Customs, Excise and Gold Tribunal - Delhi
M.P. State Industries Corpn. Ltd. vs Cce, Raipur on 10 April, 2001
ORDER
K.K. Bhatia,
1. The brief facts in the case are that the appellants filed the refund claims of Rs.7.74,451.91, Rs.32,092.90 and Rs. 75,919.77 in respect of the duty paid by them under protest. These refunds had become due to the consequent upon the order No. 402/89 dated 4.10.89 passed by the CEGAT and the order dated 30.5.92 passed by commissioner (Appeals), in their favour. In this decision of the CEGAT, it was held that 26 units of M/s M.P. State Industries Corporation are entitled to exemption under Notification No. 175/86 dated 1.9.86 as amended and they should get benefit of Explanation No. V of this Notification. Consequently the duty paid by them became refundable to them. The Assistant Collector of Central Excise, Bhilai-II issued a show-cause notice dated 13.9.90 calling them to show cause why the claims filed by them should not be rejected. However, on consideration of the representation made by the party, the Assistant Collector allowed the refund claims vide his order dated 24.7.95 but ordered these amounts to be credited in the Consumer Welfare Fund establishing under Section 12 C of the Central Excise Act, 1944. The Assistant Collector in his order observed that the Tribunal granted exemption to the party under Notification No. 175/86 but its order is silent about the refund to be granted under the amended Section 11B. The Assistant Collector relied on the judgement of the Hon'ble Supreme Court in UOI Vs. Jain Spinners [1992 (61) ELT 321] in which it is held that on 20.9.1991 the amended provisions of Section 11 B of the Act came into force with retrospective effect and applied not only to all pending applications for refund of duty but also to all earlier orders and directions given by any Court for such refunds.
2. The party filed an appeal but the Commissioner (Appeals), Bhopal vide his order dated 8.8.2000 held that the appellants had accepted before the adjudicating authority that the duty amount paid by them had been received from their purchasers and this is sufficient for invoking the provisions of unjust enrichment. He accordingly, held that the refund application had rightly been denied by the adjudicating authority and rejected the appeal of the party.
3. This is the second stage appeal filed by the appellants. I have heard Sh. N.L. Srivastava, Consultant for the appellants and Sh. A.K. Jain, JDR for the respondents. The ld. Consultant for the appellants argues that in respect of the amount of Rs.7,74,451.91 they were issued a show-cause notice dated 13.9.90 by Assistant Collector of Central Excise, Bhilai; that they had filed a reply on 10.10.90 and attended the personal hearing on 31.10.90 but however, Assistant Collector of Central Excise, Bhilai failed to pass an order. It is stated that another notice dated 19.6.92 was issued to them asking them to show cause as to why refund claim should not be rejected as the appellant had not submitted certificate as provided under Notification No. 31/91 dated 20.9.91. It is stated that they had already submitted all the concerned documents. It is contended that Assistant Collector vide his impugned Order-in-Original dated 24.7.95 has allowed all the 3 refund claims but the same have been credited to the consumer Welfare fund. It is contended that the appellant's factory is owned and managed by the State of the Government of Madhya Pradesh; that the Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India [1997 (89) ELT 247 (SC)] have held that doctrine of unjust is inapplicable to the State as the State represents the people of the country. It is stated that since their factory is owned and managed by the Govt. of M.P., therefore in the light of the above observation of the Apex Court, the doctrine of unjust enrichment is not applicable in their case.
4. I have considered the above submissions. The only ground raised before me is that the factory of the appellants is owned and managed by the Govt. of M.P. and therefore the doctrine of unjust enrichment is not applicable to them in the light of the observations of the Hon'ble Supreme Court in the case of Mafatlal Industries (supra). The observations of Hon'ble Supreme Court in para 99 of the judgement of M/s Mafatlal Industries Ltd. on which the reliance is placed by the appellants are extracted below:-
"The doctrine of unjust enrichment is a just and salutory doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchasers at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched."
5. The contention of the appellants that since they are owned and managed by the Government of M.P., the principle of unjust enrichment is not applicable to them in the light of the above observations of the Apex Court even when the amount of refund claimed by them is already collected from their buyers, is wholly mis-conceived and entirely against the ratio of the judgement in Mafatlal case. The above observations have to be seen in the light of the plea made before the Court, that, if the refund amount is not paid to the claimant then it remains with the State thereby unjustly enriching it. It is in this context that the Apex Court has made the above observations and also the observations in para 74 of this judgement thus :-
"Where the petitioner-plaintiff alleges and establishes that he has not passed on the burden of the duty of others, his claim for refund may not be refused. In other words, if he is not able to allege and establish that he has not passed on the burden to others, his claim for refund will be rejected whether such a claim is made in a suit or a writ petition. It is a case of balancing public interest vis-a-vis private interest. Where the petitioner plaintiff has not himself suffered any loss or prejudice (having passed on the burden of the duty to others), there is no justice or equity in refunding the tax (collected without the authority of law) to him merely because he paid it to the State. It would be a windfall to him. As against it, by refusing refund, the monies would continue to be with the State and available for public purposes. The money really belongs to a third party - neither to the petitioner/plaintiff view taken in all jurisdictions. It has also been emphasised by this Court In D. Cawasji wherein Mathew, J. not only pointed out the irrational and unjust consequences flowing from the holding in Bhailal Bhai and Aluminium Industries but also pointed out the adverse impact on public interest resulting from the holding that expending the taxes collected by the State is not a valid defence (see Paras 39 and 40). This would not be a case of unjust enrichment of the State, as suggested by the petitioners-appellants. The very idea of "unjust enrichment" is inappropriate in the case of the State, which is in position of parens patrea, as held in Charan Lal Sahu V. Union of India [1990 (1) S.c.C. 613 at 649]. And even if such a concept is tenable, even then, it should be noticed that the State is not being enriched at the expense of the petitioner-plaintiff but at someone else's expense who is not the petitioner-plaintiff. As rightly explained by Saikia, J. in Mahabir Kishore & Ors. V. State of Madhya Pradesh [1989 (43) ELT 205 (SC) = 1989 (3) SCR 596], "the principle of unjust enrichment requires - first that the defendant had been 'enriched' by the receipt of a 'benefit'; secondly, that this enrichment is 'at the expense of the plaintiff'; and thirdly, that the retention of the enrichment be just. This justifies restitution". We agree with the holding in Air Canada (quoting Professor George C. Palmer) that in such a case, "it seems preferable to leave the enrichment with the tax authority instead of putting the judicial machinery in motion for the purpose of shifting the same enrichment to the tax-payer."
6. I think the above views of the Apex Court effectively negate the plea raise by the appellants. There is, therefore, no force in this appeal and the same is rejected upholding the order passed by the lower authorities.