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TMI Blog1992 (8) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee-petitioner's claim. The petitioner filed an appeal before the Collector (Appeals). The appeal filed by the petitioner was accepted by the Collector (Appeals) on 22-1-1986, alongwith other 14 appeals of different assessees. As a result of the appellate order, passed by the Collector (Appeals), on the appeal filed by the petitioner, the petitioner became entitled to refund of duty paid by him 'under protest' as a result of wrong classification by the Assistant Collector, Central Excise. 2. The petitioner applied for the refund. The Assistant Collector, Central Excise allowed the refund in the cases of 8 assessees, whose appeals were simultaneously disposed off by a common order by the Collector (Appeals); however, the Assistant Collector rejected the claim of following 7 assessees to refund, in persuance of the order passed by the Collector (Appeals) by order dated 20-10-1986 (Ex. 3) :- 1. M/s. Sancheti Steel, Jodhpur 2. M/s. Chopra Chemicals, Jodhpur 3. M/s. Swastik Metals, Jodhpur 4. M/s. Mehta Metals, Jodhpur 5. M/s. Adarsh Metals Corpn., Jodhpur 6. M/s. Sancheti Synthetics Pvt. Ltd., Jodhpur 7. M/s. Salawas Metals, Jodhpur. 3. Aggrieved w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result, I allow this writ petition and S.B. Civil Writ Petitions No. 1744/89 and 1745/89 for the reasons mentioned above and direct the respondents to refund the amount of the excise duty charged with 12% per annum interest from the date of actual payment to the date of refund. The respondents are directed to make payment of the amount with interest as aforesaid within a period of 4 months from today." 6. The petitioner contends that his case is no different in any manner from the cases of M/s. Swastik Metals, M/s. Salawas Metals and M/s. Mehta Metals, stated above and he too is entitled to the same relief. 7. No return has been filed by the respondents. None of the facts stated above are, however, disputed including the fact that this Court has directed refund of amount in respect of aforesaid three petitioners on the identical facts arising out of a common judgment of the Collector (Appeals), which was affirmed by CEGAT vide orders dated 31-8-1989 as rectified by order dated 25-10-1989, referred to above. 8. However, learned counsel for the respondents raised the contention that since the amendment has been effected in the Act of 1944, with effect from 20th September, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es who were identically placed with each other, merely as a result of inaction on the part of the respondents in discharging their statutory obligation to suo moto refund the duty of excise illegally recovered from the petitioner. It was further contended that the amending provisions, particularly. Sections 12A, 12B and 12C cannot apply to the present case, inasmuch as, the conditions laid down therein cannot be fulfilled by the petitioner at the time when the duty was paid and, therefore, the presumption envisaged under Section 12B under Chapter 2A about passing of incidence of duty to the buyer, cannot be raised in favour of the Department in the present case so as to deny refund to the petitioner with respect to the amended provisions. 11. I first take up the question as to what is the effect of amendments in the Central Excises Salt Act, that has taken effect with effect from 20-9-1991. 12. In order to understand the controversy raised before me, it is apposite to reproduce the provisions relating to refund, as they existed immediately before the amendment relied upon by the respondents have come into force, as well as the amending provisions. Section 11B, when the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry for the purposes aforesaid. (c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when ex- ported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory; (d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; (e) in a case where duty of excise is paid provisionally under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (f) in any other case, the date of payment of duty." (Old version) Section 11B, after it was amended with effect from 20-9-1991 is as under :- "11B. Claim for refund of duty. - (1) Any person claiming refund of any duty of excise may make an applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government, the incidence of duty has not been passed on by the person concerned to any other person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2). (4) Every notification under clause (f) of the first proviso to sub-section (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of the Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of duty." (Amended version). Chapter IIA "Section 12-A. Price of goods to indicate the amount of duty paid thereon. - Notwithstanding anything contained in this Act or any other law for the time being in force, every person who is liable to pay duty of excise on any goods shall, at the time of clearance of the goods, prominently indicate in all the documents relating to assessment, sales invoice, and other like documents, the amount of such duty which will form part of the price at which such goods are to be sold. Section 12-B. Presumption that incidence of duty has been passed on to the buyer. - Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods. Section 12-C. Consumer Welfare Fund. - (1) There shall be established by the Central Government a fund, to be called the Consumer Welfare Fund. (2) There shall be credited to the Fund, in such manner as may be prescribed, - (a) the amount of duty of excise referred to in sub-section (2) of Section 11B or sub-section (2) of Section 11C or sub-section (2) of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Explanation (B) obviously cannot apply in cases where refund becomes due as a result of order passed in appeal or revision under the Act inasmuch as the date specified in sub-clause (f) is 6 months with effect from the date of payment of duty whereas, the refund under sub-section (3) becomes payable as a result of order passed in an appeal or revision. The two dates have no connection with each other. In my opinion, the provisions of Section 11B(1) and (3), as it stood before amendment with effect from September 20,1991; makes it abundantly clear that no application is required to be made where the return of any duty of excise becomes due to any person as a result of order passed in any appeal or revision under the Act. The refund of duty in such cases does not depend upon further adjudication by the Assistant Collector of Central Excise under sub-section (2) of Section 11B as to whether the applicant is entitled to refund at all and, if so, entitled; whether he is entitled to whole or any part of excise duty to be refunded to him. 15. This conclusion is in consonance with the soul and spirit of Article 265 of the Constitution of India, which prohibits levy or collection whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax has been collected either in excess of what has been authorised by law or not authorised by law; immediately an obligation arises on the State to refund what has been collected without authority of law to the person from whom the same is collected. If that obligation is not cast upon the assessing authority the very meaning and purport of providing remedies against probable human error at the initial stage would be meaningless and would be a futile exercise. 19. It cannot be accepted that when a tax is collected due to error on the part of the assessing authority in spite of resistance by the tax-payer and ultimately, when the tax-payer succeeds in establishing his view-point, the revenue would be entitled to retain the tax so forcibly collected from the assessee. That will be negating the very right to litigate the question of taxability of the person concerned under any taxing statute. 20. It may also be noticed that there is a difference where levy have been paid voluntarily without raising any protest under some mistake but when that mistake is discovered the claim is made by such assessee for refund of the duty paid by him. Refunding in such cases has been held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, under a statutory duty to refund the amount to the petitioner." 23. To this effect, there is also a circular of the Central Board of Excise and Customs issued on 28-3-1990, whereby the Central Government authorities stated as under :- "......I am directed to invite your attention to Board's telex F. No. 390/93/88-AU dated 22-9-1988 and 10-11-1989 and letter of even number dated 18-11-1989 and letter of even number dated 18-11-1988 regarding various Court pronouncements for denying refund of Central Excise duties on the ground of fortuitous benefits and undue enrichment. ......In this connection, attention is invited to Board's instructions is sued vide F. No. 210/30/81-CX. 6 dated 10-8-1981 wherein it has been clarified that there is no provision in the Central Excises Salt Act, 1944, or the rules framed thereunder empowering the department to reject refund claims on the ground that sanction of the claim would result in fortuitous benefit to the manufacturer. ......The matter has been examined by the Board once again and it has been decided to reiterate instructions dated 10-8-1981. A telex in this connection was already sent on 21-3-1990 (F. No. 390/80/88-AU) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory obligation on the revenue to refund such levy, without an application being made under law, and, the provisions of Section 11A(1) are applicable only to such applications of refund where entitlement to refund is not automatic as a result of judicial or quasi-judicial decision, but depend on independent determination of such entitlement with reference to certain eventualities envisaged therein. The position does not appear to have been altered with the amendments in question in this context. No doubt, sub-section (3) of Section 11 B, as it existed prior to present amendment do not exist. But, it will be noticed that under the present scheme, after amendment also, an application is required to be made within six months from 'the relevant date'. 'Relevant date' has been defined in Explanation (B) which has been amended only to the extent that, existing clause (e) has been substituted with the following :- "(B) 'relevant date' means :- (a) xxx xxx xxx xxx (b) xxx xxx xxx xxx (c) xxx xxx xxx xxx (d) xxx xxx xxx xxx (e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existed and commit breach the provisions of Art. 265 of the Constitution of India. In this view of the matter, it has to be held that claim of refund envisaged under Section 11B and its dealing is confined to contingencies on arising of which an application is to be made within six months; however, it does not relate to any claim which becomes due as a result of decision in an appeal or revision, which the State is under an obligation to refund from whom it has been collected. (B) Secondly, it may be stated that the amended provisions apply only to those cases where an application was required to be made for the purpose of claiming refund and such application was pending disposal by the Assistant Collector of Central Excise for determining the entitlement of the claimant to refund. Even, the newly substituted sub-section (2) of Section 11B requires the Assistant Collector of Central Excise to satisfy himself that whether whole or any part of the excise paid by the petitioner-assessee is refundable and then he is required to pass order accordingly. As I have held above, in the case of petitioner, no application was required to be made for refund of the claim and the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the directive has been obtained. Appeal of the Department was also dismissed by CEGAT on 31-8-1989 and the order Ex. 4 became final, much before the amendment came into force. In that view of the matter also, it can be said that the application filed by the petitioner stood disposed off much before 20-9-1991, and could not have been said to be pending consideration with the Asstt. Collector of Central Excise on the date of commencement of Amending Act. The question whether the amending provisions are applicable even in cases where directive for refunding the amount has already been issued before the amending provisions came into force, is also subject to me amending provisions; came up before their Lordships of High Court of Judicature for Calcutta in Titagarh Paper Mills Co. Ltd. v. The Union of India [1992 (57) E.L.T. 527 (Cal.)], wherein his Lordship of the Calcutta High Court held as under :- "This proviso can only apply to applications which have been made before the amendment came into force but was not dealt with and or disposed of in accordance with the law in force at the material time. On or from 20th September, 1991, the applications which were pending, will have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s impossible to be fulfilled and, therefore, this provision cannot apply in the case of deliveries of goods taken place prior to 20th September, 1991. Consequently, the presumption of goods cleared with aforesaid documents as mentioned in Section 12A of the Act, also cannot follow in favour of Deptt. so as to debar refund to the manufacturer. (E) Fifthly, the provisions of crediting amount of excess duty paid to the Consumer Welfare Fund is applicable only in cases where it is held by virtue of presumption raised in Section 12B or otherwise, that the duty of excise paid by the manufacture had been passed on to the other person. When the aforesaid presumption required to be raised in Section 12B is not available to the respondents to be raised against the petitioner in the present case, which, undoubtedly, relates to clearance of goods prior to insertion of these provisions with effect from September 20, 1991. There is no evidence on record on the basis of which it can be said that incidence of duty passed on to other person. There is no counter-affidavit which has been filed to raise any such plea in the petition. On this ground also, the respondents are not entitled to retain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the amended provisions is required to pay to the applicant, the amount of duty of excise if the incidence of the same has not been passed on to 'any other person'. It may be noticed that the term "any other person" has been used in the sense "a person other than buyer". Clauses (d) and (e) of proviso to Section 11B(2) provides that if the duty of excise paid by the manufacturer has not been passed on to any other person, it is refundable to the applicant as well as if the duty of excise borne by the buyer if it has not been passed on to another person (emphasis supplied), is also required to be refunded. Section 12B only raised a presumption that the person who has paid the duty of excise on any goods is deemed to have passed on the full incidence of such duty on the buyer of the goods. The scheme of the amended provisions which provides establishment of a Consumer Welfare Fund, crediting all the excise duty claimed as have been paid otherwise, than in accordance with law, to the Fund; indicate that the Consumer Welfare Fund has been devised as a scheme for protecting end consumers' [who may appropriately be described "any other person", mentioned in clauses (d) and (e) of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same High Court, and has not been followed in subsequent cases of the very same High Court. In that view of the matter, the decision in Foremost Dairies' case (supra) does not lend any assistance to the case of respondents. The first contention of the learned Counsel for the respondents that the petitioner's claim for refund cannot be accepted in view of amended provisions of the Act of 1944, is rejected. 30. Once I have come to the conclusion that the petitioner cannot be denied the relief to refund with reference to the amending provisions, it takes me to the second question raised by the respondents whether the relief under Art. 226 of the Constitution of India could be denied on the principle of 'unjust enrichment'. This contention of the respondents also cannot be accepted. Firstly, it is not disputed before me that the person whose appeal were decided by a common judgment, 8 assessees out of 14, whose appeals were decided by a common judgment, were granted refund by the Asstt. Collector of Central Excise himself, and, out of aforementioned 7 persons whose claim demand was rejected by the Asstt. Collector, Central Excise, in the case of 3 persons who approached this Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both in the matter of heads under which they could be recovered and the period of limitation for the recovery." It was in the aforesaid context, the Court held that the tax voluntarily paid, though under mistake, also are liable to be refunded; provided the same are claimed within the period of limitation within which a suit for recovery of payment made under mistake can be filed. 32. In Salonah Tea Company Ltd. etc. v. Superintendent of Taxes, Nowgong Ors., etc. [1988 (33) E.L.T. 249 (S.C.)], their Lordships of Hon'ble Supreme Court observed as under :- "In this case indisputably it appears that tax was collected without the authority of law, indeed the appellant had to pay the tax in view of the notices which were without jurisdiction. It appears that the assessment was made under Sec. 9(3) of the Act. Therefore, it was without jurisdiction. In the premises it is manifest that the respondents had no authority to retain the money collected without the authority of law and as such was liable to refund." (emphasis supplied) 33. Justice Krishna Iyyer in Shiv Shankar Dal Mills etc. etc. v. State of Haryana and ors. etc. [1980 (1) SCR 1170] speaking for the Apex Court, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for the purpose of refund of a tax on the ground that the same would be clearly violative of Article 265 of the Constitution, which prohibits not only levy but as well the collection of tax, without authority of law. 35A. In this connection, it may also be noticed that though the Excise Duty indirectly affects the price of goods, but it is not a levy on goods nor it is levy, object of which is to regulate price. Excise duty is a levy, in relation to goods leviable on manufacture or production of goods. There is nothing in theory, to prevent the central legislature from imposing a duty of excise on commodity as soon as it comes into existence, no matter what happens to it afterwards; whether it be sold, consumed, destroyed or given away. This principle is well established in the Province of Madras v. Messrs. Boddu Paidanna Sons [AIR (29) 1942 F.C. 33], wherein the Court observed as under :- "There is in theory nothing to prevent the Central Legislature from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards, whether it be sold, consumed, destroyed, or given away......It is the fact of manufacture which attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority of law or illegal, a plea of unjust enrichment of the manufacturer or producer cannot be advanced to deprive the person who paid duty under erroneous order passed by the authority, which has been ultimately found to be not sustainable. The question of passing of incidence in such cases to the 'end consumer' is really not relevant. It may also be noticed in this connection that the duty is leviable on manufacture or production and the incidence arises at that time. The stage at which collection is authorised, in all cases, may not be necessary at the stage of production but may depend upon the provisions of statute which authorise the levy but, by providing the stage of collection of tax at a different stage does not convert the levy of manufacture into levy on any other transaction, much less on the sale. At what stage the payment of excise becomes part of the cost and whether it is ultimately recovered from the end consumer as a part of price, depends upon the market forces. The fixation of price is not regulated, for the purpose of the purchaser as a result of any provision under the Excise Act. It may also be noticed that the price when charged was not illegal and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986 (23) E.L.T. 411, 421 (Del.)]; Gujarat in Union of India v. Bharat Vijay Mills [1988 (34) E.L.T. 605 (Guj.) = 1984 (3) ECC 1 (Guj.)]; and Karnataka in Alembic Glass Industries Ltd. v. Union of India [1990 (48) E.L.T. 232 (Kar.) = 1990 (25) ECC 39 (Kant.)]; have held that refund cannot be denied to the assessee on the ground of unjust enrichment. 37. In this connection, the decisions relied upon by learned counsel for the respondents have no application. In Nawabganj Sugar Mills' case (supra), their Lordships of Supreme Court dealt with a situation where the price of levy on sugar was pegged down by the State. The Mill-owners impeached the validity of control and obtained stay on operation of the order issued under Essential Commodities Act. Under covers of Court's order, which was granted on bank guarantee for the excess price being furnished to the Court, the appellants sold sugar at free market rate. Eventually the High Court upheld the Price Control Order and question of enforcing obligation to restore this to the Court for its equitable distribution in terms of bank guarantees furnished as a condition of stay order arose. In these circumstances, the Supreme Court negated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not." 39. Thus, apparently, a tax which forms part of the cost of the goods; on selling of the goods whatever is received or recovered from the buyer is the sale price and whatever is recovered in excess of such cost, becomes his profit. Any difference in cost-price and sale-price constitute income of the manufacturer or loss to the manufacturer, depending upon at what price he is able to sell his goods. If such tax is later on refunded to manufacturer, it forms part of his income liable to income-tax under Income-tax Act, which is a Direct Tax. 40. In the next place, learned counsel for the respondents relied on a decision delivered in M/s. Shiv Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sugar manufacturers. This was also not a case of levy of tax. Thus, keeping in view the purpose of the Act and the Order which the difference between the ex-factory and supply prices was ordered to be deposited by the Government; the Court held :- "....It is really a law returning to the public what it has taken from the public (emphasis supplied), by enabling the committee to utilise the amount for the performance of services required, of it under me Act. Instead of allowing middlemen to profiteer by ill-gotten gains, the legislature has devised a procedure to undo the wrong that has been done by the excessive levy by allowing to committees to retain the amount to be utilized hereafter for the benefit of the very person for whose benefit the marketing legislation was enacted (emphasis sup- plied)." 42. Thus, for the reasons aforesaid, the ratio of the decision in State of Madhya Pradesh v. Vyankatlal and Anr. (supra) also does not apply in the question of refund, of tax or duty. A legislation to levy, tax or duty cannot be said to be a legislation with object of benefit to a class of persons for giving effect to any such policy. 43. The another case on which reliance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of the consumers of the product. In case the excisable product is of mass consumption, benefit of return may be given by way of reduction of its price for a certain period or by promotion of research, rationalisation, etc. It would be always preferable in these cases to leave the discretion with Court to decide how the consequential relief ought to be formulated." The Bombay High Court in its subsequent decisions has also held that the decision in Roplas (India) Ltd.'s case (supra) is no longer a good law in view of the above Full Bench decision. Reference in this connection may be made to a decision delivered in Kusum Engg. Works v. Union of India [1992 (58) E.L.T. 3 (Bom.)], where their Lordships of Bombay High Court observed as under :- "....It has been repeatedly pointed out by this Court that the decision in Roplas case is not a good law. Apart from this consideration, the doctrine of unjust enrichment has no application whatsoever in cases where the duty is paid under protest. The recovery of duty by Department in such cases is subject to the right of the petitioners to seek refund and the petitioners having succeeded in establishing that the levy of duty can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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