WavIn India Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. the issue involved in this appeal, filed by m/s. wavin india ltd., is whether the bar of unjust enrichment is applicable to the refund of customs duty claimed by them.2.1 shri lajja ram, learned advocate, submitted that the appellants had placed order for the purchase of 5,000 m.t. of pvc suspension grade k65-67 with m/s. fina chem international company; that they filed bill of entry with the kandla customs on 8-8-1985; that the vessel ocean star had encountered rough and moisturous weather during voyage and the cargo of pvc resin was damaged; that after exchange of correspondence, deputy collector, customs, under order-in-original no. kdl/06/dc/88, dated 28-1-88 ordered abatement of duty on account of damage of the goods by reducing the value of the goods to the extent of 30%; that as a consequence of the said order, the appellants preferred a refund claim of rs. 45,38,280.72 on 18-3-1988. the learned advocate also mentioned that collector (appeals), under order-in-appeal no. 3161/88, dated 29-8-88, rejected their appeal for enhancing the abatement in value; that the tribunal also vide final order no. 773/1991-a, dated 30-9-91 had held that the department was justified in giving 30% reduction in value; that the tribunal vide miscellaneous order, dated 8-9-92 directed the collector to implement the tribunal's order, dated 30-9-91 within one month.2.2 he, further, mentioned that the collector (appeals) set aside the deputy commissioner's order dated 28-1-1988 in a separate proceeding on the appeal preferred by the department vide order-in-appeal no. 627/92, dated 25-8-92; that, however, the tribunal, vide final order no.123/93-a, dated 14-6-1993 allowed the appeal filed by the appellant, ordered that they were entitled for relief based on the 30% reduction in value and directed the collector, customs, kandla to implement the final order dated 30-9-91 forthwith.2.3 fie also stated that the assistant commissioner, under order-in-original no. 6/96-refund, dated 31-1-96 has held that no refund of duty is due to them due to the bar of unjust enrichment; that the commissioner (appeals) also, under the impugned order, has rejected their appeal holding that amended provisions of section 27 are applicable to all pending refund claims.3.1 the learned advocate submitted that the present case is a case of abatement of duty on damaged and deteriorated goods under section 22 of the customs act; that the provisions of this section dealing with the abatement of duty on damaged or deteriorated goods is different than the law relating to refund under section 27 of the customs act; that as per section 22, if the imported goods had been damaged at any time after they had been unloaded but before they were examined by the proper officer, the rate of duty would be applied to the reduced value of goods; that if the decision is taken by the department before the clearance of the damaged goods, the duty will be collected on the basis of reduced value of the damaged goods and if duty has already been paid before clearance, it will be adjusted in terms of provisions of section 22 of the act; that even if the dispute is settled subsequent to the removal of the goods and duty has been paid on unabated value, then also the matter remains one of readjustment; that under section 2(2) of the act, assessment includes re-assessment and such adjustment/readjustment will be a part of the assessment procedure; that thus the provisions relating to refund of duty under section 27 are not applicable to the claim for abatement of duty on damaged or deteriorated goods under section 22; that all claims for refund have to be filed in their prescribed form within the prescribed period of limitation; that no such procedure is prescribed for abatement of duty under section 22. he referred to misc. order dated 8-9-92 by which the tribunal directed the collector to implement the abatement order and not 'refund' as goods were damaged.3.2 he also contended that even if it is considered to be a case of refund, the provisions of unjust enrichment are not attracted; that on 19-9-91 when these provisions were introduced in section 27, there was no pending proceedings, as the admissibility of refund had already been decided by the collector (appeals) under order dated 29-8-88; that after the decision of the collector (appeals) the challenge to the order-in-original dated 28-1-88 of the deputy collector allowing 30% reduction in value could not have any validity; that the collector (appeals) in his order-in-appeal dated 29-8-88 has held "the lower authority has correctly granted rebate proportionately" and this order was not challenged by the department and had become final, much before 19-9-1991; that the review order passed by the collector on 27-1-89 was thus non est in the eyes of law. the learned advocate relied upon para 87 of the judgment in the case of mafatlal industries ltd. v. uoi, 1997 (89) e.l.t. 247 (s.c.) wherein it has been held by the supreme court as under :- "it is of course, obvious that where the refund proceedings have finally terminated in the sense that the period prescribed for filing the appeal against such order has also expired before the commencement of the 1991 (amendment) act (september 19, 1991), they cannot be re-opened and/or be governed by section 11b(3) as amended by 1991 (amendment) act." 3.3 reliance has also been placed on the decision in the case of bajaj auto ltd. v. uoi, 2003 (151) e.l.t. 23 (bom.) wherein the bombay court has held that when unconditional refund order was passed before 19-9-91, as per law existing at that time, it could not be said that the matter was covered within the expression "pending proceeding". he also relied upon the decision in oscar tele video (p) ltd. v. cce, new delhi, 4. finally the learned advocate submitted that in any case the incidence of duty had not been passed on to any other person; that the damaged and deteriorated raw material was used in the manufacture of final products which could not fetch the same price as the final product manufactured out of good raw material; that moreover the cost of processing of the damaged and deteriorated raw material will be an additional burden on the manufacturer; that in such a situation, there is no question of passing of the duty burden on any other person; that it has been held by the supreme court in uol v. solar pesticides pvt.ltd., 2000 (116) e.l.t. 401 (s.c.) that "the procedure provided by section 27(1) is applicable in case of application for refund being filed after the said section was amended." he also mentioned that the appellants had produced documents to show that the incidence of duty had not been passed on by them; that they had suffered losses in 1986-87 to the extent of rs. 98 lakhs; that heavy discount was given to the buyers in 1986-87 because of the poor quality of the final product manufactured out of contaminated pvc resin; that they had also submitted a chartered accountant certificate dated 15-2-1994 according to which on account of contamination and poor quality of raw material, an extra manufacturing/process cost of about rs. 90 lakhs had been incurred; that the sales realisation from the pvc pipes was simultaneously lower than the price of prime quality pipes.5. countering the arguments, shri virag gupta, learned d.r., submitted that the provisions of section 27 of the customs act are applicable whenever any person claims refund of any duty; that as the appellants in the present matter are claiming refund of customs duty paid by them in excess, the provisions of section 27 are applicable; that as per the provisions of that section, the claimant has to satisfy that the incidence of duty of which refund is being sought has not been passed on by him to any other person; that as the refund claim has not been finalised when the amended provisions of section 27 came into force, the appellants have to prove that the incidence of duty was borne by them. he relied upon the judgment in mafatlal industries case wherein it has been held that "any and every claim for refund of excise duty can be made only under and in accordance with rule 11 or section 11b, as the case may be, in the forums prescribed by the act". he mentioned that the supreme court has further held that no order of refund is to be made unless the claimant establishes that he has not passed on the burden of duty to others and no exception can be made for the refund claim arising as a result of decision in appeal/reference/writ petitions. the learned d.r. reiterated the findings of adjudicating authority who has given a specific finding that the appellants had not produced any documentary evidence, such as correspondence between them and their buyers showing the reasons for giving the heavy discount on the sale of their final product, and "they were also not able to produce the invoices pertaining to one month before and one year after the clearance/use of the imported materials in the factory." he also referred to the finding as contained in order-in-original to the effect that it has been mentioned in their annual report of 1986-87 that in spite of strong competitive pressure in the market and low margin the company's product continued to be in demand because of its quality. the learned d.r. also relied upon the judgment in i/o/ v. solar pesticides pvt. ltd., 2000 (116) e.l.t. 401 (s.c.) wherein the supreme court has held that "to claim refund of duty it is immaterial whether the goods imported are used by the importer himself and the duty thereon passed on to the purchasers of the finished product or that the imported goods are sold as such with the incidence of tax being passed on to the buyers. in either case the principle of unjust enrichment will apply and the person responsible for paying the import duty would not be entitled to get the refund because of the plain language of section 27 of the act." reliance has also been placed on the decision in the case of cce v. usha beltron ltd., 2000 (119) e.l.t. 3 (s.c.) in reply the learned advocate mentioned that the fact of deterioration of the quality of the imported goods is not in dispute and as such finished goods cannot be of prime quality.6. we have considered the submissions of both the sides. the facts which are not in dispute are that the appellants claimed abatement of duty on account of the goods imported by them being damaged or deteriorated during the voyage. they had cleared the goods on payment of full rate of duty without availing the abatement as the same was allowed to them subsequently by the dy, collector under the order-in-original dated 28-1-88 and they had claimed the refund of the duty paid by them in excess on 18-3-88. as the abatement of duty allowed by the dy. collector remained in dispute the refund claim was not sanctioned to them and it was pending when the provisions of section 27 of the customs act were amended by section jo of the central excise and customs laws (amendment) act, 1991 w.e.f. 20-9-91. we do not agree with the submissions of the learned advocate that their matter relates to abatement of duty on damaged and deteriorated goods and not to the refund of duty under section 27 of the customs act. the issue regarding abatement of duty on damaged or deteriorated goods has been settled and they have been allowed abatement of duty by reducing the value of imported goods to the extent of 30%. the present issue before us is the refund of duty which has been paid by the appellants in excess. as contended by the learned d.r. the refund of any duty is regulated by the provisions of section 27 of the customs act. as per section 27 the claimant for the refund has to establish that the incidence of duty has not been passed on by him to any other person.first proviso to section 27(1) of the act provides that where an application for refund has been made before the commencement of the amendment act, 1991, such application shall be deemed to have been made under amended sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2) of section 27. the constitution bench of the supreme court, in the case of mafatlal industries ltd. (supra), has upheld the validity of amended section 27 of the customs act. the supreme court has also upheld the retrospective effect. it has been held by the supreme court by majority that "in the face of this proviso, it is idle to contend that sub-sections (1) and (2) of section 11b do not apply to pending proceedings. they apply to all proceedings where the refund has not been made finally and unconditionally. where the duty has been refunded under the orders of the court pending disposal of an appeal, writ or other proceedings, it would not be a case of refund finally and unconditionally, as explained in jain spinners and i.t.c. it is, of course, obvious that where the refund proceedings have been finally terminated - in the sense that the period prescribed for filing the appeal against such order has also expired - before the commencement of the 1991 (amendment) act [september 19, 1991], they cannot be re-opened and/or be governed by section 11b(3). [as amended by the 1991 (amendment) act]".7. it is thus apparent that the provisions of amended section 27 applies to all refund claims which have not been made finally and unconditionally. in the present matter when the amended provision came into effect on 19-9-91, the refund application filed by the appellants was pending with the department. the refund, thus, has not become final and unconditional and as such the department is within its right to examine whether the bar of unjust enrichment would apply to the refund claim. the reliance of the learned advocate on para 87 of the judgment in the case of mafatlal industries does not advance the case of the appellants. the supreme court has clearly mentioned that where the duty has been refunded under the orders of the court and the period of filing the appeal has also expired it would be considered that the refund has attained finality. in the present matter it is not disputed that the duty has not been refunded to the appellants as refund claim was pending when the amendment to section 27 came into effect.similarly the decision in the case of bajaj auto ltd. is not applicable as the refund had already been granted to the petitioner therein.8. coming to the question whether the incidence of duty has been passed on to their customers, we observe that all the points contended by the learned advocate have been duly considered by the adjudicating authority. the appellants have not been successful in controverting the findings recorded in the order-in-original which have been highlighted by the learned d.r. in his arguments. the appellants have not produced any material to show that the discount was given by them on the sale of their final product on account of inferior quality of their finished product manufactured out of damaged raw material imported by them. we observe from the adjudication order that the chartered accountant's certificate simply mentions that as a result of contamination and poor quality of material extra manufacturing/process cost of about rs. 90 lakhs had been incurred and the sales realisation from the pvc pipes was substantially lower than the price of prime quality pipe. this does not anyway indicate that the incidence of duty has not been passed on to their customers. the learned advocate has relied upon the observation of the supreme court in para 16 of the decision in the case of uoi v. solar pesticides ltd. the said paragraph was dealing with the submissions made by the learned counsel for the respondents to the effect that section 27 should be construed harmoniously with section 28d of the act and it was contended that the absence of presumption leads to inference that the provisions of unjust enrichment were not intended to apply to cases of captive consumption. the supreme court did not agree with these submissions and observed that "section 27 of the act is, in a sense complete code by itself, dealing with the claim for refund of duty. the procedure provided by section 27(1) is applicable in case of application for refund being filed after the said section was amended. sub-section (1) itself requires a person making an application for refund, to furnish documents and evidence (including the documents referred to in section 28c) to establish that the amount of duly in respect of which refund is claimed, was collected or paid by him and incidence of such duty had not been passed on by him to any other person". these observations in para 16 does not mean to convey that the principle of unjust enrichment will not apply to the refund claim which were filed and pending before the amendment of the section as the same has been held to be applicable by the constitution bench in mafatlal industries case which was followed by the supreme court in the case of solar pesticides ltd, in fact, the supreme court referred to the observation in the case of mafatlal industries to the effect that "doctrine of unjust enrichment is a just and salutary doctrine. no person can seek to collect from both the ends.......... the power of the court is not meant to be exercised for unjustly enriching a person". we also observe that in the solar pesticides case the asstt.collector of customs had rejected the refund claim by order dated 16-2-1985 which is much before the amendment of section 27 in 1991 and the appeal filed by the revenue against high court decision was allowed. we, therefore, reject the appeal filed by the appellants.

Judgment:
1. The issue involved in this appeal, filed by M/s. Wavin India Ltd., is whether the bar of unjust enrichment is applicable to the refund of Customs duty claimed by them.

2.1 Shri Lajja Ram, learned Advocate, submitted that the Appellants had placed order for the purchase of 5,000 M.T. of PVC Suspension Grade K65-67 with M/s. Fina Chem International Company; that they filed Bill of Entry with the Kandla Customs on 8-8-1985; that the vessel Ocean Star had encountered rough and moisturous weather during voyage and the cargo of PVC resin was damaged; that after exchange of correspondence, Deputy Collector, Customs, under Order-in-Original No. KDL/06/DC/88, dated 28-1-88 ordered abatement of duty on account of damage of the goods by reducing the value of the goods to the extent of 30%; that as a consequence of the said Order, the Appellants preferred a refund claim of Rs. 45,38,280.72 on 18-3-1988. The learned Advocate also mentioned that Collector (Appeals), under Order-in-Appeal No. 3161/88, dated 29-8-88, rejected their appeal for enhancing the abatement in value; that the Tribunal also vide Final Order No. 773/1991-A, dated 30-9-91 had held that the Department was justified in giving 30% reduction in value; that the Tribunal vide Miscellaneous Order, dated 8-9-92 directed the Collector to implement the Tribunal's Order, dated 30-9-91 within one month.

2.2 He, further, mentioned that the Collector (Appeals) set aside the Deputy Commissioner's Order dated 28-1-1988 in a separate proceeding on the appeal preferred by the Department vide Order-in-Appeal No. 627/92, dated 25-8-92; that, however, the Tribunal, vide Final Order No.123/93-A, dated 14-6-1993 allowed the appeal filed by the Appellant, ordered that they were entitled for relief based on the 30% reduction in value and directed the Collector, Customs, Kandla to implement the Final Order dated 30-9-91 forthwith.

2.3 Fie also stated that the Assistant Commissioner, under Order-in-Original No. 6/96-Refund, dated 31-1-96 has held that no refund of duty is due to them due to the bar of unjust enrichment; that the Commissioner (Appeals) also, under the impugned Order, has rejected their appeal holding that amended provisions of Section 27 are applicable to all pending refund claims.

3.1 The learned Advocate submitted that the present case is a case of abatement of duty on damaged and deteriorated goods under Section 22 of the Customs Act; that the provisions of this Section dealing with the abatement of duty on damaged or deteriorated goods is different than the law relating to refund under Section 27 of the Customs Act; that as per Section 22, if the imported goods had been damaged at any time after they had been unloaded but before they were examined by the proper officer, the rate of duty would be applied to the reduced value of goods; that if the decision is taken by the Department before the clearance of the damaged goods, the duty will be collected on the basis of reduced value of the damaged goods and if duty has already been paid before clearance, it will be adjusted in terms of provisions of Section 22 of the Act; that even if the dispute is settled subsequent to the removal of the goods and duty has been paid on unabated value, then also the matter remains one of readjustment; that under Section 2(2) of the Act, assessment includes re-assessment and such adjustment/readjustment will be a part of the assessment procedure; that thus the provisions relating to refund of duty under Section 27 are not applicable to the claim for abatement of duty on damaged or deteriorated goods under Section 22; that all claims for refund have to be filed in their prescribed form within the prescribed period of limitation; that no such procedure is prescribed for abatement of duty under Section 22. He referred to Misc. Order dated 8-9-92 by which the Tribunal directed the Collector to implement the abatement order and not 'refund' as goods were damaged.

3.2 He also contended that even if it is considered to be a case of refund, the provisions of unjust enrichment are not attracted; that on 19-9-91 when these provisions were introduced in Section 27, there was no pending proceedings, as the admissibility of refund had already been decided by the Collector (Appeals) under Order dated 29-8-88; that after the decision of the Collector (Appeals) the challenge to the Order-in-Original dated 28-1-88 of the Deputy Collector allowing 30% reduction in value could not have any validity; that the Collector (Appeals) in his Order-in-Appeal dated 29-8-88 has held "The lower authority has correctly granted rebate proportionately" and this Order was not challenged by the Department and had become final, much before 19-9-1991; that the Review Order passed by the Collector on 27-1-89 was thus non est in the eyes of law. The learned Advocate relied upon Para 87 of the judgment in the case of Mafatlal Industries Ltd. v. UOI, 1997 (89) E.L.T. 247 (S.C.) wherein it has been held by the Supreme Court as under :- "It is of course, obvious that where the refund proceedings have finally terminated in the sense that the period prescribed for filing the appeal against such order has also expired before the commencement of the 1991 (Amendment) Act (September 19, 1991), they cannot be re-opened and/or be governed by Section 11B(3) as amended by 1991 (Amendment) Act." 3.3 Reliance has also been placed on the decision in the case of Bajaj Auto Ltd. v. UOI, 2003 (151) E.L.T. 23 (Bom.) wherein the Bombay Court has held that when unconditional refund Order was passed before 19-9-91, as per law existing at that time, it could not be said that the matter was covered within the expression "pending proceeding". He also relied upon the decision in Oscar Tele Video (P) Ltd. v. CCE, New Delhi, 4. Finally the learned Advocate submitted that in any case the incidence of duty had not been passed on to any other person; that the damaged and deteriorated raw material was used in the manufacture of final products which could not fetch the same price as the final product manufactured out of good raw material; that moreover the cost of processing of the damaged and deteriorated raw material will be an additional burden on the manufacturer; that in such a situation, there is no question of passing of the duty burden on any other person; that it has been held by the Supreme Court in UOl v. Solar Pesticides Pvt.

Ltd., 2000 (116) E.L.T. 401 (S.C.) that "the procedure provided by Section 27(1) is applicable in case of application for refund being filed after the said section was amended." He also mentioned that the Appellants had produced documents to show that the incidence of duty had not been passed on by them; that they had suffered losses in 1986-87 to the extent of Rs. 98 lakhs; that heavy discount was given to the buyers in 1986-87 because of the poor quality of the final product manufactured out of contaminated PVC resin; that they had also submitted a Chartered Accountant Certificate dated 15-2-1994 according to which on account of contamination and poor quality of raw material, an extra manufacturing/process cost of about Rs. 90 lakhs had been incurred; that the sales realisation from the PVC pipes was simultaneously lower than the price of prime quality pipes.

5. Countering the arguments, Shri Virag Gupta, learned D.R., submitted that the provisions of Section 27 of the Customs Act are applicable whenever any person claims refund of any duty; that as the Appellants in the present matter are claiming refund of Customs duty paid by them in excess, the provisions of Section 27 are applicable; that as per the provisions of that Section, the claimant has to satisfy that the incidence of duty of which refund is being sought has not been passed on by him to any other person; that as the refund claim has not been finalised when the amended provisions of Section 27 came into force, the Appellants have to prove that the incidence of duty was borne by them. He relied upon the judgment in Mafatlal Industries case wherein it has been held that "any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums prescribed by the Act". He mentioned that the Supreme Court has further held that no order of refund is to be made unless the claimant establishes that he has not passed on the burden of duty to others and no exception can be made for the refund claim arising as a result of decision in appeal/reference/writ petitions. The learned D.R. reiterated the findings of adjudicating authority who has given a specific finding that the Appellants had not produced any documentary evidence, such as correspondence between them and their buyers showing the reasons for giving the heavy discount on the sale of their final product, and "they were also not able to produce the invoices pertaining to one month before and one year after the clearance/use of the imported materials in the factory." He also referred to the finding as contained in Order-in-Original to the effect that it has been mentioned in their Annual Report of 1986-87 that in spite of strong competitive pressure in the market and low margin the company's product continued to be in demand because of its quality. The learned D.R. also relied upon the judgment in I/O/ v. Solar Pesticides Pvt. Ltd., 2000 (116) E.L.T. 401 (S.C.) wherein the Supreme Court has held that "to claim refund of duty it is immaterial whether the goods imported are used by the importer himself and the duty thereon passed on to the purchasers of the finished product or that the imported goods are sold as such with the incidence of tax being passed on to the buyers. In either case the principle of unjust enrichment will apply and the person responsible for paying the import duty would not be entitled to get the refund because of the plain language of Section 27 of the Act." Reliance has also been placed on the decision in the case of CCE v. Usha Beltron Ltd., 2000 (119) E.L.T. 3 (S.C.) in reply the learned Advocate mentioned that the fact of deterioration of the quality of the imported goods is not in dispute and as such finished goods cannot be of prime quality.

6. We have considered the submissions of both the sides. The facts which are not in dispute are that the Appellants claimed abatement of duty on account of the goods imported by them being damaged or deteriorated during the voyage. They had cleared the goods on payment of full rate of duty without availing the abatement as the same was allowed to them subsequently by the Dy, Collector under the Order-in-Original dated 28-1-88 and they had claimed the refund of the duty paid by them in excess on 18-3-88. As the abatement of duty allowed by the Dy. Collector remained in dispute the refund claim was not sanctioned to them and it was pending when the provisions of Section 27 of the Customs Act were amended by Section JO of the Central Excise and Customs Laws (Amendment) Act, 1991 w.e.f. 20-9-91. We do not agree with the submissions of the learned Advocate that their matter relates to abatement of duty on damaged and deteriorated goods and not to the refund of duty under Section 27 of the Customs Act. The issue regarding abatement of duty on damaged or deteriorated goods has been settled and they have been allowed abatement of duty by reducing the value of imported goods to the extent of 30%. The present issue before us is the refund of duty which has been paid by the Appellants in excess. As contended by the learned D.R. the refund of any duty is regulated by the provisions of Section 27 of the Customs Act. As per Section 27 the claimant for the refund has to establish that the incidence of duty has not been passed on by him to any other person.

First proviso to Section 27(1) of the Act provides that where an application for refund has been made before the commencement of the Amendment Act, 1991, such application shall be deemed to have been made under amended sub-section and the same shall be dealt with in accordance with the provisions of Sub-section (2) of Section 27. The Constitution Bench of the Supreme Court, in the case of Mafatlal Industries Ltd. (supra), has upheld the validity of amended Section 27 of the Customs Act. The Supreme Court has also upheld the retrospective effect. It has been held by the Supreme Court by majority that "In the face of this proviso, it is idle to contend that Sub-sections (1) and (2) of Section 11B do not apply to pending proceedings. They apply to all proceedings where the refund has not been made finally and unconditionally. Where the duty has been refunded under the orders of the Court pending disposal of an appeal, writ or other proceedings, it would not be a case of refund finally and unconditionally, as explained in Jain Spinners and I.T.C. It is, of course, obvious that where the refund proceedings have been finally terminated - in the sense that the period prescribed for filing the appeal against such order has also expired - before the commencement of the 1991 (Amendment) Act [September 19, 1991], they cannot be re-opened and/or be governed by Section 11B(3). [as amended by the 1991 (Amendment) Act]".

7. It is thus apparent that the provisions of amended Section 27 applies to all refund claims which have not been made finally and unconditionally. In the present matter when the amended provision came into effect on 19-9-91, the refund application filed by the Appellants was pending with the Department. The refund, thus, has not become final and unconditional and as such the department is within its right to examine whether the bar of unjust enrichment would apply to the refund claim. The reliance of the learned Advocate on Para 87 of the judgment in the case of Mafatlal Industries does not advance the case of the Appellants. The Supreme Court has clearly mentioned that where the duty has been refunded under the orders of the Court and the period of filing the appeal has also expired it would be considered that the refund has attained finality. In the present matter it is not disputed that the duty has not been refunded to the Appellants as refund claim was pending when the amendment to Section 27 came into effect.

Similarly the decision in the case of Bajaj Auto Ltd. is not applicable as the refund had already been granted to the petitioner therein.

8. Coming to the question whether the incidence of duty has been passed on to their customers, we observe that all the points contended by the learned Advocate have been duly considered by the adjudicating authority. The Appellants have not been successful in controverting the findings recorded in the Order-in-Original which have been highlighted by the learned D.R. in his arguments. The Appellants have not produced any material to show that the discount was given by them on the sale of their final product on account of inferior quality of their finished product manufactured out of damaged raw material imported by them. We observe from the Adjudication Order that the Chartered Accountant's certificate simply mentions that as a result of contamination and poor quality of material extra manufacturing/process cost of about Rs. 90 lakhs had been incurred and the sales realisation from the PVC pipes was substantially lower than the price of prime quality pipe. This does not anyway indicate that the incidence of duty has not been passed on to their customers. The learned Advocate has relied upon the observation of the Supreme Court in Para 16 of the decision in the case of UOI v. Solar Pesticides Ltd. The said paragraph was dealing with the submissions made by the learned Counsel for the Respondents to the effect that Section 27 should be construed harmoniously with Section 28D of the Act and it was contended that the absence of presumption leads to inference that the provisions of unjust enrichment were not intended to apply to cases of captive consumption. The Supreme Court did not agree with these submissions and observed that "Section 27 of the Act is, in a sense complete code by itself, dealing with the claim for refund of duty. The procedure provided by Section 27(1) is applicable in case of application for refund being filed after the said section was amended. Sub-section (1) itself requires a person making an application for refund, to furnish documents and evidence (including the documents referred to in Section 28C) to establish that the amount of duly in respect of which refund is claimed, was collected or paid by him and incidence of such duty had not been passed on by him to any other person". These observations in Para 16 does not mean to convey that the principle of unjust enrichment will not apply to the refund claim which were filed and pending before the amendment of the section as the same has been held to be applicable by the Constitution Bench in Mafatlal Industries case which was followed by the Supreme Court in the case of Solar Pesticides Ltd, In fact, the Supreme Court referred to the observation in the case of Mafatlal Industries to the effect that "doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect from both the ends.......... The power of the Court is not meant to be exercised for unjustly enriching a person". We also observe that in the Solar Pesticides case the Asstt.

Collector of Customs had rejected the refund claim by order dated 16-2-1985 which is much before the amendment of Section 27 in 1991 and the appeal filed by the Revenue against High Court decision was allowed. We, therefore, reject the appeal filed by the Appellants.