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TMI Blog2009 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... – refund denied - 70 of 2008 - - - Dated:- 29-7-2009 - Pinaki Chandra Ghose and Sankar Prasad Mitra JJ. Mr. Pranab Kr. Dutta, Advocate, Mr. Atish Dipankar Roy, Advocate, Mr. Kaushik Dey, Advocate., for the Appellant. Mr. Tilak Bose, Advocate, Mr. Mohit Gupta, Advocate, for the Respondent. [Judgment per : Pinaki Chandra Ghose J.] - This appeal is directed against the judgment and/or order dated 7th May, 2008 passed by the Customs, Excise Service Tax Appellate Tribunal, Kolkata in appeal No. EDM-584/04 under Section 35 G of the Central Excise Act, 1944 (hereinafter referred to as 'CESTAT'). The appeal was admitted on 23rd September, 2008 on the following substantial questions of law: a) When a position of law is well settled as a result of judicial pronouncement of the Hon'ble Supreme Court whether it would amount to judicial impropriety or adventurism for the learned Tribunal to ignore the settled decisions and then to pass a judicial order which is contrary thereto? b) Whether the learned Tribunal erred in law in not appreciating that the law as laid down by the Hon'ble Supreme Court of India that in case of provisional assessment if any duty is due or is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istant Commissioner pursuant to the order of the Appellate Commissioner as modified by the learned CESTAT, re-finalized the assessment and came to the finding the appellant had paid Rs.56,14,262.35p in excess as duty at the provisional stage of which Rs.32,76,500/- should be refunded but the balance which was paid under Rule 9B cannot be refunded due to the provision of unjust enrichment. The Appellate Commissioner refused to intervene and rejected the appeal filed by the appellant against the said order dated 20 th of December, 2000. Being aggrieved, appeal was preferred before the learned CESTAT, in turn CESTAT refused to intervene with the said order of the lower authority without considering the fact stated clearly in the written submission as pointed out on behalf of the appellant that the Constitutional Bench of the Supreme Court have held that the doctrine of 'unjust enrichment' will not apply in case of finalization of provisional assessment under Rule 9B and that the learned CESTAT having been followed the Constitutional Bench of Supreme Court have held in terms of the statutory definition that assessment includes reassessment. Being aggrieved, the appellant preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock Secondary Packing Purchase Tax not paid by the Assessee at the time of clearance of goods Rs.1,22,15,959.54 c) Net Refund Paid (a-b) Rs.23,37,762.35 10. In addition to this refund they had already deposited an adhoc amount of Rs.32,76,500/- and thus there is a total refund claim of Rs.56,14,262.35". It is necessary for us to quote Clause 27 at page 99 of the paper book which reads as follows : "It is not disputed that in the instant case there was a provisional Assessment of the goods during the relevant period." He submitted that the Assistant Commissioner had proceeded to finalize the provisional assessment made under Rule 9B. He further submitted that in Mafatlal Industries Ltd. Vs. Union of India reported in 1997 (89) E.L.T. 247 (S.C.) in paragraph 95 at page 325 that while finalizing provisional assessment something extract is found to be paid, then returning of such amount would not be guided by the provisions of refund under Section 11B. Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. As a consequence, the concept of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case according to him the appellant merely acted as a Collector. In fact, the appellant did not suffer in any manner whatsoever. The appellant merely calculated the tax and paid the same on behalf of the buyer to the authorities. Therefore, according to him, no refund could be granted in favour of the appellant. He also drew our attention to the decisions of Mafatlal Industries Ltd. Vs. Union of India reported in 1997(89) E.L.T. 247(S.C.); Sahakari Khand Udyog Mandal Ltd. vs. Commissioner of C.Ex. CUS., reported in 2005 (181) ELT 328(S.C.); SRF LTD. Vs. Asst. Collector of C.Ex., Trichy reported in 2001 (134) ELT 324(S.C.); in support of his such contention. According to Mr. Bose, the appellant could not have the right to get refund of the said amount. It appears to us that in the scheme of the Act, Section 17 states the assessment of duty which has to be made in respect of import and export. In Section 18 of the said Act, if there is any difficulty to overcome certain difficulties, overriding provision has been made in the said Act and provision has been made in Section 18 for provisional assessment of duty. The provisional assessment is resorted to the situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reproduced hereunder :- "4.6 : It was observed by the Hon'ble Supreme Court in the case of CCE, Mumbai v. ITC Ltd. - 2006 (203) E.L.T. 532 (S.C.) in para 21 at page 537 of the reported judgment that a provisional assessment is made in terms of Rule 9B of Central Excise Act, 1944, inter alia, that at the instance of the assessee. Such a recourse is resorted to only when the condition laid down therein are satisfied, viz., where the assessee is found to be unable to produce any document or furnish any information necessary for assessment of duty of any excisable goods. In Para 22 of the said judgment, the Hon'ble Court held that where as provisional duty is levied in terms of sub-rule (1) of Rule 9B, final assessment is contemplated under sub-rule (5) thereof, by reason of which the duty provisionally assessed shall be adjusted against the duty finally assessed and in the event, the duty provisionally assessed fall short of or is in excess of the duty finally assessed, the assessee will pay the deficiency or will be entitled to a refund, as the case may be, ultimately, thus the liability of the assesse would depend upon the undertaking of exercises by the assessing officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion, deemed a fresh bond and may, if the security furnished for a bond is not adequate, demand additional security (4) The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are not so assessed. (5) When the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty finally assessed, the [assessee] shall pay the deficiency or be entitled to a refund, as the case may be.] (6) Notwithstanding the provisions of self-assessment in this rule, in cases of provisional assessment, the final assessment shall be made by the proper officer." In case of a provisional assessment under Rule 9B of the Central Excise Rules 1944, it is necessary to establish that the clearances were made on provisional basis, there should be first of all an order under Rule 9B of the Rules and then material to show that the goods were cleared on the basis of the said provisional basis and payment of duty was also made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim is subject to a presumption enacted in Section 28D of the Act, which states that every person who has paid the duty on any goods under the Act shall, unless, contrary is proved by him, by deemed to have passed on the full incidence of such duty to the buyers of such goods. Sectioin 27(1) underwent an amendment w.e.f. 20-9-1991 by Section 10 of the Central Excise and Customs Laws (Amendment) Act, 1991 (40 of 1991) of legislate that a refund governed by that sub-section shall meet the test of unjust enrichment. 4.8 : In Mafaatlal Industries Ltd. v. Union of India [1997 (89) E.L.T. 247 (S.C.)] decided on 19-12- 1996, Hon'ble Supreme Court held that "that any recoveries or refund consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Sectioni11A or Section 11B, as the case may be. However, if the final order passed under sub-rule (5) are appealed against or questioned in a writ petition or still, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of law that if refund arises upon finalization of provisional assessment, Section 11B will not apply. It was therefore held in Para 14 that refund arising consequent upon finalization of provisional assessment does not attract the bar of unjust enrichment. While deciding the case of Allied Photographics' case, the Apex Court also affirmed its decision in Collector of Central Excise, Chennai v. TVS Suzuki Ltd. - 2003 (156) E.L.T. 161 (S.C.). In TVS Suzuki's case, refund on finalization of provisional assessment accrued to the assessee in the year 1996 and refund was claimed by making an application on July 5, 1996 and that was prior to the amendment of Section 11B on August 1, 1998 by Act 21 of 1998. Repelling argument of Revenue that during pendency of the claim for refund dated July 5, 1996 and that was prior to the amendment of Section11B on August 1, 1998 by Act 21 of 1998. Repelling argument of Revenue that during pendency of the claim for refund dated July 5, 1996, the amendment to Rule 9B (5) had come into force with effect from June 25, 1999 and, therefore, the pending refund application dated July 5, 1996, has to be decided as per the amended Rule 9B(5) "The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Allied Photographics India Ltd., where the Court held as follows: "The third question arises is whether refund arising by order dated 10-12-1999 which was a final asasessment order under Section 18(2) of the Act as aforesaid shall meet test of unjust enrichment. This issue is no more in res integra in view of ratio laid down by Hon'ble Supreme Court in Allied Photographics Ltd. case (supra) and subsequently followed in Civil Appeal No. 4231 of 2001 in the case of CC v. Oriental Exports - 2006 (200) E.L.T. A138 affirming decisions of Tribunal in the case of Oriental Exports v. Commissioner - 2001 (127) E.L.T. 578 holding that Three-judges Bench in Allied Photographics case - 2004 (166) E.L.T. 3 (S.C.) had also taken the same view, as was taken by the Tribunal, to the effect that the doctrine of unjust enrichment is not applicable to the provisional assessment even after finalization thereof". It is now necessary for us to quote paragraph - 6, 7 Section 11B. "Para - 6 : The points at issue in this civil appeal are - whether refund of duty paid provisional assessment is similar to duty paid under protest as both are "On Account" payments adjustable on finalizatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix months from the relevant date except in cases where duty was paid under protest in terms of the proviso. However, even in such cases, the person claiming refund had to pay the duty under protest in terms of prescribed rules. A bare reading of Section11B(1) , therefore, shows that it refers to claim for refund as against making of refund by the proper officer under Rule 9B." "Section 11B : Claim for refund of duty. - (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the relevant date : Provided that the limitation of six months shall not apply where any duty has been paid under protest. Explanation - For the purpose of this section, - (A) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India ; (B) "relevant date" means (a) In the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim." He also drew our attention in the case of Timcan India Ltd. (supra), wherein the learned Tribunal following the decision of the Supreme Court held as follows :- Clause 6.4 at page - 125 (paper book) : "The third question arises is whether refund arising by order dated 10-12-1999 which was a final assessment order under Section 18(2) of the Act as aforesaid shall meet test of unjust enrichment. This issue is no more in res integra in view of ratio laid down by Hon'ble Supreme Court in Allied Photographics Ltd. case (supra) and subsequently followed in Civil Appeal No. 4231 of 2001 in the case of CC v. Oriental Exports - 2006 (200) E.L.T. A138 affirming decisions of Tribunal in the case of Oriental Exports v. Commissioner - 2001 (127) E.L.T. 578 holding that Three-judges Bench in Allied Photographics case - 2004 (166) E.L.T. 3 (S.C.) had also taken the same view, as was taken by the Tribunal, to the effect that the doctrine of unjust enrichment is not applicable to the provisional assessment even after finalization thereof". According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact". He drew our attention to the decision in the case of Mafatlal Industries Ltd. Vs. Union of India (supra) wherein the Supreme Court held that refund of tax/duty wrongfully paid can be claimed on the basis of doctrine of equity and a person demanding such restitution must plead and prove that he had paid such tax/duty and had suffered loss/injury. The burden is on the petitioner to prove that the tax/duty paid by him is not passed on to customers or third party and that he is entitled to restitution. He also drew our attention to the decision in the case of Godfrey Phillips India Ltd. Anr. Vs. State of U.P. Ors., Writ Petition (C) No.567 of 1994, dated January 20, 2005 reported in 2005(181) ELT 328(SC) wherein the Supreme Court held that the Constitution Bench of Uttar Pradesh Tax on Luxuries Act, 1995 as also other State Acts was challenged on the ground of legislative competence of the State Legislatures were not competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not granted appellant would suffer loss. Following such test we hold that appellant is not entitled to claim any amount on the given facts. In these circumstances, in our considered opinion, refusal to grant benefit to the appellant cannot be held arbitrary, unreasonable or unequitable. He also drew our attention to the decision in the case of SRF LTD. Vs. Asst. Collector of C.Ex., Trichy (supra) wherein the Three Judges' Bench held as follows : "7. Secondly, assuming it to be a case of unconstitutional levy still the appellant would not be entitled to refund in terms of law settled by the Mafatlal Industries, case. Even in that eventuality it has to be established that incidence of duty has not been passed on to others. IT has been held that 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 requirement that the burden of duty has not been passed on to others. It was not submitted before us that this requirement had been fulfilled by the appellant. Thus looking from any angle, the appellant is not entitled to refund." In our consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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