M/S Hindustan Metal Pressing Works Vs.
Commissioner of Central Excise, Pune [2003] Insc 121 (27 February 2003)
M.B.
Shah & D.M. Dharmadhikari Shah, J.
M/s
Hindustan Metal Pressing Works removed the excisable goods at the effective
rate of duty awaiting approval of their classification list No.2/88 in which
they claimed benefit of exemption Notification No.175/86-CE dated 1.3.1986. In
pursuance of the approval of the classification list on 21.6.1988, the Range
Superintendent granted the refund of excise duty for the months of April 1988
to August 1988.
Thereafter,
a show-cause notice dated 22.2.1989 was issued for recovering the said amount
on the ground that it was erroneously refunded. By order dated 8.2.1990, the
Assistant Collector, Central Excise confirmed the demand for a sum of Rs.2,36,515.55
on the basis of principles of unjust enrichment by the assessee. The appeal
against the said order was dismissed by the Collector (Appeals) by judgment and
order dated 20.11.1990. The Customs, Excise & Gold (Control) Appellate
Tribunal, New Delhi (hereinafter referred to as 'the
Tribunal') also dismissed the appeal by impugned judgment and order dated
20.10.1999. That order is challenged by filing this appeal.
Learned
counsel appearing on behalf of the appellant submitted that the orders passed
by the authorities below are, on the face of it, illegal and de hors the
statutory provision. He contended that the foundation for initiating the
proceedings under Section 11-A of the Central Excise Act, 1944 (hereinafter referred
to as 'the Act') in the present case is so-called erroneous refund of the
excise duty paid by the appellant. At the time when the refund order was passed
on the basis of Rule 173-I of the Central Excise Rules (hereinafter referred to
as 'the Rules), there was no question of erroneous refund. It was based on
assessment of RT-12. Admittedly, there is no mistake or error in such
assessment or refund. Hence, it is his submission that principles of unjust
enrichment would not be applicable in the present case.
As
against this, it has been pointed out that though classification list was
approved in June 1988, the appellant continued to collect duty of excise on
enhanced rate from the beginning of financial year 1988-89 even though they
were availing benefit of exemption Notification No.175/86 in the preceding
financial year and, therefore, Assistant Commissioner was justified in coming
to the conclusion that the appellant had intentionally paid excise duty with an
intent to get the same by way of refund and to become enriched with the public
money.
In the
present case, it is admitted that duty was paid in excess of effective rate of
duty and the excess duty paid was refunded while assessing the RT-12 Returns.
The question, therefore, is whether the principles of 'unjust enrichment' as
incorporated in amended provisions would be applicable to the facts of the
present case? Admittedly, refund of the excise duty paid in excess was granted
in 1989. Thereafter, sub-section (2) of Section 11-B which incorporates the
principle of 'unjust enrichment' had come into force w.e.f. 20.9.1991, which
inter alia provides that duty of excise paid in excess would be refunded if the
manufacturer had not passed on the incidence of such duty to any other person.
This provision is not at all attracted. There is basic error in approach by the
Authorities below as the assessee has not filed any application under Section
11B of the Act for refund of the excise duty paid by him. There is no question
of application of principles of unjust enrichment as incorporated in Section
11B. Other relevant provision would be Section 11D which also came into force
from 20.9.1991. It inter alia provides that every person who is liable to pay
duty under the Act or the Rules made thereunder, and has collected any amount
in excess of the duty assessed or determined and paid on any excisable goods
under the Act or the rules made thereunder from the buyer of such goods in any
manner as representing duty of excise is required to forthwith pay the amount so
collected to the credit of the Central Government. If such amount is not paid
to the credit of the Central Government, the Central Excise Officer can serve a
notice requiring him to show cause why the said amount should not be paid by
him to the credit of the Central Government. As stated above, the amount was
refunded to the assessee in 1989, hence there is no question of application of
this provision.
Further,
it would be difficult to hold that past finalized transaction could be reopened
by holding that refund was erroneously granted as there was unjust enrichment.
Considering Rule 173-I of the Rules and Section 11A of the Act, this Court in Serai
Kella Glass Works Pvt. Ltd. v.Collector of Central Excise, Patna [(1997) 4 SCC
641] held thus:
"Rule
173-I. Assessment by proper officer
(1)
The proper officer shall on the basis of the information contained in the
return filed by the assessee under sub- rule (3) of Rule 173-G and after such
further inquiry as he may consider necessary, assess the duty due on the goods
removed and complete the assessment memorandum on the return. A copy of the
return so completed shall be sent to the assessee.
(2)
The duty determined and paid by the assessee under Rule 173-F shall be adjusted
against the duty assessed by the proper officer under sub-rule (1) and where
the duty so assessed is more than the duty determined and paid by the assessee,
the assessee shall pay the deficiency by making a debit in the account- current
within ten days of receipt of copy of the return from the proper officer and
where such duty is less, the assessee shall take credit in the account-current
for the excess on receipt of the assessment order in the copy of the return
duly countersigned by a Superintendent of Central Excise.
16.
The assessee is entitled under Rule 173-F to determine his liability for duty
on the excisable goods manufactured by him and to remove such goods on payment
of duty on self-assessment in accordance with the provisions laid down in the
Rules. But this is only the first step in making of the assessment. The proper
officer is empowered to assess the duty on the goods so removed by the assessee
and complete the assessment on the return filed by the assessee. A copy of the
return so computed by the proper officer has to be sent to the assessee. The
duty assessed and paid by the assessee on self-assessment will be set off
against the duty assessed by the proper officer. If the duty paid by the proper
officer on final assessment is more than the duty determined and paid by the assessee,
the assessee has to pay the deficiency by making a debit in the account-
current within ten days of the receipt of the copy of the return from the
proper officer. If the duty on final assessment payable by the assessee is less
than what he has actually paid, the assessee is entitled to take credit in the
account-current for the excess payment. No question of any show-cause notice
under Section 11-A arises at this stage. The duty has to be paid by making
adjustment in the account-current which has to be maintained by the assessee
within ten days' time." Further, similar contention was specifically dealt
with in Mafatlal Industries Ltd. and others v. Union of India and others
[(1997) 5 SCC 536] and it has been held that provisions of Section 11B do not
apply where refund has been finally and unconditionally made. The relevant
discussion (in paragraph 104) is as under:
"104.
Rule 9-B provides for provisional assessment in situations specified in clauses
(a), (b) and (c) of sub-rule (1). The goods provisionally assessed under
sub-rule (1) may be cleared for home consumption or export in the same manner
as the goods which are finally assessed. Sub-rule (5) provides that "when
the duty leviable on the goods is assessed finally in accordance with the provisions
of these Rules, the duty provisionally assessed shall be adjusted against the
duty finally assessed, and if the duty provisionally assessed falls short of or
is in excess of the duty finally assessed, the assessee shall pay the
deficiency or be entitled to a refund, as the case may be". Any recoveries
or refunds consequent upon the adjustment under sub-rule (5) of Rule 9-B will
not be governed by Section 11-A or Section 11-B, as the case may be. .."
Relying upon the aforesaid judgment, in a similar matter, the Court in Sinkhai
Synthetics & Chemicals (P) Ltd. v. Collector of Central Excise, Aurangabad
[(2002) 9 SCC 416] allowed the appeal and rejected the contention of the
Revenue that the excise duty paid under protest also would be covered by the
provisions of Section 11B.
In the
result, the appeal is allowed. The impugned order passed by the Tribunal
confirming the orders passed by the Assistant Collector and the Collector
(Appeals) is set aside. There shall be no order as to costs.
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