TMI Blog1993 (7) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... cigarettes affects excise duty under the Central Excises and Salt Act, 1944 (hereinafter the Act). The case of the respondent in the writ petition was that under a mistake of law regarding the true interpretation of Section 4(a) of the Act, it cleared its products but paid excess excise duty under the impression that the prices charged by the wholesale dealers to the secondary wholesalers would form the correct basis of assessment and not the price at which goods were sold to wholesale dealers. Consequent upon the judgment of this Court in the case of A.K. Roy v. Voltas Limited [1973 (3) SCC 503 = 1973 (2) SCR 1089 = 1977 (1) E.L.T.(J 177) ( S.C.)], wherein it was held that under Section 4(a) of the Act, the value for the purpose of assessment is required to be determined on the basis of the price at which the manufacturer sells the products to the wholesale dealers and not the price at which the wholesale dealers further make a sale of the product to secondary wholesalers, the respondents filed five applications before the appropriate authority under the Act seeking refund of the excess duty paid under mistake of law. Two applications pertained to the period 1-9-1970 to 28-5-1971 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made by the petitioners for the period September 1, 1970 to February 19, 1972 cannot be legally termed as payment of excise duty authorised by law as the authorities under the Act themselves did not treat the excess duty in identical circumstances paid for the subsequent period from February 20, 1972 to February 28, 1973, as authorised by law. The excess excise duty was not payable by the petitioners under the Act and there is a corresponding legal right in the petitioners to recover it. This right cannot be defeated by a mere limitation in the Act or the Rules when the collection is without the authority of law. The Department was directed to refund to the respondent the sum of ₹ 23,68,686.85 plus ₹ 26,21,356.16 or such other lesser sum as may be found on verification to be due within a period of six months from the date of the judgment i.e. April 12, 1982. Aggrieved, by the judgment of the High Court, the Department filed special leave petition and on 8-10-1982, special leave was granted. In the stay application filed by the Union of India, the Bench directed the appellant to pay to the respondent the amount which it was required to refund under the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The respondent realised the mistake after this Court in Voltas case (supra) laid down the correct basis for assessment in such cases. It has been settled by this Court that where excess duty was not payable by the party under the provisions of a statute but had in fact been paid under a mistake of law, the party has a right to recover it and there is a corresponding legal obligation on the part of the Government to refund the excess duty so collected because the collection in such cases would be without the authority of law. The payment and recovery of excess excise duty was thus on account of a mutual mistake. The Collector Central Excise (Appeals) accepted this position and allowed three refund applications but rejected the two applications as barred by limitation. The Department did not question the order of the Collector Central Excise (Appeals) granting three refund applications and that order acquired finality. The High Court in the writ petition filed by the respondent against the rejection of two refund applications found that the respondent could not be non-suited on the plea of limitation since the excess excise duty had been paid on account of mistake of law and set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , while disposing of the writ petition under Article 226 of the Constitution of India, was perfectly justified in holding that the bar of limitation which had been put against the respondent by the Collector Central Excise (Appeals) to deny them the refund for the period 1-9-1970 to 28-5-1971 and 1-6-1971 to 19-2-1972 was not proper as admittedly the respondent had approached the Assistant Collector of Central Excise soon after coming to know of the judgment in Voltas case (supra) and the assessee was not guilty of any laches to claim refund. 9. This now takes us to the basic question, viz. the right of the respondent to receive refund otherwise than in accordance with the provisions of Section 11B of the Act as amended by Act 40 of 1991, which amendments are aimed at preventing unjust enrichment . Learned Counsel for the appellants urged that the excise duty, being an indirect tax, is passed on to the consumers and therefore the respondent was not in law justified to claim refund since, it was not even stated by the respondent in its affidavit that they were going to return the amount to various consumers or that any consumer had in fact sought such a refund. Reference in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied and no interest be directed to be paid by the respondent. Placing reliance on the judgment in Tata Engnieering and Locomotive Company Ltd. v. Municipal Corporation of the City of Thane and Ors., JT 1991 (6) SC 322, it was urged that the plea of unjust enrichment be negatived and the appeal dismissed. 11. Let us first deal with the objection raised on behalf of the respondent that the plea based on Section 11B cannot be permitted to be taken during the hearing of the appeal for the first time. Indeed the respondent is right in contending that the plea of unjust enrichment had not been canvassed before the High Court in the writ petition. The writ petition was directed against the order of the appellate authority rejecting two refund claim petitions as time-barred. The writ petition was decided in 1982. The amended provisions came into force with effect from 20-9-1991, while the appeal was pending in this Court. The appellant could, therefore, not have taken the ground contained in Section 11B(2) or (3) of the Act in their written statement in the High Court. Though as pointed out by learned counsel for the respondent, the appellant has not taken a specific plea based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of six months from the relevant date in a prescribed form supported by documentary and other evidence intended to establish that the amount of duty of excise in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty has not been passed on by him to any other person. The first proviso to the sub-section lays down that where an application for refund has been made before the commencement of Act No. 40 of 1991 such application shall be deemed to have been made under the amended provisions and shall be dealt with in accordance with the provisions of sub-section (2) as amended. In the second proviso, it is stated that the limitation of six months shall not apply where such duty has been paid under protest. Sub-section (2) of Section 11B inter alia provides that the Assistant Collector of Central Excise while entertaining the claim for refund of duty may order the refund of the amount of duty paid by the claimant provided he had not passed on the incidence of such duty to any other person. The thrust of the amendment vide Section 11B(2) of the Act is that the refund of duty paid by the manufacturer can be allowed, if due, only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k guarantee to the Collector of Central Excise, Meerut for the amount in question; and (ii) that in case the respondent fails in this appeal, it shall be liable to pay interest @ 12% p.a. while refunding the amount to the appellant. Thus, the amount in question was directed to be paid to the respondent by this Court only as an interim arrangement, during the pendency of the appeal and could not be construed to be an order of 'execution' of the order and directions of the High Court. The conditional order made on 8-10-1982 did not finally conclude the refund claim of the respondent and cannot take the case of the appellant out of the purview of Section 11B(3) of the Act read with the first proviso to Section 11B(1), as amended. The argument on behalf of the respondent to the contrary is not only spacious but also fallacious. In this connection, it would also be advantageous to note a judgment of a three Judge Bench of this Court in Union of India Ors. v. Jain Spinners Limited and Anr., 1992 (4) SCC 389 = 1992 (61) E.L.T. 321 ( S.C.), as the law on the question of retrospectivity of Section 11B(3) has been settled therein. In Jain Spinners' case (supra), refund was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or refund in accordance with the amended provisions of Section 11B. The application was rejected by the High Court in view of the order dated 19-9-1991, which had been passed prior to the coming into force of the Amendment Act with effect from 20-9-1991. In November, 1991, the assessee filed a contempt petition alleging failure on the part of the officers of the Union of India to comply with the High Court's order granting refund to the assessee. When the petition came up for hearing on 18-3-1992, the counsel for the respondent submitted that the question regarding the applicability of the amended provisions was under consideration of the Government and he sought time. On 13-4-1992, the Assistant Collector passed an exhaustive order holding that since the assessee had passed on the incidence of duty to others, it was not entitled to receive the refund. The High Court at the time of hearing of the contempt petition on 20-4-1992 was apprised of the order of the Assistant Collector but it held that the decision of the Assistant Collector was not a decision of the Government and directed the Union of India to deposit the entire amount of refund with bank interest on or before 24-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essees, viz., those who have paid the duty to the authorities and those who have obtained orders from the courts for depositing the duties in courts. The former will, and the latter will not, be governed by the amended provisions of the Act. This would result in a discriminatory and invidious situation. The view canvassed by the learned counsel will also open a new door for unjust enrichment by enabling the assessees to bypass the statutory provisions which have been specifically enacted to prevent the malpractice. 16. The judgment in Jain Spinners' (supra), therefore, answers fully the submissions raised on behalf of the respondents and we reject the plea raised on behalf of the respondent that the prohibition contained in Section 11B(3) of the Act would not apply to the facts and circumstances of the present case more so because the judgment and order, of the High Court directing refund was pending final adjudication by this Court when the amended provision of Section 11B(3) of the Act came into force with effect from 20-9-1991. 17. That apart, the argument on behalf of the respondent that in the present case refund has already been made to the respondent in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other person and had borne it himself, but with a view to obviate delay, which would result by an order of remand aimed at providing an opportunity to the respondent to establish by any material or documentary evidence before the Assistant Collector Excise, that it had not passed on the incidence of duty to any other person, we directed the respondent to furnish documentary or other evidence, as it may deem appropriate, to establish that the amount of duty of excise in relation to which the refund is claimed was collected from or paid by him and that the incidence of such duty had not been passed on by him to any other person. The respondent has not furnished any documentary or other evidence at all. With the written submissions, the respondent has however, filed an affidavit in which it has been stated in paragraph 3 as follows :- Without prejudice to the contention that sub-section (3), or sub-section (2)(d) or any other sub-section of Section 11B of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act ), as amended by Central Excises Customs Laws (Amendment) Act, 1991 (Act 40 of 1991) is not applicable to the present case, since refund has alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be rebutted by the manufacturer who has paid the duty. The burden of proof is on the person claiming the refund to establish that he has paid the duty but not passed on the duty to the buyer of such goods. Since, this Court granted sufficient opportunity to the respondent to furnish such documentary or other evidence as it may wish to produce to establish that it had not passed on the incidence of the excess excise duty to the buyers of such goods and despite the grant of that opportunity, it has failed to produce any such evidence or material and the affidavit filed by it falls completely short of the necessary averments, we would consider it futile to either remand the case to the Assistant Collector Excise or to grant an opportunity to the respondent to file a fresh application before the Assistant Collector Excise under Section 11B(1) and (2) of the Act to seek refund in the manner known to law by adducing such evidence as is required by the amended provisions of law. The failure of the respondent to produce the necessary evidence before us goes to show that the respondent has failed to rebut the presumption that it had not passed on the burden of the excise duty to any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the order of the Division Bench of the Delhi High Court directing the refund of ₹ 23,68,686.85 + 26,21,356.16 while upholding the order of the High Court as regards the question of limitation. Further, in accordance with the interim order of this Court dated 8-10-1982, we direct the respondent to refund to the appellants the sum of ₹ 23,68,686.85 and ₹ 26,21,356.16 (total ₹ 49,90,043.01) with 12% interest per annum from the date when the amount was received by the respondent, within a period of eight weeks from today since the respondent has been unable to make good its submission that it should not be burdened with the payment of interest at the rate of 12% per annum, which was a specific condition contained in the interim order dated 8-10-1982. On the failure of the respondent to pay the amount as per the above direction, the appellants shall be entitled to encash the bank guarantee and/or take such other steps as may be available to it in law for recovery of the amount. The amount after recovery shall be appropriated by the appellants in the manner provided by the amended provisions of the Act. 22. In the peculiar circumstances of the case we howev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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