1. In the impugned order, ld. Commissioner (Appeals) examined this case and observed the view of the judgment of Calcutta High Court in Haryana Plywood v. CCE, 1994 (74) E.L.T. 224 about the theory of undue enrichment is not to be applied to pending claims as the same is in a Customs case and moreover the judgment of the Supreme Court in Union of India v. Jain Spinners, 1992 (61) E.L.T. 321 (S.C.) is different from that. Even though refund was applied in Sept. '91, this will attract the undue enrichment principle in view of the Supreme Court judgment and the amount of Rs. 64,450/- will not be admissible to the appellants. Similarly endorsement of duty paid under protest on PLA will not be of any help and the amount of Rs. 51,025.00 also does not be entitled to be refunded. The appellant is not entitled to any interest as there was no provision at that time for grant of interest in CESA, 1944 other claims remain mis-substantiated by the appellants.
Appeal rejected accordingly.
2. Being aggrieved by this decision, the appellants have filed this appeal.
3. The facts of the case briefly stated are that the appellants manufactured Gummed Paper Tape Slit into required sizes of width and length. A dispute therefore arose whether Gummed Paper Tape is dutiable or not. The Department alleged that gummed paper tape was dutiable. The appellants contested stating that gummed paper tape is not dutiable.
When matter came up to this Tribunal. This Tribunal held that gummed paper tape was not covered by the old Central Excise Tariff Item No. 68 and was not liable to duty. This Tribunal passed this order on 12-2-1990. Against this decision of this Tribunal, Revenue filed appeal before the Hon'ble Supreme Court in 1992. The Hon'ble Supreme Court rejected the said appeal. The appellants submitted refund claim on 21-7-1990 which was received in the office of the Asstt. Commissioner on 23-7-1990. The claim was rejected. Against this rejection the appellants filed appeal before the Collector (Appeals). Ld. Collector (Appeals) rejected the appeal on 13-7-1992 as indicated in the preceding paragraph. In the meantime the appellants filed a writ before the Hon'ble Allahabad High Court. The Hon'ble Allahabad High Court quashed the Asstt. Commissioner's order dated 7-2-1991. The Asstt.
Commissioner thereafter issued a SCN on 15-11-1994 in which he called for remaining TR. 6 Challans for the period from 18-1-1982 to 11-2-1983 and observed that duty has been paid under protest was not written and as such the claim is time barred. The Asstt. Commissioner also observed that for the period from 14-5-1983 to 11-2-1988, the claim of Rs. 64,450/- is based on the ground that the duty has been paid under protest. The appellants were also directed to produce evidence showing that Kraft Paper used by the appellants for manufacture of gummed paper tape was duty paid for purpose of Notification No. 68/76. It was also alleged that factory paid duty from 1-3-1971 to 28-2-1986 of the order of Rs. 6,71,920.00 which had been charged from Customers on G.P.ls and since the burden on duty was passed on to the Customers, therefore, refund was not admissible. It was also alleged that the appellants had not furnished any basis of calculation of interest. It has also alleged that an amount of Rs. 20,589.70 has been arbitrarily claimed as relief.
After considering their submissions, the Asstt. Commissioner held that claim of the appellants about payment of duty under protest is not recorded in the PLA; that only few documents have been submitted in respect of duty paid character of Kraft Paper: that duty during the period 1-3-1971 to 28-2-1986 to the rune of Rs. 6,71,920.90 was already passed on to the customers and therefore, refund of such duty shall amount to unjust enrichment. Ld. Asstt. Commissioner held that the assessee submitted documents only for the period from 14-5-1983 to 11-2-1985. Payment of duty under protest comes to Rs. 64,450/- only. He also held that this amount is refundable which will be credited to the consumer welfare fund under Section 11B of Central Excise Act. He also held that interest was not payable under the Rules and that the arbitrarily relief was not acceptable.
4. Arguing the appeal Shri R. Santhanam alongwith Shri Alok Arora, ld.Advocates appeared for the appellants and submitted that Hon'ble Bombay High Court, in the case of Jai Hind Oil Mills & Co. v. U.O.I. reported in 1994 (71) E.L.T. 902 (Bom.) held that Appellate Order becomes final and binding if not appealed against Show Cause Notice and that initiation of fresh proceedings for unjust enrichment under Section 11B of Central Excises & Salt Act, 1944, thereafter is illegal. Ld. Counsel submitted that in their case the Tribunal passed the orders on 12-2-1990 and that the Revenue filed an appeal before the Hon'ble Supreme Court only in 1992. He submitted that with the passing of the order by the Tribunal on 12-2-1990, the assessment had become final and the refund should have been given suo moto. He submitted that since three months period was over this decision of the Tribunal had become final and that the appeal filed by the Revenue before Hon'ble Supreme Court was only to show that the dispute was still pending. He submitted that no dispute was pending after the decision of the Tribunal on 12-2-1990. Ld. Counsel also referred to the decision of Hon'ble Calcutta High Court in the case of Asstt. Collector of Customs v. East Angalia Plastics (India) Ltd. reported in 1994 (74) E.L.T. 29 wherein it was held Tax collected without authority of law is liable to be refunded to the assessee and that the High Court can direct in exercise of its writ jurisdiction under Article 226 of Constitution of India even though the claim may be barred by limitation.
Ld. Counsel submitted that law was amended w.e.f. 20-2-1991 when nothing was pending. He referred to the Judgment: of Karnataka High Court in the case of Gopal Films v. Dy. Commissioner of Income Tax and Ors. reported in 1999 (237) ITR 655. Ld. Counsel submitted that the Hon'ble Karnataka High Court held "The object of the Kar Vivad Samadhan Scheme is to realise the revenue locked up in litigations pending at different levels, by giving incentive to honest tax payers. Having regard to the provisions of the KVS Scheme, pendency of a proceeding either by way of appeal or revision or reference or writ petition should be a bona fide pendency. When a matter has attained finality and when no litigation is pending, creation of an artificial pendency, after the announcement of the scheme, merely to obtain the benefit of the scheme is impermissible".
Ld. Counsel referred to the decision of the Hon'ble Allahabad High Court in the case of Guru Charan Industrial Works v. U.O.I. reported in 1988 (33) E.L.T. 648 and submitted that the Hon'ble High Court held that right to claim refund of tax or duty paid under mistake of law with corresponding obligation of State to repay has been consistently upheld by the Courts and that taxation is sovereign power of the State.
But it is subject to constitutional restriction under Article 265; that no tax shall be levied or collected except by authority of law.
Therefore, any levy or collection which is contrary to law has to be struck down.
5. Ld. Counsel referred to the clarifications given by the Central Board of Excise & Customs which appeared in the Hand Book on Self Removal Procedure, 4th Edn. in Chapter 5. In para 5.18 it has been clarified that no formal application need be made by an assessee to get a refund granted as a result of adjudication order or order-in-appeal or order in revision where the amount is readily ascertainable from the case records. In such cases, the Asstt. Collector concerned will prepare the payment order and the cheque will be issued after obtaining a stamped receipt from the party. Where the amount to be refunded is not easily ascertained a proforma in the form prescribed (Annexure XII) will be sent to the party for completion of Part I. On receipt back of the same from the party; the claim will be processed and payment order furnished in Part II and the cheque issued. Ld. Counsel submits that in view of this clear clarification given by the Govt, the amount should have been refunded suo moto by the Govt. which they did not do.
Ld. Counsel also referred to the Judgment of the Apex Court in the case of Mafatlal Industries Ltd. reported in 1997 (89) E.L.T. 247. He submits that in para 146, their case was covered under Clause 2 which reads refund order by the statutory authority concerned which have become final. He submits that refund had become final after issue of the order-in-appeal passed by this Tribunal and that when within three months, no appeal was filed by the Revenue before the Supreme Court order passed by the Tribunal had become final and therefore, suo-moto refund should have been given to them. He submitted that this Tribunal in the case of Dalmia Cement (P) Ltd. v. CCE reported in 1998 (101) E.L.T. 669 in para 7 held "We have considered the submissions and have perused the case law relied on by the parties. The admitted factual position in the case before us is that the present appellants had obtained an order allowing refund of Rs. 4,97,101.01 by Order No. 222/89, dated 6-6-1989 passed by the Tribunal. No appeal had been filed against the said order. The said order had thus become final. The Department had not implemented the order of the Tribunal when the amendment to the Central Excises and Salt Act was enacted with effect from 20-9-1991 which made it obligatory on the Department to credit all refund amounts to the Consumer Welfare Fund. The said amendment also applies to all pending cases of refund. Whereas the appellant's contention that the amended provisions did not apply to their case, the Department has contended that since the refund had not yet been effected, the matter was still pending as on 20-9-1991 and, therefore, the amended provisions would apply. The question really boils down to whether the non-payment of the refund claim which had been adjudicated in favour of the appellants would make it a pending proceeding. We find force in the Ld. Sr. Counsel's arguments that delay in execution of a judicial/quasi-judicial order by an administrative authority cannot make it a pending proceeding. The non obstante clause in Sub-section (3) of Section 11B directing that no refund shall be made except as provided in Sub-section (2) and the further provision that it will apply to ail proceedings pending on the date of coming into force of 1991 amendment cannot, in the very nature of things, in our view, cover a case of the type before us. The observations in the majority judgment of the Apex Court in Mafatlal Industries case, supra, brings out the position very clearly. We extract paragraph 146 which specifically covers the question before us: "146. As stated, Section 11B(2) and Section 11B(3) go together. The applications for refund made before the commencement of the Amendment Act, 1991, shall be deemed to have been made under Section 11B(1) of the Act as amended and it shall be dealt with in accordance with Section 11B(2) of the Act. The Section contemplates disposal of the applications pending on the date of the Amendment Act as also fresh applications filed after the Amendment Act, 1991, as per the amended provisions. Counsel for the assessees urged that the provisions relating to refund and, in particular, Sections 11B(2) and (3) as amended in 1991 cannot apply to : 1. 'Refund' made or due as per orders passed by Courts, in a suit or in a petition under Article 226 of the Constitution of India, which have become final.
2. Refunds ordered by the statutory authority concerned which have be come final.
It is obvious that in such cases no application can or will be deemed to be pending on the date of the commencement of the Amendment Act. No application praying for refund is to be filed in such cases, either. No further probe, regarding the requisites for obtaining refund specified in the Amendment Act, 1991, is called for in such cases. The above aspects are fairly clear. Section 11B(2) and (3) cannot be made applicable to refunds already ordered by the Court or the refund ordered by the statutory authorities, which have become final. It follows from a plain reading of Section 11B, Clauses (1), (2) and (3) of the Act. The provisions contemplate the pendency of the application on the date of the coming into force of the Amendment Act or the filing of an application which is contemplated under law, to obtain a refund, after the Amendment Act comes into force, i am of the opinion, that if the said provisions are held applicable, even to matters, concluded by the judgments or final orders of Courts, it amounts to stating that the decision of the Court shall not be binding and will result in reversing or nullifying the decision made in exercise of the judicial power. The legislature does not possess such power. The Court's decision must always bind parties unless the condition on which it is passed are so fundamentally altered that the decision could not have been given in the altered circumstances. It is not so herein. Shri Prithvi Cotton Mills Ltd. and Anr. v. Broach Borough Municipality and Ors.
1970 (1) SCR 388 and Madan Mohan Pathak v. U.O.I. and Ors. etc. 1978 (3) SCR 334. See also Comorin Match Industries (P) Ltd. v. State of Tamil Nadu JT 1996 (5) S.C. 167. Alternatively, it may be stated that duty paid in cases, which finally ended in orders or decrees or Judgments of Courts, must be deemed to have been paid under protest and the procedure and limitation etc. stated in Section 11B(2) read with Section 11B(3) will not apply to such cases. It need hardly be stated, that Section 11B(1) the proviso thereto, Section 11B(2) and Section 11B(3) read together will apply only to (1) refund applications made before the Amendment of the Act and still pending on the date of commencement of Amendment Act, 1991 and (2) applications contemplated under law to obtain refund and filed after the commencement of the Amendment Act, 1991. (Cases dealt within Paras 5 and 29 of this judgment will not be covered by the above, to the extent stated therein)".
He submitted that the ratio of this finding of the Tribunal squarely covers their case. He also referred to para 86 of the Apex Court Judgment in the case of Mafatlal Industries stating that when the duty is paid under the orders of Court, it will certainly be the payment under protest. Ld Counsel, therefore, submitted that having regard to the fact that refund arose because of the order passed by the Tribunal which was not appealed against within the specified time for filing the appeal and had thus become final. There was no necessity of filing a refund application and refund should have been given suo moto and thus the requirement of filing the application or limitation did not arise in their case. He, therefore, prayed that in view of the above submissions and the position of law as aforesaid the appeal may be allowed.
6. Shri D.K. Nayyar, ld. DR appearing for the respondent Commissioner submits that in so far as limitation is concerned, duty paid under protest was recorded only in PLA during the period 18-1-1982 to 23-2-1983. He submitted that thus only a small amount is covered by the endorsement of duty paid under protest in the PLA. He submits that in so far as suo moto refund is concerned, para 146 of the Mafatlal Industries' case Judgment records: "It need hardly be stated that Section 11B(1) the proviso thereto, Section 11B(2) and Section 11B(3) read together will apply only to (1) refund applications made before the Amendment of the Act and is still pending on the date of commencement of the Amendment Act, 1991 and (2) applications contemplated under law to obtain refund and filed after the commencement of the Amendment Act, 1991".
He submits that for claiming a refund an application was essential. He submitted that paras 68, 82, 96 and 99.11 are relevant in so far as an application of claiming refund is concerned. Thus in the instant case since the amount was not determined in the order of the Tribunal holding that gummed paper tapes are not excisable, therefore, there was no question of any suo moto refund and the refund claim was required to be filed along with the documents in support of payment of duty during the relevant period. He submits that even if suo moto refund was admissible then unless it was quantified it could not be sanctioned and for quantification of this refund, other documents like TR.6 Challans, GPls and other duty paying documents were essential alongwith the records for which the refund application invariably became necessary.
He submits that the admitted position was that on the date of amendment of the law i.e. on 20-9-1991, the application filed by the appellants was pending and therefore, the refund claim by the appellants was subject to the provisions of the amended Section 11B on 20-9-1991.
Ld. DR submitted that the demand was not hit by limitation, For a certain period, the appellants endorsed the PLA. The duty was paid under protest. This will not be subject to limitation. All the other demands will be subject to limitation. Ld. DR submits that para 82 and 83 of the Judgment in the case of Mafatlal Industries Ltd. clearly stipulates that refund claims are required to be made in all cases and unless the refund claim is made, refund cannot be granted.
7. In regard to the clarifications given by the Govt, he submits that now the orders of the Supreme Court are on the subject. He submits that since the law has now been settled by the Apex Court, the clarifications given by the Govt. are no longer valid if they are contrary to the law settled by the Apex Court. He submits that the ratio of the judgment of the Karnataka High Court in the case of Gopal Films cited and relied upon by the appellants is not applicable to the facts of the present case.
8. We have heard the rival submissions. On a careful consideration of the submissions made, we find that the refund claim except for a short period is hit by limitation because it was only for the period from 18-1-1982 to 23-2-1983 when there was an endorsement on PLA reading as duty paid under protest.
Insofar as the filing of the claim is concerned, we have seen paras 82 and 83 wherein the Apex Court in the case of Mafatlal Inds. Ltd. clearly sets out that refund claim is required to be filed when Apex Court in para 82 ruled : "It is accordingly submitted that it would be just and proper that the amended Section 11B is held not to take in refund claims arising as an consequent of Appellate or a Superior Court order. We do not think it is possible to agree such a holding would run against the very grain of the entire philosophy underlying the 1991 Amendment.
The idea underlying the said provisions is that no refund shall be ordered unless the claimant establishes that he has not passed on the burden to others. Sub-section (3) of the amended Section 11B is emphatic. It leaves no room for making any exception in the case of refund claim arising as a result of the decision in a appeal/reference/writ petition. There is no reason why an exception should be made in favour of such claims which would nullify the provision to a substantial degree".
"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 11B alongwith the definition of "relevant date", there is no room for any apprehension of the kind expressed by the Ld. Counsel".
9. In view of the findings of the Apex Court as reproduced above, we find that the refund claim is hit by limitation except as held above.
10. The claim for interest and the amount claimed as damages, is not covered by any Rule or Section of the Central Excise Act and hence they were not sustainable in law.
11. In view of the above discussions and findings, the appeal is rejected.