Punjab-Haryana High Court
Venus Plywoods Pvt. Ltd. vs Asstt. Collector, C. Ex. on 1 April, 1991
Equivalent citations: 1991ECR486(P&H), 1992(58)ELT467(P&H)
JUDGMENT A.L. Bahri, J.
1. The petitioner's Company is registered under the Companies Act as Private Limited Company. The business of the Company is of manufacturing of plywood and other articles of wood falling under Chapter 44 of the Central Excise Tariff Act. The factory is situated at Patrknkot Road, Village Raowali, Jalandhar City. Excise duty was charged from the Company. However, the Customs, Excise & Gold (Control) Appellate Tribunal, on January 22, 1990, ordered on the appeal Filed by the Company that the goods were covered under the classification under Tariff sub-heading 4410.90 and thus the Company was entitled to the consequential relief. Annexure P. 2 is the copy of the order of the Tribunal. The Company preferred an application on April 18, 1990 for refund of the Excise Duty illegally collected. Two amounts were claimed by refund. Rs. 13,36,329.74 and Rs. 56,000/- which covered the period from February 6, 1987 to March 17, 1990. Exhibit P. 3 is the copy of the refund application. The Assistant Collector, ultimately ordered refund of Rs. 56,000/-, but no action was taken for refund of Rs. 13,36,329.74 as stated above. This led the Company to file Civil Writ Petition No. 10037 of 1990 in this Court for a direction to the respondent to implement the order of the Tribunal by granting refund of the aforesaid amount.
2. The Division Bench on October 5, 1990 passed the final order on the writ petition directing the respondent to implement the order of the Tribunal aforesaid within a period of two months provided there was no stay order against the implementation of the same from the Supreme Court. It was further ordered that as a result of the implementation, if any amount was found due, the same should be released forthwith.
3. In spite of the directions given in the order of the High Court, as aforesaid, the amount due was not refunded. Instead, the respondent issued a show cause notice to the Company as to why their application for refund be not rejected, as the duty in question was not borne by the Company but by the customers ultimately. This led the Company to file present Shri Y.D. Banga, Assistant Collector, Central Excise Division, Jalandhar City, who had issued the notice aforesaid and had violated the order passed by the High Court in the writ petition. The notice was issued by the respondent a day before the expiry of two months time allowed by the Division Bench for implementing the order of the Tribunal.
4. On a notice to show-cause, why proceedings under the Contempt of Courts Act be not taken against the respondent, reply has been filed, inter alia, alleging that the notice aforesaid was issued by the respondent in response to instructions issued by the department by Telex (copy Annexure R.1), withdrawing previous instructions on the subject and directing that refund claim should not be sanctioned to manufacturers and importers on the ground of unjust enrichment.
5. Learned counsel for the petitioner has argued that present is a case of deliberate disobedience of the directions given by this Court in the writ petition aforesaid in not implementing the Award of the Tribunal Reference has been made to Section 11 of the Act ibid which imposes a duty on the Authorities to refund the duty illegally collected on acceptance of appeals etc. preferred against the orders imposing such duties. Reliance has been placed on some decisions of the Bombay High Court holding that the doctrine of unjust enrichment is not applicable to the authorities under the Act while deciding cases of refund under Section 11 of the Act. On the other hand, learned counsel for the respondent has argued that a policy decisions was taken by the Department (Government) not to sanction refund of the duty collected if the assessee had shifted the burden to the customers i.e. the assessee had charged duty from the customers. Reference has been made to the decisions on the subject where the Supreme Court and the High Court had pressed into service the doctrine of unjust enrichment, in such like matters. Further, it has been argued that only a show cause notice has been issued as to why application for refund be not rejected leaving the Company to satisfy the Assistant Collector that the liability was not shifted to the customers and the Company was entitled to the refund.
6. In Shiv Shankar Dal Mills etc. etc. v. State of Haryana and Ors. etc., AIR 1980 SC 1037, while holding the market-fee was illegally recovered from the dealers to the extent: of 1% framed a scheme directing the deposit of such amount with the Registrar of the High Court and leaving the assessees to make claims for the refund which was to be allowed on establishing that the liability was not shifted to the consumer. Again the Supreme Court in State of Madhya Pradesh v. Vyankatlal and Anr., AIR 1985 SC 901 declined the refund of sugar fund illegally recovered on the ground of unjust enrichment holding that the burden of paying the amount was transferred by the factory to the purchasers and allowing such a refund to the factory would amount to unjust enrichment. It was held further that it was only on those persons on whom lay the ultimate burden to pay the amount, would be entitled to get a refund of the same. If if was not possible to identify such persons, the amount of the fund could be utilised by the Government for the purpose for which it was created. The aforesaid decisions are not helpful in deciding the present case. Each case of refund of tax or duty, illegally collected, has to be decided on the language of statute dealing with the subject. Furthermore, the Supreme Court and the High Court in the exercise of vast jurisdiction conferred under Articles 32 and 226 of the Constitution, respectively, could pass orders and give directions as considered necessary for just and proper decision of the case. The Supreme Court in Mahabir Kishore and Ors. v. State of Madhya Pradesh, (1989) 4 SCC 1 held that non-refund of the money collected under mistaken view law would amount to unjust enrichment of the State. That was a case covered by Section 72 of the Contract Act.
7. Learned Counsel for the respondent referred to the decision of the Bombay High Court in Roplas (India) Limited and Anr. v. Union of India and Anr., AIR 1989 Bombay 183 where claim for refund was made by the Company and it was held that the Company was not entitled for the refund as the duty was found to have been recovered by the Company from the customers. Their claim for such a refund amounted to a fraud on consumers and the society, as observed. It was further observed that any indulgence in their favour would amount to helping them to enrich them unjustly. Thus they were not entitled to refund the claim. Learned Counsel for the respondent, relying upon the aforesaid decision, has argued that the notice was rightly issued to the petitioner to show cause why the refund claim be not rejected as the Company had collected the amount of the duty from the purchasers. A bill (invoice) was produced in a photostat copy to show that duty was charged from the customer by the Company. This contention cannot be accepted. Roplas's case (supra) was considered subsequently by the Bombay High Court and was held to be not good law in view of Full Bench decision of the Bombay High Court in New India Industries Ltd. v. Union of India, 1990 (46) ELT 23. Those decisions are : Collector of Central Excise v. Weldekar Laminates Pvt. Ltd., 1990 (47) ELT 610; Roche Products Ltd. v. Union of India, 1991 (51) ELT 238 (Bom.); Bombay Burmah Trading Corpn. Ltd. v. Union of India, 1991 (52) ELT 195 (Bom.). In the Roche Products Ltd. 's case (supra) duty was paid under protest, the refund of which was claimed after the Revisional Authority had set aside the decision of the lower forum. It was held in Para 6 of the judgment that the duty recovered by the department on an erroneous principle was bound to be refunded to the Company. Similar view was taken by the Bombay High Court in Kirloskar Cummins Ltd. v. Union of India, 1991 (51) ELT 325 (Bom.). In this judgment interest was also allowed on the amount refundable. The Full Bench decision in the case of New India Industries Ltd. (supra) was followed.
8. From the ratio of the decisions aforesaid it is quite clear that the. doctrine of unjust enrichment is not to be pressed into service by the authorities under the Act while dealing with the cases of refund of duty illegally collected.
9. The explanation offered in the reply filed by the respondent that notice to show cause why application for refund be not rejected on the ground of unjust enrichment on the basis of Government instructions - Annexure R.1 cannot be accepted. If the instructions are issued by the Government which are in accordance with the provisions of the Act or the Rules framed thereunder, they are to be followed by the Authorities under the Act. However, if such instructions are contrary to the provisions of the Act they cannot take the place of law substituting the express provision of the statute. Section 11A as interpreted in the judgments referred to above casts a duty upon the Authority to make refund of the duty collected under orders of the Authorities which have been set aside on appeal or revision. When on judicial side the Court had adjudicated that the doctrine of unjust enrichment would not be applicable to refund application under Sec. 11A of the Act, instructions to the contrary issued by the State Government could not have any precedence. If the intention of the State Government was to nullify the effect of the judicial pronouncements regarding interpretation of the statute, the same could only be achieved by amendment of the statute and not by issuing executive instructions. In the proceedings of the like nature it is not necessary to determine as to whether the amount of the duty illegally collected should or should not be refunded to the Company taking in view the doctrine of unjust enrichment? The question for consideration is short and simple as to whether the respondent has violated order passed by this Court in the writ petition as referred to above which directed the respondent to implement the order of the Tribunal and to refund the amount of duty, if found due to the Company. This was to be done within a period of two months from passing of the aforesaid order. Since, admittedly the Supreme Court has not stayed operation of the order of the High Court though S.L.P. is stated to have been pending and the matter was heard by the Supreme Court when order dated December 21, 1990 was passed which has been produced. In the fact stated above, the respondent was expected to pass the orders of refund on the claim of the Company which was to the tune of Rs. 13,36,329.74 and doctrine of unjust enrichment could not be pressed into service by the respondent.
10. The contempt petition is admitted. The respondent is directed to put in appearance in person on the next date i.e. May 3, 1991, for which date the case stands adjourned for further proceedings.