TMI Blog2005 (4) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... 11B brought on the statute by way of the Central Excise and Customs (Amendment) Act, 1991 ("Amendment Act of 1991" for short). However, now challenge in this behalf does not survive since the Apex Court in the case of Mafatlal Industries Ltd. v. Union of India, 1997 (89) E.L.T. 247 has upheld the validity of Section 11B of the Central Excise Act, 1944. 3.Before dealing with the points raised by the parties in the present petition, relevant facts of the case may be stated in brief. The Facts : 4.The Petitioner No. 1 Shree Vindhya Paper Mills Limited, inter alia, manufactures quoted paperboards. The quoted paperboards are manufactured out of purchased cess-paid base paper. According to the petitioners, the respondents compelled them to pay cess on the quoted paperboards manufactured by them under the Cess Rules, 1981. Accordingly, the cess was paid by them under protest during the period from 1981 to 1990 since they were of the view that no cess is payable on the products manufactured out of cess-paid base paper. Petitioners, from time to time, filed refund applications to claim refund of cess paid by them under protest under the Cess Rules, 1981. 5.According to the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of excise on the goods, namely, paper and paperboards, under the provisions of Section 9 of the IDR Act, 1951. The Central Government has framed rules known as "Paper and Paperboard Cess Rules, 1981", inter alia; for levy and collection of cess on paper and paperboard, in exercise of its powers under Section 30 of the IDR Act, 1951. Rule 3 of these Rules provides for application of the Central Excises and Salt Act and Rules made thereunder in relation to the levy and collection of cess on paper and paperboard. Said Rules came into force on 16th February, 1981. 9.According to Mr. Sanklecha, the aforesaid rule, namely, rule 3 incorporates the provisions of the Excise Act and Rules made thereunder in the said Cess Rules. The effect of incorporation is as if the said provisions, as they stood at the date of the said Cess Rules, were written out in the said Cess Rules and became a part of it. Rule 3 is, thus, an instance of legislation by incorporation. On such incorporation, the provisions incorporated have become integral part of the said Cess Rules in which the former have been transposed. Any subsequent amendment made in the said provisions (in the statute form which the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue involved in the case of Barnagore Jute Factory Co. (supra) was whether or not intermediate goods were liable to duty before amendment to Rules 9 and 49 of the Central Excise Rules, 1944. The Apex Court took into account the fact that even under the unamended Rules 9 and 49 of the Central Excise Rules, 1944 the intermediate goods were liable to duty. According to the learned Counsel for the petitioners, the aforesaid decision is based on its own facts and, therefore, clearly not applicable to the facts of the present case. 12.According to Mr. Sanklecha, in view of his above submission, Rule 3 of the Cess Rules, 1981 is required to be examined independently to determine whether or not the provisions of Excise Law with regard to refund have been incorporated by reference or is a mere reference in the Cess Rules, 1981. 13.Learned Counsel for the petitioners drew our attention to the judgments of the Apex Court in the case of Nagpur Improvement Trust v. Vasantrao, 2002 (7) SCC 657, U.P. Avas Vikas Parishad v. Jainul Islam, 1998 (2) SCC 467 and Mahindra and Mahindra Ltd. v. Union of India, 1979 (2) SCC 529. In all these judgments, the Apex Court has, in very clear terms, held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e those made, in year 1991; were to be made applicable to the Cess Rules, 1981, then the delegated legislation would have carried out necessary amendment to the delegated legislation. In absence of such amendment to the Cess Rules, 1981, the Central Excise Act as it existed in 1991 alone is to be applied. 16.Mr. Sanklecha submitted that in any view of the matter Rule 3 of the Cess Rules, 1981 uses the expression "so far as may be" while applying Central Excise Act to it, as such clearly makes the Central Excise Act applicable only to such an extent as may be necessary and not otherwise. In his submission, doctrine of unjust enrichment found in Section 11B of the Central Excise Act requires that the amount recovered from the customers as excise duty to be credited to the Consumers Welfare Fund. This amount which is recovered by the manufacturers from its customers is used for the general benefit of the consumers. So far as the Cess Rules under the IDR Act, 1951 is concerned, the object of imposing the cess is for betterment of the industry from which the cess is recovered. Thus, according to learned Counsel for the petitioners, in the circumstances between the two, i.e. consumers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and Rules are required to be made applicable. In view thereof, in his submission, Chapter 2 of the Central Excise and Customs Law (Amendment) Act, 1991 is applicable and the petitioners are not entitled to any refund inasmuch as there is non-compliance with the provision of Section 11B as amended. 21.Alternatively, without prejudice to the aforesaid contention, it is further submitted that at any rate on the principles of unjust enrichment no refund should be granted in exercise of powers under Article 226 of the Constitution of India. The respondents, in support of their submission, placed reliance on the judgment of the Apex Court in the case of Sahakari Khand Udyog Mandal Ltd. v. Commissioner of C. Ex. Cus, 2005 (181) E.L.T. 328 (S.C.) and judgment of this Bench in the case of Bussa Overseas and Properties Pvt. Ltd. v. Union of India, 2003 (158) E.L.T. 135 (Bom). It is, thus, submitted that the petition is devoid of any substance and the same is liable to be dismissed. Consideration : 22.Having heard rival parties, in our view, it is not necessary for us to delve upon the issue raised by learned Counsel for the petitioners that the provision of refund in Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to the levy and collection of cess under Section 9 of the Act. He also points out that the Act does not confer upon the Central Government the power to make rules with retrospective effect. He relied upon the decision of this Court in Mahindra Mahindra v. Union of India Another [1979 (2) S.C.R. 1038]. In our opinion, however, the very approach of the learned Counsel is based upon an incorrect premise. Firstly, it is not true to say that Rules 9 and 49 of the Central Excise Rules, as they stood before the 1982 amendment, did not permit levy on capitively consumed goods." 25.Since the aforesaid rule has already been interpreted by the Apex Court, to mean that it was not referred to by incorporation under the Jute Cess Rules but only a reference thereof had been made in the Jute Cess Rules. This conclusion reached by the Apex Court by holding that the effect of Rule 3 in Jute Cess Rules is that the words "as if the words for the time being in force" were thereafter the words "the provisions of Central Excises and Salt Act, 1944" in Rule of the Jute Cess Rules as on date binds us. The contention of the petitioners that the Apex Court could not have added the words to Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of refund, the person claiming refund must show that he has paid the amount for which relief is sought; that he has not passed on the burden on the consumers and that if such relief is not granted, he would suffer loss. 28.In the instant case it is not in dispute that the petitioners have recovered the cess from their customers. In view of this undisputed fact, it is an academic debate as to whether or not incorporation of the provisions of the Central Excise Act is a legislation by incorporation or by reference. Irrespective of the applicability of Section 11B of the Central Excise Act, no refund can be allowed unless it stands to the test of doctrine of unjust enrichment. 29.This Bench in the case of Bussa Overseas and Properties Pvt. Ltd. (supra) had an occasion to consider an identical issue based on identical submission; wherein this Court ruled as under : "Even otherwise, while exercising the Writ jurisdiction, if the Writ Court finds that any direction to refund results in unjust enrichment to the Petitioner, then it is open to the Writ Court to decline to exercise its Writ jurisdiction, even though the Petitioner has a right to obtain refund. This reasoning of ours i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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