Calcutta High Court
Orient Paper And Industries Ltd. vs Union Of India (Uoi) And Ors. on 17 February, 1987
Equivalent citations: 1992(39)ECC13, 1988(17)ECR225(CALCUTTA), 1987(30)ELT87(CAL)
Author: Suhas Chandra Sen
Bench: Suhas Chandra Sen
JUDGMENT Suhas Chandra Sen, J.
1. During the period between August, 1961 and May, 1968 a dispute arose about the classification of M.G. Poster Paper manufactured by the petitioner, the Central Excise authorities claimed that the M.G. Poster Paper was assessable to duty under Tariff Item 17(4) as packing wrapping paper whereas the contention of the petitioner company was that the M.G. Poster Paper should be assessed to duty under tariff Item 17(3) as printing/writing paper. The Central Excise authorities collected duties on the goods manufactured by it under tariff Item 17(4) and such duties were paid by the petitioner under protest.
2. The petitioner company preferred appeals to the appellate authorities. The appellate proceedings contained for a long time. The matters went upto the Supreme Court. The Supreme Court remanded the cases back to the Collector for deciding afresh on 3rd May 1968. The Appellate Collectoi of Cciucal Excise decided 32 appeals pending before him for different periods and against different orders by an order dated 30th November, 1973 jn favour of the petitioner company. These appellate orders of the Appellate Collector was reviewed by the Government of India and by an order dated 30th September, 1976 the Government of India directing the Appellate Collector to decide the matters afresh after setting aside the order dated 30th November, 1973.
3. The Appellate Collector once again heard the appeals and by two several orders dated 9-6-1980 and 10-7-1980 disposed of all the appeals and held that M.G. Poster Paper should be classified as printing/writing paper and not as packing/wrapping papers. The Appellate Collector directed the Excise Department to grant consequential reliefs to the petitioner in both the aforesaid orders.
4. The petitioner on 23rd July, 1980 applied to the Assistant Collector for giving effect to the orders dated 9th June, 1980 and 10th July, 1980 passed by the Appellate Collector. The Assistant Collector by his order dated 3rd October, 1980 refused to grant refund to the petitioner on two grounds.
5. Firstly, in both the appellate orders, the learned Collector had directed to grant consequential reliefs to the appellant. But it had not been categorically stated the rein to grant the refund of excise duty.
6. The second ground was that the petitioner company sold poster papers manufactured by it to a number of customers/wholesalers. Whatever duty has been paid by the company had been realised in full from all such customers. Since the company had already passed on the entire burden of levy of excise duty to their customers from whom they had collected in full the amount of excise duty paid to the department, no refund of the said duty could be claimed by the company. If any customer of the company from whom excise duty had been collected came with a claim of refund on the ground of any duty unlawfully collected by the company, a question of refund might have arisen. But in this case, if any refund is granted to the company, it will accrue to them "as fortuitous benefit because this benefit cannot be passed on to the actual consumers of the goods who have already accepted the burden of taxation."
7. The claim for refund, therefore, was rejected by the Assistant Collector, Central Excise and Customs, Sambalpure.
8. The Appellate Collector of Central Excise in both the orders dated 9th June, 1980 and 10th July, 1980 had set aside the orders under appeal and directed that 'consequential reliefs be granted to the appellants'. This order has to be carried out by the Assistant Collector. Consequential reliefs in this context can only mean refund of the duty that has been collected from the appellant company. The appeal was against classification and consequential levy of duty on M.G. Poster Paper. The appellant succeeded in the appeals. Consequential relief can only mean refund of the duty unlawfully realised from the appellant. There cannot possibly be any other relief. The Assistant Collector had no jurisdiction to restrict the operative part of the order passed by the Appellate Collector and refused to grant consequential relief on the ground that the appellant had in its turn realised the entire amount of the duty from its customers. What ineffect the Assistant Collector has done is to refuse to grant consequential relief which he was specifically directed to by the Appellate Collector of Central Excise. The order of the Assistant Collector is entirely without jurisdiction and erroneous.
9. Moreover, the petitioner company cannot be refused refund of duty on the ground that the burden of duty has been passed on uiumatel) to its customers. The petitioner company paid the duty under protest and preferred an appeal against the levy. If the contention of the respon dents is to be accepted, it has to be held that whether the petitioner company succeeds in the appeal or loses the result would be the same. The duty will not be refunded to the petitioner company in any event. The question in the appeal was whether the classification was wrongly made and duty was wrongly realised from the petitioner company. If the classification was wrong and the duty was unlawfully realised, the respondents had to refund the duty which was unlawfully realised. The Excise Authority cannot be permitted to retain any amount of tax which has been unlawfully gathered from a tax payer.
10. There is also another aspect of the case. It has been argued that if the refund application is allowed, there will be unlawful enrichment on the part of the petitioner company. I fail to appreciate this argument. It excise duty has been unlawfully realised from the petitioner and if the petitioner paid the duty under protest, the petitioner is entitled to get back whatever has been paid under protest after he succeeds in the appeal. There is nothing unlawful or morally wrong in preferring appeals against unlawful levy of duty. Otherwise, the provision for appeals become meaningless. Goods are not allowed to be removed sold by the Excise authorities until and unless the excise duty is paid. Therefore, excise levies were paid under compulsion of law by the petitioner company. The Central Excise Act, provides for appeals and the petitioner preferred appeals against what it considered unlawful levy of duty. The Appellate authority has upheld the contention of the petitioner company. If the excise authority thereafter refused to refund the amount which was unlawfully realized by the petitioner, that will be morally and legally a wrongful act. If the petitioner's claim is denied, it will be unlawful enrichment on the part of the Government.
11. I am fortified in the view that I have taken by a Judgment of Sabyasachi Mukherjee, J, in the case of Union Carbide Company Limited v. The Assistant Collector of Central Excise 1978 E.L.T. (J. 190). In that case, it was observed :
"If unjust enrichment is not to be permitted to a litigant, it should not also be permitted to the State. The State has no right to collect unauthorised tax or illegal tax. Goods fiscal administration enjoins that all lawful taxes should be properly collected and taxes which are not due if realised by the State should be refunded. Such fiscal administration alone ensures the atmosphere of tax compliance."
12. A similar view was taken by a Division Bench of this Court in the case of Khardah Company Limited. v. Union of India, 1983 E.L.T. 2159 where it was held that where excise duty was collected under compulsion, the assessee had a right to get the refund of duty after the appellate authority had held that excessive realisation has been made. It was observed in that case that the claim of refund of any amount realised under any authority of law was enforceable in law unless it was barred by any specific statutory provisions.
13. In the instant case, excise duty was realised from the company under compulsion of law by the excise authority. The Appellate authority has decided that the levy of duty was erroneous in law. The order of the Appellate Authority must be implemented. In fact, the Appellate Collector has given a direction for grant of consequential reliefs to the petitioner. The petitioner has acquired a right to get back the amount that was realised in excess from the petitioner.
Therefore, there will be an order in terms of prayer (a).
14. By an interim order passed on December, 1980 Mukherji, J, directed the Assistant Collector of Central Excise and Customs, Sambalpur Division, to quantify the consequential reliefs to be given to the petitioner company pursuant to the orders passed by the Appellate Collector of Central Excise on 9th June, 1980 and 10th 3uly, 1980. The quantification was to be done within 15th January, 1981. Since it was not done on 16th 3anuary, 1981, the case was adjourned till 30th 3anuary, 1981. But the quantification was not done by the Assistant Collector of Central Excise even by January 30, 1981. Therefore, an order as passed directing the respondents to refund the sum of Rs. 1,31,15,326.57 p. to the petitioner upon furnishing a bank guarantee to the satisfaction of the Registrar, Appellate Side, the bank guarantee was to be kept renewed till the disposal of the Rule.
15. It has been stated that the amount of Rs. 1,31,15,326.57 p. has been refunded to the petitioner upon the petitioner's furnishing a bank guarantee for the said amount and the bank guarantee had been kept renewed in terms of the aforesaid interim orders dated January 30, 1981.
16. Since I have held in this case that the petitioner is entitled to succeed and the amount of refund claimed by the petitioner has already been paid by the Central Excise .authority, there will be an order directing the Registrar, Appellate Side, to return the bank guarantee furnished by the petitioner. The petitioner is absolved from its undertaking to keep the bank guarantee renewed.
17. The Rule is disposed of finally as above.
18. There will be no order as to costs.
19. This order will not prevent the Department concerned from realising any tax in case the Department succeeds in the appeals that are pending in the Tribunal or in any other or further proceedings in connection with this case.