred by the assessee had already been allowed finally by the orders of CEGAT dated 01.06.1989 and 06.06.1989. This obviously happened before the amendment in the Section in the year 1991. At the same time, the refund had not been actually paid to the assessee till 1991 when the provisions of Section 11B came to be amended. We now advert to the decision in the case of Mafatlal Industries Ltd. (1996 (12) TMI 50 - SUPREME COURT OF INDIA). In no unambiguous terms and with utmost clarity and certainty, the majority interpreted amended provisions of Section 11B including proviso to sub-section (1) thereof to hold that so long as refund proceedings are pending, the amended provision would get attracted and would disentitle the manufacturer/payer from claiming any refund contrary to the said proviso. However, in those cases where the refund proceedings had finally been terminated, in the sense that the appeal period has also expired before the commencement of the amended provision, these cannot be re-opened and/or governed by the amended provision. Only after amendment in Section 11B of the Act in the year 1991, any person applying for refund has to establish that incidence of such duty has not been passed on by him to any other person. The unamended provision did not contain any such stipulation. Therefore, under the old provision, the only obligation of the person claiming refund was to make such an application before the expiry of six months from the relevant date and to show how the refund was admissible to the applicant. In such a case, the Assistant Collector of Central Excise was to only examine as to whether excise duty was paid in excess etc. and was refundable to the claimant as a result of adjudication of the dispute or otherwise. It is only in the amended provision that additional stipulation is provided as per which the claimant is required to file, along with application for refund, such documentary or other evidence including documents referred to any Section 12A of the Act to establish that the amount of duty of excise was collected from the claimant or paid by the claimant and that incidence of such duty had not been passed on by him to any other person . Order on the refund application of the respondent had been passed on 06.06.1989, which was much before the amended provision came into operation. In fact, even after the order of refund was passed, the appellant had not refunded the amount and it is in these circumstances that writ petition was filed in the High Court for initiation of contempt proceedings against the defaulting officers. In such proceedings, the High Court had passed the order dated 18.07.1995. In this order, no doubt, the Court observed that the Assistant Commissioner would go into the question if the respondent should be granted the refund in spite of Section 11B of the Act. However, merely because of such observations, it cannot be said that the Assistant Commissioner was entitled to look into the issue of unjust enrichment when if, otherwise, he he was otherwise had no jurisdiction to do so in the facts of the present case. Thus, when the order of the Assistant Commissioner was challenged and the matter came before the Tribunal, the Tribunal was duty bound to apply the law laid down in Mafatlal Industries Ltd. (supra), which it did. - there is no scope to interfere with the impugned decision of the High Court - Decided against Revenue.
Issues Involved:
1. Applicability of amended Section 11B of the Central Excise Act, 1944 to pending refund orders. 2. Interpretation of the doctrine of "unjust enrichment" under the amended Section 11B. 3. Finality of refund orders passed before the amendment of Section 11B. 4. Jurisdiction of authorities to revisit the issue of unjust enrichment after the amendment. Issue-wise Detailed Analysis: 1. Applicability of amended Section 11B of the Central Excise Act, 1944 to pending refund orders: The primary question referred to the High Court was whether the amended Section 11B of the Central Excise Act applies to cases where an order directing a refund has been passed but its implementation is pending. The High Court ruled in favor of the assessee, stating that the proceedings under the old Section 11B had attained finality, and the amended provision, particularly the proviso to sub-section (1), would not apply. The principle of "unjust enrichment" introduced by the amendment in 1991 would not be applicable as the proceedings under the unamended Section had already concluded with a refund order. 2. Interpretation of the doctrine of "unjust enrichment" under the amended Section 11B: The amended Section 11B, effective from 20.09.1991, introduced the principle of "unjust enrichment," requiring the Assistant Collector to ascertain whether the incidence of duty had been passed on to another person. If so, the refund application could be rejected. The proviso to sub-section (1) of the amended Section 11B deemed that applications filed before the amendment but still pending should be treated under the amended provision. However, the Supreme Court clarified that this proviso applies only to pending applications, not to cases where refund orders had already been passed before the amendment. 3. Finality of refund orders passed before the amendment of Section 11B: The Supreme Court emphasized that refund proceedings that had concluded before the 1991 amendment, with no pending applications, could not be reopened under the amended Section 11B. The Court referred to the majority opinion in the Mafatlal Industries Ltd. case, which held that the amended provisions would apply to pending refund proceedings but not to those that had attained finality before the amendment. The Court reiterated that orders passed before the amendment should be implemented without revisiting the issue of unjust enrichment. 4. Jurisdiction of authorities to revisit the issue of unjust enrichment after the amendment: The Supreme Court rejected the appellant's argument that the Assistant Commissioner could still examine the issue of unjust enrichment at the implementation stage of a pre-amendment refund order. The Court held that once a refund order had been passed under the unamended provision, the Assistant Commissioner had no jurisdiction to invoke the amended Section 11B to reassess unjust enrichment. The Court noted that the High Court's order directing the Assistant Commissioner to consider the amended provision was based on the counsel's statement and did not confer jurisdiction where none existed. Conclusion: The Supreme Court upheld the High Court's decision, affirming that the amended Section 11B, including the principle of unjust enrichment, does not apply to refund orders passed before the amendment. The Court dismissed the appeal, confirming that the authorities must implement pre-amendment refund orders without revisiting the issue of unjust enrichment.
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