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Thursday, February 27, 2014

Excise duty - Paid under protest on supply of raw material - High court directed to refund the amount - before returning the amount, an enquiry was conducted under wrongful enrichment - the deputy collector was satisfied that there was no wrongful enrichment but refunded the amount with an unnecessary condition linking the matter with another pending pending supreme court - become final as the amount was received under protest giving an undertaking - Apex court held that an unnecessary condition imposed beyond the scope of subject matter though become final, can not be claimed as an instrument to claim for refund the amount paid under a valid order - Apparently the condition is patent error and as such is liable to be set aside - Apex court set aside the order of tribunal and allowed the appeal = INTERNATIONAL CONVEYORS LTD. APPELLANT VERSUS COMMNR. OF CENTRAL EXCISE & CUSTOMS RESPONDENT =2014(Feb.Part) judis.nic.in/supremecourt/filename=41259

Excise duty -  Paid under protest on supply of raw material - High court directed to refund the amount - before returning the amount, an enquiry was conducted under wrongful enrichment - the deputy collector was satisfied that there was no wrongful enrichment but refunded the amount with an unnecessary condition linking the matter with another pending pending supreme court  - become final as the amount was received under protest giving an undertaking - Apex court held that an unnecessary condition imposed beyond the scope of subject matter though become final, can not be claimed as an instrument to claim for refund the amount paid under a valid order - Apparently the condition is patent error and as such is liable to be set aside - Apex court set aside the order of tribunal and allowed the appeal =

 It is, however, strange that the Deputy Collector,  Central  Excise
        and Customs, Aurangabad passed the following final order:
                 “I hereby sanction the refund u/s 27 of C.A. –  1962  claim
                 for Rs.17,35,119/- with a condition that the  party  should
                 give an undertaking that they will pay back  money  to  the
                 Government in case Supreme Court decides the SLP No.2332/92
                  U.O.I. Vs. M/s. Solar Pesticides Pvt. Ltd.  in  favour  of
                 the Department.”


     9. Apparently, there was  no  issue  of  captive  consumption  in  the
        instant case  and  yet  the  appellant  was  directed  to  file  an
        undertaking as stated hereinabove in the order.  
Being in  need  of
        money, the appellant filed an undertaking under protest, though, in
        our opinion, it was not necessary for the Deputy Collector, Central
        Excise and Customs, Aurangabad to ask for such an undertaking.   Be
        that as it may, the said order was not challenged  by  anybody  and
        therefore, it attained finality.=

it is an admitted fact that the  amount
        of duty paid by the appellant had never been  passed  over  to  the
        purchasers and the said fact has been duly recorded by  the  Deputy
        Collector, Central Excise and  Customs,  Aurangabad  in  his  order
        dated 5th April, 1995.  
The said order  has  attained  finality  as
        nobody challenged the said order. An undertaking,  though  strictly
        not required to be given, was given by the  appellant  as  demanded
        under the aforestated order dated 5th April,  1995  and  ultimately
        the amount had been refunded to the  appellant.  
In  our  opinion,
        there is no question of demanding the said amount again, especially
        when the facts which had been disputed by the  Revenue  before  the
        Tribunal had already been admitted in  the  proceedings  which  had
        been initiated by the Deputy Collector, Central Excise and Customs,
        Aurangabad in his order dated 5th  April,  1995.   
We  are  not  in
        agreement with the findings arrived at by the  Tribunal  which  are
        contrary to the facts recorded by  the  Deputy  Collector,  Central
        Excise and Customs, Aurangabad.  Unfortunately, the said order  has
        not been referred to at all by the  Tribunal.   
Without  disturbing
        the findings arrived at by the Deputy Collector, Central Excise and
        Customs, Aurangabad in his order dated 5th April, 1995, 
the Revenue
        could not have come to an altogether different conclusion on facts.
         
In our opinion, due efforts were made  to  find  out  whether  the
        amount of duty had been passed over  to  the  purchasers,  who  are
        either government  Companies  or  Corporations  controlled  by  the
        Government.  
It has been clearly stated in  the  aforestated  order
        dated 5th April, 1995 that even the  purchasers  had  admitted  the
        fact that the amount of duty paid by the  appellant  had  not  been
        passed over to the said purchasers or  in  other  words,  the  said
        amount of duty had not been recovered from the said purchasers.
    15. We fail to understand as to how the judgment  delivered  in  U.O.I.
        Vs. M/s. Solar Pesticides Pvt. Ltd. (supra) is  applicable  to  the
        case  of  the  appellant.  Neither  this  is  a  case  of   captive
        consumption nor is a case of unjust enrichment.
    16. For the aforesaid reasons, we quash  and  set  aside  the  impugned
        order passed by the Tribunal dated 6th September, 2004.  The appeal
        is allowed with costs.  Looking at the  hardship  suffered  by  the
        appellant, in our opinion, it would be just and proper to award  an
        amount of Rs.25,000/- as costs and the said amount shall be paid to
        the appellant within three months from the date of  this  order  by
        the respondent authority.
2014(Feb.Part) judis.nic.in/supremecourt/filename=41259
ANIL R. DAVE, SHIVA KIRTI SINGH

                                                              NON-REPORTABLE


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 7895  OF 2004


INTERNATIONAL CONVEYORS LTD.      APPELLANT


                                   VERSUS


COMMNR. OF CENTRAL EXCISE & CUSTOMS
                                                  RESPONDENT




                              1 J U D G M E N T




1      ANIL R. DAVE, J.



     1. Being aggrieved by  the  Order  No.  A/1426/WZB/2004/CI  dated  6th
        September, 2004 of the Customs, Excise and  Service  Tax  Appellate
        Tribunal, West Zone Bench at  Bombay  in  Appeal  No.C/560/04,  the
        appellant has approached this Court by way of this appeal.
     2. In our opinion, this case hardly involves any legal  issue  but  we
        feel more concerned  about  the  hard  luck  of  the  appellant,  a
        manufacturer of PVC Coal Conveyor Belting made from imported  Nylon
        Yarn.  We do not propose to go into the circumstances in which  the
        litigation had started but we start from the point which gave  rise
        to some confusion and as a result thereof the appellant was dragged
        to the present litigation.
     3. Upon hearing the learned counsel appearing for the parties  and  on
        perusal of the impugned order and other relevant  orders,  we  find
        that there was some issue with regard  to  imposition  of  duty  on
        import of Nylon Yarn.  It was held by the  Central  Excise  &  Gold
        (Control) Appellate Tribunal, New Delhi  by  its  order  dated  5th
        April, 1991 that the case put forward by the appellant with  regard
        to the classification of the goods imported by it was  correct  and
        the amount which had been demanded by the Revenue, which  had  been
        paid by the appellant under  protest  should  be  returned  to  the
        appellant upon production of evidence of  end use of  the  imported
        yarn in the manufacturing of belting to  the  satisfaction  of  the
        concerned Assistant Collector.
     4. In pursuance of the above order, the appellant filed a refund claim
        along with relevant documents, for Rs.17,35,119/-, the amount which
        was paid by way of duty under protest in respect of the nylon  yarn
        which was imported by the appellant during  the  period  commencing
        from February, 1987 to February, 1988.
     5. As the amount of refund had not  been  paid  in  pursuance  of  the
        refund claim made by the appellant, the appellant  was  constrained
        to file Writ Petition No.5185 of 1993  before  the  High  Court  of
        Bombay praying for a  direction  that  the  aforestated  amount  be
        refunded along with interest thereon to the  appellant.   The  said
        petition was allowed and by virtue of an order  dated  19th  April,
        1994, the High Court had directed the Revenue to  take  appropriate
        action for making payment of the refund  of  Rs.17.35  lacs  within
        three months from the date of the order to the appellant.
     6. After the aforestated order was  passed  by  the  High  Court,  the
        Assistant Collector of Central Excise issued a  show  cause  notice
        dated 27.04.1994 calling upon the appellant to show cause as to why
        the application claiming refund  should  not  be  rejected  on  the
        ground of unjust enrichment as the amount of  tax  was  alleged  to
        have been recovered by the appellant from M/s. Coal India Ltd.  and
        M/s. Singarani Collieries Co. Ltd., to  whom  the  goods  had  been
        supplied by the appellant.
     7. In pursuance of the aforestated show cause  notice,  the  appellant
        had given its reply on 9th May, 1994 giving details to  the  effect
        that the amount of duty paid had  never  been  recovered  from  the
        aforestated two units which were substantially  controlled  by  the
        Government.  Necessary evidence  was  also  adduced  and  even  the
        aforestated two units also confirmed the fact that the  aforestated
        amount of duty paid by the appellant had not  been  collected  from
        them.  The said reply was duly considered by the Deputy  Collector,
        Central Excise and Customs, Aurangabad and thereupon  he  passed  a
        final order dated 5th April,  1995  whereby  he  had  come  to  the
        following conclusion, as recorded in his order:
           “I have gone through the records  of  the  case  carefully.   As
           regards end use of nylon yarn, the jurisdictional  range  Supdt.
           has certified that the raw material  i.e.  nylon  yarn  imported
           under the said B/E has been  used  in  the  manufacture  of  the
           conveyor belting.
                 As regards unjust enrichment, party submitted  that  their
           contracts  were  fixed  price  contract  and  were  without  any
           escalation clause and were signed even before the dispute  arose
           about the custom duty.  M/s. Singarani Collieries Co.  Ltd.  and
           M/s. Coal India Ltd. have also certified that they have not paid
           any extra price due to increase in custom duty. Thus, it emerges
           that since duty is paid under protest, therefore, the limitation
           u/s 27 of C.A. is not applicable to subject refund claim.
                    i) The refund claim is admissible on merit;
                   ii) The refund claim is also admissible on the limitation
                       period;
                  iii) Also the excess duty incidence has not been passed on
                       by the assessee on their buyers.”


        The aforestated facts, as recorded by the Deputy Collector, Central
        Excise and Customs, Aurangabad clearly reveal that  the  amount  of
        duty claimed by way  of  refund  had  not  been  collected  by  the
        appellant from  the  above  named  two  buyers  who  had  purchased
        conveyor belting from the appellant.
     8. It is, however, strange that the Deputy Collector,  Central  Excise
        and Customs, Aurangabad passed the following final order:
                 “I hereby sanction the refund u/s 27 of C.A. –  1962  claim
                 for Rs.17,35,119/- with a condition that the  party  should
                 give an undertaking that they will pay back  money  to  the
                 Government in case Supreme Court decides the SLP No.2332/92
                  U.O.I. Vs. M/s. Solar Pesticides Pvt. Ltd.  in  favour  of
                 the Department.”


     9. Apparently, there was  no  issue  of  captive  consumption  in  the
        instant case  and  yet  the  appellant  was  directed  to  file  an
        undertaking as stated hereinabove in the order.  Being in  need  of
        money, the appellant filed an undertaking under protest, though, in
        our opinion, it was not necessary for the Deputy Collector, Central
        Excise and Customs, Aurangabad to ask for such an undertaking.   Be
        that as it may, the said order was not challenged  by  anybody  and
        therefore, it attained finality.
    10. Ultimately, this Court decided SLP No.2332/92, Union of  India  vs.
        M/s. Solar Pesticides Pvt. Ltd. and the judgment delivered  in  the
        said case has been reported at page no.705 of  2000 (2) SCC.
    11. In our opinion, the aforestated judgment is not at all relevant  so
        far as the appellant’s case is  concerned.   However,  the  learned
        counsel appearing for the respondent had made a  feeble  effort  to
        correlate the aforestated judgment and the facts of the case of the
        appellant.  We do not  agree  with  the  submissions  made  by  the
        learned counsel for the respondent for the  reason  that  Union  of
        India Vs. M/s. Solar Pesticides Pvt. Ltd. (supra) is a  case  where
        incidence of duty had been passed over to the buyer, whereas in the
        instant case it is an admitted fact, even as recorded by the Deputy
        Collector,  Central  Excise  and  Customs,  Aurangabad   that   the
        incidence of duty had not been passed over to the purchaser of  the
        furnished goods.  In spite of the aforestated fact, by a show cause
        notice dated 3rd March, 2003 the appellant was called upon  to  pay
        the amount which had been refunded to the appellant in pursuance of
        the undertaking filed by the  appellant  as  per  order  dated  5th
        April, 1995 passed by the  Deputy  Collector,  Central  Excise  and
        Customs, Aurangabad.  The aforestated show cause notice  dated  3rd
        March, 2003 was replied to by the appellant on 3rd April, 2003  and
        thereupon by an order dated 14th July, 2003  the  said  show  cause
        notice had been dropped.
    12. The order dated 14th July, 2003,  whereby  the  show  cause  notice
        dated 3rd March, 2003 had been dropped, was taken into  review  and
        by an order dated 31st March, 2004 the said review was allowed  and
        thereby once again the appellant was asked to pay the amount  which
        had already been refunded to it.
    13. The said order  dated  31st  March,  2004  was  challenged  by  the
        appellant before the Tribunal  and  the  Tribunal  was  pleased  to
        dismiss the said appeal and the impugned order of  dismissal  dated
        6th September, 2004 has been challenged by the  appellant  in  this
        appeal.
    14. Upon hearing the concerned counsel and looking at the facts of  the
        case, it is very clear that it is an admitted fact that the  amount
        of duty paid by the appellant had never been  passed  over  to  the
        purchasers and the said fact has been duly recorded by  the  Deputy
        Collector, Central Excise and  Customs,  Aurangabad  in  his  order
        dated 5th April, 1995.  The said order  has  attained  finality  as
        nobody challenged the said order. An undertaking,  though  strictly
        not required to be given, was given by the  appellant  as  demanded
        under the aforestated order dated 5th April,  1995  and  ultimately
        the amount had been refunded to the  appellant.   In  our  opinion,
        there is no question of demanding the said amount again, especially
        when the facts which had been disputed by the  Revenue  before  the
        Tribunal had already been admitted in  the  proceedings  which  had
        been initiated by the Deputy Collector, Central Excise and Customs,
        Aurangabad in his order dated 5th  April,  1995.   We  are  not  in
        agreement with the findings arrived at by the  Tribunal  which  are
        contrary to the facts recorded by  the  Deputy  Collector,  Central
        Excise and Customs, Aurangabad.  Unfortunately, the said order  has
        not been referred to at all by the  Tribunal.   Without  disturbing
        the findings arrived at by the Deputy Collector, Central Excise and
        Customs, Aurangabad in his order dated 5th April, 1995, the Revenue
        could not have come to an altogether different conclusion on facts.
         In our opinion, due efforts were made  to  find  out  whether  the
        amount of duty had been passed over  to  the  purchasers,  who  are
        either government  Companies  or  Corporations  controlled  by  the
        Government.  It has been clearly stated in  the  aforestated  order
        dated 5th April, 1995 that even the  purchasers  had  admitted  the
        fact that the amount of duty paid by the  appellant  had  not  been
        passed over to the said purchasers or  in  other  words,  the  said
        amount of duty had not been recovered from the said purchasers.
    15. We fail to understand as to how the judgment  delivered  in  U.O.I.
        Vs. M/s. Solar Pesticides Pvt. Ltd. (supra) is  applicable  to  the
        case  of  the  appellant.  Neither  this  is  a  case  of   captive
        consumption nor is a case of unjust enrichment.
    16. For the aforesaid reasons, we quash  and  set  aside  the  impugned
        order passed by the Tribunal dated 6th September, 2004.  The appeal
        is allowed with costs.  Looking at the  hardship  suffered  by  the
        appellant, in our opinion, it would be just and proper to award  an
        amount of Rs.25,000/- as costs and the said amount shall be paid to
        the appellant within three months from the date of  this  order  by
        the respondent authority.

                                  ……….......................................J
                            .
                                                       (ANIL R. DAVE)







                            ……...........................................J.


                                  (SHIVA KIRTI SINGH)

New Delhi
February 25 ,  2014


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