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TMI Blog2002 (2) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ice dated 2-9-1992 issued under Section 11A/11D of the Excise Act, as amended in 1991 to recover the entire amount refunded to the Petitioners in the year 1988. FACTS-IN-BRIEF 3.Since the facts up to the date of grant of refund are common in both these writ petitions, it will be proper to set out the relevant facts up to the date of grant of refund, before dealing with the controversy raised in these two petitions. 4.Bajaj Auto Limited manufactures two wheeled and three wheeled motor vehicles ('goods' for short) falling under Chapter 87 of the Central Excise Tariff Act, 1985 and has factories in Pune and Aurangabad. The Company sells its goods all over India at the factory gate to over 200 dealers without any commission or discount. 5.By a show cause notice dated 20th March, 1985 the Respondents called upon the Petitioners to show cause as to why the wholesale dealers of the Petitioners should not be treated as "related persons" and as to why the price charged by the dealers to the customers should not be treated as assessable value for the purpose of excise duty instead of the value charged by the Petitioners to the wholesale dealers. In the light of the said show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents have agreed that the position of law was settled in favour of the Petitioners and that there was a bona fide mistake on their part in postponing the consideration of the refund claim of the Petitioners. By the said judgment and order dated 28th April, 1988, this Court directed the Respondents to dispose of the refund application of the Petitioner on merits within the time stipulated therein. Thus, it was accepted by the Excise authorities before this Court in the aforesaid petition that the refund claim of the petitioners cannot be rejected or withheld on the ground that the amount refundable has already been recovered from the customers. In other words, it was accepted by the Revenue authorities that even though the petitioners had recovered the amount from the customers they were entitled to the refund as per the then prevailing provisions of the Excise Act. 9.Thereafter, the Respondents issued show cause notice dated 9-5-1988 calling upon the Petitioners inter alia to show cause as to why their refund claim should not be rejected as time-barred U/s. 11B of the Excise Act and refund if granted, why the assessable value should not be redetermined by including the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest thereon. 12.Mr. Bharucha, learned Counsel appearing on behalf of the Petitioners relied upon the decision of this Court in the case of Roche Products Ltd. v. Union of India reported in 1991 (51) E.L.T. 238 (Bom.) and several other Tribunal decisions and contended that the amount of excise duty refunded cannot be included in the assessable value and claim excise duty on such redetermined assessable value. On the other hand, Mr. Desai, learned Counsel for Respondents contended that the decision of this Court in Roche Products Ltd. (supra) is not a reasoned order and, therefore, it would be just and proper to follow the well reasoned Full Bench decision of the Karnataka High Court in the case of Union of India v. Alembic Glass Industries Ltd. reported in 1992 (61) E.L.T. 193 which is in favour of the Revenue. When it was pointed out that the decision of Karnataka High Court in the case of Alembic Glass Industries Ltd. (supra) has been approved by the Apex Court in the case of Pravara Pulp Paper Mills v. Collector of Central Excise reported in 1997 (96) E.L.T. 497 (S.C.) the learned Counsel for the Petitioners fairly conceded that the issue is squarely covered by the aforesaid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt had already been granted to the Petitioners as per the decision of the Apex Court in the case of Moped India (supra) and the refund had become final and conclusive. It was submitted that even in the application filed under Section 35E of the Excise Act, which itself is beyond the scope of the original show cause notice dated 9-5-1988, the Respondents had neither disputed the grant of refund on merits nor disputed the quantum of refund granted to the Petitioners. It was submitted that if at all the Respondents considered the refund granted was erroneous, then the only course open to the Respondents was to invoke Section 11A and serve a notice to the Petitioners within 6 months from the relevant date as contemplated under Section 11A of the Excise Act. It was submitted that the impugned notice dated 2-9-1992 issued under Section 11A/11D of the Excise Act being beyond time, is liable to be quashed and set aside. It was submitted that Section 11D deals with duty of excise collected from the buyers and not paid to the Central Government. It was submitted that Section 11D does not apply to a case where the amount is refunded to an assessee by the department and hence Section 11D will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice has been issued in the present case. In the alternative, it was submitted that as per Section 11D, the amount which has been collected by the Petitioners has to be deposited forthwith to the credit of the Central Government. It was thus submitted that the impugned show cause notice does not suffer from any infirmities and hence the petition is liable to be dismissed. FINDINGS 16.Having heard the Counsel at length and having perused the material placed before us we are of the opinion that the Order of the Collector (Appeals) dated 9-6-1992 and the show cause notice dated 2-9-1992 are untenable in law and hence the same are liable to be quashed and set aside. 17.A perusal of the refund order dated 23-5-1988 (Exhibit-A to the petition) clearly shows that the refund granted was final and unconditional. There is no dispute that the above refund was granted in view of the decision of the Apex Court in the case of Moped India (supra) and, therefore, the issue of refund on merits was covered by the decision of the Apex Court and there is no dispute as to the quantum of refund granted either. In fact, on finalisation of the refund, the Respondents have gone a step further a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unjust enrichment. Thereafter, the Respondents having processed the refund claim and having granted the refund, could not have filed application under Section 35E(2) of the Excise Act and challenge the refund order dated 23-5-1988 solely on the ground of unjust enrichment. It is relevant to note that the refund order dated 23-5-1988 was passed on the refund application of the petitioners by issuing a show cause notice dated 9-5-1988. In the said show cause notice dated 9-5-1988, the issue raised was, why the refund claim should not be rejected as time-barred under Section 11B of the Excise Act and why refund if granted should not be included in the assessable value and redetermine the assessable value and claim excise duty. Issue of unjust enrichment was not there while passing the refund order on 23-5-1988 and in fact, no such plea could have been raised in view of the Revenue admitting before this court in Writ Petition No. 2171 of 1988 on 28-4-1988 that the excise authorities cannot withhold refund on the ground of unjust enrichment. Therefore, the application filed by the Revenue under Section 35E of the Excise Act on the ground of unjust enrichment was beyond the scope of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending proceeding, the amended provisions were applicable to the case of the Petitioners. In our opinion, the submission is devoid of any merit because the case of the Petitioners cannot be said to be falling within the category of 'pending proceedings' as held by the Apex Court. In the Mafatlal's case (supra), the Apex Court has not laid down any proposition that on account of filing an application under Section 35E(2), the Respondents are absolved of their obligation from issuing a notice under Section 11A of the Excise Act for recovery of erroneous refund within 6 months from the relevant date. Section 11A(3) defines relevant date as follows : - "11A(3) for the purpose of this Section - (i) ---------- (ii) 'relevant date' means - (a) ............ (b) ............ (c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund." Therefore, mere filing of an application under Section 35E does not absolve the Respondents from their obligation to issue notice under Section 11A and if such notice under Section 11A is issued beyond the period of 6 months from the relevant date, then th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Excise Act and the only plea of unjust enrichment raised was not available under the Excise Act. Thus, in our opinion, in the facts of the present case, neither the pendency of the application under Section 35E(2) could be considered to be 'pending proceeding' pertaining to grant of refund so as to attract the amended provisions of Section 11B, nor the notice dated 2-9-1992 can be sustained, it being time-barred under Section 11A of the Excise Act. 22.Strong reliance has been placed by the Counsel for the Respondents on the decision of the Apex Court in the case of Union of India v. Raj Industries reported in 2000 (120) E.L.T. page 50. In that case, the refund claim was rejected by the excise authorities and in a writ, the High Court ordered refund and during the pendency of further appeal before the Apex Court, Section 11B was amended and in that context, before granting finality to the refund ordered by the High Court, the Apex Court remanded the matter for adjudication as per the amended Section 11B of the Excise Act. In the present case, the refund granted is not pursuant to the order of this Court in Writ Petition No. 2171 of 1988. Here, the Respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. We are unable to accept the contention of the learned Attorney General that as Section 51 has made the amendments retrospective in operation since February 28, 1944, it should be held that it overrides the provision of Section 11A. If the intention of the Legislature was to nullify the effect of Section 11A, in that case, the Legislature would have specifically provided for the same. Section 51 does not contain any non obstante clause, nor does it refer to the provision of Section 11A. In the circumstances, it is difficult to hold that Section 51 overrides the provision of Section 11A. …………………………………………………………………………………32. There is no provision in33. the Act or in the Rules enabling the Excise authorities to make any demand beyond the periods mentioned in Section 11A of the Act on the ground of the accrual of cause of action. The question that is really involved is whether in view of Section 51 of the Finance Act, 1982, Section 11A should be ignored or not. In our view, Section 51 does not, in any manner, affect the provision of Section 11A of the Act. In the absence of any specific provision overriding Section 11A, it will be consistent with rules of harmonious constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oneous refund would have to be restricted to six months from the relevant date. Under the circumstances, the show cause notice impugned in the present case, issued under Section 11A of the Act, being time barred, is liable to be quashed and set aside. 25.Moreover, the Central Board of Excise and Customs, after obtaining opinion of the Law Ministry, vide Circular No. 423/56/98-CX., dated 22-9-1998, has clarified that erroneous refund cannot be recovered by mere filing an application under Section 35E(2) of the Excise Act, unless notice under Section 11A is issued within the stipulated time. The relevant portion of the above Circular, reads as under :- "......In this context the point to be stressed is that the Order passed U/s 35E(2) does not automatically result in the recovery of the refund. This has to be followed by SCN U/S 11A which should be issued within 6 months from the date of actual refund. Since time-limit for filing appeal U/S 35E(2) is longer than the time-limit prescribed U/S 11A, the SCN should proceed (sic) the proceedings U/S 35E(2). ...........................In view of above, it is clarified that timely demands should invariably be raised (within six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability, if any, and the surplus would be either credited to the fund or refunded as the case may be. Thus, it is clear that Section 11D deals with duty of excise collected from the buyers and not paid to the Central Government. In the present case, the amount collected has been paid to the Central Government and hence the case of the Petitioners cannot be said to be falling within the ambit of Section 11D of the Excise Act. 27.The meaning and purport of Section 11D of the Excise Act was considered by the Apex Court in the case of Mafatlal Industries (supra). Relevant portion in Para 97 of the said decision reads as under : - "...........All that the section says is this : the amount collected by a person/manufacturer from the buyer of goods as representing duty of excise shall be paid over to the State; even if the tax collected by the manufacturer from his purchaser is more than the duty due according to law, the whole amount collected as duty has to be paid over to the State; if on the assessment being made it is found that the duty collected and paid over by the manufacturer is more than the duty due according to law, such surplus amount shall either be credited to the F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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