Bombay High Court
Caprihans India Ltd. vs Union Of India on 22 August, 1990
Equivalent citations: 1991ECR79(BOMBAY), 1991(51)ELT249(BOM)
JUDGMENT Pendse, J.
1. By this petition filed under Article 226 of the Constitution of India, the petitioners are challenge legality of order dated April 27, 1989 passed by Assistant Collector, Central Excise, Thane III Division, Thane holding that the petitioners are not entitled to the refund claim of Rs. 3,19,985.39. The facts leading to the passing of this order are not in dispute.
2. The petitioners are engaged in the activity of manufacture of PVC films and sheetings and decorative laminates, etc. Prior to the year 1981, the petitioners manufactured industrial laminates in different grades which are used as electrical insulations and fittings. The petitioners erroneously classified the said item under the erstwhile Tariff Item No. 68. The duty, was therefore erroneously paid at 30% ad valorem and special duty at 5% of the basic instead of 8% ad valorem. Consequently, the petitioners erroneously paid excise duty in the sum of Rs. 476394.07, for the period between October 1980 and upto March, 1981.
3. The petitioners field claim for refund before the Assistant Collector, Central Excise, Thane on May 26, 1981. The claim was subsequently reduced to Rs. 3,19,985.89. Initially, the Assistant Collector, by order dated September 9, 1981 rejected the claim but the order was set aside in appeal by Collector of Central Excise (Appeals), Bombay, by order dated September 26, 1986. The Appellate Collector held that the item was classified under residuary Tariff Item No. 68. The Department carried appeal before Customs, Excise and Gold (Control) Appellate Tribunal, but the same was rejected by order dated December 5, 1987. Thereafter, the Assistant Collector passed the impugned order rejecting the claim on the ground that the assess Company is not eligible for the refund claim in view of the decision of the High Court in the case of Roplas (India) Limited v. Union of India reported in 1988 (38) Excise Law Times 27 (Bombay). The Assistant Collector felt that grant of refund would amount to unjust enrichment in favour of the petitioners. The Assistant Collector rejected the claim of refund only on the ground of decision of High Court in M/s. Roplas Limited case. The order of Assistant Collector is under challenge in this petition filed under Article 226 of the Constitution of India.
4. Shri Talyarkhan, learned counsel appearing on behalf of the petitioners, submitted that the order of the Assistant Collector is entirely misconceived. The learned counsel urged that it was not open for the Assistant Collector to deny relief on the ground of unjust enrichment while exercising statutory powers under Central Excises and Salt Act. The learned counsel urged that the Central Excise law does not authorised denial of relief on the score of unjust enrichment nor does it make refund of duty conditional on the relief being passed on to the ultimate consumer. The submission of the learned counsel is correct and deserves acceptance. Indeed, Customs, Excise and Gold (Control) Appellate Tribunal in the decision reported in 1990 (47) E.L.T. 610 (Tribunal) Collector of Central Excise v. Weldekar Laminates Pvt. Ltd. held that it is not permissible for the authorities created under Central Excise to deny relief of refund by resort to doctrine of unjust enrichment. The Tribunal warned the Assistant Collector and the Appellate Authorities that they have no power to evoke its own scheme for the refund of the amount to the ultimate consumers and they are bound to grant refund without reference to the doctrine of unjust enrichment. The decision recorded by CEGAT which is final authority under the Act is binding on each and every officer exercising powers under Excise Act and the Assistant Collector in the present case could not ignore the judgment and refuse to grant refund.
5. We must also point out that the Assistant Collector was entirely wrong in making reference to the decision in Roplas case and declining the relief. The doctrine of unjust enrichment is not available for the Assistant Collector and even otherwise the Roplas case judgment is no longer good law in view of the subsequent decision of the Full Bench of this Court reported in 1990 (46) E.L.T. 23 New India Industries Ltd. v. Union of India. We direct the Assistant Collector to ignore the decision in Roplas case while ascertaining whether the assessee is entitled to refund and strictly follow the decision of the CEGAT which is referred to hereinabove.
6. Accordingly, petition succeeds and the impugned order passed by the Assistant Collector, Central Excise, Thane on April 27, 1989 is set aside and the matter is remitted back to the Assistant Collector for fresh disposal in view of the decision recorded by CEGAT in 1990(47) Excise Law Times 610. The Assistant Collector is directed to pass final order on the refund application and pay the refund amount on or before December 31, 1990. In the circumstances of the case, there will be no order as to costs.