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TMI Blog2021 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... ,510/- was paid by the petitioner on 21.03.2001 "under protest" pending disposal of the above appeals before the Hon'ble Supreme Court in C.A.Nos.3558 and 3559 of 2000 as the Hon'ble Supreme Court had merely ordered notice on the respondents while admitting the appeal on 17.07.2000. The stay petition filed by the petitioner against Final Order Nos. 203-205 dated 07.02.2005 of the CEGAT was also dismissed on 6.11.2000. 4. Under these circumstances, a recovery notice was issued on 29.09.2000 to the petitioner, which called upon the petitioner to pay the aforesaid amount. Therefore, the petitioner paid the aforesaid amount "under protest" on 21.03.2001. Eventually, the Hon'ble Supreme Court allowed the appeal filed by the Petitioner on 07.04.2005. Under these circumstances, the petitioner approached the respondents and thereafter before this Court in the present writ petition. 5. The facts relevant to the present case are detailed hereinafter. The petitioner had earlier imported certain machineries for its printing purpose and availed the benefit of Customs Notification No.114/1980-Cus dated 19.6.1980. 6. The petitioner filed 3 bills of entries. These bills of entries were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of the capacity of the imported machines and not their actual production. The show cause notice had also been issued on this basis. The Tribunal, on the other hand, has categorically rejected the "capacity test" and has come to the conclusion that the capacity was irrelevant. It held that the interpretation of the notification in fact shows that the only test was whether the output of a machine in one hour was 30,000 copies per hour in actuality and not whether the machine was designed or capacity of X or Y at speeds P & Q." 14. Pursuant to the favourable disposal of the above appeals on 31.03.2005 by the Hon'ble Supreme Court, the petitioner preferred a refund claim before the 2nd respondent on 18.05.2005. The office of the Deputy Commissioner of Customs therefore issued letter dated 06.01.2006 and called upon the petitioner to furnish their books of account from the date of payment of aforesaid amount till date for ruling out bar of unjust enrichment under Section 27 of the Customs Act, 1962. 15. The petitioner resisted the aforesaid attempt and tried to establish before the Deputy Commissioner of Customs that the amount that was paid by it was merely a pre-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty at later date holds no good." 20. Under these circumstances, the petitioner filed an appeal before the 1st respondent Commissioner of Customs (Appeals). Vide impugned order in Appeal No.C.CUS.844/06 dated 21.11.2006 bearing reference No.C3/659/R/2006-SEA, the 1st respondent remanded the case back to the 2nd respondent to decide the issue de novo on the ground as to whether the incidents customs duty had been passed on to the consumer or not. 21. Pursuant to Order-in-Appeal No.C.CUS.844/06 dated 21.11.2006 bearing Reference No.C3/659/R/2006-SEA of the 1st respondent Commissioner of Customs (Appeals), the office of the Deputy Commissioner of Customs (Refunds) vide communication dated 29.11.2006 also called upon the petitioner to produce documentary evidence to substantiate that there was no "unjust enrichment". 22. Aggrieved by the impugned Order in Appeal No.C.CUS.844/06 dated 21.11.2006 bearing Reference No.C3/659/R/2006-SEA passed by the 1st respondent, the petitioner has filed this writ petition to quash the order of the 1st respondent and to consequently direct the respondents to refund the amount paid by the petitioner pending disposal of the appeals before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi.ModipinFibre Co., Vs Commissioner of Central Excise, Ghaziabad, 2004 (173) E.L.T. 168 (Tri. - Del.) xvii.Plas Pack Industries Vs Commissioner of Customs & Central Excise, Ahmedabad, 2004 (167) E.L.T 422 (Tri. - Mumbai) xviii.Silwester Textiles Pvt. Ltd., Vs Commissioner of Central Excise, Mumbai, 2003 (156) E.L.T. 216 (Tri. - Mumbai) xix.Commissioner of Customs, Ahmedabad Vs Mahalaxmi Exports, 2009 (233) E.L.T. 105 (Tri. - Ahmd.) xx.Commissioner of Customs Vs Mahalaxmi Exports, 2010 (258) E.L.T. 217 (Guj.) xxi.Commissioner of Central Excise, Pune Vs Rocket Engineering Corporation Ltd., 2014 (306) E.L.T. 33 (Bom.) xxii.Commissioner of Central Excise, Chandigarh Vs Modi Oil & General Mills, 2007 (210) E.L.T. 342 (P & H) xxiii.Commissioner of Customs, Cochin Vs Shree Simandar Enterprises, 2012 (283) E.L.T. 369 (Ker.) 26. He also referred to the few other decisions of this Court in Commissioner of Central Excise Vs UCAL, 2014 (306) ELT 26 and several decisions of the Tribunals, wherein, amounts paid pending appeals were ordered to be refunded. 27. The learned counsel for the petitioner specifically relies on the decision of the Hon'ble Gujarat High Court in Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court had declined to grant stay in Civil Appeal Nos.3558-3559 of 2000 vide order dated 06.11.2000. 35. He therefore submits that the amount paid by the petitioner vide Miscellaneous Challan on 21.03.2001 was not a "refund of duty or interest" under Section 27 of the Customs Act, 1962 during the material time and therefore the question of invoking unjust enrichment did not apply. 36. It was further submitted that it was not even necessary to file an application for refund as per circular dated 02.01.2002 bearing reference No.C.B.E. & C Circular F. No.275/37/2000-CX.8A of the Central Board of Excise and Customs. 37. The learned counsel for the respondent Mrs.Apaarna Nandakumar submits that the amount which was paid by the petitioner in the year 2001 was not a pre-deposit within the meaning of Section 129E of the Customs Act, 1962 and therefore the amount paid by the petitioner has to pass a mandatory test of "unjust enrichment" as is contemplated under Section 27 of the Customs Act, 1962. 38. In this connection, the learned counsel for the petitioner drew my attention to few passages from the decision of the Hon'ble Supreme Court in the case of Mafatlal Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or refund by the proper officer under Rule 9B. 40. She also drew my attention to the decision of the Gujarat High Court in Ajni Interiors Vs. Union of India and Ors., MANU/GJ/1628/2019. She submits that the Gujarat High Court has taken a contra view while dealing with a similar circumstances. She submits that view was recently affirmed by the Hon'ble Supreme Court by its order dated 20.2.2020 while dismissing the appeal of the assessee therein in SLP (Civil) Diary No.3952 of 2020 reported. She therefore submits that the decision of the Gujarat High Court in Gujarat Insecticides Ltd., Vs. Union of India, 2005 (183) E.L.T. 9 (Guj.) though affirmed by the Hon'ble Supreme Court earlier cannot be taken as a binding precedent. 41. The learned counsel for the respondent therefore submitted that the amount that was paid during the pendency of the appeals before the Hon'ble Supreme Court was not a pre-deposit. It was a "duty" paid "under protest" and therefore the petitioner had also rightly made a refund claim on 13.04.2005. 42. It is submitted that even in the said letter the petitioner had clearly stated that the amount that was to be refunded was the "customs duty" amounting to a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnate remedy exist. It would be unfair to relegate the petitioner to an alternate remedy at this distant point of time after a lapse of 13 years since the filing of this writ petition either to CESTAT or to the 2nd respondent to comply with the directions of the 1st respondent in the facts of this case. Hence, this case is examined on merits and disposed. 49. Before dealing further, I shall proceed to deal with the objection of the learned counsel for the respondents based on the decision of the Gujart High Court in Ajni Interior Vs. Union of India MANU/GJ/1628/2019. 50. The Court there dealt with a facts situation where the amount was deposited pending investigation and not during the pendency of the appeal. The amount was not paid "under protest". Therefore, the Hon'ble Gujrarat High Court rejected the prayer for refund. 51. Therefore, it cannot be said that the said decision was an authority to hold that amount paid pending investigation was an amount paid pending disposal of the appeal. 52. The Hon'ble Supreme Court in para 92 in Mafatlal Industries Vs UOI, 1997 (89) ELT 247 : (1997) 5 SCC 536 has observed as follows:- 92. ...........Now, where a person proposes to conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent period as well. It is incorrect to suggest that the disputes regarding classification, valuation and claims for exemptions are fought only for refund; it is for more substantial reasons, though the prospect of refund is certainly an added attraction. It may, therefore, be not entirely right to say that the prospect of not getting the refund would dissuade the manufacturers from agitating the questions of exigibility, classification, approval of price lists or the benefit of exemption notifications. The disincentive, if any, would not be significant. In this context, it would be relevant to point out that the position was no different under Rule 11, or for that matter Section 11- B, prior to its amendment in 1991. Sub-rules (3) and (4) of Rule 11 (as it obtained between 6-8-1977 and 17-11-1980) read together indicate that even a claim for refund arising as a result of an appellate or other order of a superior court/authority was within the purview of the said rule though treated differently. The same position continued under Section 11-B, prior to its amendment in 1991. Sub-sections (3) and (4) of this section are in the same terms as sub-rules (3) and (4) of Rule 11; i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay. Such a situation, the learned counsel point out, is neither in the interest of law nor in the interest of consumer or the larger public interest. It is accordingly submitted that it would be just and proper that the amended Section 11-B is held not to take in refund claims arising as a consequence of appellate or a superior court order. 56. It must be also recalled in the aforesaid decision of the Gujarat High Court in Ajni Interior Vs. Union of India, MANU/GJ/1628/2019 referred to supra, the decision of the Hon'ble Supreme Court in Mafatlal Industries Ltd Vs. UOI, 1997 (98) ELT 247 : (1997) 5 SCC 536 has not been taken note, wherein, it has clearly held that "Now, where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would naturally pay the duty, whenever he does, under protest. It is difficult to imagine that a manufacturer would pay the duty without protest even when he contests the levy of duty, its rate, classification or any other aspect. If one reads the second proviso to sub-section (1) of Section 11-B along with the definition of "relevant date", there is no room for any apprehension of the kind expressed by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96) 82 ELT 177 (Bom), the Bombay High Court had held that the claim raised by the Department in the show cause notice is thoroughly dishonest and baseless. It held that in respect of a deposit made under Section 35-F, provisions of Section 11-B can never be applicable. A deposit under Section 35-F is not a payment of duty but only a pre-deposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief. 62. The decision of the Bombay High Court was challenged before the Hon'ble Supreme Court. The view was followed / approved in Mahavir Aluminium Vs. CCE, (1999) 6 SCC 65 , in Commr. of Customs (Import) Vs. Finacord Chemicals (P) Ltd., (2015) 15 SCC 697, in Commr. of Customs (Import) Vs. Finacord Chemicals (P.) Ltd., (2015) 15 SCC 697 and few other decisions. 63. The dicta / ratio of the Bombay High Court Suvidhe Ltd. Vs. Union of India, (1996) 82 ELT 177 (Bom) was affirmed by the Hon'ble Supreme Court in Union of India Vs. Suvidhe Ltd., (2016) 11 SCC 808. 64. In fact, the Central Board of Excise and Customs accepted the decision of the Bombay High Court in Suvidhe Ltd. Vs. Union of India, (1996) 82 ELT 177 (Bom) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Suvidhe Ltd. and Mahavir Aluminium that the law relating to refund of pre-deposit has become final. 3. In order to attain uniformity and to regulate such refunds it is clarified that refund applications under Section 11 B( 1) of the Central Excise Act,1944 or under Section 27(1} of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested xerox copy of the order-in-appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested xerox copy of the Challan in Form TR 6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant / Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the purpose. All pending refund applications already made under the relevant provisions of the Indirect Tax Enactments for return of such deposits and which are pending with the authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly. bank guarantees executed in lieu of cash deposits shall also be returned. 4. The above in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. It cannot be said that the Hon'ble Supreme Court has laid down a proposition of law on the other provisions of the respective Acts. 68. No order was required either under Section 129E or Section 35F of the respective enactments for deposit the disputed duty or penalty as a condition for hearing the appeal. Only when a person seeks for waiver or partial waiver, an order was required to be passed. These provisions have been liberalized in 2014. Now the maximum amount of pre-deposit has now been capped to 7.5% at the stage of first appeal and 10% at the stage of second appeal before the CESTAT. 69. When the appeals were filed by the petitioner before the Hon'ble Supreme Court, the petitioner was enjoined to pay the sums due to the Government as a result of an order passed under sub-section (1) of Section 129-B of the Customs Act, 1962 and 35C of Central Excise Act, 1944 in accordance with the order so passed by CESTAT. 70. As per these provisions, notwithstanding a reference has been made to the High Court or to the Supreme Court or an appeal has been preferred to the Supreme Court under the Act, Section 131 of the Customs Act, 1962 and/or Section 35N of the Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the amounts paid during the pendency of the appeals before the Hon'ble Supreme Court has to be construed as having paid "under protest" for the purpose of Section 131 of the Customs Act, 1962 in a similar manner under Section 265 of the Income Tax Act, 1961 and refund of such amounthas to be considered outside the purview of sting of "unjust enrichment" in Section 27 of the Customs Act, 1962. 79. Further, the question of subjecting a person to the rigours of "unjust enrichment" under the aforesaid provisions of the Customs Act, 1962 is attracted only where a refund claim is made on the duty paid or interest borne. 80. Section 27 of the Customs Act, 1962 as it reads could be pressed into service only in the case of refund of the any amount paid as "duty" in pursuance of an order of assessment or on the interest borne thereon by such person. 81. It must be also recalled that Section 17 of the Customs Act, 1962 provides a machinery for assessment of duty. Under the scheme of the Act, customs duty is payable only pursuant to an order of assessment or final assessment where pre-assessment is resorted under Section 18 of the Customs Act, 1962. 82. Section 18 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded under Rule 9-B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11-B. It follows logically that position would be the same in the converse situation. 85. In order to get over the situation arising out of observation in paragraph No.104 of Mafatlal Industries Ltd. case referred to supra, the Central Government brought an amendment to Sub-Rule (5) of Rule 9B of the Central Excise Rules,1944 vide Notification No.45/99-CE (NT) dated 25-6-1999, by adding a proviso thereto. 86. The effect of the proviso was that even after finalisation of the provisional assessment under Rule 9-B(5), if it is found that an assessee was entitled to refund, such refund shall not be made to him except in accordance with the procedure established under sub-section (2) of Section 11-B of the Act. 87. In CCE Vs. TVS Suzuki Ltd., (2003) 7 SCC 24, the Hon'ble Supreme Court held that "Merely because the departmental authorities took a long time to process the application for refund, the right of the assessee does not get defeated by the subsequent amendment made in Sub-Rule (5) of Rule 9-B. 88. It was held that the Commissioner of Central Excise and CEGA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. UOI, 1997 (98) ELT 247 : (1997) 5 SCC 536 was only concerned with the constitutional validity of the twin amendments to Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1962 in 1991. 95. The Hon'ble Supreme Court was really not concerned with the assessment procedures under the respective enactments. However, in the course of discussion while upholding the constitutional validity of the amendments to Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1927, the Hon'ble Supreme Court has made several observations while attempting questions and answers that were posed by the counsel for the manufacturer and importers.Therefore, all the observations in the said decision cannot be considered to have laid down the law. 96. It is to be also noted that the Hon'ble Supreme Court in Mafatlal Industries Ltd Vs. UOI, 1997 (98) ELT 247 : (1997) 5 SCC 536 did not examine the specific issue from perspective of Section 129E and Section 131 of the Customs Act, 1962 and Section 35F and 35N of Central Excise Act, 1944. 97. Therefore, not all observation of the Hon'ble Supreme Court can be said to have laid down the law as the Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the akin provisions under Section 35F and 35N of the Central Excise Act, 1944. 103. A supplementary issue which fell for consideration was whether the doctrine of "unjust enrichment" in Section 11B of the Central Excise Act 1994 was applicable to the facts of the case in CCE Vs. Allied Photographics India Ltd., (2004) 4 SCC 34, having regard to the fact that manufacturer had paid the differential disputed excise duty "under protest" from 01.03.1974 to 31.10.1984 after the assessment was finalized in favour in view of the judgment of this Court in Union of India Vs. Bombay Tyre International Ltd., (1984) 1 SCC 467 : 1984 SCC (Tax) 17 : AIR 1984 SC 420 and had passed to the incidence of the duty to the appellant who was a distributor of the manufacturer. 104. Thus, the point for determination before the Hon'ble Supreme Court in CCE Vs. Allied Photographics India Ltd., (2004) 4 SCC 34 was whether the respondent who was the distributor therein who had stepped into the shoes of the manufacturer who had earlier paid the duty "under protest" was entitled to refund without complying with Section 11B of the Central Excise Act, 1944. Answering this point, the Court held as follows:- "Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viewed having rendered contrary to the law in Union of India Vs. SuvidheLtd., (2016) 11 SCC 808. 106. Further, from a reading of the provisions, it is clear that only refund of "duty" or "interest thereon" under Section 27 of the Customs Act, 1962 are governed by the doctrine of "unjust enrichment" under Section 27 of the Customs Act, 1962. 107. Pre-deposits as a condition under Section 129E of the Customs Act, 1962 or under Section 35F of the Central Excise Act, 1944 are not governed by the Section 27 and 11B of the respective enactments. 108. In fact, even under the scheme of these two enactments, for payment of interest on delayed refund of "duty" and "interest thereon" are treated separately under Section 27A and Section 11B respectively of the respective enactments from payment of interest on refund of pre-deposit made under Section 129E of the Customs Act, 1962 or under Section 35F of the Central Excise Act, 1944 under Section 129EE and 35FF of the respective enactments. 109. In this case, though the amount paid by the petitioner on 21.03.2001 was not paid pursuant to any order under Section 129E of the Customs Act, 1962 of CESTAT, nevertheless, it is to be emphasised th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that the amount that was paid pending the appeals was pursuant to an order of assessment before clearance of the goods from the customs barriers. The imported goods were not assessed to duty provisionally under Section 18 of the Customs Act, 1962 and cleared later. Imported machines were assessed to duty under Section 17 and cleared on the duty assessed by the proper officer. 117. The amount that was paid by the petitioner was the amount that was affirmed as payable by the CESTAT pending the appeal before the Hon'ble Supreme Court. The amount that was paid "under protest" at the appellate stage was long after the imported goods were cleared and assessed to duty. The petitioner has not sought for refund of amount paid as duty under Section 17 of the Customs Act, 1962. There is no evidence to suggest that the imported goods were also sold to a third party. 118. Therefore, amounts deposited in terms of Section 131 of the Customs Act, 1962 or Section 35N of the Central Excise Act, 1944 has to be refunded without insisting on such importer or manufacturer satisfying the requirement of "unjust enrichment" as in the case of pre deposit under Section 129E of the Customs Act, 1927/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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