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TMI Blog1995 (2) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Central Excise Tariff Act, 1985. According to the petitioners their product was paper based decorative laminated sheets and not plastic based. Therefore, they classified their product under chapter 48 sub-heading 4818.90 upto February 28, 1988. Thereafter from March 1, 1989 the product was classified under sub-heading 4823.90 of the Schedule to the Central Excise Tariff Act, 1985. The petitioners filed classification list before the Assistant Collector accordingly. The Assistant Collector did not approve the same and held that the product manufactured by the petitioners was falling under Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985, which dealt with plastics and articles thereof. Therefore the petitioners contend that they started paying the duty of excise under protest. In some cases the dispute as regards classification appears to have been carried upto Customs, Excise Gold (Control) Appellate Tribunal (CEGAT) and thereafter upto the Supreme Court before which the appeals filed by the Department against the decision of CEGAT classifying the article under sub-heading 4818.90 upto February 28, 1988 and under sub-heading 4823.90 from 1-3-1988 has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners. The Court at the interim stage observed that the petitioners claimed Rs. l,36,84,418.65 ps. with interest at the rate of 18%. However the Court felt it just and proper at that stage to direct the respondent to refund only the principal amount on the conditions mentioned in the order. Pursuant to the mandatory direction given by the Court, the amount of refund of Rs. 88,66,022.74 has been paid to the petitioners in cash and credit of Rs. 33,23,107.98 has been given. This order has been passed by the Assistant Collector on April 6, 1990. Against the said order the Department has preferred appeal before the Collector (Appeals) who rejected the appeal preferred by the Department as per order dated September 24, 1992. Against the said order the Department filed appeal before CEGAT and the same is pending. Spl. C.A. 960/90 :4. In the instant case also the petitioners had classified their product under sub-heading 4818.90 from March 1, 1986. They straightaway filed refund claim on September 1, 1986 for the period commencing from March 1, 1986 to August 31, 1986. The Assistant Collector, vide his order dated December 17, 1987 disapproved the classification and ordered classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief within three months. 5.1The petitioners filed refund claim on October 20, 1989 before the Department. According to the petitioners, since the refund claim was not decided the petitioners approached this Court. On February 19, 1990 Division Bench of this Court (Coram: G.T. Nanavati, J. as he then was J.U. Mehta. J.) passed mandatory order at interim stage and the principal amount of Rs. 83,49,099.65 ps (Rupees eighty three lakhs forty nine thousand ninety nine and paise sixty five) was ordered to be paid to the petitioners on the terms and conditions mentioned in the order. However, the Court observed that at that stage the claim of interest at the rate of 18% per annum be not granted. The petitioners had filed Misc. Civil Application No. 70/90 in this very special civil application. According to them there was confusion with regard to the amount inasmuch as instead of Rs. 93,44,771.70 ps. figure of Rs. 83,49,099.65 ps. was mentioned in the order. However, the Court disposed of the application by keeping it open for the petitioners to convince the Department about the amount and for the Department to verify the amount. In the instant case it appears that there does not se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 39. The Assistant Collector, as per his order dated September 1, 1988, disapproved the classification and held that the products were classifiable under Chapter 39. The petitioners preferred appeal before the Collector (Appeals) who decided in favour of the petitioners as per order dated March 21,1989, and directed that decorative laminated sheets be classified under sub-heading 4848.90 and Industrial laminated sheets under sub-heading 8546.00. The Collector (Appeals) also directed to grant consequential relief. The department preferred appeal No. E/2499/89-C before CEGAT and challenged the order passed by the Collector. 7.1On March 29, 1989 the petitioners filed refund claim for the period commencing from March 1, 1986 to January 31, 1989, pursuant to the order passed by the Collector (Appeals). The Assistant Collector rejected the refund claim as per his order dated June 26, 1989. The Collector (Appeals), as per order dated September 28, 1989 allowed the appeal filed by the petitioners against the order rejecting the refund claim passed by the Assistant Collector. CEGAT, by common order dated October 4, 1989 [1990 (49) E.L.T. 75 (Tri.)] disposed of a group of appeals (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the order dated February 19, 1990. Petitioner No. 1 firm and its partners filed undertaking on December 10, 1994 and have undertaken to refund the amount received by them to the respondents in case they lose in the petition. 8.2In special civil application No. 960/90, though the petitioners received the amount, no undertaking was filed till December 8, 1994. It was submitted that the undertaking was filed earlier. Thereupon the learned Counsel for the petitioners was handed over the entire record of the Court. But he was not able to point out any such undertaking from the record of the petition, nor any proof of undertaking having been filed earlier was produced. Ultimately undertaking dated December 9, 1994 was filed. Again, that was not in terms of the interim order passed by this Court. Therefore further undertaking has been filed by the petitioners on December 10, 1994. By this undertaking the petitioner-Company and its Directors have undertaken to refund the amount received by the petitioners pursuant to the interim order dated February 19, 1990 passed by this Court. 8.3In special civil application No. 965/90 no undertaking was filed by the petitioners pursuant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order of attachment of the property belonging to the petitioners shall remain in force, and that the Department may not proceed further pursuant to the order of attachment and for effecting coercive recovery for a period of fifteen days from today. 9.Learned Counsel for the petitioners submit that all these petitions are for seeking compliance of the order of CEGAT and or other departmental authority which passed the order as regards classification of the articles in question. In his submission, as per unamended provisions of section 11-B(3) of the Act which remained in force upto September 20, 1991, no application for refund of the amount was required to be submitted. In his submission there were three alternatives for seeking refund of the excise duty paid, namely: (i) seeking refund as per the unamended provisions of Section 11-B(3) of the Act which inter alia provided that when an assessee succeeds in appeal the consequential relief was required to be granted by the officer concerned without insisting upon separate application for refund; (ii) refund sought on the ground that the amount was paid under mistake of law and the mistake was discovered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is required to be decided on the basis of the law as it exists today. In this view of the matter we do not discuss this point any further. 11.In the case of Titagarh Paper Mills Co. Ltd. (supra), it appears that the Collector (Appeals) had passed order of refund. Since it was not being carried out the High Court of Calcutta appears to have been moved. The High Court directed on August 16, 1991 that the order of the appellate authority be carried out within a period of three weeks. That was not carried out. It was submitted that in view of the amended provisions of section 11-B which came into force on September 20, 1991 it was not carried out within three weeks as directed. Therefore application was made by the Department for modification or order dated August 16, 1991 in view of the amending section 11-B of the Act which has come into force on September 20, 1991. Learned single Judge of the Calcutta High Court came to the conclusion that the amended provisions of section 11-B had no effect of nullifying the order dated August 16, 1991. Learned single Judge held that the application was mala fide. The learned single Judge also held that the proviso to amended section 11-B(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities, after the interim mandatory order passed by this Court, should not be disturbed, and it should be held as conclusive. 14.The aforesaid submission cannot be accepted. First of all, the very dispute with regard to classification of the article manufactured by the petitioners is pending before the Hon'ble Supreme Court. It is an undisputed position that against the judgment and order passed by CEGAT in a group of matters, appeals are preferred before the Hon'ble Supreme Court [Civil Appeals No. 3182/90 to 3202/90 - since reported in 1997 (91) E.L.T. 13 (S.C.)], and they are pending before the Hon'ble Supreme Court. Therefore, still there is no finality attached even to the question of classification of the article manufactured by the petitioners. Hence it is too much to urge that the refund claim which is made and which has been decided pursuant to the interim orders passed by this Court should be treated as final. 15.It must be noted that the departmental authority has passed order granting refund because this Court passed mandatory interim direction. This Court gave direction to grant refund subject to the conditions mentioned in the order. Initially for a stipulated p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitions is that the petitioners have succeeded in appeal before CEGAT. But that does not mean that the petitions are for execution of the order passed by CEGAT. This High Court does not sit as an executing Court for seeking execution of the order passed by the statutory authority. The petitions, as stated hereinabove, are for a writ of mandamus. It may be that grant of writ of mandamus may result into compliance with the order passed by the Statutory authority, but on that ground it cannot be said that the petitions are for execution of the order passed by CEGAT. The petitions, in form as well as in substance are for claiming refund of the amount of excise duty, which according to the petitioners was erroneously recovered from them on account of wrong classification of their product, i.e. decorative laminated sheets. 18.Learned Counsel for the petitioners submitted that there was no need for making formal application, claiming refund, to the Assistant Collector when the direction of granting consequential relief was issued by the appellate authority. This submission is based on the unattended provisions of sub-section (3) of section 11-B of the Act. In support of this submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 1988 (33) E.L.T. 648 (All.); (ii) ITC Ltd. v. M.K. Chipkar, reported in 1985 (22) E.L.T. 334 (Bom. DB); (iii) New India Industries Ltd. v. Union of India, reported in 1990 (46) E.L.T. 23 (Bom.); (iv) Asst. Collector v. Andhra Fertilizers Ltd., reported in 1987 (32) E.L.T. 343 (A.P.); (v) Union of India v. Arpai Incorporated, reported in 1989 (40) E.L.T. 311 (Bom.); (vi) Alembic Glass Ltd. v. Union of India, reported in 1990 (48) E.L.T. 232 (Kar.). However, the aforesaid question does not directly arise in these petitions. Even if the question were to be considered as to whether the doctrine of unjust enrichment would be applicable or not, and as to whether the petitioners claiming restitution on the ground that the amount is paid under mistake of law or under coercion, are required to prove any loss or injury to them, has been decided by series of decisions of this High Court in the following cases : (1) Union of India v. Tata Chemicals Ltd., reported in 1983 (12) E.L.T. 776 (Guj.) (Division Bench); (2) Union of India v. New India Industries Ltd., reported in 1983 (14) E.L.T. 1763 (Guj.) - (Division Bench); (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but who has not suffered the burden of the tax), it would amount to permitting taxation by private individuals. This could never be done by the Court while exercising powers under Article 226 of the Constitution of India. It would amount to perversion of the Constitution rather than enhancing the objects and ideals of the Constitution. 20.In view of the aforesaid settled legal position, as far as this High Court is concerned, the petitions under Article 226 of the Constitution of India cannot he entertained unless the petitioners prove entitlement to claim refund. Unless entitlement to claim the refund is pleaded there would be no cause of action in favour of the petitioners. There would not be any cause of action in favour of the petitioners unless all the three ingredients stated hereinabove in para 19 are pleaded and proved. This is the position of law laid down by this Court in the case of Dhrangadhra Municipality (supra). In the instant case there is no pleading to the effect that the incidence of tax has not been passed on to the consumers. There is no pleading that the State will be unjustly enriched and that too at the expense of the petitioners. Therefore on this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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)." After referring to the aforesaid provision the Supreme Court negatived the contention that the amended provisions of Section 11B can be applied only prospectively, i.e. to refund claims made after the introduction of the amendment and would not apply to pending cases and refund claim filed prior thereto. The Supreme Court held that even if the amount of refund was paid by the Department pursuant to order of the High Court, then even it could not be said to be final inasmuch as the appeal was pending before the Supreme Court and the amount was paid or ordered to be paid on certain conditions imposed by the High Court. The Hon'ble Supreme Court also held that since the order passed by the High Court directing refund was pending final adjudication by the Hon'ble Supreme Court when the amended provision of Section 11B(2) of the Act came into force with effect from September 20, 1991, the case would be governed by the amended provisions of the Act. 23.Similarly in this case also presumption raised in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erim arrangement. Interim order made by this Court is subject to the final order. In view ot the decision of the Hon'ble Supreme Court in the case of Jain Spinners (supra) and in I.T.C. Ltd., (supra), after amending Act No. 40 of 1991, even the High Court has no jurisdiction to pass any order of refund. 25.It is ought to be contended that the refund claim made by the petitioners has been finally concluded by the order passed by the departmental authorities pursuant to the interim order dated February 19, 1990 passed by this Court in each petition. This contention can never be accepted. The order of refund passed is subject to the final order that may be passed by this Court in all the petitions. Interim orders that may be passed by the Court are always subject to the final orders that may be passed by the Court at the time of final hearing of the case. Moreover, in all these cases this becomes evident by the fact that the Court imposed condition of filing undertaking in each case by concerned petitioners Company and its Directors to the effect that they shall restore the amount to the respondent in case they lose in the petition. The petitioners have filed such undertakings also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Procedure apply, interest is part of the normal relief given in restitution. We do not see any reason why this principle of restitution which governs the proceedings to which the provisions of Code of Civil Procedure apply, be not applied to the proceedings in which writ jurisdiction of the High Court under Article 226 of the Constitution of India is invoked. The Court cannot permit any party to suffer on account of its order. It is settled principle of law that no one should suffer on account of the orders of the Court. It is one of the first and highest duty of the Courts to take care that the act of the Court does no injury to any of the parties. 28.In this connection reference may be made to a decision of the Division Bench of the Delhi High Court in the case of Parekh Prints v. Union of India, reported in 1992 (62) E.L.T. 253 (Del.). In that case the petitioners who were job processors doing job work of cotton/man-made fabrics had obtained interim relief at the time of filing of petition under Article 226 of the Constitution of India. As per the interim relief granted, they did not pay part of the amount of excise duty which would have been otherwise payable by them. The Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court has inter alia observed that the Court in making restitution is bound to restore the parties, so far as they can be restored, to the same position they were in at the time when the Court by its earlier action had displaced them from. 30.In all these cases, in our opinion, if the petitioners are directed to refund the amount received by them with 18% interest it would meet the ends of justice. It may be noted that in the year 1990 when the petitioners obtained the interim relief from this Court, the bank rate of interest for commercial loans was to the extent of 21%. Moreover, the banks charge interest with quarter yearly rest. In view of this position when interest is awarded at the rate of 18% it would come to around 15% to 16% as far as bank loans are concerned. Therefore, if the petitioners are directed to pay the amount with 18% interest, in facts and circumstances of the case, it would be just and proper. Moreover, even the petitioners have considered rate of interest at 18% per annum as just and proper, and that must be the reason that the petitioners have claimed refund of the amount of excise duty with interest at 18% per annum. For this reason also we thin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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