TMI Blog1993 (4) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Central Excises and Salt Act, 1944 (for short "the Central Excise Act"). The Company classified "Liquid Glucose" under sub-heading 1702.19 in Chapter XVII which was approved by the Assistant Collector, Central Excise, Hyderabad Division (the third respondent). The Company was paying Basic Excise Duty (BED) at 15% and Special Excise Duty (SED) at 10% on BED. With effect from June 27,1991, the Company revised the classification list and classified Liquid Glucose under sub-heading 1702.29. Under Rule 9B of the Central Excise Rules, 1944 (for short "the Rules"), provisional assessment was made and the said goods were cleared. On receiving chemical examiner's analytical report, the revised list was also approved on 22-11-1991, classifying the liquid glucose under sub-heading 1702.29. 4. The benefit that the Company derived by the revised classification is that under sub-heading 1702.29 the Excise Duty payable is 10% BED plus SED at 10% on BED. The Company claimed that it paid excess Excise Duty for the period from 9-6-1991 to 14-10-1991. On 6-12-1991 the Company claimed refund of Excise Duty paid by it during the said period, from 9-6-1991 to 14-10-1991, quantified BED at Rs. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excess levy collection, which is held to be illegal. In such cases there is nothing unjust if the amount is retained by the Government. The Company cannot claim the amount which does not-actually belong to it. It is stated that the impugned Act is a valid legislation and is not liable to be struck down on any of the grounds urged by the Company. 6. Mr. Subrahmanya Reddy, learned counsel appearing for the petitioner in this Writ Petition and in W.P. No. 10305 of 1991, contended, inter alia, that the Amendment Act amending Section 11B and adding Sections 11D, 12B and 12C in the Central Excise Act is beyond legislative competence of Parliament. Mr. Nankani, learned counsel for the petitioner in Writ Petition No. 4937 of 1990, canvassed constitutional validity of Sections 11B, 11D, 12B, 12C and clauses (e) and (f) in Explanation 'B' to Section 11B. Mr. A. Krishna Murthy, learned counsel for the petitioners in W.P. Nos. 7877 of 1987 and 12309 of 1988 and Mr. Y.G. Rama Murthy, learned counsel for the petitioners in Writ Petition Nos. 13666 of 1987, 13667 of 1987 and 3848 of 1988, adopted the argument of said learned counsel and urged further contentions both on the question of cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses (e) and (f) of Explanation (B) to Section 11B, the contention is that filing an application within the statutory period with reference to clauses (e) and (f) is an impossibility as the manufacturer who would agitate the matter before the authorities, disputes the payment of duty after the date of payment and by the time the correct duty payable is determined, the period of six months would have expired from the date of payment of duty by the manufacturer as well as from the date of purchase by the ultimate consumer, and in such cases no application can be filed in time in view of the definition of 'relevant date'. 7. It would be relevant to mention here that as a result of determination of correct duty payable, claims for refund were being preferred by the manufacturers; in such cases the contention of the revenue was that the excise duty being an indirect tax, the burden of duty was passed on by the manufacturer to the wholesaler or the dealer or the consumer, as the case may be, and therefore the manufacturer was not entitled to any refund and if claim of refund was allowed, it would amount to unjust enrichment of the manufacturer. The contention of the manufacturer was und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, is inserted. Section 14 incorporates a consequential amendment in Section 157 of the Customs Act by inserting clauses (aa) after clause (a) in sub-section (2) of that Section, m Section 159 of the Customs Act for the word 'rule', the words 'rule or regulation' are substituted. 8. The first and the main contention of the learned counsel is that the Amendment Act is a colourable legislation and that Parliament has no legislative competence to enact Sections 11B, sub-section (2) of Section 11C, 11D, 12B, 12C and 12D of the Excise Act and Sections 27, sub-section (2) of Section 28A, 28B and 28D of the Customs Act, so they are unconstitutional and are liable to be struck down. 9. It will be useful to set out the impugned sections here. "11B. Claim for refund of duty :- (1). Any person claiming refund of any duty of 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 as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A) as the applicant may furnish to establish t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such rate is reduced, the date of such reduction; (e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person; (f) in any other case, the date of payment of duty. (2). If, on receipt of any such application, the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund : Provided that the amount of duty of excise as determined by the Assistant Collector of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) 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) unspent advance deposits lying in balance in the applicant's account current maintained with the Collector of Central Excise; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued, under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made to the Asstt. Collector within six months from the relevant date; (ii) it should be accompanied by such documentary or other evidence including the documents referred to in Sec. 12A, as the applicant may furnish; to establish - (a) that the amount of duty of excise in relation to which the claim for refund is made, was collected from and paid by him; and (b) that the incidence of such duty has not been passed on by him to any other person. 11. It may be noticed that all applications made before the Amendment Act are deemed to be applications made under the amended provisions of sub-section (1) of Sec. 11B and will have to be dealt with under the provisions of sub-section (2) of that Section. There is only one exception to the rule of limitation and that is where duty has been paid under protest. Sub-section (2) of Sec. 11B lays down how the application for refund should be disposed of. If the Assistant Collector is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he has to make an order accordingly and then to credit the amount held to be refundable to the "Consumer Welfare Fund", established under Section 12C of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted initially by the Amendment Act 25 of 1978 with effect from 11-7-1980. It required any person claiming refund of any duty of excise to make an application for refund of such duty to the Assistant Collector of Excise, within the expiry of six months from the date of payment of duty. By Finance No. 2 Act, 1980 (Act 44/80) in sub-section (1) of Section 11B for the words "from the date of payment of duty" the words "from the relevant date" were substituted. By the same Act the explanation was also added inter alia defining the expression "relevant date". 15. Before the amendment in question. Section 11B contemplated two modes of refund of excise duty - (a) suo motu refund, and (b) refund on application. Where as a result of any order passed in appeal or revision under the Act refund of any duty became due to any person, the Assistant Collector was empowered to refund the duty suo motu to such person without his having to make any claim in that behalf. In other cases the application for refund had to be made within six months from the relevant date as defined therein. It was also enjoined that except as provided by or under the Act no claim for refund of any duty of excise sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2): Provided further that me limitation of one year or six months, as the case may be, shall not apply where any duty has been paid under protest. Explanation. - For the purposes of this sub-section, "the date of payment of duty", in relation to a person, other than the importer, shall be construed as "the date of purchase of goods" by such person. (2) If, on receipt of any such application, the Assistant Collector of Customs is satisfied that the whole or any part of the duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund : Provided that the amount of duty as determined by the Assistant Collector or Customs under the foregoing provisions, of this sub-section shall, instead of being credited to the Fund, he paid to the applicant, if such amount is relatable to - (a) the duty paid by the importer, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... middlemen due to refund of the duty. 18. On the application for refund of duty made by the manufacturer or producer or the importer or the ultimate consumer or the person who has borne the burden of duty, if it is found by the concerned authority that the whole or any part of the duty is refundable, the authority will have to credit the amount of refundable duty to a fund called 'Consumer Welfare Fund' constituted under Section 12C of the Excise Act unless the case falls within any of the six categories which are specified in the proviso to sub-section (2) of Section 11B of the Excise Act or sub-section (2) of Section 27 of the Customs Act for purpose of granting refund of duty. 19. The object of the Amendment Act in amending the provisions of the Central Excise Act and the Customs Act, is to regulate the refund of duty so as to prevent the unjust enrichment of middlemen like the manufacturers, producers, importers etc. and in the event of duty being found refundable, to credit the same to the Consumer Welfare Fund and to utilise the same for the welfare of the consumers, in accordance with the rules to be framed by the Central Government, and to enable the person who has born ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptroller and Auditor-General of India." 22. At this stage it may be advantageous to elucidate the concept of colourable legislation. A legislation is said to be colourable when it is passed without legislative competence or on a prohibited subject or when incompetency or prohibition is cloaked to give a colour of permissiveness. It has nothing to do with the bona fides or mala fides or malice or bad motive of the legislature. 23. In K.C.G. Narayan Deo v. State of Orissa - AIR 1953 SC 375, Mukherjea, J. explained the doctrine of colourable legislation observing that the doctrine of colourable legislation does not involve any question of "bona fides" or "mala fides" on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. The idea conveyed by the expression is that although apparently a legislature is passing a statute purported to act within the limits of its powers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. Article 246 says that notwithstanding anything in clauses (2) and (3) of that Article, Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule. Clause (2) of that Article lays down that notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule. Clause (3) deals with the subject matter of laws made by the Legislatures of the States and this clause is not relevant for the present discussion. 27. Entry 84 in List I deals with duties of excise on tobacco and other goods manufactured or produced in India except - (a) alcoholic liquors for human consumption; and (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and other toilet preparations containing any of the substances mentioned in clauses (a) and (b) above. A reading of Entry 84 List I makes it clear that Parliament has competence to legislate regarding the levy of duties of excise on goods manufactured or produced in India. So also it is competent to legislate on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed. The ultimate incidence of an excise duty, a typical indirect tax, must always be on the consumer who pays as he consumes or expends; and it continued to be an excise duty - a duty on home-produced or home-manufactured goods, no matter at what stage it is collected. It will obviously be imposed at the stage which the authority finds to be the most convenient and the most lucrative, wherever it may be, but that is a matter of the machinery of collection and does not affect the essential nature of the tax. There was in theory nothing to prevent the central legislature from imposing the duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards, whether it be sold, consumed, destroyed or given away and that it was the fact of manufacture which attracted the duty even though it might be collected later. The same principles were reiterated by the Federal Court in The Province of Madras v. Boddu Paidanna - AIR 1942 FC 33 = 1978 (2) E.L.T. (J 272) (FC). 31. In Governor-General in Council v. Province of Madras - AIR 1945 PC 98 = 1978 (2) E.L.T. (J 280) (FC), the Privy Council explained the meaning of the expression 'excise duty' in En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation. On appeal to the Supreme Court it was brought to the notice of their Lordships that the Orissa Legislature inserted Section 14A in the Orissa Sales Tax Act with retrospective effect under which the company could not claim refund of tax; it was inter alia contended that the Act was beyond the legislative competence. The Supreme Court observed thus: "By Item 54 of List II of Schedule 7 to the Constitution, the State Legislature was indisputably competent to legislate with respect to taxes on sale or purchase of papers and paper-boards. This power comprehends the power to impose the tax, to prescribe machinery by collecting the tax, to designate the officers by whom the liability may be enforced and to prescribe the authority, obligations and indemnity of those officers; It further observed - "The diverse heads of legislation in the Schedule to the Constitution demarcate the periphery of Legislative competence and include all matters which are ancillary or subsidiary to the primary head"; and held that - The Legislature of the Orissa State was therefore competent to exercise power in respect of the subsidiary or ancillary matter of granting refund of tax improperly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take in all matters which are of a character incidental to the topics mentioned therein. Even so, there is a limit to such incidental or ancillary power flowing from the legislative entries in the various Lists in the Seven Schedule. These incidental and ancillary powers have to be exercised in aid of the main topic of legislation, which in the present case is a tax on sale or purchase of goods. All powers necessary for the levy and collection of the tax concerned and for seeing that the tax is not evaded, are comprised within the ambit of the legislative entry as ancillary or incidental. But where the legislation under the relevant entry, proceeds on the basis that the amount concerned is not a tax exigible under the law made under that entry, but even so lays down that though it is not exigible under the law, it shall be paid over to Government, merely because some dealers by mistake or otherwise have collected it as tax, it is difficult to see how such a provision can be ancillary or incidental to the collection of tax legitimately due under a law made under the relevant taxing entry. We do not think that the ambit of ancillary or incidental power goes to the extent of permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of matters necessarily incidental to 'taxes on the sale and purchase of goods' and the provision contained in sub-sections (3), (4) and (5) compelling a dealer who had deliberately or erroneously recovered an amount from the purchaser on a representation that he was entitled to recover it to recoup himself for payment of tax, to pay over that amount to the State, could not be regarded as necessarily incidental to the entry and that the impugned sub-sections were ultra vires the State Legislature. Following Abdul Quader's case (supra) the Supreme Court further observed that in effect the provision was one for levying the amount for tax when the State was incompetent to levy and that a mere devise could not be permitted to defeat the provisions of the Constitution by clothing the claim in form of a demand for depositing the money with the State which the dealer has collected but he was not entitled to collect. The Supreme Court distinguished its earlier judgment in Orient Paper Mills case (supra) observing that that case did not support the plea that the State Legislature was competent to legislate for demanding payment of or retaining amounts recovered by registered deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices required of it under the Act and that instead of allowing middleman to profiteer by ill-gotton amount, the legislature had devised a procedure to undo the wrong that was done by excessive levy by allowing the committee to retain the amount to be utilised thereafter for the benefit of the particular persons for whose benefit the marketing legislation was intended. With regard to the legislative competence it was observed that that case was akin to Orient Paper Mills case (supra) which disabled a dealer to get refund of fee paid by him, the burden of which he had already passed on to the next dealer and that that case was affirmed in R.S. Joshi's case (supra) and that therefore Section 23A was within the competence of Punjab Legislature. 40. In M/s. Kasturi Lal Harlal v. State of U.P. - AIR 1987 SC 27 - the constitutional validity of Section 29A of U.P. Sales Tax Act, 1948 was questioned before the Supreme Court, having lost in the High Court of Allahabad, by the appellants therein. They were carrying on business as dealers in coal and were as such registered under that Act. They paid the sales tax on the sale of coal but after the order of assessment realised that the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was not payable by the purchaser with a view to refund the same to the purchaser such a power is incidental to the taxing power under the relevant entry. 42. In New India Industries Ltd. v. Union of India - 1990 (46) E.L.T. 23 - a Full Bench of the Bombay High Court has observed that where the collection of the excise duty results in unjust enrichment to the manufacturer the government also cannot be allowed to retain the same as the same principle would equally apply to the Government and in a such case a welfare fund can be created to avoid unjust enrichment. This is a clear authority for the proposition that a fund can be created for the benefit of the customers who ultimately bear the burden of tax. 43. From the above discussion the following principles emerge :- (i) The power given to legislature by Article 246 read with the relevant Entries in the Three lists of the Seventh Schedule to the Indian Constitution, are field for legislation or legislative heads of fields of legislation and that the widest amplitude should be given to the language of entries and that each word should be held to extend on ancillary and subsidiary matters which can fairly and reasonably be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to passing of incidence of excise duty/customs duty, are ancillary and incidental to the main power in the taxing entries of the Seventh Schedule to the Constitution. Therefore, it follows that Sections 11B, sub-section (2) of Section 11C, 12B, 12C of the Central Excise Act and Sections 27, sub-section (2) of Section 28A and 28D of the Customs Act cannot be held to be unconstitutional as being colourable legislation or lacking legislative competence. 45. The provisions that remain to be considered on the ground of legislative competence are Section 11D of the Central Excise Act and Section 28B of the Customs Act. 46. Section 11D is inserted by the Amendment Act which reads as follows: "11D. Duties of excise collected from the buyer to be deposited with the Central Government. (1) Notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder, every person who has collected any amount from the buyer of any goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government. (2) The amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the person on finalisation of assessment and where any surplus is left after such adjustment, the amount of such surplus shall either be credited to the fund or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of Section 27 and the application under that section in such cases shall be made before the expiry of six months from the date of the public notice to be issued by the Assistant Collector of Customs." 50. The provisions of sub-section (1) of these two sections are identical and aim at recovering the duty collected by every person from the buyer of any goods in any manner as representing duty of customs. 51. The power to levy and collect excise duty is contained in Entry 84 of List I of Seventh Schedule to the Constitution. It has been noticed above that the power to regulate refund of duty is incidental and ancillary to the power under this entry. The duty is imposed on the manufacture or production of the goods. There is a distinction between the levy of excise duty which is at the stage of manufacture or production of goods in India and the collection of duty which may be in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d relevant charging sections, they cannot be said to be within incidental and ancillary power of the legislature. In view of the above discussion and applying principle No. (2) aforementioned, sub-section (1) of Section 11D of the Central Excise Act and sub-section (1) of Section 28B of the Customs Act cannot but be held to be beyond the legislative competence. Therefore the answer to the aforesaid first question will be in the negative. 53. This takes us to the consideration of the second question. Can the above-said provisions be read down reasonably to bring them within the legislature's constitutional power? Though we have already discussed above that the purport of sub-section (1) of Section 11D of the Central Excise Act and sub-section (1) of Section 28B of the Customs Act is not only to collect the amount received by manufacturers, producers, importers etc. in the form of excise duty/customs duty but also from persons other than the manufacturers or producers, importers etc. from whom excise duty/customs duty cannot otherwise be collected. Yet on examination of provisions of sub-section (2) of Section 11D of the Central Excise Act and sub-section (2) of Section 28B of Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t question the illegality for he is not entitled to refund and the consumers cannot question the same as no machinery is provided for them to question the levy. In support of the contention that the Amending Act being arbitrary, is liable to be struck down, learned counsel relied on the observations of the Supreme Court in Ajay Hasia v. Khalid Mujib - AIR 1981 SC 487. It is also contended that the doctrine of unjust enrichment is not a universally accepted doctrine but a questionable doctrine, so on the basis of this doctrine provisions of Section 11B cannot be sustained. 55. It has been discussed above that the object of amending Section 11B is to prevent unjust enrichment of the middleman and to ensure that the person who has ultimately borne the burden of duty gets the refund of the duty and if that cannot be done, then to utilise the amount for the benefit of that class of persons in terms of Section 12D of the Central Excise Act after crediting the refundable amount to Consumers Welfare Fund created under Section 11C of the Excise Act for that purpose. From the scheme of the provisions of Section 11B, as noticed above, it is evident that any person who has borne the burden o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /duty which it cannot collect having regard to the mandate of Article 265 of the Constitution. To meet such a situation, the parliament has passed the Amendment Act making the necessary amendments in the Central Excise Act and the Customs Act to regulate refund of tax/duty whereby a manufacturer/producer/importer can claim refund only when he satisfies the authority that he had paid the duty and that the incidence of duty has not been passed on to others. By the Amendment Act manufacturers/producers/importers are classified into two groups - those who suffered the burden of duty but have not passed on the same to others and those who have suffered the burden of duty but have passed on the same and got themselves reimbursed. This classification is reasonable and has nexus with the object sought to be achieved, namely, to prevent unjust enrichment of the middleman. Further having regard to the scheme of the amended provisions of Section 11B to grant refund of duty illegally collected only to those who having suffered the duty did not pass on the incidence to others, the contention of discrimination between the manufacturers/producers/importers etc. and the ultimate consumer is devoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act, it cannot be said to be arbitrary. 60. The contention that the Act seeks to perpetuate the illegalities as in the event of illegal levy and collection of duties being passed on to the consumer, he cannot question the same as no machinery is provided for the consumer to question the illegal levy, is misconceived. This submission appears to have been made on the assumption that under the scheme of the Act no person other than the manufacturer/producer can appeal against an order of the Central Excise Officer with regard to levy or collection of excise duty. Section 35 of the Central Excise Act which provides appeal to the Collector against any decision or order under the Act by a Central Excise Officer lower in rank than a Collector of Central Excise, provides a right of appeal to any aggrieved person. Therefore the premise that there is no machinery under the Act for the consumer to question the illegal levy is factually incorrect, consequently the contention fails. It is, however, further contended that in the case of illegal levy and collection of duties it would be too much to expect that an individual consumer would come to know of the. illegality to imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut a right subject to the provisions of the Act. It arises by virtue of an order passed under the Act and is controlled by the provisions of the Act. The contention that the deprivation of the right of property is violative of Article 300A, is without any substance. Firstly, there is no deprivation of the right to property; the right to claim refund is regulated by the provisions of the Act which does not amount to deprivation of the right. Secondly Article 300A prohibits deprivation of the property otherwise than by authority of law and when the right to claim refund of duty is regulated by the provisions of the Act, it cannot be legitimately contended that there has been deprivation of the property without the authority of law. Further Article 300A does not provide for payment of any compensation even when there is deprivation of property, it only ordains that no person shall be deprived of his property save by authority of law. 62. Then the contention that Mr. Mankarni advanced before us is that the last portion of sub-section (3) of Section 11B is in the nature of ouster clause which ousts the jurisdiction of this Court, therefore it has to be declared as illegal and unconsti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the date of purchase of the goods by such person and in any other case, not covered by sub-clauses (a) to (e), the claim should be made within six months from the date of payment of duty. We shall presently examine the scope of sub-clauses (e) and (f) of the definition of 'relevant date' and application of rule of limitation of six months. However, we may note here that only exception to this rule of limitation is provided in the second proviso to sub-section (1) of Section 11B which says that the limitation of six months shall not apply where any duty has been paid under protest. There is a special procedure for payment of duty under protest. This is not relevant for the present discussion. 68. What is contended before us is that the question whether the duty has been rightly collected or not, can only be known after prolonged litigation and that would be long after the date of purchase of goods or the date of payment of tax as the case may be. So in such cases no claim can be made within the period of limitation as contemplated under the Act. 69. The right to claim refund of tax/duty illegally collected by the State, submits the learned counsel, may arise under any of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brogate the entire judicial system and the machinery set up for administration of justice. Therefore it follows that if refund of duty cannot be obtained by having recourse to the forum available under the law of the land, in view of the provisions of Section 11B of the Central Excise Act or Section 27 of the Customs Act, as the case may be, where the provision of any statute applies, the same cannot be obtained even by invoking the jurisdiction of the High Court under Ariicte 226 of the Constitution for that power is never meant to override or ignore the constitutionally valid statutory provisions. 71. For purposes of application of rule of limitation we shall consider various circumstances under which duty is paid; (i) where the duty is paid under mistake of law; (ii) where the duty is paid under coercion and (iii) where the duty is paid for reasons where the claim of refund is relatable to the circumstances mentioned in sub-clauses (a) to (d) of Clause B of the Explanation to Section 11B. The period of limitation of six months appears to apply only to cases falling under categories (ii) and (iii) aforementioned. Regarding category (iii) which relates to claim for refund falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund of the duty in that Act, would have no application and as a corollary of that proposition the restrictions on the refund and the rule of limitation provided therein will have no application to cases arising thereunder. The same will be the position where refund is claimed consequent upon declaration of the correct position of law either by any order in appeal or revision or in reference under the Act and no limitation for claiming refund of duty in such cases is prescribed under the Act. In such cases the general rule of limitation contained in the Limitation Act will apply and the rule of limitation as contained in Section 11B will have no application. 74. We shall now refer to the decisions relevant on this aspect. 75.Venkatraman CO. v. State of Madras-AIR 1966 SC 1089.That case arose under the Madras General Sales-Tax Act. The appellants therein were assessed to sales-tax on the basis that the contracts executed by them were works contracts. The High Court held that the relevant provisions of the Madras General Sales-tax Act empowering the State of Madras to assess indivisible building contracts to the sales tax, were ultra vires the power. The appellants filed a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw relating to assessment were ultra vires and for a consequential relief of refund of tax illegally collected. 78. Section 17 of the Act provided that no assessment made and no order passed under that Act or the Rules made thereunder by the assessing authority, appellate authority or the Commissioner, should be called into question in any court and save as was provided under Sections 11 and 12 no appeal or application for revision should lie against any such assessment or order. While laying down the principles regarding the exclusion of jurisdiction of civil court, Hidayatullah, Chief Justice, held, on the facts and in the circumstances of the case, that the suit in question for declaration that the provisions of the law relating to assessment under the M.B. Sales Tax Act were ultra vires and for refund of the amount of the tax illegally collected, was not barred by Section 17 of the Act. 79. In Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills -1988 (37) E.L.T. 478, the Supreme Court laid down that for refund claims made before the departmental authority limitation provided under the Customs Act/Central Excise Act or the rules made thereunder would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Limitation Act do not as such apply to the granting of relief under Art. 226. It appears to us however that the maximum period fixed by the legislature as the time within which the relief by a suit in a civil court must be brought may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under Art. 226 can be measured. This Court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it will almost always be proper for the Court to hold that it is unreasonable. The period of limitation prescribed for recovery of money paid by mistake under the Limitation Act is three years from the date when the mistake is known. If the mistake was known in these cases on or shortly after January 17,1956 the delay in making these applications should be considered unreasonable. If, on the other hand, as Mr. Andley seems to argue, that the mistake discovered much later this would be a controversial fact which cannot conveniently be decided in writ proceedings. In either view of the matter we are of opinion, the orders for refund made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such it follows that in such a case the manufacturer/producer/importer can claim refund within three years under Article 113 of the Limitation Act. 85. To sum up Sections 11B, 11C(2), 12B, 12C and 12D of the Central Excise Act and Sections 27 and 28A to 28D of the Customs Act are constitutionally valid. However, the period of limitation prescribed in sub-section (1) of Section 11B has no application to a case where refund is claimed pursuant to an order passed by the appellate authority or appellate tribunal or revisional authority or the Court, as the case may be, holding that levy and collection of the duty was illegal/unauthorised. We further hold that the expression 'every person' in sub-section (1) of Section 11D of the Central Excise Act is to be read down as like manufacturer/producer; so also the expression 'every person' occurring in Section 28B of the Customs Act has to be read down as the importer. W.P. No. 8339 of 1992. 86. For the foregoing reasons, the Writ Petition fails and it is accordingly dismissed without costs. Advocate's fee Rs. 500/-. W.P. Nos. 3612/87, 3629/87, 2153/88, 4705/88 8611/88. 87. In these four cases the facts are identical. The Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve already upheld the validity of Section 11B. The petitioner has not approached the Assistant Collector for revised classification. It is not his case that the revised classification under Item 16A(2) has been approved by the excise authority. In any event in view of the above discussion and following the judgments of the Supreme Court in Miles India Ltd. v. Assistant collector of Customs (supra) and Union of India v. Jain Spinner Ltd. (supra), petitioner has to claim the refund only under section 11B. For these reason the Writ Petitions fail and are accordingly dismissed, but in the circumstances without costs. Advocate's fee Rs. 500/- in each. W.P. Nos. 13666/87 and 13667/87. 93. The petitioner in these Writ Petitions, claims that his business is executing jobs and contracts ranging from fabrication of steel and iron materials and loading, transporting and unloading of materials including fabrications at the site of the customer and/or helping the customer in fixing, fitting, installing fittings, fixtures, equipment or plant at site for contractual remuneration and that it is not liable to payment of excise duty because the work done by it does not amount to manufacture or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st respondent herein, who admitted part of the claim and rejected the claim for the period above- referred to as being barred by time in July, 1980. On appeal the Collector of Customs, the 6th respondent herein, took the view that what had been collected in excess was not duty under the Act so the statutory limit would not apply and accordingly allowed the appeal on 23-1-1981. However, on 2-11-1981 the Government of India issued a show cause notice under Section 131(3) of the Customs Act to revise the said order of the Collector. While so, the 7th respondent-Tribunal, CEGAT was constituted on 11-10-1982 and the case was transferred to CEGAT. The CEGAT by order dated 9-1-1985 reversed the order of the 6th respondent. It is the validity of this order that is assailed in this Writ Petition. 98. The petitioner filed an additional affidavit praying for a declaration that Section 27(3) of the Customs Act which corresponds to Section 11B(3) of the Central Excise Act is ultra vires and that the same is not retrospective in operation and that the Consumers Welfare Fund is an alibi to an indirect levy of tax on the consumer and not an excise on the goods. 99. Mr. Y.G. Ramamurthy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 131 had not then substituted : Provided further that the applicant or the other party may make a demand to the Appellate Tribunal that before proceeding further with that proceeding or matter, he may be re-heard." 102. From a perusal of the above provision, it is evident that every proceeding which was pending immediately before the appointed day before the Central Government under Section 131, as it is stood before that day, and any matter arising out of or connected with such proceeding and which was so pending, stood transferred on that day to the Appellate Tribunal. The Tribunal was empowered to proceed with such proceedings or matters from the stage at which it was on that day as if such proceeding or matter were on appeal filed before it. The first proviso excepts the categories of cases from the operation of such a transfer. The second proviso, however, gives the right to the parties to the proceedings to have a rehearing of the whole case. The expression 'appointed day' is defined in clause (a) of Section 131C to mean the date of coming into force of the amendments to the Customs Act specified in Part I of the Fifth Schedule to the Finance (No. 2) Act, 1980 (Act 44 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Act. For the aforementioned reasons the Writ Petition fails and is accordingly dismissed, but in the circumstances without costs. Advocate's fee Rs. 500/-. W.P. No. 10305 of 1991. 108. In this case the petitioner filed a price list under Tariff Item 16B of the First Schedule of the Central Excise Act in respect of Flush Doors which was approved by the Assistant Collector. Later he contended that the said item did not fall under Item 16B but fell under a residuary Item 68 and claimed refund of duty from March, 1975 to March, 1981. The claim was rejected by the Assistant Collector as being barred by limitation. Thereafter the petitioner carried the matter in appeal to the Collector. The Collector also dismissed the appeal and on further appeal, the CEGAT upheld the order of the Collector (Appeals) and observing that in view of rule of limitation of six months prescribed in Section 11B the claim was barred by limitation, dismissed the appeal. 109. As the validity of Section 11B has been upheld by us, the petitioners are not entitled to claim excise duty after the claim is barred by limitation under Section 11B of the Act. For the above reasons and in view of the judgments o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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