Judgment:
Mathur, J.
1. The petitioner Company is engaged in manufacturing of yarn and fabrics using cotton and man made fibres. It paid additional duty of excise levied under the Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953, hereinafter referred-to as 'the Act', Popularly known as 'Handloom Cess'. During the period 1.10.1984 to 31.12.1988, according to the petitioner Company, cess was paid under a bonafide belief that the fabric in question is subject to the Handloom Cess, whereas the fabric in question was falling under Chapter 52.09 of the Central Excise Tariff Act, 1985, chargeable at nil rate of Basic Excise Duty. Prior to the introduction of the aforesaid Act of 1985, the fabric in question fell under classification No. 19-I(B) of the First Schedule to the Central Excise and Salt Act, 1944 and that too, was chargeable to nil rate of Basic Excise Duty. The petitioner Company entertained a doubt whether the Handloom Cess is leviable on the fabric in question from the query raised by one of its customers viz; Jeetu Agencies in the letter dated 14.12.1988. In the said letter, M/s Jeetu Agencies questioned the petitioner Company as to charging of Handloom Cess in their bill. Accordingly, the petitioner Company moved an application dated 27.12.88 for revising the classification of the fabric in question for claiming exemption from payment of Handloom Cess. The Assistant Collector accorded his approval for revised classification of fabric in question. Thus, the petitioner Company stopped paying Handloom Cess with effect from 1.1.1989. The petitioner Company also moved an application dated 28.1.1989 claiming refund of Rs. 71,734.28p. for the cess paid during the period 1.2.1986 to 31.12.1998. Another application dated 18.9.1989 was made claiming refund of Handloom Cess paid during the period 1.10.84 to 31.1.86 amounting to Rs. 8,909.35p, in addition to the refund claimed under application dated 28.1.89. The second respondent found the claim of refund under application dated 28.1.1989 barred by limitation of six months as provided under Section 11-B of the Central Excise Act, except for an amount of Rs. 7,936/-. The second claim dated 18.9.89 was rejected in toto being barred by limitation under Section 11-B of the Central Excise and salt Act, 1944. By way of this petition under Article 226 of the Constitution of India. The petitioner Company seeks direction to the respondents for refund of Rs. 72,707.63p.
2. It is contended by Mr. M.S. Singhvi, learned counsel for the petitioner that where any duty or tax has been recovered without authority of law, the claim for refund of such unauthorised recovery of tax is not governed by the limitation provided bySection 11-B of the Central Excise Act but by the General Law of Limitation i.e. within the period of three years from the date of discovery of mistake.
3. Mr. N.M. Lodha, Central Government Standing Counsel, has raised an objection with respect to the maintainability of the writ petition on the ground of alternate remedy. It is submitted that against the impugned order of the Assistant Collector, an statutory appeal is maintainable before the Collector (Appeals) as provided under Section 35(c) of the Central Excise and Salt Act, 1944. Per contra, it is submitted by Mr. M.S. Singhvi that the provisions of the Central Excise Act are not attracted as the cess has been paid by mistake under the provisions of the Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953. Mr. Singhvi has heavily r.elied upon a recent decision of the Apex Court in U.P. Pollution Control Board v. Kanoria Industrial Ltd. (1), wherein the Supreme Court has held that where the collection of cess, levy or tax is held to be unconstitutional and invalid, the writ remedy for recovery is not deniable under the general Law of Limitation for filing suits for recovery of amount due.
4. In the U.P. Pollution Control Board's case (supra), the Apex Court has scanned all its earlier decisions and held that in case of tax or cess being declared unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending upon the facts and circumstances of a given case. The Apex Court held that where the cess was paid under protest, no case of undue enrichment had been made out and there were no latches or delay on the part of the assessee, who approached the court within reasonable time of levy and collection of cess being declared unconstitutional. Ordinarily, the remedy for refund of cess collected, should not be denied under Article 226 of the Constitution of India.
5. In M/s. Orissa Cement Limited v. State of Orissa (2), the Apex Court held that in the case where the levy of tax is declared to be invalid or unconstitutional, no direction with respect to refund of tax can be given automatically. The Court can in its discretion mould and restrict the relief in the manner appropriate to the situation.
6. In Mafat Lal Industries v. Union of India (3), the Apex Court held that the concept of economic justice demands that in the case of indirect taxes like Central Excises duties and Customs duties, the tax collected without the authority of law shall not be refunded to the assesses, unless he alleges and establishes that he has not passed on the burden of duty to a third party and that he himself has borne the burden of the said duty. The Court observed thus :
'One of the equitable considerations may be the fact that the person claiming the refund has passed on the burden of duty to another. In other words, the person claiming the refund has not really suffered any prejudice or loss. If so, there is no question of reimbursing him. He cannot be recompensated for what he has not lost. The loser, if any, is the person who has really borne the burden of duty; the manufacturer who is the claimant, has certainly not borne the duty notwithstanding the fact that it is he who has paid the duty. Where such a claim is made, it would be wholly permissible for the court to call upon the petitioner/plaintiff to establish that he has not passed on the burden of duty to a third party and to deny the relief of refund if he is not able to establish the same.'
7. A duty of excise is primarily the duty levied on manufacturer in respect of the commodity produced by him. It is an indirect tax, which the manufacturer passes on the ultimate consumer. By ordering refund, the benefit of refund of excise duty must normally go the consumer but not the intermediary manufacturer. Therefore, it such refund is ordered, the manufacturer retains the benefit and gets the windfall of money refunded for which he has no legal right, title or interest and thereby gets an unjust enrichment. In this context, a reference may also be made to the decisions of the ApexCourt in Nawab Sugar reported in 1976 (1) S.C.R. P. 803 and M/s S.S. Dal Mills v. State of Haryana (4).
8. In the case of U.P. Pollution Control Board's case (supra), relied upon by the petitioner, the assessee had specifically pleaded the they did not pass on the liability of water cess on their customers. For the convenience, para 25 of the judgment is extracted as follows :
'The respondent had specifically pleaded that they did not pass on the liability of the water cess on their customers; it appears this contention was not denied by the petitioners before the High Court. On the other hand the only plea taken by the petitioners was that money had been passed to the Central Government under Section 8 of the Act. It was brought to the notice of the Court by the respondents that 65% of the sugar was sold by the respondents through public distribution system under the Essential Commodities Act. Hence there was no question of unjust enrichment also in these cases.'
9. In the instant case, there is not a word in the entire writ petition, if the petitioner did not pass on the liability of the Handloom Cess on the customers. On the contrary, it is evident from Ex.P.1, a document produced by the petitioner, that the Handloom Cess was being charged by the petitioner Company from its customers. The contents of letter of one of customers of the petitioner Company viz; M/s. Jeetu Agencies dated 6.12.88, are extracted as follows:
'We have come to know from the market that other mills are not charging Handloom Cess in respect of Polyester/Cotton 48/52 shirting. You are also manufacturing and selling cloth of Sort No. 1382 Polyester/Cotton 48/52 shirting- CRYSTAL and SAHIL for which Hand-loom Cess is being charged by you in your bills. Kindly enquire about this and if Handloom Cess is not payable on such fabrics, the same should not be charged in the bills raised by you also.'
A reading of the said letter clearly shows that the Handloom Cess was included in the bills of the petitioner and, as such, there can be no escape from the conclusion that the petitioner Company has passed on the burden of Handloom Cess collected to its consumers. Since the petitioner has not borne the burden of the said duty, the refund will amount to unjust enrichment.
10. Consequently, we find no merit in this petition and the same is hereby dismissed.