9911796707
TMI Blog2012 (8) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... duty under the said Rules became a centre of legal controversy. Case of the petitioner and other manufacturers of same or similar compound was that such final product should be charged at reduced duty under Item No. 1(ii)(a) under the Schedule to the said Rules whereas the Government held an opinion that same was chargeable at higher rate under Item No. 1(ii)(b) of the Schedule to the Rules. 2.3 A group of petitions being Special Civil Application No. 4116/1982 and connected matters came to be decided on 14-3-1985. The Court noticed that under Item No. 1(ii)(a), the excise duty prescribed was @ 20% ad valorem or ₹ 13.20 ps per litre of pure alcohol content in such substance whichever is higher. Clause (a) covered medicinal preparations which contained any active ingredients in therapeutic quantities whereas Clause (b) was residuary clause and covered all those which were not included in Clause (a). Under sub-item (b) of Item No. 1(ii), the rate of duty prescribed was 20% ad valorem or 52.80% per litre of alcohol content whichever is higher. The Court noticed the provisions contained in Rule 60 and in particular, sub-rule (3) thereof under which the Central Government had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thirdly, it was also directed that whatever duty has been recovered which has been paid under protest shall be refunded. 4. Though the present petitioner was not before the Court in the said group of petitions which came to be decided by judgment dated 14-3-1985, three separate petitions came to be filed by the petitioner being Special Civil Application No. 15/1983, 1353/1984 and 1460/1984. From the record it is not clear to us why separate petitions were filed by the same petitioner with the same grievances. However, all the petitions were disposed of by different orders in line with the judgment dated 14-3-1985. We may reproduce relevant portion in one such case being an order dated 14-3-1985 passed in Special Civil Application No. 15/1983, which reads as under : For the reasons stated in the common oral judgment recorded in Spl. C.A. No. 4116/82, the Court allows the petition and sets at naught the demands made from this petitioner or the orders made against him and confirmed in appeal. The Court restrains the respondent authorities from demanding and recovering from the petitioner the excise duty on the assumption that his products do not contain known active ingredients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To this aspect, we will revert to at a later stage. Suffice it to note that even after the judgments and orders of this Court, the petitioner continued to deposit excise duty with the State Government at a higher rate. 7. On the basis of samples supplied by the petitioner, albeit after considerable delay, the Central Government took a final decision on its categorisation by a notification dated 9-7-1990. The preparation was categorised as one not containing any ingredients of therapeutic quantities. In other words, they were to be charged at a higher rate of duty under Item No. 1(ii)(b). It appears that upon such final decision, the petitioner discontinued its business. Such decision has not been challenged. The same has been accepted by the petitioner and the classification has thus become final. However, for the period between 1987 to 1990 during which period the petitioner deposited duty with the Government at a higher rate, the petitioner moved the authority in July, 1994 for refund. Such refund application came to be dismissed by the Commissioner of Prohibition and Excise Department, Bhavnagar by order dated 22-2-1995. Aggrieved by such decision, the petitioner preferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard it and on such ground also the decision was vulnerable on the principle of one who hears must decide. In support of such a contention, counsel relied on the decision of the Division Bench of this Court in case of (M/s.) Shree Ram Packaging Another v. Union of India Another reported in 1990 (2) GLH 343 = 1991 (56) E.L.T. 15 (Guj.). The Court set aside the order passed by the Assistant Collector and directed fresh decision find that the hearing was granted by one Assistant Collector and final decision was taken by another. Counsel submitted that the respondents can support the orders only on the basis of reasons recorded in such order and not on other external grounds. 10. On the other hand learned AGP Ms. Maithili Mehta opposed the petitions contending that the petitioners had made refund applications after much delay. The authorities had examined the cases but found that the preparations of the petitioners were not containing the ingredients in therapeutic quantities. On such basis, the petitioners were liable to pay higher excise duty. She submitted that the question of unjust enrichment would also arise. 11. Having thus heard learned counsel for the parties and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1994. Thus there was clear delay of four years in making the refund application. Additionally, we also notice that despite the judgment of this Court, the petitioners continued to deposit the duty at a higher rate. It has not come on record that such deposit was under compulsion by the respondents. Even if it were so, the petitioners could have and ought to have taken legal recourse instead of continuing to suffer silently despite a clear judgment from the Court. Instead of doing so, the petitioners supplied the samples after much delay. Once while the final decision was rendered, the petitioner discontinued the preparation all together, and long many years thereafter, made refund claim which came to be rejected for various reasons. 14. In addition to above impediments, we were also conscious of principles of unjust enrichment. The Commissioner in the order challenged in Special Civil Application No. 6691/2002 had also indicated that as per the Superintendent such burden of duty was already passed on to the consumer. Under the circumstances, we had in our order dated 29-6-2012 finding that certain additional documents were produced without any affidavit, while permitting the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m is made, it would be wholly permissible for the Court to call upon the petitioner/plaintiff to establish that he has not passed on the burden of duty to a third party and to deny the relief of refund if he is not able to establish the same, as has been done by this Court in I.T.C. In this connection, it is necessary to remember that whether the burden of the duty has been passed on to a third party is a matter within the exclusive knowledge of the manufacturer. He has the relevant evidence - best evidence - in his possession. Nobody else can be reasonably called upon to prove that fact. Since the manufacturer is claiming the refund and also because the fact of passing on the burden of duty is within his special and exclusive knowledge, it is for him to allege and establish that he has not passed on the duty to a third party. This is the requirement which flows from the fact that Section 72 is an equitable provision and that it incorporates a rule of equity. This requirement flows not only because Section 72 incorporates a rule of equity but also because both the Central Excises duties and the customs duties are indirect taxes which are supposed to be and are permitted to be passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner/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 he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e. by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in AIR 1959 Supreme Court 308, the Apex Court applied the principle that one who hears must decide. It was a case wherein the decision was taken by the Chief Minister, but hearing was granted by the Secretary. In such context while striking down the decision by a majority view, the said opinion was expressed. However, such principle has since been seen in different light in different subsequent situations. In case of General Manager, Eastern Railway and Another v. Jawala Prosad Singh reported in 1970 (1) Supreme Court Cases 103, the Apex Court noted that an inquiry committee consisting of three persons was constituted to inquire into the charges levelled against the railway servant. After the proceedings had progressed for sometime and witnesses were examined, one of the members was transferred. His place was taken by his successor in the office. The proceedings continued from the stage where they had stopped. Committee submitted a report holding that the respondent was guilty of charges levelled against him. On the basis of such report, disciplinary authority dismissed the delinquent from service. Such decision was questioned inter alia on the ground that the same was in brea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding on the Government. 7. In such a state of affairs a change in the personnel of the Inquiry Committee after the proceedings are begun and some evidence recorded cannot make any difference to the case of the railway servant. The record will speak for itself and it is the record consisting of the documents and the oral evidence as recorded which must form the basis of the report of the Inquiry Committee. The committee is not the punishing authority and the personal impression of a member of the committee cannot possibly affect the decision of the Disciplinary Authority. In a state of affairs like this we cannot see any reason for holding that any known principles of natural justice is violated when one member of the committee is substituted by another. In case of Ossein and Gelatine Manufacturers Association of India v. Modi Alkalies and Chemicals Limited and Another reported in (1989) 4 Supreme Court Cases 264, the Apex Court held that the fact that the officer other than who heard the case had passed the order would not be fatal where question was of the approval by the Government and not by any particular officer statutorily designated and further that entire record and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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