TMI Blog2004 (3) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... . They deal with assessees' invoice bearing a composite price. They are the cases which dealt with the claim of refund by the manufacturer. They did not deal with claim of refund by the buyer. Hence, they have no bearing on the facts of the present case. Before concluding, we may state that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. Hence, even on merits, the respondent has failed to make out a case for refund. Since relevant 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. - HON'BLE V.N. KHARE, C.J., S.B. SINHA AND S.H. KAPADIA, JJ. For the Appellant : A.K. Ganguli, S. Ganesh and Dushyant A. Dave, Sr. Advs. , Dileep Tandon, G. Venkatesh Rao, B. Krishna Prasad, Sandeep Narain, Narain, Anjali, Rohina Nath, Umesh Kumar Khaitan and Kum Kum Sen, Advs. For the Respondent : None Judgment S.H. Kapadia, J. 1. Finding inconsistenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Act. On 1-10-1975, the said Section 4 of the Act was amended and the concept of related person was introduced. On 11-11-1975, NIIL was asked by the Department to pay excise duty on the price charged by M/s. AGIL to its dealers. NIIL went in appeal which was dismissed on 21-9-1979. On 31-10-1984 the Department approved the ex-factory price of NIIL instead of the price list of M/s. AGIL to its dealers. Therefore, from 1-11-1984, NIIL started paying excise duty on the ex-factory price charged by NIIL to M/s. AGIL and not on price charged by M/s. AGIL to its dealers. On 11-8-1986, NIIL filed refund claims for Rs. 60,19,238.65 for recovery of excise duty between the period 1-11-1981 to 31-10-1984. On 29-9-1986 another refund claim for Rs. 42,77,358.59 was lodged for recovery of excise duty during the period 1-11-1978 to 31-10-1981. Similarly on 7-4-1987 another refund claim was lodged for excise duty paid in excess during the period 1-3-1974 to 31-10-1978 by NIIL amounting to Rs. 22,38,391.72. These refund claims were made in view of judgment of this Court in the case of Union of India Ors. v. Bombay Tyre International Ltd. reported in [1983 (14) E.L.T. 1896 (S.C.) = AIR 1984 SC 420 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide SLP No. 7484 of 1993. By order dated 30-1-1997, this Court disposed of the SLP observing that since NIIL had passed on the burden of excise duty to M/s. AGIL the refund claims filed by NIIL are liable to be rejected. Accordingly, the said SLP was dismissed. However it was clarified that the said Order will not prevent M/s. AGIL from adopting appropriate remedy as open to it in law. In view of the order dated 30-1-1997 passed by this Court, M/s. AGIL filed Writ Petition No. 1776 of 1993 in the High Court contending that the petitioners (AGIL) were entitled to refund of Rs. 1,25,34,988.97 as sole selling distributors of NIIL. That as distributors they (AGIL) were not related to NIIL. That their transaction was at arms length and therefore, the Department had erred in collecting excess excise duty from NIIL on the basis of the prices charged by M/s. AGIL to its dealers. In the Writ Petition, M/s. AGIL relied on the judgment of this Court in the case of Bombay Tyre (supra). By order dated 28-9-1993 passed by the High Court, the Department was allowed to withdraw Rs. 1,25,34,988.97 with undertaking to bring back the amount with interest as and when the Court so directs. In the meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of justice. Learned Counsel next contended that M/s. APIL as the sole distributor of NIIL had bought the products in the course of trading between 1974 and 1984 and had sold them to its dealers earning profits between 12.6535% to 21.1333%. That during the said period, the purchaser had no right to claim refund and that M/s. APIL became entitled to claim refund only after 20-9-1991 when Section 11B was amended by the Central Excise and Customs Amendment Act of 1991 when such right was recognised for the first time and, therefore, there was no reason for M/s. APIL not to pass on the burden to its dealers. That M/s. APIL not only passed on the burden to its dealers but even admittedly made profits on its sales. That the consideration paid by M/s. APIL to NIIL included excise duty and the very fact that M/s. APIL recovered all its expenses and made profits in all its sales to its dealers itself establishes that incidence of duty was passed on to the dealers by M/s. APIL in the course of its trading business. It was further urged that M/s. APIL had never moved any refund claim prior to 8-6-1990 and that it filed its affidavit on that day in response to suo moto notice issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it was held that the distributor could not be treated as a related person and accordingly the amounts paid by NIIL towards excise duty during 1974-84 were adjusted and appropriated against the amounts found payable on the said assessments and consequently the disputed amount of excess duty of 1.62% paid by NIIL under protest during the above period became refundable on the finalisation of NIIL's assessments in 1984. That neither NIIL nor M/s. APIL ever disputed the said assessments made in 1984 and M/s. APIL had based their refund claim on the said assessment. It was submitted that when a provisional assessment is made under the Act or when excise duty is paid under protest by the appellant, all payments of excise duty are on account payments which are to be adjusted and appropriated only on vacating of the protest or finalisation of assessment. In this connection, reliance was placed on Rule 9B(5) as it stood prior to its amendment in 1989 and Rule 233B(v) and (vi). In either situations, when the assessment is finalised or the protest is vacated and the account is settled between the appellant and the Department and the said on account payments made by the appellant ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2% in the form of the enhanced purchase price paid by it to NIIL and on the contrary, far from enhancing its sale prices, M/s. APIL granted discounts between 2% to 4% on the sale price charged by it to its dealers and this discount was more than the disputed differential amount of excise duty which came to 1.62% of the price. It was submitted that the case of M/s. APIL has been accepted by all the authorities below and that this Court should not interfere with the concurrent findings of fact recorded by the authorities below. In this connection it was submitted that the said findings were based on the audited accounts of APIL; certificate of Chartered Accountant, Sale Invoices of APIL and two affidavits filed on behalf of APIL. It was further urged that in the case of Mafatlal (supra) it has been held that where the claim for refund relates to the period from ...... to 20-9-1991, any evidence which reasonably shows that the disputed duty has not been passed on to the dealers/customers in the form of increased price would suffice and the claimant is not required to produce documents specified in Section 12A which has prospective operation. Hence, M/s. APIL (respondents herein) had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant date : Provided that the limitation of six months shall not apply where any duty has been paid under protest. Explanation. - For the purposes 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) 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 manufacture of such goods, - (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or (ii) if the goods are exported by land, the date on which such goods pass the frontier, or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid; (c) in the case of goods to which banderols are required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full information for the assessment of duty, but the proper officer deems it necessary to make further enquiry (including the inquiry to satisfy himself about the due observance of the conditions imposed in respect of the goods after their removal) for assessing the duty, the proper officer may, either on a written request made by the assessee or on his own accord, direct that the duty leviable on such goods shall, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally at such rate or such value (which may not necessarily be the rate or price declared by the assessee) as may be indicated by him, if such assessee executes a bond in the proper form with such surety or sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed. (2)... (3) The Collector may permit the assessee to enter into a general bond in the proper Form with such surety or sufficient security in such amount or under such conditions as the Collector approves for assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t means determination of the tax liability. Under the Act, duty was payable by the manufacturer on his own account. Hence, under Section 11B(1), such a person had to claim refund by making an application within six 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 Section 11B(1), therefore, shows that it refers to claim for refund as against making of refund by the proper officer under Rule 9B. 9. On 20-9-1991, the above Section 11B underwent a drastic change vide Central Excises and Customs Laws (Amendment) Act, 1991 (40 of 1991) (hereinafter referred to as the Amendment Act ). By the Amendment Act, the concept of unjust enrichment as undeserved profit was introduced. We reproduce herein below amended Section 11B :- Section 11B : Claim for refund of duty. Any person claiming refund of any duty of (1) 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 in such form and manner as may be presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the persons concerned to any other person. (3) Notwithstanding anything to the contrary(3) 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). Explanation. For the purposes of this section ... (B) relevant date means - (f) in any other case, the date of payment of duty. 10. According to Statement of Objects and Reasons for enacting the Amendment Act, the Public Accounts Committee recommended introduction of suitable legislation to amend the said Act to deny refunds in cases of unjust enrichment. Under the amended Section 11B(3) of the said Act, notwithstanding anything to the contrary in any judgment, decree, order or direction of the appellate Tribunal or any Court, no refund was to be made except in accordance with Section 11B(2) of the said Act. Further, there was substitution of sub-clause (e) to explanation B to Section 11B(1) by which the original sub-clause (e) was deleted and substituted by new sub-clause (e) under which in cases where duty has been passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to a refund, as the case may be . 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. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, 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. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) reagitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation. 11. At the outset it may be pointed out that in Para 104 there is nothing to suggest that payment of duty under protest does not attract bar of unjust enrichment. Para 104 only states that if refund arises upon finalisation of provisional assessment, Section 11B will not apply. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Mafatlal Industries Ltd. (supra). For above stated reasons, since there was failure to comply with Section 11B, the respondent was not entitled to refund. 13. The point which still remains to be decided is - whether the respondent herein was entitled to refund without complying with Section 11B of the Act on the ground that it had stepped into the shoes of NIIL (manufacturer) which had paid the duty under protest. It was argued on behalf of the respondent that NIIL had paid the excise duty under protest pending final assessment, which was ultimately decided in favour of NIIL and since NIIL had sold the product to the respondent herein, the respondent was entitled to the benefit of the second proviso to Section 11B(1) which inter alia stated that limitation of six months shall not apply where duty had been paid under protest. We do not find any merit in this argument. In the case of Bombay Tyre International Ltd. (supra), it has been held by this Court that Section 3 of the said Act is a charging section whereas Section 4 is a computation section which covers assessment and collection of excise duty. That the basis of assessment under Section 4 was the real value of exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11B will not apply. Para 104 of the said judgment does not deal with payment under protest. In the light of what is stated herein, we may now consider the judgment of this Court in the case Sinkhai Synthetics Chemicals Pvt. Ltd. (supra). In that matter, the assessee was a manufacturer. The assessee claimed exemption which was denied by the Department. The assessee went in appeal to CEGAT. Pending appeal, assessee paid excise duty under protest. The assessee succeeded before the CEGAT and claimed refund on 17-1-1991. Refund was denied by the Department. Therefore, it was a case of payment of duty under protest. However, in the said decision, this Court applied Para 104 of the judgment of the Constitution Bench in the case of Mafatlal Industries Ltd. (supra), which with respect, had no application. As stated above, Para 104 of the judgment in the case of Mafatlal Industries Ltd. (supra) dealt with refund consequent upon finalisation of provisional assessment. Para 104 does not deal with refund of duty paid under protest. As stated above, there is a difference under the Act between payment of duty under protest on one hand and refund consequent upon finalisation of provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Sema, JJ.], has referred the matter as stated above to the Larger Bench in the light of conflict which the Division Bench noticed between the earlier judgments of this Court on one hand and Paragraph 104 of the judgment of the Constitution Bench of nine-Judges in the case of Mafatlal Industries Ltd. (supra). Hence, by this judgment, we have clarified the position in law. 16. Having come to the conclusion that the respondent was bound to comply with Section 11B of the Act and having come to the conclusion that the refund application dated 11-2-1997 was time-barred in terms of Section 11B of the Act, we are not required to go into the merits of the claim for refund by the respondent who has alleged that it has not passed on the burden of duty to its dealers. Mr. Ganesh, learned Senior Counsel however submitted that this Court should not interfere, under Article 136 of the Constitution, in view of the concurrent finding of fact given by the authorities below that the respondent has not passed on the incidence of duty to its dealers. We do not find any merit in this argument. In May, 1974, the Department took the view that price declared by NIIL in its price list cannot be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improbable for a distributor to incur cost of purchase which included 20% element of duty in addition to the purchase price without passing on the burden to its dealers. From the record, it appears that during the disputed period 1974 to 1984, M/s. AGIL were in trading which further supports the above improbability. In the present case, there is no material placed on record by M/s. AGIL as to how it had accounted for the cost of purchase in its books and the accounting treatment it gave to the said item at the time of payment of the purchase price. No record as to costing of that item has been produced. This material was relevant as in the present case NIIL conceded that it had passed on the burden of duty to its distributor M/s. AGIL (buyer) and it was the buyer who claimed refund. It has been urged on behalf of the respondent and which argument has been accepted by the authorities below that 20% of the total price paid by M/s. AGIL to NIIL represented total excess excise duty levied and not the excess duty collected by NIIL in the form of sale price from its distributor M/s. NIIL. It was argued that excess duty collected by NIIL represented only 1.62% of the total price. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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