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TMI Blog2014 (9) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... orklift trucks which were individually sold directly to the buyers in retail. The case of the first Petitioner Company is that the sale was a negotiated contract sale and the sale was at separate prices. According to the Petitioner, the valuation of the forklift trucks (for short "forklift") was required to be done in accordance with Rule 6(a) of the Central Excise Valuation Rules, 1975 (for short "the Valuation Rules of 1975"). It is contended that the valuation would be based on the retail price reduced by such amount as was necessary and reasonable to arrive at a price at which the assessee would have sold such forklifts in the course of wholesale trade to non-related person. On 15th September, 1975, the first Petitioner Company filed a price list in the prescribed format for sales made in retail price. The first Petitioner claimed a rebate of 9.66% from the retail price to arrive at the wholesale price. On 22nd June, 1976, the Assistant Collector passed an order approving the price list, but while doing so, he allowed the rebate of only 7.5%. The Appellate Authority proceeded to set aside the order and passed an order of remand. Thereafter, on 15th October, 1976, a show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the CEGAT upheld the order of the Collector in the Appeal. 5. On 8th January, 1987 and 18th March, 1987, the first Petitioners wrote to the Assistant Collector to expeditiously decide the pending price lists in the light of the order of the CEGAT and considering the fact that he himself had granted abatement of 7.5%. The request was made to approve all the price lists by treating them as retail sales and granting them an abatement of 7.5%. On 11th May, 1987, the first Petitioner again wrote to the Assistant Collector by pointing out that the forklifts have been sold only in retail and, therefore, they are entitled to abatement of such retail prices. It was also pointed out that the price lists dated 12th December, 1986 to 16th April, 1987 and the price list dated 26th December, 1986 had been filed in the Proforma-II though the CEGAT held that the applicable proforma was the Proforma-V. Therefore, the first Petitioner again submitted the same price lists in the correct Proforma-V and claimed abatement of 7.5%. On 7th August, 1987, an order was passed by the Assistant Collector holding that the assessable value of forklifts was governed by Rule 6(a) of the Valuation Rules o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the Writ Petition and injunction was granted by way of interim relief restraining the Respondents from taking any action in pursuance of the show cause notice. 8. The learned Senior Counsel appearing for the Petitioners has invited our attention to Section 4 of the said Act of 1944 and the Valuation Rules of 1975 and in particular, Rule 6 thereof. His basic submission is that the issue whether the forklifts are sold by the Petitioners in retail or wholesale has been finally decided in their favour by the CEGAT on the basis of which the price lists in respect of the period from 1975 to 1987 have been finalized by the officers. His submission is that the issue has, therefore, become final and conclusive between the Petitioners and the Department. Inviting our attention to the impugned show cause notice, he submitted that by the show cause notice, an issue is sought to be agitated which is already decided conclusively. He relied upon various decisions in support of this proposition including the decision in the case of Union of India v. East & West Shipping Agency [2010 (253) E.L.T. 12 (Bom.)] and several other decisions. He relied upon the said decisions in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He lastly submitted that the doctrine of res judicata also applies to the quasi judicial proceedings and, therefore, the Department cannot reopen the concluded issues. He urged that the Department has not placed any material on record of this Petition to show even prima facie that it is entitled to assume jurisdiction by issuance of a show cause notice relating to the same issue which has already been adjudicated upon in the past. He urged that even in this Petition, the Respondents have not placed any material to show that the pattern of sale of forklifts has undergone a change. The learned counsel appearing for the Respondents opposed the submissions made by the learned Senior Counsel appearing for the Petitioners and supported the show cause notice. 9. We have given careful consideration to the submissions. As far as the issue of applicability of the principles of res judicata is concerned, it will be necessary to make a reference to what is held by a Division Bench of this Court in the case of Union of India v. East & West Shipping Agency (supra), which reads thus :- "20. Section 11 of the Code of Civil Procedure lays down that an order or issue which had ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. He, therefore, directed that the Petitioners should declare the price lists in Part-1 in respect of forklifts as required under clause (a) of sub-section (1) of Section 4 of the said Act of 1944. He also directed that differential duty on all the past clearances effective from 1st October, 1975 onwards should be recovered from them. Thereafter, there are two communications issued on 15th December, 1978 and 6th December, 1979 by the Petitioner in which it is recorded that an Appeal has been filed against the order of the Assistant Collector and without prejudice to the contentions of the Petitioners that the case will be governed by Rule 6(l)(a) of the Valuation Rules of 1975, the Petitioners will be filing revised price lists in appropriate format. It was pointed out that the excise duty would be paid under protest. Accordingly, the price lists were filed in the revised format and duty was paid under protest. 11. Now, it will be necessary to make a reference to the Order-in-Appeal passed by the Collector on 11th June, 1980. He observed that the Assistant Collector recorded a finding that the Petitioners sold the forklifts in wholesale in view of the existence of rate cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons), who sell such goods in retail; (b) where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed." 13. Section 4 lays down the manner in which the valuation of the excisable goods for the purposes of charging duty of excise shall be made. Clause (a) of sub-section (1) of Section 4 of the said Act of 1944 provides that when the goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arranges that the excisable goods are generally not sold by him in the course of wholesale trade except to or through a related person and the value cannot be determined under clause (iii) of the proviso to clause (a) of sub-section (1) of Section 4 of the Act, the value of the goods so sold shall be determined - (i) In a case where the assessee sells the goods to a related person who sells such goods in retail, in the manner specified in clause (a) of this rule; (ii) In a case where a related person does not sell the goods but uses or consumes such goods in the production or manufacture of other articles, in the manner specified in clause (b) of this rule; (iii) in a case where a related person sells the goods in the course of wholesale trade to buyers, other than dealers and related persons, and the class to which such buyers belong is known at the time of removal, on the basis of the price at which the goods are ordinarily sold by the related person to such class of buyers." 14. Clause (a) of Rule 6 applies to the goods which are sold by the assessee in retail. It provides that the value shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice lists filed on this account were also approved after arriving abatement of 7.5%. On the basis of the said order, the price lists filed up to 19th February, 1988, except four or five, were approved. However, the price lists filed between the period 24th February, 1988 to 27th January, 1989 were not approved. 17. Now it will be necessary to make a reference to the impugned show cause notice. The show cause notice has been issued calling upon the Petitioner to show cause as to why :- "(a) The abatement of 7.5% claimed in the price list nos. SHQ/MH/CPL-199, dated 27-10-1987 to SHQ/MH/CPL-220, dated 24-2-1988 in part V against contract with their customers should not be disallowed; (b) the price list Nos. SHQ/MH/CPL-221, dated 29-2-1988 to SHQ/MH/CPL-257, dated 17-10-1988 should not be approved in proforma II of the price list and the abatement of 7.5% be disallowed; (c ) the Central Excise duty of Rs. 7,94,648.42 should not be demanded and recovered from them under Section 11A of the Central Excises and Salt Act, 1944, on the said 153 forklift trucks failing under chapter sub-heading 8427.00 and valued at Rs. 5,04,53,868.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of order-in-original No. PI/V(6)1-34B/PL/77, dated 13-9-1978. They have changed their selling pattern subsequent to the relevant period but this fact was not brought to the notice of CEGAT at the time of personal hearing (Ref: Party's letter No. MTHB/15360/SHQ, dated 11-6-1981). Therefore, the relevant remarks made by CEGAT on the pattern of sales pronouncing them as retail sales have to be restricted to the period 1-10-1975 to 13-9-1978 and clearances effected under similar price list (prices which are uniform to all) for the subsequent period. This order cannot be made applicable to the sales effected by them against individual contract in the subsequent period to the order-in-original dated 13-9-1978." 20. Thus, what is alleged is that after the order-in-original was passed, the first Petitioner had changed the pattern of sale. Thus, the show cause notice is based on the allegation that the pattern of sale has subsequently undergone a change. We may note here that the finding of fact recorded by the CEGAT which was relied upon by the Petitioners is based on the perusal of the various invoices made available by the first Petitioner during the course of hearing be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Laws (Amendment) Act, 1991 or thereafter - by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview. (iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is offensive to several well-established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(l)(c) of the Limitation Act, 1963, has no application to such a claim for refund. (v) Article 265 of the Constitution has to be construed in the light of the goal and the ideals set out in the Preamble to the Constitution and in Articles 38 and 39 thereof. The concept of economic justice demands that in the case of indirect taxes like Central Excises duties and Customs duties, the tax collected without the authority of law shall not be refunded to the petitioner-plaintiff unless he alleges and establishes that he has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty." 23. In the present case, it is not established that the Petitioner has not passed on burden of excise duty on third parties. The refund applications are still pending. If that be so, the refund applications will have to be decided expeditiously. Hence, we find that there is no merit in the Petition, and therefore, all the prayers except the prayer in clause b(iv) will hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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