Customs, Excise and Gold Tribunal - Delhi
Hindustan Metal Pressing Works vs Collector Of C. Ex. on 20 October, 1999
Equivalent citations: 1999(114)ELT991(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal filed by M/s. Hindustan Metal Pressing Works is whether the provisions of Section 11B of the Central Excise Act relating to unjust enrichment are applicable in a case where refund has been sanctioned at the time of assessing RT 12 and a notice has been issued to demand the amount refunded erroneously.
2. Briefly stated facts are that the Appellants removed the excisable goods at the effective rate of duty awaiting approval of their classification list No. 2/8b in which they had claimed the benefit of Notification No. 175/86-C.E., dated 1-3-1986; that in pursuance of the approval of the classification list, the Range Superintendent allowed the refund of excise duty for the month of April, 1988 to August, 1988. Subsequently a show cause notice dated 22-2-1989 was issued for recovery of amount erroneously refunded. The Assistant Collector confirmed the demand amounting to Rs. 2,36,515.55 under his Adjudication order dated 8-2-1990, applying the principles of Unjust Enrichment following the decision of the Bombay High Court in the case of Roplas (I) Ltd. v. C.C.E. On appeal, Collector (Appeals), under the impugned order dated 20-11-1990, rejected the appeal filed by the Appellants.
3. Shri B.S. Nankani, ld. Advocate , submitted that the Refund of the Excise Duty paid by the Appellants was granted in terms of Rule 173-1 of the Central Excise Rules; that the provisions of unjust enrichment cannot be applied to Section 11A of the Central Excise Act and reliance was placed on the decision in the case of C.C.E., Ahmedabad v. Nayan Tobacco Products - 1999 (32) RLT 683 (T) wherein it was held that "the question of unjust enrichment can only be applied in respect of refund claim Under Section 11B and not in receipt of demand of duty Under Section 11A"; that similar views were expressed in the case of C.C.E., BombayII v. Mansukh Dyeing and Printing Mills - 1999 (33) RLT 504 (T). The ld. Advocate, further, submitted that the provisions of Section 11B of the Act are not applicable to the present case as the refund was sanctioned under the provisions of Rule 173-1; that further Under Section 11B of the Act, an application for seeking refund has to be filed and claim for refund has to be made within the time specified in Section 11B; that in present matter no application claiming refund of the excise duty was made; that as per decision in Sulekha Works Ltd. v. C.C.E., Calcutta - 1997 (21) RLT 70 (T), suo moto credit taken by the Appellant therein of excess duty shown to have been paid on assessment of RT 12 Returns by the Range Superintendent was correct in law in terms of Rule 173 (2). The Tribunal also held that "no separate refund applications were required in terms of Section 11B of the Central Excises and Salt Act, 1944 when it was merely a case of assessment of RT 12 Returns under Rule 173-1 in terms of approved classification or price list." He also relied upon the decision in C.C.E., Jamshedpur v. Usha Beltron Ltd. [1996 (13) RLT 237 (T)] wherein it was held that Rule 173-1 does not envisage separate application tor refund and where the Superintendent fails to make suitable endorsement and assess the return authorising the assessee to take credit of the duty paid in PLA refund cannot be denied on the ground of time bar. The ld. Advocate mentioned that the submissions are fortified from the fact that Rule 9B of the Central Excise Rules has been recently amended to make the refund arising as a result of finalization of provisional assessment, subject to the provisions of Section 11B of the Act. He also referred to para 95 of the decision in the case of Mafatlal Industries Ltd. v. U.O.I. - 1997 (89) E.L.T. 247 (S.C.) in which it was mentioned that "Any recoveries or refunds consequent upon the adjustment under Sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be."
4. Countering the arguments, Shri M.P. Singh, ld. DR submitted that though the classification list was approved in June, 1988, the Appellants continued to charge duty of excise at the enhanced rate from their customers; that they should not have paid the duty at enhanced rate from the begining of the financial year 1988-89 as they were availing exemption under Notification No. 175/86 in the preceding financial year and as such the Assistant Commissioner was justified in coming to conclusion that the Appellants had intentionally paid excess duty with an intent to get the same by way of refund and to become enrich with public money. The ld. JDR, further, submitted that para 95 of Mafatlal Industries (supra) decision is not applicable as the assessments were not provisional under Rule 9B of the Rules and moreover the said paragraph refers to limitation and was not referring to the applicability of doctrine of unjust enrichment. He also mentioned that the Act and Rules do not provide any definition for erroneous refund; the erroneous refund could be made for various reasons and it need not be confined to only mistake in assessment; that the Andhra Pradesh High Court in the case of Smith, Klims Beechan Consumer Brands Ltd. v. Assistant Collector, Central Excise - 1993 (67) E.L.T. 469 (AP) has held in a case where refund has already been made and adjusted in PLA, that refund was erroneous as the Petitioner has passed on the incidence of duty to the Customer and Assistant Collector has jurisdiction to issue the show cause notice Under Section HA read with Section 11B of the Act. Finally, he relied upon the decision in the case of Vidula Chemicals & Manufacturing Industries Ltd. v. C.C.E., Calcutta-I -1996 (82) E.L.T. 489 (Tribunal) wherein it was held that in view of provisions of Sub-section (3) of Section 11B, provision of Section 11B are applicable to all types of refunds which are required to be made and this also includes a refund by way of adjustment as contemplated under Rule 173-1 of the Central Excise Rules, 1944."
5. We have gone through the submissions of both the sides. The undisputed facts are that the duty was paid in excess of the effective rate of duty and the refund of excess amount paid as duty was refunded while assessing the RT 12 Returns. The Appellants' main plea is that the provisions of Section 11B relating to unjust enrichment does not apply to demand raised Under Section 11A and to the refund sanctioned in terms of provisions of Rule 173-1. We do not find substance in the submissions of the Appellants. Section 11A of the Central Excise Act provides for issuing of a show cause notice if any duty of excise has been erroneously refunded. In the present appeal, show cause notice has been issued as the incidence of duty had been passed on to the buyers. The Assistant Collector, while adjudicating the matter, relied upon the decision in the case of Roplas (India) Ltd. v. U.O.I. - 1988 (38) E.L.T. 27 (Bom.). Now Section 11B (2) of the Central Excise Act provides for crediting the amount of refund into Consumer Welare Fund if the incidence of duty has been passed on to any other person. The issue involved is whether refund was admissible or not and as it was felt by the Revenue that refund of duty was not payable to the Appellants, a notice for erroneous refund was issued. It cannot, therefore, be said that the provisions relating to unjust enrichment are being made applicable to Section 11A of the Act. The Andhra Pradesh High Court in Smith Klims Beechan Consumer Brands case, (supra) was dealing with such a situation only and held as under :
"It is true that the Supreme Court was considering a case where an application for refund is pending whereas in the present case, the refund has already been effected. However, Section 11A read with Section 11B of the Act confers jurisdiction on the authorities to recover duty alleged to have been erroneously refunded and it is for the manufacturer to prove that the refund is not erroneous. Threfore, we are unable to accept the contention of the petitioner-company that the Assistant Collector has no jurisdiction to issue the show cause notice. It is open to the petitioner to raise all the objections raised in this writ petition before the Assistant Collector and the authorities shall consider them and pass appropriate order."
This judgment of the Andhra Pradesh High Court was not brought to the notice of the Tribunal in the case of Nayan Tobacco Products and Mansukh Dyeing & Printing Mills, supra.
6. The ld. Counsel has relied upon the two decisions of the Tribunal in support of his submissions that provisions of unjust enrichment are not applicable to a refund sanctioned by the Superintendent under Rule 173-1. The issue in Usha Beltron case (supra) was the time limit applicable to the refund claim and the Tribunal held that refund was not hit by time limit as the assessee had made a claim for refund in their RT12 Return. We further observe that the Tribunal in the said decision, also held that "in view of the amended provisions of Section 11B with effect from 20-9-1991, there should be a harmonious construction and in that view of the matter, I also hold that Respondents firm herein is entitled for the adjustment of excess duty paid if they had not passed on the incidence of such duty to any other person." (Emphasis supplied) Further, in Sulekha Works Ltd., (supra) the issue involved was whether separate refund applications were required in terms of Section 11B of the Act when it was merely a case of assessment of RT 12 Returns under Rule 173-1 in terms of approved classification or price list. The Tribunal did not consider the issue as to whether provisions of unjust enrichment will be applicable to such refund. The issue was dealt with by the Tribunal in Vidula Chemicals & Manufacturing Industries case, relied upon by the ld. DR. The Tribunal held as under :
"The above said Sub-section (2) was substituted by the Central Excise and Customs Law (Amendment) Act, 1991 with effect from 20-9-1991 vide Notification No. 30/91-C.E., dated 19-9-1991. It is further seen that under Rule 11B (3) it is specifically mentioned that notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in Sub-section (2). Therefore, the Sub-section (3) covers all types of refunds which are required to be made and this also includes a refund by way of adjustment as contemplated under Rule 173-1 of the Central Excise Rules, 1944."
7. The Appellants have not claimed nor brought any material on record to show that the incidence of duty was not passed on their customers. Accordingly, the appeal filed by them is rejected.