Karnataka High Court
M/S Astrazeneca Pharma India Ltd., vs Union Of India on 16 November, 2012
Author: H.G.Ramesh
Bench: H.G.Ramesh
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W.P.No.7502/2009
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 16TH DAY OF NOVEMBER 2012
BEFORE
THE HON'BLE MR. JUSTICE H.G.RAMESH
W.P.No.7502/2009 (T-TAR)
BETWEEN:
M/S ASTRAZENECA PHARMA INDIA LTD.
(FORMERLY KNOWN AS M/S ASTRA-IDL LIMITED)
12TH MILE, BELLARY ROAD
VENKATALA KATTIGENHALLI VILLAGE
BANGALORE-560 063
A COMPANY INCORPORATED UNDER THE
COMPANIES ACT 1956
REPRESENTED BY ITS SECRETARY
SHRI N.R.SRINIVASAN ... PETITIONER
(BY SRI RAJESH CHANDER KUMAR, ADVOCATE)
AND:
1. UNION OF INDIA
REPRESENTED BY ITS ADDITIONAL SECRETARY
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
NORTH BLOCK
NEW DELHI
2. STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
MINISTRY OF STATE FOR EXCISE
GOVERNMENT OF KARNATAKA
FINANCE DEPARTMENT (EXCISE)
VIDHANA SOUDHA
BANGALORE
3. THE COMMISSIONER OF EXCISE
IN KARNATAKA STATE
D.J.C. BUILDING
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W.P.No.7502/2009
KITTUR RANI CHENNAMMA CIRCLE
BANGALORE - 560 027 ...RESPONDENTS
(BY SRI B.PRAMOD, CGC FOR R1;
SRI T.K.VEDAMURTHY, HCGP FOR R2 & R3 - ABSENT)
THIS WP IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO DIRECT R1 TO R3 TO
REFUND THE DUTY OF EXCISE TO THE EXTEND OF A SUM OF
RS.37,32,988/- (RUPEES THIRTY SEVEN LAKHS THIRTY TWO
THOUSAND NINE HUNDRED EIGHTY EIGHT ONLY) PAID TO
THE UNION OF INDIA THROUGH THE STATE GOVERNMENT
AUTHORITIES UNDER THE PROVISIONS OF THE MEDICINAL
AND TOILET PREPARATIONS (EXCISE DUTIES) ACT 1955 FOR
THE PERIOD FROM 8.3.1998 TO 8.9.1998 BEING A SUM
EQUAL TO THE AMOUNT OF DUTY OF EXCISE PAID BY THE
PETITIONER TO THE CENTRAL GOVERNMENT UNDER THE
PROVISIONS OF THE CENTRAL EXCISE ACT, 1944 FOR THE
SAID PERIOD, IN RESPECT OF ITS EXCISABLE GOODS BEING
MIT LINCTUS CODEINAE CO.
THIS WP COMING ON FOR HEARING THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
H.G.RAMESH, J. (Oral):
The grievance of the petitioner is that its claim for refund of the Excise duty paid under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 ("the Medicinal Act' for short) on the manufacture of a cough syrup by name, 'Mit's Linctus Codeinae Co' has been erroneously rejected.-3- W.P.No.7502/2009
2. I have heard the learned Counsel appearing for the petitioner and the learned Central Government Counsel for respondent No.1 and perused the orders at Annexures - P, Q & R. None appeared for respondent Nos.2 & 3.
3. The case of the petitioner is that the petitioner had erroneously paid duties under both the Medicinal Act & the Central Excise Act, 1944 ('the Excise Act' for short) and the burden of excess duty paid had not been passed on to the customers and therefore the petitioner is entitled for refund of such excess duty paid during the period of six months prior to 07.09.1998. 07.09.1998 is the date on which the claim was made for refund.
4. Learned Counsel for the petitioner referred to the following finding recorded by the Revisional Authority namely, the Central Government at para 5.7 of its order dated 29.12.2008 (Annexure-R): -4- W.P.No.7502/2009
"5.7 From the records it appears that the Central Excise duty was paid at a later stage under protest which was regularized while confirming the demand. At no occasion it has been disputed by the State government that the Central Excise duty was not passed on to the customer, however the same does not appear to be the case for duty paid by the petitioner under the M&TP Act.
From the facts and circumstances of the case, it appears that the same goods has suffered the duty twice, though under different enactments viz. M&TP Act and the Central Excise Act. However it appears that the duty incidence in respect of duty paid under the M&TP Act has been passed on though the duty paid under the Central Excise Act has been borne by the petitioner. In such a circumstances, the refund claim filed under Rule 13 of the M&TP Rules is hit by the principle of unjust enrichment, and being a Revisionary Authority under rule 128 of the M &TP Rules 1956, it is not possible for me to allow the subject refund -5- W.P.No.7502/2009 claim filed by the petitioner, based on payment made under different enactment."
(Underlining supplied)
5. Learned Counsel appearing for the petitioner, in support of the writ petition, referred to the nine Judge Bench decision of the Hon'ble Supreme Court in Mafatlal Industries Ltd. v. Union of India [(1997) 5 SCC 536] wherein the Supreme Court has held that an assessee is entitled for refund of the duty paid erroneously, if the burden of duty had not been passed on to the customer, subject to satisfying other conditions like period of limitation etc. He submitted that in the light of the law laid down in Mafatlal's case and the finding recorded by the Revisional Authority referred to above, the petitioner is entitled for refund of the excess excise duty paid during the period of six months prior to 07.09.1998. He further submitted that the approach made by all the three authorities in considering the petitioner's claim for refund is contrary -6- W.P.No.7502/2009 to law laid down by the Hon'ble Supreme Court in Mafatlal's case.
6. Learned Central Government Counsel submitted that it is not permissible for the authorities under the Medicinal Act, to refund the duty paid under the Medicinal Act, as admittedly the duty paid under the said Act had been passed on to the customers. He submitted that the approach made by three authorities is in accordance with the Medicinal Act and as admittedly the duty paid under the said Act was passed on to the customers, the impugned order at Annexure - R cannot be faulted with. In support of his submission, he referred to the judgment of the Hon'ble Supreme Court in Union of India v. Kirloskar Pneumatic Co. Ltd. (1996(4) SCC 453). He specifically referred to para 10 of the said judgment which reads as follows:
"10. According to these sub-sections, a claim for refund or an order of refund can be made only in accordance with the provisions of Section 27 which inter alia includes the period -7- W.P.No.7502/2009 of limitation mentioned therein. Mr Hidayatullah submitted that the period of limitation prescribed by Section 27 does not apply either to a suit filed by the importer or to a writ petition filed by him and that in such cases the period of limitation would be three years. The learned counsel refers to certain decisions of this Court to that effect. We shall assume for the purposes of this appeal that it is so, notwithstanding the fact that the said question is now pending before a larger Constitution Bench of nine Judges along with the issue relating to unjust enrichment. Yet the question is whether it is permissible for the High Court to direct the authorities under the Act to act contrary to the aforesaid statutory provision. We do not think it is, even while acting under Article 226 of the Constitution. The power conferred by Articles 226/227 is designed to effectuate the law, to enforce the rule of law and to ensure that the several authorities and organs of the State act in accordance with law. It cannot be invoked for directing the authorities to act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law. In particular, -8- W.P.No.7502/2009 the Customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27, whether before or after amendment. May be the High Court or a civil court is not bound by the said provisions but the authorities under the Act are. Nor can there be any question of the High Court clothing the authorities with its power under Article 226 or the power of a civil court. No such delegation or conferment can ever be conceived. We are, therefore, of the opinion that the direction contained in clause (3) of the impugned order is unsustainable in law. When we expressed this view during the hearing Mr Hidayatullah requested that in such a case the matter be remitted to the High Court and the High Court be left free to dispose of the writ petition according to law".
7. In my opinion, the authorities have examined the claim in a technical manner as to whether the refund was permissible under Rule 13 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 without taking note of the duty paid under the Excise Act. The authorities ought to have taken note of the excise duty -9- W.P.No.7502/2009 paid under both the enactments namely the Medicinal Act & the Excise Act and to the extent the burden of the excess duty paid during the admissible period had not been passed on to the customers, should have been refunded to the petitioner. In my view, this should have been the approach, in the light of the law laid down by nine Judge Bench of the Hon'ble Supreme Court in Mafatlal's case referred to above. This having not been done, in my opinion, the matter requires to be reconsidered by respondent No.3 namely, the Commissioner of Excise.
8. In view of the above, I make the following order:
The orders at Annexure-P dated 25.07.2001, Annexure-Q dated 26.06.2002 & Annexure-R dated 29.12.2008 are set-aside. The matter is remitted to respondent No.3, namely the Commissioner of Excise in Karnataka, for re-examination and on such re-examination, if it is found that any duty not liable to be paid by the petitioner under the Medicinal Act or the -10- W.P.No.7502/2009 Excise Act had been paid during the admissible period, then, to the extent the said burden had not been passed on to the customers, shall be refunded to the petitioner. Respondent No.3 shall take into account the duties paid by the petitioner under both the aforesaid enactments during the admissible period, to examine as to whether any excess duty was paid and as to whether the burden of such excess duty paid had been passed on to the customers or not. It is open to respondent No.3 to ascertain from the concerned officials of the Department of Central Excise, as to whether the excise duty paid under the Excise Act during the admissible period had been passed on to the customers or not. Respondent No.3 shall re-
examine the matter expeditiously as the claim for refund was made in the year 1998.
The writ petition is allowed in the above terms.
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JUDGE Yn.