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1996 (2) TMI 149 - HC - Central ExciseInterpretation of statute - Notification - Refund - Bar of unjust enrichment when not applicable
Issues Involved:
1. Classification of products under Tariff Item 3402.90. 2. Eligibility for exemption from excise duty under Notification No. 101 of 1966 as amended by Notification No. 4 of 1968. 3. Validity of final approval of classification lists subject to the Deputy Chief Chemist's report. 4. Refund of excise duty amounting to Rs. 12,70,274.62. 5. Applicability of amended Section 11B of the Central Excises and Salt Act, 1944. Issue-wise Detailed Analysis: 1. Classification of Products under Tariff Item 3402.90: The Petitioners manufacture products "INDOSTAT SF52" and "INDOSTAT SF", which they claim are classifiable under Tariff Item 3402.90. These products were initially classified under old Tariff Item 15AA. The Petitioners argue that the products are emulsifiers and should be exempt from excise duty under the relevant Notifications. 2. Eligibility for Exemption from Excise Duty under Notification No. 101 of 1966 as Amended by Notification No. 4 of 1968: The Petitioners contend that their products are covered under Notification No. 101 of 1966, which exempts "Emulsifiers, wetting out agents; softeners and other like preparations intended for use in any industrial process." This Notification was amended by Notification No. 4/68-C.E., dated January 20, 1968. The Petitioners argue that they meet the conditions stipulated in the Notification for exemption. 3. Validity of Final Approval of Classification Lists Subject to the Deputy Chief Chemist's Report: The Petitioners submitted fresh classification lists, which were provisionally approved and later treated as finally approved, subject to the Deputy Chief Chemist's report. The Petitioners argue that the final approval should not be subject to the report of the Deputy Chief Chemist. 4. Refund of Excise Duty Amounting to Rs. 12,70,274.62: The Petitioners seek a refund of Rs. 12,70,274.62, consisting of two amounts: Rs. 7,54,714.70 and Rs. 5,15,559.92. The first amount was conceded by the 2nd Respondent, and the Petitioners were directed to take credit for this amount in their Personal Ledger Account. The second amount was paid under protest. The Court made a distinction between the two amounts, permitting the Petitioners to withdraw the first amount by executing a bond and the second amount by furnishing a Bank Guarantee. 5. Applicability of Amended Section 11B of the Central Excises and Salt Act, 1944: The Court considered whether the Petitioners' claim for refund of Rs. 5,15,559.92 is subject to the amended provisions of Section 11B, which requires that no refund shall be made except as provided in sub-section (2) of Section 11B. The Court held that the Petitioners' claim for refund of the second amount is subject to the amended provisions of Section 11B. Judgment: The Court found merit in the Petitioners' contentions regarding the classification of their products and their eligibility for exemption under the relevant Notifications. The Court held that the Petitioners are entitled to the benefit of the exemption Notification as they have satisfied the conditions stipulated therein. The Court also held that the Petitioners are entitled to a refund of Rs. 7,54,714.70, which was already granted under the Assessment Memorandum issued on 25th June 1986. However, the refund of Rs. 5,15,559.92 is subject to the amended provisions of Section 11B of the Act. The Court directed the Petitioners to deposit this amount along with interest and directed the 2nd Respondent to reconsider the refund claim in light of the amended provisions. Order: 1. Rule is made partly absolute in terms of prayer (a) of the Petition. 2. The Petitioners are directed to deposit Rs. 5,15,559.92 along with interest within four weeks. 3. In case of non-compliance, the Respondents may encash the Bank Guarantees. 4. The 2nd Respondent is directed to reconsider the refund claim of Rs. 5,15,559.92 in light of the amended provisions of the Act. 5. The Petition is disposed of with no order as to costs.
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