Customs, Excise and Gold Tribunal - Tamil Nadu
Sahu Cylinders And Udyog Pvt. Ltd. vs Collector Of Central Excise on 4 December, 1985
Equivalent citations: 1986(7)ECR307(TRI.-CHENNAI), 1986(26)ELT394(TRI-CHENNAI)
ORDER C.T.A. Pillai, Member (T)
1. The Asst. Collector of Central Excise, Madras VII Division, has by his Order C. No. V/46/18/ 32/84-T.3 dated 26-3-85 rejected the claim for refund of duty from the appellants on a short point that the appellants had not evidenced their intention to refund duty collected from the buyer or given proof of such payment. An appeal was filed by the appellants against this order before the Collector of Central Excise (Appeals), Madras, and that authority rejected the appeal on two grounds:
(a) The provisions of a notification cannot be forced upon a manufacturer if he does not avail of such provision of his own choice. In the present case, the appellants had paid duty on their own voilation; and
(b) It is a well settled principle that where duties have been collected and paid to the Exchequer properly, the same cannot be refunded if the benefit does not pass on to the consumer.
2. Before us, the learned representative for the appellants points out that on 30-11-83, the appellants filed a declaration with the Department indicating that during the financial year 1983-84, their clearances would not exceed Rs. 25 lakhs. They also filed a classification list on 7.1.84 in which the benefit of notification No. 83/83 was claimed. This notification permits clearances up to Rs. 7.5 lakhs free of duty and the next Rs. 7.5 lakhs at a lower rate of duty (75% of the normal rate). On 27.1.84 the appellants received an order for 20,000 cylinders from Hindustan Petroleum Ltd. out of which they were required to supply 8,000 cylinders before the end of the financial year. Similarly an order for 25,000 cylinders were received from Bharat Petroleum Corporation on 3-2-84 with the requirement that 5,000 units should be supplied by the end of the financial year. The appellants found that they would have to supply 13,000 units which would take the value of clearances to about Rs. 35 lakhs. In order not to get into a hassle with the Department, they cleared the goods produced by them on payment of duty. However, one of the important items needed for the manufacture of L.P.G. cylinders is safety valve. The safety valves have to be supplied by the respective customers. Though the two customers expected 13,000 cylinders to be supplied by the end of financial year, they were able to supply only 5998 safety valves. This resulted in the clearance of only 4503 cylinders as against an estimated 13,000 cylinders and the total value of clearances during the financial year thus came to only Rs. 12,07,000/-. The appellants made a claim for refund on 31-8-84 well within the period laid down in Section 11B of the Central Excises and Salt Act, 1944, the first clearance having taken place on 13-3-84. The learned representative for the appellants drew our attention to a decision of this Bench in the case of Collector of Central Excise, Guntur v. Andhra Asphalt (P) Ltd. [Appeal No. E-152/83 (MAS) dated 9.7.85]-1985 (22) E.L.T. 539 (Tribunal), wherein it has been held that the theory of unjust enrichment finds no place in dealing with a claim for refund of duty under Sec. 11B of the Act. He also referred to the decision of the Bombay High Court in the case of I.T.C. Ltd. v. M.K. Chipker and Ors. - 1985 (22) E.L.T. 334 (Bom).
3. The learned Departmental Representative urged that the appellants on their own did not hold themselves out to be a unit in the small scale sector - Notification No. 83/83 is meant to benefit only units in that sector. The decisions cited are not relevant to the present case, as in one there was an erroneous payment of duty and in the other, payment of duty was under mistake of law. Again, the appellants did not wait till their clearances crossed the exemption limit but opted to pay duty from the very beginning. The learned Department Representative referred to the decision of the Delhi High Court in the case of "P. N. Monga Bottlers (P) Ltd. v. Union of India, etc." in C.W. No. 2028/83 dated 23-8-84, wherein that Court has stated where duty has been collected and there was no intention or possibility of the duty amount being returned to the customers, the Court would not interfere.
4. We have considered the arguments of both sides. We note that in terms the appellants are entitled to the benefit of notification as their total clearances during the financial year 1983-84 were only Rs. 12,07,000/- well within the limit of Rs. 25 lakhs set under the notification. We also find that initially they had filed a 'declaration that their clearances would not exceed Rs. 25 lakhs and followed it up with a classification list in which the benefit of the said notification was also claimed. Sufficient material has been brought out to explain how the appellants thought that they were likely to exceed the limit of Rs. 25 lakhs in the financial year 1983-84 but found themselves in trouble due to non-supply of safety valves by the customers, resulting in the lower production and clearances on payment of duty.
5. We have already dealt with the theory of unjust enrichment in our order dated 9-7-85 in the case of Collector of Central Excise, Guntur v. Andhra Asphalt (P) Ltd., Visakhapatnam 1985 (22) E.L.T. 539 (Tribunal). As we have noticed therein a factor kept in view by the High Courts and the Supreme Court in exercising writ jurisdiction under Articles 32 and 226 of the Constitution cannot be imported in dealing with a regular claim for refund of duty under Sec. 11B of the Act. (We have also noted that even in the exercise of this extraordinary jurisdiction, the High Courts have differed in their approach in regard to the theory of unjust enrichment). Hence the decision of the Delhi High Court in the 'P.N. Monga Bottlers (P) Ltd.' case is hardly of any relevance in disposing the present case.
6. We find it difficult to agree that merely because an assessee paid duty voluntarily in excess, he is not entitled to claim refund thereof. If it were so, there would be no justification for a provision like Section 11 B in the Act in its present form.
7. In the result, we allow the appeal with consequential benefit to the appellants.