The Joint Secretary To The Government of India v. Beema Manufacturers Private Limited
1988-10-05
BAKTHAVATSALAM, MOHAN
body1988
DigiLaw.ai
JUDGMENT Mohan, J. 1. Both these writ appeals arise out of a common judgment rendered in W.P. Nos. 5013 of 1978 and 17 of 1979 dated 27.1.1982. The writ petitions were filed praying the High Court to issue writs of certiorari calling for the records on the files of the first respondent in Order No. 1962/1977 dated 29.10.1977 and in Order No. 2061/1977 dated 5.12.1977 and of the Second Respondent in A. No. 445/73 (M) (1290/75) dated 23.7.1975 and in A.No. 523/73(M) order in Appeal No. 1291/75 dated 23.7.1975 and of the third respondent in C.No. V/30.A/3/8/72 Tech. dated 8.12.1972 and C.No. V/30.A3/9/72 Tech. dated 15.12.1972, respectively in W.P. Nos. 5013 of 1978 and 17 of 1979 and quash the same. However, the learned Judge, for reasons stated in his judgment, held that the products manufactured by the respondents herein will fall within Tariff Item No. 30-A of the Central Excise Tariff. Having held so, he went on to add: Yet another contention taken by respondents is that, the petitioners cannot seek for refund of the tariff already paid. It is not made out as to why such contentions are raised, particularly when the petitioners have in no unmistakable terms made it clear that the amounts of excise collected were being paid under protest. Therefore, in all these remittances, where they have been paid under protest, in the light of what has been held above, excess amounts, collected, require to be refunded, and the process of refund to be completed within three months of the date of this order. It is the last portion which we have extracted above that is objected to in these appeals. 2. It is the contention of Mr. T. Somasundaram, learned Counsel for appellants, that the grant of this prayer was not supported by the prayers in the affidavits. He also contended that the refund is not a matter of course and that even if the respondents are entitled to refund, it could only be as laid down by the decisions in (i) Madras Aluminium Co., Ltd. v. Union of India Vol 8 1981 ELT 478 D.B. (ii) Asst.
He also contended that the refund is not a matter of course and that even if the respondents are entitled to refund, it could only be as laid down by the decisions in (i) Madras Aluminium Co., Ltd. v. Union of India Vol 8 1981 ELT 478 D.B. (ii) Asst. Collector v. Madras Fertilizers Ltd. Vol 27 1987 ELT 48 D.B. (iii) State of Madhya Pradesh v. Vyankallal, that is to say, in a case where the manufacturer had not (sic) passed on the excise duty to the consuming public, if refund is ordered straightaway in his favour, it would amount to unjust enrichment. 3. In opposition to these, Mr. K.P. Jagadeesan, learned Counsel for the respondents (writ petitioners), would urge that it is true the prayer for refund was not specifically asked for. Nevertheless, the learned Judge found that in the circumstances of the case, excise duty was paid under protest and hence refund would follow as a matter of course under Rule 11 of the Central Excise Rules, 1944. Should this Court come to a conclusion that it is required on the part of the respondents to prove that they had not passed on the excise duty to the consuming public, the matters could be remitted for proving the same by the respondents. 4. On a careful consideration of the above, we are of the view that the stand taken by the appellants is sound. We have already extracted the prayer. Therefore, the direction with regard to refund ordered by the learned Judge goes beyond the prayer. We cannot even call it a logical corollary to his earlier finding with regard to the correct tariff-item 30-A, because refund is not a matter of course. The payment under protest can only save the respondents from limitation envisaged under Rule 11, which is conveniently extracted below: Claim for refund of duty--(1) Any person claiming refund of any duty paid by him may make an application, for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the date of payment of duty: Provided that the limitation of six months shall not apply where any duty has been paid under protest.
Explanation--Where any duty is paid provisionally under these rules on the basis of the value or the rate of duty, the period of six months shall be computed from the date on which the duty is adjusted after final determination of the value or the rate of duty, as the case may be. (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 paid by applicant should be refunded to him, he may make an order accordingly. (3) Where, as a result or any order, passed in appeal or revision under the Act, refund of any duty becomes due to any person, the proper officer may refund the amount to such person without his having to make any claim in that behalf. (4) Save as otherwise provided by or under these rules, no claim for refund of any duty shall be entertained. Explanation--For the purposes of this rule, 'refund' includes rebate referred to in Rules 12 and 12-A. Therefore, payment under protest is only between the Department and the manufacturer to arrest limitation. Beyond that, it has no value. But what the learned Judge has directed is for refund. It is well-settled in law that refund cannot be ordered as a matter of course. It is subject to an important qualification based on the equitable doctrine of unjust enrichment, in that, the manufacturer had not passed on the excise duty to the consuming public. This is the law, as settled by the three decisions cited supra. Therefore, unless and until it is established that the respondents had not passed on the excise duty to the consuming public, they cannot claim refund. Should refund be ordered in such cases, it would amount to unjust enrichment. In this connection, it is necessary for us to note what the respondents as writ petitioners themselves had stated in paragraph 7 of their respective affidavits and it reads as follows: In pursuance of the enforcement of the impugned orders passed by the respondents herein, the petitioners had to pay the amounts demanded under the said orders 'under protest'. By reason of the impugned orders, the petitioners had to continue to pay the additional duty demanded, which they are paying under protest and without prejudice to their claims and remedies.
By reason of the impugned orders, the petitioners had to continue to pay the additional duty demanded, which they are paying under protest and without prejudice to their claims and remedies. The amounts so far collected from the petitioners as differential duty of excise under the impugned orders and also the additional duty of excise as the power driven pumps by reason of the application of the Notification Nos. 83/72 and 112/72 are wholly illegal and are liable to be refunded to the petitioners. Therefore, prima facie, it appears they had collected the same from the consuming public. Yet, because it is a factual dispute, we do not want to decide and, therefore, we direct the original assessing authority to take up the refund applications stated to have been filed, after the disposal of the writ petitions, and examine the question whether the respondents had passed on the excise duty to the consuming public. This shall be decided in the light of the materials that may be produced by the respondents before the Authority concerned and having regard to the rulings cited above. The writ appeals will accordingly stand allowed and the matters are remitted for the limited purpose indicated above. No costs.