2013 (4) TMI 327 - HC - Central Excise

Interest on Refund - Writ petition - the claim of interest was rejected on the ground that earlier refund was denied on the ground of unjust enrichment, meaning thereby that the refund was lying with the Consumer Welfare Fund and was not with the department. Therefore, no interest is payable to the petitioner - Held that - this writ petition is totally misconceived, and is nothing but misuse of the process of the Court. The petitioner in this writ petition challenged the order of Commissioner of Central Excise (Appeals) dated 23.01.2007. In the counter filed to the writ petition, it was disclosed, that the impugned order already stood set aside in appeal. The copy of the order was also placed on record. Inspite of order of the CESTAT, the petitioner did not choose to challenge that order in not granting interest. It is well settled law, that no relief can be granted, which is not claimed and qua which there is no pleadings in the affidavit to support the prayer made. It is true, that the petitioner had disclosed in the writ petition, that the petitioner had also challenged the order before CESTAT and that the writ petition was on the plea, that petitioner did not expect justice from the Tribunal. - This cannot be a ground to maintain the writ petition. The writ as framed itself was not maintainable in view of the settled law, that it is not open to the party to continue two parallel proceedings, i.e., appeal and writ petition on the same cause of action. Even on merit, the plea raised by petitioner for grant of interest is not sustainable in law, in view of the law laid down by the Honble Supreme Court in the cases of Union of India vs. Shreeji Colour Chem Industries 2008 (9) TMI 12 - SUPREME COURT , and Union of India vs. E.Merck (India) (1994 (12) TMI 95 - SUPREME COURT OF INDIA). - Decided in favor of revenue.

Issues Involved:
1. Refund of central excise duty.
2. Unjust enrichment.
3. Time-barred claims under Section 11(B) of the Central Excise Act, 1944.
4. Entitlement to interest on the refund amount.
5. Maintainability of the writ petition alongside statutory appeal.

Detailed Analysis:

1. Refund of Central Excise Duty:
The petitioner, engaged in manufacturing pharmaceutical products, sought a refund of Rs. 60,108.72 with interest, claiming that excise duty was absorbed in the price due to the Drug Control Order. The petitioner argued that excise duty was not passed on to customers, as established by previous judgments, and thus, they were entitled to the refund. The department initially disallowed this, but subsequent court orders directed the refund calculation, which the department failed to comply with, leading to the current writ petition.

2. Unjust Enrichment:
The respondents contended that the petitioner was not entitled to the refund on the grounds of unjust enrichment, arguing that the refund amount should go to the Consumer Welfare Fund. However, previous judgments had established that the excise duty element was absorbed by the petitioner and not passed on to customers. The court noted that the prices remained unchanged and no excise duty was charged to customers, negating the unjust enrichment claim.

3. Time-Barred Claims under Section 11(B) of the Central Excise Act, 1944:
The respondents also argued that part of the refund claim was time-barred under Section 11(B). However, the court found this argument contrary to the Division Bench judgment, which had already directed the refund. The statutory appeal filed by the petitioner before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) resulted in an order favoring the petitioner, except for a small portion of the claim deemed time-barred.

4. Entitlement to Interest on the Refund Amount:
The petitioner claimed interest on the refund amount for the period before the introduction of Section 11BB of the Act, citing the Interest Act and equitable grounds. The court examined precedents, including the Supreme Court's judgment in Alok Shanker Pandey vs. Union of India, which held that interest is a normal accretion on capital. The court also considered the Allahabad High Court's judgment in Hello Minerals Water (P) Ltd. vs. Union of India, which supported awarding interest on delayed payments. However, the respondents argued that no interest was payable as the refund was initially denied due to unjust enrichment and the amount was with the Consumer Welfare Fund.

5. Maintainability of the Writ Petition Alongside Statutory Appeal:
The respondents challenged the maintainability of the writ petition, given that the petitioner had already filed a statutory appeal before CESTAT. The court noted that it is not permissible to pursue parallel proceedings on the same cause of action. The petitioner disclosed the appeal in the writ petition but did not challenge the CESTAT order, which had set aside the impugned order without granting interest. The court emphasized that no relief can be granted without proper pleadings and that the writ petition was rendered infructuous once the CESTAT set aside the impugned order.

Conclusion:
The court dismissed the writ petition, finding it misconceived and an abuse of the court process. The petitioner's claim for interest was not supported by a written demand, and the writ petition was not maintainable due to the parallel statutory appeal. The court upheld the principle that no relief can be granted without proper pleadings and foundation in the affidavit.

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