1995 (1) TMI 80 - HC - Central Excise

Summary

Issues:
1. Challenge to show cause notice and orders passed by various authorities.
2. Interpretation of Finance Bill 1986 and exemption notification.
3. Claim for refund of excise duty paid.
4. Application of the principle of unjust enrichment in tax refund cases.

Analysis:
1. The petitioner, a private limited company processing man-made fabrics, challenged a show cause notice and subsequent orders issued by Central Excise authorities and the Customs, Excise and Gold (Control) Appellate Tribunal. The petitioner sought to quash the notice and orders, requesting restoration of a previous order and refund of a specific sum with interest.

2. The issue revolved around the classification of man-made fabrics under the Central Excise Tariff Act and subsequent exemption notifications. The petitioner argued that the Finance Bill 1986, effective from 13-5-1986, should not be applied retrospectively to demand higher duty. The Government clarified this position in a letter dated 15-9-1986. The petitioner contended that the Tribunal erred in denying the refund claim based on Section 11C of the Central Excises and Salt Act, 1944.

3. The petitioner's claim for refund of excise duty paid between 1-3-1986 and 12-5-1986 was based on the exemption notification issued on 21-12-1988. However, the Court held that the notification did not grant a right to refund duty already paid. Citing a Supreme Court case, the Court emphasized that waiver or refund applies to unpaid duty, not duty already paid. The petitioner failed to establish a statutory right to claim a refund.

4. The Court applied the principle of unjust enrichment in tax refund cases. It noted that the burden is on the claimant to prove that the excess duty was not passed on to consumers or others. Without such proof, a refund cannot be granted. Referring to previous Supreme Court decisions, the Court emphasized the need for clear evidence that the burden of duty was not transferred before allowing a refund. As the petitioner failed to demonstrate that the excess duty was not passed on, the Court dismissed the writ petition, denying relief to the petitioner.