Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Cus. And C. Ex. vs Shree Synthetics Ltd. on 15 January, 2003
Equivalent citations: 2003(161)ELT931(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1.In these three appeals filed by the Revenue, the issue involved is whether principles of unjust enrichment will apply to the refund claimed by the respondents, M/s. Shree Synthetics Ltd.
2. Shri R.D. Negi, learned Senior Departmental Representative, submitted that the respondents manufactured synthetic yarn; that they imported spin finish oil from Japan for smooth winding/unwinding of the yarn during different stages of manufacture; that the spin finish oil was assessed to customs duty under Heading No. 34.03 of the First Schedule to the Central Excise Tariff Act without extending the benefit of Notification No. 136/86; that at the time of removal of the goods from the warehouse, the respondents claimed classification under Heading 34.02 of the Tariff read with Notification No. 81/86-Cus. which was not agreed upon by the Department; that subsequently refund claims were filed by the respondents in respect of excess customs duty paid by them; that the matter ultimately reached the Appellate Tribunal which vide Final Order Nos. A/125-127/99-NB, dated 18-2-99 had held that the question of unjust enrichment did not arise in the case of goods used captively, relying upon the decision of the Bombay High Court in the case of Solar Pesticides (P) Ltd., 1992 (57) E.L.T. 201; that on appeals filed by the Revenue, the Supreme Court, vide Order dated 20-3-2002 in Civil Appeal Nos. 3660-3662 of 1999 [2002 (142) E.L.T. 277 (S.C.)], has held that appeals are covered in favour of the Appellants by the judgment of this Court in Union of India v. Solar Pesticides (P) Ltd. [2000 (116) E.L.T. 401 (S.C.) - 2000 (2) SCC 705]; that the Supreme Court has remanded the matter to the Tribunal to consider as to whether the burden of duty was passed on by the assessee. At this stage Shri Dholkia, learned Advocate for the Respondents, mentioned that the Appeal Nos. C/593/95-NB and C/594/95-NB may be remanded to the Adjudicating Authority for considering the question as to whether the incidence of duty was passed on by the respondents to any other person as this aspect has not been considered by the Adjudicating Authority. Learned Senior Departmental Representative also does not have any objection if both these appeals are remanded to the Adjudicating Authority. We, accordingly remand both these appeals to the Adjudicating Authority to consider the question as to whether the principle of unjust enrichment will apply in these matters after affording a reasonable opportunity of hearing to the respondents.
3. In respect of Appeal No. C/620/95-N.B., the learned Advocate for the respondents submitted that in this matter, the refund claims filed by them had been sanctioned by the Asstt. Collector vide Order dated 23-11-90, that subsequently the Appeal was filed against the refund-granted by the Assistant Collector which has also been rejected; that the refund has been sanctioned to the respondents before the amendment of Section 27 of Customs Act; that in such a situation the provisions relating to unjust enrichment are not applicable; that a perusal of Section 27 of the Customs Act reveals that any person claiming refund of any duty has to make an application for refund of duty which shall be accompanied by the evidence that the amount of duty has not been passed on to any other person; that it is thus apparent from Section 27 of the Customs Act that the provisions of unjust enrichment relates to the application being filed for the refund; that once the refund has been sanctioned, the matter cannot be reopened on the ground of unjust enrichment. The learned Advocate relied upon the decision of the Supreme Court in the case of Mafatlal Industries Ltd. v. Union of India - [1997 (89) E.L.T. 247 (S.C.) = 1997 (5) SCC 536] and submitted that in Paragraph 87 (or 96 respectively) Supreme Court has observed that the provisions of Sub-sections (1) and (2) of Section 11B of Central Excise Act apply to pending proceedings; that the Supreme Court has held that these provisions "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 Spinner and ITC. 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 reopened and/or be governed by Section 11B(3) [as amended by the 1991 (Amendment) Act]." Learned Advocate further referred to Para 99(viii) (or Para 108 respectively), wherein the Apex Court has held that "the law laid down in propositions (i) to (vii) above - shall not however entitle the State to recover the taxes/duties already refunded and in respect whereof no proceedings are pending before any Authority/Tribunal or Court as on this date. All pending matters shall, however, be governed by the law declared herein notwithstanding that the tax or duty has been refunded, pending those proceedings, whether under the orders of an Authority, Tribunal or Court or otherwise." Learned Advocate thus contended that in express terms, Section 27 of the Customs Act is not retrospective and it has to be interpreted in terms of language used thereunder; that as the application for refund of excess duty has been finally decided the matter cannot be regarded as a pending matter to which the provisions of amended Section 27 of the Customs Act will apply. He, therefore, submitted that as provisions relating to unjust enrichment are not applicable, the Revenue Appeal deserves to be rejected.
4. On the other hand, Shri R.D. Negi, learned Senior Departmental Representative, submitted that it is not in dispute that after the Assistant Commissioner sanctioned the refund claim to the respondents, the Appeal was preferred before the Commissioner (Appeals) challenging the sanction of refund; that Appeal was also filed with the Appellate Tribunal against the Order passed by the Commissioner (Appeals) rejecting the Revenue's Appeal; that it can, therefore, be not claimed by the respondents that the Assistant Collector's Order had attained finality and matter was not pending in Appeal. He emphasized that the Apex Court in the case, of Mafatlal Industries has clearly held that amended provisions will apply to all proceedings where the refund has not been made finally and unconditionally; that this is evident from both the paragraphs from the decision of the Mafatlal Industries case, referred to by the learned Advocate for the Respondents. Learned Senior Departmental Representative also relied upon the decision of the Supreme Court in the case of Commissioner of Central Excise, Shillong v. Woodcraft Products Ltd. - 2002 (143) E.L.T. 247 (S.C.) wherein it has been held that "upon the reversal by this Court of the Tribunal's Order, the assessee was bound in law to restitute the amounts of such refund to the Revenue".
5. We have considered the submissions of both the sides. We find substantial force in the submissions of learned Senior Departmental Representative that the refund of the duty claimed by the Respondent in Appeal No. C/620/95-N.B. has not attained finality as the matter was challenged first before the Commissioner (Appeals) against the Assistant Collector's Order granting the refund and subsequently before the Appellate Tribunal against the Order-in-Appeal passed by the Commissioner (Appeals). The matter did not end here also as the Tribunal also rejected the Appeal of the Revenue relying on the decision of the Bombay High Court in the case of Solar Pesticides Ltd. The matter finally reached the Apex Court which has allowed the appeals holding that the appeals are covered in favour of the Revenue by the judgments of the Supreme Court in Union of India v. Solar Pesticides (P) Ltd. The Supreme Court has remanded the matter by observing as under :-
"The question as to whether the burden of duty was passed on by the assessee, has not been examined by the Tribunal. It is, therefore, necessary to remand the matter to the Tribunal to consider this aspect in the light of the decision in Solar Pesticides (P) Ltd."
6. In view of this specific direction given by the Apex Court, the matter has to be examined as to whether burden of duty has been passed on by the Respondents. Moreover, in both the paragraphs of the judgment in the case of Mafatlal Industries, the Supreme Court has categorically held that all pending matters shall be governed by the law declared in Mafatlal Industries case notwithstanding that the tax or duty has been refunded. The present matter had not attained finality as the Appeal filed by the Revenue was pending when the amendment was made in Section 27 of the Customs Act. We observe that in the present matter also the Adjudicating Authority has not considered this aspect. We, therefore, remand this matter also to the Adjudicating Authority to examine as to whether the incidence of duty has been passed on by the respondents to other persons, after affording a reasonable opportunity of hearing them.
7. Thus all the three appeals are allowed by way of remand.