Bombay High Court
Union Of India vs Chemical Process Equipments Pvt. Ltd. on 9 January, 1992
Equivalent citations: 1993ECR297(BOMBAY), 1992(59)ELT377(BOM)
Author: S.H. Kapadia
Bench: S.H. Kapadia
JUDGMENT Pendse, J.
1. This is an appeal preferred by the Union of India against judgment dated March 21, 1983 delivered by Hon'ble Mr. Justice Bharucha in Writ Petition No. 1243 of 1981. By the impugned judgment, the learned Judge made the petition absolute and directed Union of India to refund a sum of Rs. 80,477.92 to the respondents. The facts giving rise to passing of this order are as follows :
The respondent No. 1 is a joint stock company of which respondent No. 2 is the Director. Respondents are carrying on business of manufacturing articles of plastics, i.e. pipes of fittings, ducting chimney etc. in a factory situate at Chembur, Bombay. The articles manufactured by the respondents are liable to payment of excise duty and the respondents have paid excise duty in accordance with the rate prescribed under Tariff Item No. 68 during period commencing from March 1, 1975 and ending on December 31, 1978. It is the claim of the respondents that the March 1978, it was realised that duty was paid under T.I. No. 68 by mistake of law because the articles manufactured by the respondents were liable to excise duty under Tariff Item No. 15A(2). On realisation of the mistake, the respondents filed fresh classification list before the Assistant Collector of Central Excise on March 7, 1978. The Government of India published a Trade Notice on September 8, 1978 accepting the claim of the respondents that the articles manufactured by the respondents are liable to payment of excise duty under T.I. No. 15A(2). On publication of the Trade Notice, the Assistant Collector of Central Excise approved the classification list with effect from December 30, 1978. The respondents challenged that order before the Appellate Collector of Central Excise and appeal was allowed and classification list was approved from the date of issuance of the Trade Notice.
2. The respondents filed refund application on April 16, 1979 demanding refund of excise paid between the period September 3, 1977 and February 27, 1978. The refund claim was to the extent of Rs. 80,477.92. The Assistant Collector of Central Excise served show-cause notice upon the respondents as to why the refund claim should not be rejected and after giving personal hearing to the respondents, by order dated May 29, 1981, claim for refund was turned down on the ground that the claim was barred by limitation as prescribed under Rule 11 of Central Excise Rules, 1944. The Asstt. Collector of Central Excise held that as the claim was not made for a period of six months prior to the date of loading of refund claim, the claim was barred by limitation. The decision of the Asstt. Collector of Central Excise was challenged by the respondents by filing Writ Petition No. 1243 of 1981 under Article 226 of the Constitution before the learned single Judge. The learned single Judge by the impugned order set aside the conclusion of the Assistant Collector of Central Excise and directed payment of the refund as claimed. The learned single Judge relied upon the consistent decisions of this Court holding that once it was found that the recovery of excise was illegal, the provisions of Rule 11 are not attracted and it is open for the High Court to direct payment of refund in exercise of writ jurisdiction. Before the learned single Judge, the accuracy of the quantum of the refund was not disputed. The order of the learned single Judge is under challenge.
3. Shri Lokur, learned counsel appearing on behalf of the appellants, submitted that the learned single Judge was in error in holding that the claim of refund was not barred by provisions of Rule 11 of Central Excise Rules, 1944. The submission cannot be accepted. By a catena of decisions delivered by this Court, it has been held that the limitation prescribed under Rule 11 is available to the department in proceedings before the authorities under the Act, but such a defence is not available when the claim is made before the High Court by the assessee in writ jurisdiction. This Court has repeatedly held that it is not permissible for the department to retain the duty recovered without any authority of law by pleading defence of limitation under Rule 11. The learned single Judge therefore was quite justified in setting aside the order of the Assistant Collector of Central Excise and directing refund of the amount claimed by the respondents.
Shri Lokur submitted that even assuming that the duty has been illegally collected by the department, the learned single Judge should have declined the relief. Shri Lokur did not dispute that the Government accepted by issuance of Trade Notice that the duty payable by the respondents was one fixed under Tariff Item No. 15A(2), but urged that the excise duty recovered under Tariff Item No. 68 need not have been directed to be refunded. Reference was made to the decision of the Supreme Court India Cement Ltd. and Others v. State of Tamil Nadu and Others. The submission is entirely misconceived. In the case before the Supreme Court, the validity of levy of cess on royalty under Section 115 of Tamil Nadu Panchayats Act, 1958 was challenged. The Supreme Court upheld the challenge and in paragraph 36 of the judgment declared that the cess is ultra vires and the Government of Tamil Nadu was restrained from enforcing the same any further. The Supreme Court then observed :-
"But the respondents will not be liable for any refund of cess already paid or collected."
From this observation, Shri Lokur submitted that the Supreme Court had laid down a law that in no case, refund should be granted, and even when the duty or tax is recovered without any authority of law. It is impossible to accept this submission. The observation do not lay down any law applicable to all cases.
4. Shri Lokur then submitted that the refund claimed by the respondents should be denied on the doctrine of unjust enrichment. It is not possible to accept the submission of learned counsel for more than one reason. In the first instance, the contention was not raised before the learned single Judge and it is not permissible to raise fresh contention which requires examination of several disputed questions of facts of the first time in appeal. Shri Lokur submitted that the Full Bench of this Court in a judgment reported in 1990 (46) E.L.T. 23, New India Industries Ltd. v. Union of India, has held that it is open for the department to establish by leading evidence that the assessee has passed on liability to the customers. It is undoubtedly so, but the appellants have not produced any material whatsoever even in this appeal to substantiate their claim.
5. Shri Lokur submitted that on April 2, 1991, Shri S. N. Prasad, Assistant Collector of Central Excise had filed affidavit producing the evidence in support of the claim of passing of duty to the customers by the respondents. The counsel for the respondents very rightly submitted that the affidavit should not be read at all because the appellants did not care to serve a copy of the affidavit on the respondents at any stage. Shri Lokur had to concede that the copy of the affidavit was not served and the affidavit was merely tendered before the Prothonotary. As the copy of the affidavit was not served, we direct the Prothonotary to take the affidavit off the record. It is not permissible for the appellants to take the respondents by surprise by tendering affidavit in the registry and without furnishing a copy, to enable the respondents to challenge the correctness of the same. In these circumstances, we decline to examine the contention of Shri Lokur that the respondents have passed on duty to the customers and therefore, are not entitled to claim the refund. In our judgment, the order under challenge does not suffer from any deficiency.
6. Shri Lokur then submitted that in view of the passing of Central Excises and Customs Laws (Amendment) Act, 1991, it is open for the department to decline to make refund notwithstanding any judgment, decree, order or direction of the court and therefore, the order of the learned single Judge should be set aside. We decline to examine any such contention in the present appeal. The issue for our consideration is about the entitlement of the respondents to the amount of refund and in our judgment, the entitlement is successfully established. The question as to whether the department can rely upon the provisions of the amending act the decline to make refund inspite of the judgment, is a question which we are not required to examine at this juncture. In case the department passes any order declining to make payment in view of the provisions of the amending act and in case such order is challenged, then we will examine the same.
7. Accordingly, appeal fails and is dismissed with costs.