TMI Blog2013 (6) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... orized. Refund - period of limitation - held that:- The contention of the petitioners that, therefore, in view of Section 17(1)(c) of the Limitation Act, 1963, such refund claim made within three years from the detection of the mistake should be entertained, must be rejected. It is a case where the duty was collected without any authority of law. Such collection of duty is not illegal or unlawful or irregularly collected Customs duty under the Customs Act, but a duty collected without authority of law and therefore opposed to Article 265 of the Constitution of India and is thus unconstitutional. In that view of the matter, the petitioners cannot be bound by the limitation prescribed in the Customs Act, 1962 for claiming refund of excess duty or duty collected illegally. The period of limitation prescribed under the Limitation Act would apply. Unjust enrichment - held that:- The Apex Court in the case of Mafatlal Industries & Ors. v. Union of India & Ors. (1996 (12) TMI 50 - SUPREME COURT OF INDIA) having taken note of such decisions, has held that in every case of refund of duty even if the same is on the ground of the provisions under which such duty was collected having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs is that such demand and levy of additional duty was wholly unauthorized, illegal and unconstitutional. Stated in brief, the petitioners contend that under Section 6 of the Coal Mines Act, the authorities had power to collect only additional duty over and above excise duty on the excisable goods and therefore, any notification issued under Section 6 of the Coal Mines Act would not permit the customs authorities to collect any such additional duty on the imported goods. The petitioners point out that Section 7 of the Coal Mines Act prescribed such additional duty on imported goods. When no notification under Section 7 of the Coal Mines Act was issued the authorities did not have any authority to collect such duty on the imports made by the petitioners. It is not in dispute that the petitioners paid the entire duty on the imports made from time to time and never challenged the levy thereof. 2.3 It would be useful to take note of contents of such notifications which read as under : In exercise of the powers conferred by sub-section (1) of Section 6 of the Coal Mines (Conservation Development) Act, 1974 (28 of 1974) and in supersession of the notification of the Govt. of India i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description Rate of Excise duty per tonne (1) (2) Coking/non-coking coal Rs. 10.00 (Rupees ten only) 2.4 We may notice that the department has been collecting such duty under said two separate notifications. As noted in the first notification No. S.O. 95(E) dated 8-2-1983 it was provided that on the excise duty payable by the manufacturer, additional duty shall be levied on coal of the description specified in that table at the rates specified therein. For coking coal, the rate specified was Rs. 4.25 per tonne and for non-coking coal, such rate was Rs. 3.50 per tonne. In the subsequent notification dated 25-6-2003, such rates were revised to Rs. 10/- per tonne for coking as well as non-coking coal. 2.5 The petitioners point out that the Supreme Court in the case of Commissioner of Central Excise Customs, Bhubaneswar-I v. Tata Iron Steel Co. Ltd., (2003) 12 SCC 150 = 2003 (154) E.L.T. 343 (S.C.), examined the validity of collection of such duty under the Coal Mines Act held that in absence of any notification issued under Section 7 of the Coal Mines Act, no additional duty could be levied. 2.6 At one stage, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel further submitted that the petitioners had not passed on the burden of this duty on the consumer. He submitted that coal is used for energy generation for manufacturing of cement. It is not a component and, therefore, there would be no question of passing on the burden of such additional duty on the consumer. The learned counsel submitted that during the period under consideration, the Company was running losses. For this purpose, he relied on the certificate of the Cost Accountant, which is produced on record by the petitioners. 7. In addition to the decision in the case of Central Excise Customs, Bhubaneswar-I v. Tata Iron Steel Co. Ltd. (supra), the counsel relied on the following decisions : (i) In the case of Shree Baidyanath Ayurved Bhawan Pvt. Ltd. v. State of Bihar Ors., 1996 (6) SCC 86 = 1996 (88) E.L.T. 27 (S.C.), wherein the Apex Court observed that writ petition for refund of tax illegally collected was maintainable. He pointed out that the Apex Court finding that the writ petition was filed within two months of the decision of the Supreme Court, held that such petition was within time. (ii) In the case of Godavari Sugar Mills Limited v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted above and relied upon by the department for collection of such duty have been issued in exercise of powers under Section 6 of the Coal Mines Act and referred to as collection of excise duty. In that view of the matter, the entire collection of additional duty in the name of Customs duty was wholly unauthorized. Even the department dropped the demand in the order dated 30th September, 2005 passed by the Assistant Commissioner of Customs, Jamnagar. Such order, we are informed, was never challenged. In any case the decision of the Apex Court being amply clear and squarely covering the case of the petitioners, we have no hesitation in holding that the entire levy of the duty was without authority of law. 12. The question is to what extent and under what circumstances, can the petitioners claim refund. The fact that the petition is maintainable for such refund can hardly be disputed. The duty has been declared illegal by the Supreme Court. The petitioners claim that in view of such decision they are entitled to refund of such illegally collected duty. Can such a claim, however, be made at any point of time without reference to limitation, is a question, which is required to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law will presume that he knew the exact ground of unconstitutionality. It was held that it was a duty of the petitioner to have brought the matter before the Supreme Court for consideration. It is of course true that in such decision, the petitioner had earlier questioned the levy but failed before the High Court and had, thereafter, sought refund on the ground that in another case, the Supreme Court had declared the statute under which such duty was collected as unconstitutional. 16. Quite apart from the above two significant decisions of the Constitutional Benches of the Supreme Court, the entire issue is now well settled by the later decision of a Larger Bench of nine judges in the case of Mafatlal Industries Ors. v. Union of India Ors., (1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.). The Larger Bench was constituted in view of the correctness of the Constitution Bench in the case of The Sales Tax Officer, Banaras Ors. v. Kanhaiya Lal Makund Lal Saraf, AIR 1959 SC 135, being doubted. The Apex Court examined various aspects touching the refund claims arising out of indirect tax laws such as Central Excise and Customs Acts. The Hon ble Justice B.P. Jeevan Reddy, speaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out reopening such assessment/order on the ground of a decision in another person s case. Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well-established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Act, 1963 has no application to such a claim for refund. 17. The contention of the petitioners that, therefore, in view of Section 17(1)(c) of the Limitation Act, 1963, such refund claim made within three years from the detection of the mistake should be entertained, must be rejected. 18. Undisputedly, the collection of the duty was not only illegal but wholly unauthorised. The question is to what extent the refund claim can be maintained. 19. The Coal Mines Act was enacted to provide for the conservation of coal and development of coal mines and for matters connected therewith and incidence thereto. Section 6 of the Coal Mines Act pertains to imposition of Excise duties and reads as under : Section 6 : (1) With effect from the appointed day, there shall be levied and collected on all coal raised and dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the owner of coal mine, to whom money is disbursed under Section 9, shall open a separate account to be known as the Coal Mine Conservation and Development Account and shall credit to the said account all sums so disbursed. Sub-section (2) of Section 10 provides that the money standing to the credit of the Coal Mine Conservation and Development Account, shall be applied to the following purpose; (a) the furtherance of the object of this Act; (b) the acquisition of stowing or other materials needed for stowing operations in coal mines; (c) the execution of stowing and other operations in furtherance of the objects of this Act; (d) the prosecution of research work connected with the conservation, development and utilisation of coal and safety in coal mines; (e) the planning and development of coal mines in a scientific manner; and (f) any other expenditure which the Central Government may direct to be defrayed out of the money standing to the credit of the Account. 20. From the above, it can be seen that the Coal Mines Act is enacted for the purpose of conservation of coal and development of coal mines. For such purpose, Sections 6 and 7 envisaged collection of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed in the Customs Act, 1962 for claiming refund of excess duty or duty collected illegally. The period of limitation prescribed under the Limitation Act would apply. 24. The last question that remains is with respect to unjust enrichment. The principles of unjust enrichment though have been statutorily included in Customs and Central Excise Acts, even in absence of such statutory provisions, the constitutional courts in India have been applying such principles in case of collection of indirect tax where such burden may have been passed on to the ultimate consumer. It is not necessary to refer to large number of decisions in this respect. The Apex Court in the case of Mafatlal Industries Ors. v. Union of India Ors. (supra) having taken note of such decisions, has held that in every case of refund of duty even if the same is on the ground of the provisions under which such duty was collected having been declared unconstitutional, the duty would be on the person, claiming refund, to establish that the incidence of such duty was not passed on to any other person. In Mafatlal Industries case (supra) the Apex Court in Para 108 held and observed as under. A claim for refund, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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