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Tuesday, August 30, 2016

refund of paid excess excise duty= in the claim for refund of excess duty paid can be allowed only in case where the burden of duty has not been passed on to any other person, which includes the ultimate consumer as well = The respondent-Assessee is a 100 per cent Export Oriented Unit (EOU) manufacturing cotton yarn. The respondent filed an application for refund of an amount of Rs. 2,00,827/- on 14.08.2002 on the ground that it had paid excess excise duty at the rate of 18.11 per cent instead of 9.20 per cent. The Assessee initially passed on the duty incidence to its customers. Later the Assessee returned the excess duty amount to its buyers which was evidenced by a certificate issued by the Chartered Accountant on 02.08.2002. The refund claim was rejected by the Deputy Commissioner of Central Excise, Kolhapur Division vide an order dated 24.09.2002 on the ground that the Assessee did not submit either the credit notes or the Chartered Accountant’s certificate at the time of filing the refund application. Not satisfied with the genuineness of the documents the Deputy Commissioner rejected the refund claim. The Commissioner (Appeals) Central Excise, Pune allowed the appeal filed by the Assessee by taking note of the certificate issued by the Chartered Accountant and the credit notes dated 29.07.2002. The Appellate Authority accepted the Assessee’s contentions and held that there was no reason to doubt the genuineness of the documents produced. The Appellate Authority allowed the appeal of the Assessee and the said order was confirmed by the Central Excise and Service Tax Appellate Tribunal vide judgment and order dated 06.10.2005. The said order of Central Excise and Service Tax Appellate Tribunal was further confirmed by the High Court of Judicature at Bombay in Central Excise Appeal No. 100 of 2008 filed by the Revenue. The Revenue has filed the above Civil Appeal challenging the validity of the judgment of the High Court in Central Excise Appeal No. 100 of 2008. Except for a factual dispute about the genuineness of the certificate issued by the Chartered Accountant and the credit notes raised by the Assessee regarding the return of the excess duty paid by the Assessee, there is no dispute in this case of the duty being passed on to any other person by the buyer. As it is clear that the Assessee has borne the burden of duty, it cannot be said that it is not entitled for the refund of the excess duty paid. In view of the facts of this case being different from Civil Appeal No. 7906 of 2002, the appeal preferred by the Revenue is dismissed.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 7906 of 2002

Commissioner of Central Excise, Madras
                                                           .... Appellant(s)
                                   Versus
M/s Addison & Co. Ltd.
                                                             … Respondent(s)
                                    WITH

                        CIVIL APPEAL No. 8488 of 2009

                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 25055 of 2009)

                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 18426 of 2015)

                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 18423 of 2015)

                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 18425 of 2015)


                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 23722 of 2015)

                       CIVIL APPEAL No. 14689 of 2015

                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 12282 of 2016)


                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 16142 of 2016)

                      CIVIL APPEAL No. _________of 2016
                 (Arising out of SLP (C) No. 16141 of 2016)


                               J U D G M E N T
L. NAGESWARA RAO, J.
      The above Appeals have been listed  before  us  because  of  an  order
dated 16.07.2008, by which there was a reference to a Larger Bench  in  view
of the importance of the questions involved.
2.    Civil  Appeal  No.  7906  of  2002  arises  from  the  judgment  dated
23.11.2000 passed by the Madras High Court in R.C. No. 01  of  1999.   Civil
Appeal No. 14689 of 2015 was filed  by  the  Revenue  against  the  judgment
dated 26.11.2014 in Central Excise Appeal No. 21  of  2009.   Special  Leave
Petition (C) Nos. 18426 of 2015, 18423 of 2015,  18425  of  2015,  23722  of
2015, 12282 of 2016, 16142 of 2016 and 16141 of 2016 are filed  against  the
judgment of the Andhra Pradesh High Court in Central Excise Appeal Nos.   21
of 2005, 9 of 2005, 51 of 2004, 10 of 2005, 44 of 2004, 38 of  2004  and  18
of 2005 respectively.
3.    Civil Appeal No. 8488 of 2009 is  filed  against  the  judgment  dated
20.08.2008 passed by the Bombay High Court in Central Excise Appeal No.  100
of 2008 and Special Leave Petition (C) No. 25055 of 2009  is  filed  by  the
Union of India against the judgment dated 26.11.2008 of the  High  Court  of
Rajasthan at Jodhpur in D.B. Central Excise Appeal No.  34 of 2007.
4.    Civil Appeal No. 7906 of 2002 will be taken as the lead matter as  SLP
(C) Nos. 18426, 23722, 18425, 18423 of 2015 and 12282, 16141  and  16142  of
2016 and Civil Appeal No. 14689 of 2015  were  disposed  of  by  the  Andhra
Pradesh High Court by following the Madras High  Court’s  impugned  judgment
in Civil Appeal No. 7906 of 2002.  Civil Appeal No. 8488  of  2009  and  SLP
No. 25055 of 2009 will be dealt with separately as the facts and  the  point
involved are slightly different.
Civil Appeal No. 7906 of 2002
5.    The respondent in the  above  appeal  is  a  manufacturer  of  cutting
tools.  The respondent-Assessee filed a refund claim for Rs. 40,22,133/-  on
19.07.1988  and  a  supplementary  refund  claim  for  Rs.   5,44,688/-   on
15.06.1989 towards excise duty paid on various taxes and discounts  such  as
turnover tax, surcharge, additional sales discounts,  transitory  insurance,
excise discounts, additional discounts and  turnover  discounts.   The  said
claim was later on revised to Rs. 40,37,938/- on 17.08.1988.  The  claim  of
the Assessee was that the said amount was deductable from the  excise  duty.
The Department was of the opinion that the refund towards turnover  discount
and additional discount was to be rejected as the Assessee was not  eligible
for deduction from the wholesale price  for  determination  of  value  under
Section 4 of the Central Excises & Salt Act, 1944.  On 23.08.1989  a  notice
was issued to the respondent to show  cause  as  to  why  the  refund  claim
involving turnover discount and additional discount should not be  rejected.
 After hearing the Assessee, the  Assistant  Collector  by  an  order  dated
06.12.1989  rejected  the  refund  claim  amounting  to  Rs.26,37,462/-  and
Rs.17,17,808/- in respect  of  turnover  discount  and  additional  discount
respectively on the ground that the quantum of discount  become  known  only
at the year end.  The Collector of Central  Excise  Appeals  set  aside  the
said order dated 06.12.1989 of the  Assistant  Collector  by  his  order  in
appeal dated 21.02.1990 and held that the Assessee was entitled to refund.
6.    As per the amendment made to Section 11-B of the Central  Excise  Act,
1944, (hereinafter referred to  as  “the  Act”)  an  application  filed  for
refund prior to the Central Excises &  Customs  Laws  (Amendment)  Act  1991
shall be deemed to have been made under the  Amendment  Act  and  considered
accordingly.  The Assistant Collector of Excise issued a show  cause  notice
dated 13.02.1992, directing the Assessee to produce evidence in  support  of
the refund claim. It was mentioned in the said notice  that  the  burden  of
proof to show that the full incidence of duty  has  not  passed  on  to  the
buyers is on the Assessee as per Section 12-B of the Act.
7.    The Assistant Collector passed an Order-in-Original  dated  27.10.1992
holding that the Assessee is entitled for the refund claimed  by  him.   The
Collector of Central Excise by  Order-in-Appeal  dated  20.10.1993  rejected
the appeal filed by the Revenue and upheld the  order  dated  27.10.1992  of
the Assistant  Collector  of  Central  Excise,  Madras  Vth  Division.   The
Customs, Excise and Gold (Control) Appellate Tribunal  (CEGAT),  South  Zone
Bench of Madras allowed the appeal filed by the Revenue  against  the  order
dated 20.10.1993 of the Collector of  Central  Excise.   The  Tribunal  held
that the Assessee would be entitled to grant of refund only if  he  had  not
passed on the duty burden to his buyers.  It was also held  that  the  buyer
in turn, would be entitled to claim refund only if he has not passed on  the
incidence of duty to any other person.  It was further held by the  Tribunal
that the event which gives rise to cause of action for refund is payment  of
duty made in respect of goods cleared from the factory  and  once  the  duty
burden has been passed on to the buyer at the time  of  clearance,  issuance
of credit note at a later point of time would not entitle  the  Assessee  to
claim any refund.  The Tribunal also held that burden of  duty  is  normally
passed by the manufacturer and the dealer to the ultimate consumer.
8.    The Assessee filed an application for reference of  questions  arising
out  of  the  final  order  dated  07.12.1996.  The  Tribunal  referred  the
following questions for consideration of the High Court by its  order  dated
28.08.1998, taking note of the fact of the existence of divergent  views  on
the point.
“1. Whether by passing on the duty element on the discount  to  its  dealers
the applicant had satisfied the requirements of proviso ‘d’ to  sub  Section
11-B (2) of the Central Excise Act, 1944 and was therefore, entitled  to  be
paid the amount claimed as refund?
2.    Whether the Tribunal after finding that the burden of duty was  passed
on by the applicant to its various dealers by  issue  of  credit  notes  was
right  in  concluding  that  the  ingredients  of  Section  11-B  were   not
satisfied.”
9.    The High Court of Madras answered  the  reference  in  favour  of  the
Assessee by its judgment dated 23.11.2000.  The High  Court  held  that  the
refund towards deduction of  turnover  discount  cannot  be  denied  on  the
ground that there was no evidence to show who is the  ultimate  consumer  of
the product and as to whether the ultimate consumer had borne the burden  of
the duty.   According to the High Court, Section 11-B of the Act  cannot  be
construed as having reference to the  ultimate  Consumer  and  it  would  be
sufficient for the claimant to show that he did not pass on  the  burden  of
duty to any other person.  It was further held by the High  Court  that  the
claim  for  refund  made  by  the  manufacturer  is  not  dependent  on  the
identification of the ultimate consumer.  The word ‘buyer’ used  in  Section
12-B of the Act does not refer to ultimate consumer and has  reference  only
to the person who buys the goods from the person who has paid duty i.e.  the
manufacturer.  The High Court  concluded  that  the  Tribunal  committed  an
error in holding that the Assessee was not entitled for refund  despite  the
Assessee  proving  that  the  duty  was  not  passed  on  to   its   buyers.
Challenging the legality and validity of  the  said  judgment  of  the  High
Court, the Commissioner of Central Excise, Madras  has  filed  Civil  Appeal
No. 7906 of 2002.
10.   We have  heard  Mr.  Atmaram  N.  S.  Nadkarni,  Additional  Solicitor
General and Mr. K. Radhakrishnan, Senior Advocate for the appellant and  Mr.
N. Venkatraman, Senior Advocate for the respondent. The  learned  Additional
Solicitor General submitted that a claim for refund can be entertained  only
when the claimant has not passed on  the  duty  to  any  other  person.   By
referring to the statement of objects and reasons for the amendment made  to
the Central Excises  &  Customs  Laws  (Amendment)  Act  1991,  the  learned
Additional Solicitor General submitted that the Act had given effect to  the
recommendations of the Public Accounts Committee whereby the refund  of  any
duty was proposed to be made only to the person  who  ultimately  bears  the
incidence of such duty.  He submitted that  it  would  be  necessary  for  a
verification to be done to find out as to who actually bore  the  burden  of
duty.   According  to  him  such  verification  would  not  stop  with   the
manufacturer and his buyer but would extend to the ultimate buyer  i.e.  the
consumer. He submitted that there can be no claim for refund  on  the  basis
of post clearance  transactions.  He  further  submitted  that  there  is  a
presumption, though rebuttable, that the full  incidence  of  the  duty  has
passed on to the buyer of  the  goods.   The  learned  Additional  Solicitor
General has strongly relied upon Mafatlal Industries  Ltd.  and  Others  Vs.
Union of India And Ors., reported  in  (1997)  5  SCC  536  to  support  his
contentions on unjust enrichment.
11.   Mr.  N.  Venkatraman,  Senior  Advocate  appearing  for  the  Assessee
contended that turnover discount is an admissible deduction, the  scheme  of
turnover discount was known to the buyer even at the time of sale,  discount
was given on the basis of the turnover of sales made by the buyer  and  that
the credit notes issued to the buyer contains the  discounts  and  the  duty
element.  Though there is a confusion  from  the  pleadings  and  the  order
passed by the High Court regarding the passing of  the  incidence  of  duty,
Mr. N. Venkatraman had fairly  submitted that  the  incidence  of  duty  was
originally passed on to the buyer.  He submitted that the turnover  discount
should be allowed to be deducted from the sale price as  held  in  Union  of
India and Others Vs. Bombay Tyre International Pvt. Ltd. reported in  (1984)
1 SCC 467 and (2005) 3 SCC 787.  He contends that in the said  judgments  it
was held that trade discounts should not be  disallowed  only  because  they
are not payable at the time of each invoice or  deducted  from  the  invoice
price.  He also placed reliance on IFB Industries Ltd. Vs. State  of  Kerala
reported in (2012) 4 SCC 618 to support his submission that to  qualify  for
exemption, discounts need not be shown in the invoice itself.
12.   Mr.Venkatraman further submitted that the eligibility of the  Assessee
for refund of amounts towards turnover discounts is no longer  in  doubt  as
this Court by its judgment dated  11.03.1997  in  Addison  &  Company  Ltd.,
Madras Vs. Collector of Central Excise, Madras reported in (1997) 5 SCC  763
had held that turnover discount is an admissible deduction.  He stated  that
Section 4 read with Section 11-B of the Act permits the respondent to  claim
for refund of turnover discount given after the sale,  provided  the  scheme
of discount has been agreed upon prior to the removal  of  the  goods.   The
Assessee while issuing a credit note for the turnover discount has  returned
the duty component forming part of the said discount. As  the  Assessee  has
not retained the duty component of the turnover discount, he does not  stand
to benefit from both ends and hence he is entitled for claiming a refund  of
the excess duty paid.  The refund to  which  the  Assessee  is  entitled  to
would not result in any unjust enrichment. While referring to  the  relevant
provisions of Section 11-B, 12-A and 12-B of the Act,       Mr.  Venkatraman
submitted that the buyer mentioned in  the  said  provisions  would  be  the
buyer of the  goods  from  the  manufacturer  Assessee.   He  stressed  upon
Clauses ‘a’ to ‘f’ of the Proviso to Section 11-B  (2)  in  support  of  his
submission that the only persons eligible to make a claim for  refund  would
be the manufacturer, his buyer and a class of persons  as  notified  by  the
Central Government.  On the basis of the above submission,  he  states  that
there is absolutely no necessity for any verification to be made as  to  who
is the ultimate consumer and as to whether he had borne the  burden  of  the
duty.  According to him, if  the  manufacturer  is  entitled  for  a  refund
towards an admissible deduction, such refund has to be given to  him  if  he
did not retain the benefit.   He also  stated  that  the  judgment  of  this
Court in Mafatlal Industries Ltd. & Ors. Vs. Union of  India  (supra)  which
was relied upon by the learned Additional Solicitor General would, in  fact,
support his case.  He further submitted that  the  identity  of  the  Excise
duty is lost at the sales conducted downstream as the duty becomes  part  of
the price.
13.   In reply to the submissions of Mr. Venkatraman, Sr. Advocate, the  Ld.
Additional Solicitor General stated that the verification to be done by  the
Department to enquire about the ultimate buyer who  has  actually  paid  the
duty is not a futile exercise.  He stated that the  refund  can  be  granted
only to the person who has paid the duty and not  to  anyone  else.  If  the
ultimate consumer cannot be identified, the amount would be retained in  the
Fund and utilized for the benefit of Consumers.
14.   We have considered the submissions made by the Counsel  carefully  and
examined the material on record. The questions that arise for  consideration
in this case are whether the Assessee is entitled for a refund  and  whether
there would be unjust enrichment if the said  refund  is  allowed.   It  was
held by the Special  Bench  of  CEGAT,  New  Delhi  by  its  judgment  dated
17.03.1994 in Collector of Central Excise, Madras Vs.  Addison  &  Co.  Ltd.
that the turnover discount is not an  admissible  abatement  on  the  ground
that the quantum of discount was not known prior to  the  removable  of  the
goods.  In an appeal filed by the respondent-Assessee,  this  Court  by  its
judgment dated 11.03.1997 in Addison & Co. Ltd.  Vs.  Collector  of  Central
Excise, Madras (supra) held that the  turnover  discount  is  an  admissible
deduction.  This Court approved the normal practice  under  which  discounts
are given and held that the discount is known to the dealer at the  time  of
purchase.  The Additional Solicitor General submitted that any  credit  note
that was raised post clearance will  not  be  taken  into  account  for  the
purpose of a refund by the Department.   We  do  not  agree  with  the  said
submission as it was held by this Court in Union of  India  Vs  Bombay  Tyre
International (supra) that trade discounts  shall  not  be  disallowed  only
because they are not payable at the time of each invoice  or  deducted  from
the invoice price.  It is the submission of the Assessee that  the  turnover
discount is known to the dealer even at the  time  of  clearance  which  has
also been upheld by this Court.   It  is  clear  from  the  above  that  the
Assessee is entitled for filing a claim for refund on the  basis  of  credit
notes raised by him towards turnover discount.
15.   The following provisions of Central Excise Act, 1944 are relevant  for
appreciating the point of unjust enrichment:-
SECTION 11B. Claim for refund of duty. —
“(1) Any  person  claiming  refund  of  any  duty  of  excise  may  make  an
application for refund of  such  duty  to  the  [Assistant  Commissioner  of
Central Excise or Deputy Commissioner of Central Excise] before  the  expiry
of [one year] [from the relevant date] [[in such form and manner] as may  be
prescribed and the application shall be accompanied by such  documentary  or
other evidence (including the documents referred to in section 12A)  as  the
applicant may furnish to establish that the amount  of  duty  of  excise  in
relation to which such refund is claimed was collected  from,  or  paid  by,
him and the incidence of such duty had not been passed  on  by  him  to  any
other person :
Provided that where an application for  refund  has  been  made  before  the
commencement of the Central Excises and Customs Laws (Amendment) Act,  1991,
(40 of 1991), such application shall be deemed to have been made under  this
sub-section as amended by the said Act and the same shall be dealt  with  in
accordance with the provisions of sub-section (2)  as  substituted  by  that
Act :]
[Provided further that] the limitation of [one year] shall not  apply  where
any duty has been paid under protest.
 * * * *
(2) If, on receipt of any such application, the [Assistant  Commissioner  of
Central Excise or Deputy Commissioner of Central Excise] is  satisfied  that
the whole or any part of the  duty  of  excise  paid  by  the  applicant  is
refundable, he may make an order accordingly and the  amount  so  determined
shall be credited to the Fund :
Provided that the amount of duty of excise as determined by  the  [Assistant
Commissioner of Central Excise or Deputy  Commissioner  of  Central  Excise]
under the foregoing provisions of this sub-section shall, instead  of  being
credited to the Fund, be paid to the applicant, if such amount is  relatable
to-
(a)   rebate of duty of excise on excisable goods exported    out  of  India
or on excisable materials used in  the    manufacture  of  goods  which  are
exported out of India;
(b)   unspent advance deposits lying in balance in the  applicant’s  account
current maintained with the [Commissioner of Central Excise];
(c)   refund of credit of duty paid on excisable goods  used  as  inputs  in
accordance with the rules made, or any notification issued, under this  Act;

(d)   the duty of excise paid by the manufacturer, if he had not  passed  on
the incidence of such duty to any other person;
(e)   the duty of excise borne by the buyer, if he had  not  passed  on  the
incidence of such duty to any other person;
(f)   the duty of excise borne by any other such class of applicants as  the
Central Government may, by notification in the Official Gazette, specify :
Provided further that no notification under clause (f) of the first  proviso
shall be issued unless  in  the  opinion  of  the  Central  Government,  the
incidence of duty has not been passed on by the  persons  concerned  to  any
other person.
(3) Notwithstanding anything to the  contrary  contained  in  any  judgment,
decree, order or direction of the Appellate Tribunal of  any  Court  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).
(4) Every notification under  proviso  to  sub-section  (2)  shall  be  laid
before each House of Parliament, if it is sitting, as soon as may  be  after
the issue of the notification, and, if it is not sitting, within seven  days
of its re-assembly, and the Central Government shall seek  the  approval  of
Parliament to the notification by a resolution  moved  within  a  period  of
fifteen days beginning with the day on which the  notification  is  so  laid
before the House of the People and if Parliament makes any  modification  in
the notification or directs that  the  notification  should  cease  to  have
effect, the notification shall thereafter have effect only in such  modified
form or be of no effect, as the case may be, but without  prejudice  to  the
validity of anything previously done thereunder.
(5) For the removal of doubts, it is hereby declared that  any  notification
issued under clause f of the first proviso  to  sub-section  (2),  including
any such notification approved or modified under  sub-section  (4),  may  be
rescinded by the Central Government at  any  time  by  notification  in  the
Official Gazette.]
[Explanation. — For the purposes of this section, -
(A)  “refund” includes rebate of duty of excise on excisable goods  exported
out of India or on excisable materials used  in  the  manufacture  of  goods
which are exported out of India;
(B)    “relevant date” means, -
(a) in the case of goods exported out of India  where  a  refund  of  excise
duty paid is available in respect of the goods themselves or,  as  the  case
may be, the excisable materials used in the manufacture of such goods, -
(i)   if the goods are exported by sea or air, the  date  on           which
the ship or the aircraft in which such goods             are loaded,  leaves
India,
      or
(ii)  if the goods are exported by land, the  date  on                 which
such goods pass the frontier,
      Or
(iii)        if  the   goods   are   exported   by   post,   the   date   of
dispatch of goods by the Post Office concerned to a           place  outside
India;
  (b)  in  the  case  of  goods  returned   for   being   remade,   refined,
reconditioned, or subjected to any other similar process,  in  any  factory,
the date of entry into the factory for the purposes aforesaid;
(c) in the case of goods to which banderols are required to  be  affixed  if
removed for home consumption but  not  so  required  when  exported  outside
India, if returned to a factory after having been removed from such  factory
for export out of India, the date of entry into the factory;
(d) in a case where a manufacturer is required to pay a sum, for  a  certain
period, on the basis  of  the  rate  fixed  by  the  Central  Government  by
notification in the Official Gazette in full discharge of his liability  for
the duty  leviable  on  his  production  of  certain  goods,  if  after  the
manufacturer has made the payment on the basis of such rate for  any  period
but before the expiry of that period such rate is reduced, the date of  such
reduction;
[(e) in the case of a person, other  than  the  manufacturer,  the  date  of
purchase of the goods by such person;]
(ea)  in the case of goods which are  exempt  from  payment  of  duty  by  a
special order issued under sub-section (2) of section 5A, the date of  issue
of such order;]
(eb) in case where duty of excise is paid provisionally under  this  Act  or
the rules made thereunder, the date of adjustment of duty  after  the  final
assessment thereof;]
(f)   in   any   other   case,   the   date    of    payment    of    duty.]


SECTION 12A. Price of goods to indicate the amount of duty paid thereon. —
Notwithstanding anything contained in this Act or  any  other  law  for  the
time being in force, every person who is liable to pay  duty  of  excise  on
any goods shall,  at  the  time  of  clearance  of  the  goods,  prominently
indicate in all the documents relating to  assessment,  sales  invoice,  and
other like documents, the amount of such duty which will form  part  of  the
price at which such goods are to be sold.
SECTION 12B. Presumption that the incidence of duty has been  passed  on  to
the buyer. —
Every person who has paid the duty of excise on any  goods  under  this  Act
shall, unless the contrary is proved by him, be deemed  to  have  passed  on
the full incidence of such duty to the buyer of such goods.
SECTION 12C. Consumer Welfare Fund. —
 (1) There shall be established by the Central  Government  a  fund,  to  be
called the Consumer Welfare Fund.
(2) There shall  be  credited  to  the  Fund,  in  such  manner  as  may  be
prescribed, -
(a) the amount of duty of excise referred to in sub-section (2)  of  section
11B or sub-section (2) of section 11C or sub-section (2) of section 11D;
(b) the amount of duty of customs referred to in sub-section (2) of  section
27 or sub-section (2) of section 28A, or sub-section (2) of section  28B  of
the Customs Act, 1962 (52 of 1962);
(c) any income from investment of the amount credited to the  Fund  and  any
other monies received by the Central Government for  the  purposes  of  this
Fund.
SECTION 12D. Utilisation of the Fund. —
(1) Any money credited  to  the  Fund  shall  be  utilised  by  the  Central
Government for the welfare of the consumers in accordance  with  such  rules
as that Government may make in this behalf.
(2) The Central Government shall maintain or, if it thinks fit, specify  the
authority which shall  maintain,  proper  and  separate  account  and  other
relevant records in relation to the Fund in such form as may  be  prescribed
in consultation with the Comptroller and Auditor-General of India”.

16.   In the instant case, the Assessee has admitted that the  incidence  of
duty was originally passed on to the buyer.  There is  no  material  brought
on record to show that the buyer to whom the incidence of  duty  was  passed
on by the Assessee did not pass it on to  any  other  person.   There  is  a
statutory presumption under Section 12-B of the Act that the duty  has  been
passed on to the ultimate consumer.  It is  clear  from  the  facts  of  the
instant case that the duty which was originally paid  by  the  Assessee  was
passed on. The refund claimed by the Assessee is  for  an  amount  which  is
part of the excise duty paid earlier and passed on.  The  Assessee  who  did
not bear the burden of the duty, though entitled to claim deduction, is  not
entitled for a refund as he would be unjustly enriched.
      It  will  be  useful  to  refer  to  the  relevant  para  of  Mafatlal
Industries Vs. Union of India (supra) in this connection.
“108.  (iii) A claim for refund, whether made under the  provisions  of  the
Act as contemplated in Proposition (i) above or in a suit or  writ  petition
in the situations contemplated by Proposition (ii) above, can  succeed  only
if the petitioner/plaintiff alleges and establishes that he has  not  passed
on the burden of duty to another  person/other  persons.  His  refund  claim
shall be allowed/decreed only when he establishes that he has not passed  on
the burden of the duty or to the extent he has not  so  passed  on,  as  the
case  may  be.  Whether  the  claim  for  restitution  is   treated   as   a
constitutional imperative or as a statutory requirement, it  is  neither  an
absolute right nor an unconditional obligation but is subject to  the  above
requirement, as explained in the body of the judgment. Where the  burden  of
the duty has been passed on, the claimant cannot say that  he  has  suffered
any real loss or prejudice. The real loss or prejudice is suffered  in  such
a case by the person who has ultimately borne the  burden  and  it  is  only
that person who can legitimately claim its refund.  But  where  such  person
does not come forward or where it is not possible to refund  the  amount  to
him for one or the other reason,  it  is  just  and  appropriate  that  that
amount is  retained  by  the  State,  i.e.,  by  the  people.  There  is  no
immorality or impropriety involved in such a proposition.
The doctrine of unjust enrichment  is  a  just  and  salutary  doctrine.  No
person can seek to collect the duty from  both  ends.  In  other  words,  he
cannot collect the duty from his purchaser at one end and also  collect  the
same duty from the State on the ground that it has been collected  from  him
contrary to law. The power of the Court is not meant  to  be  exercised  for
unjustly enriching a person. The doctrine of unjust enrichment is,  however,
inapplicable to the State. State represents the people of  the  country.  No
one can speak of the people being unjustly enriched”.

17.   Section 11-B (2) of the Act contemplates that  the  amount  of  refund
determined by the Authorities shall be credited to the fund. The Proviso  to
Section 11-B (2) permits the refund to be paid to the applicant  instead  of
being credited to the fund if such amount is relatable to the  manufacturer,
the buyer or any other such class of applicants as notified by  the  Central
Government.
18.   Mr. Venkatraman interpreted the said provision to mean that  the  only
persons who were entitled for claim of  refund  are  the  manufacturer,  his
buyer and any other class of persons as notified by the Central  Government.
 There is no dispute about the fact that no notification has been issued  by
the Central Government as contemplated in Clause (f) to proviso  to  Section
11-B (2) of the Act.  He contested that the claim for  refund  can  be  made
only by the manufacturer or his buyer and any enquiry pertaining  to  unjust
enrichment should be restricted only to the manufacturer and his buyer.  The
ultimate buyer/ consumer will not figure in the scheme of Sections 11-B, 12-
A, 12-B and 12-C of the Act.  This  submission  was  accepted  by  the  High
Court in the impugned judgment.  We do not approve the findings of the  High
Court in this regard.
19.   The sine qua non for a claim for refund as contemplated in Section 11-
B of the Act is that the claimant has to establish that the amount  of  duty
of excise in relation to which such refund is claimed was paid  by  him  and
that the incidence of such duty has not been passed on by him to  any  other
person.  Section 11-B (2) provides that, in case it is found that a part  of
duty of excise paid is refundable, the  amount  shall  be  credited  to  the
fund.  Section 2 (ee)  defines  Fund  to  mean  the  Consumer  Welfare  Fund
established under Section 12-C.  There is a  proviso  to  Section  11-B  (2)
which postulates that the amount of excise duty which is refundable  may  be
paid to the applicant instead of being credited to the fund, if such  amount
is relatable to the duty of excise paid by the manufacturer and he  had  not
passed on the incidence of such duty to any other  person.   Clause  (e)  to
proviso of Section 11-B (2) also enables the buyer to receive the refund  if
he had borne the duty of excise, provided he did not pass on  the  incidence
of such duty to any other person.  There is a third category of a  class  of
applicants who may be specified by the Central Government by a  notification
in the official gazette who are also entitled for  refund  of  the  duty  of
excise.  A plain reading of Clauses (d), (e)  and  (f)  of  the  proviso  to
Section 11-B (2) shows that refund to be made  to  an  applicant  should  be
relatable only to the duty  of  excise  paid  by  the  three  categories  of
persons mentioned therein i.e. the manufacturer, the buyer and  a  class  of
applicants notified by the Central Government.  Clause  (e)  refers  to  the
buyer which is not restricted to the  first  buyer  from  the  manufacturer.
The buyer mentioned in the above Clause can be a buyer downstream  as  well.
While dealing with the absence of a provision for refund to the consumer  in
the rules this Court in Mafatlal Industries Vs. Union of India (supra)  held
as follows:-
“98. A major attack is mounted  by  the  learned  counsel  for  petitioners-
appellants on Section 11-B and its allied  provisions  on  the  ground  that
real purpose behind them was  not  to  benefit  the  consumers  by  refusing
refund to manufacturers (on the ground of passing on the  burden)  but  only
to enable the Government to retain the  illegally  collected  taxes.  It  is
suggested that the creation of the Consumer Welfare Fund is a mere  pretence
and not an honest exercise. By reading the Rules framed under Section  12-D,
it is pointed out, even a consumer, who has really borne the burden  of  tax
and is in a position to establish that fact, is yet not  entitled  to  apply
for refund of the duty since the Rules do not provide for such a  situation.
The Rules contemplate only grants being made to Consumer Welfare  Societies.
Even in the matter of making grants, it  is  submitted,  the  Rules  are  so
framed as to make it highly difficult for any consumer organisation  to  get
the grant. There is no provision in the  Act,  Shri  Nariman  submitted,  to
locate the person really entitled to refund and to make over  the  money  to
him. “We expect a sensitive Government not to bluff but  to  hand  back  the
amounts  to  those  entitled  thereto”,  intoned  Shri  Nariman.  It  is   a
colourable device — declaimed Shri Sorabjee — “a dirty trick” and “a  shabby
thing”. The reply of Shri Parasaran to this criticism  runs  thus:  It  ill-
becomes the manufacturers/Assessees to espouse the cause of consumers,  when
all the  while  they  had  been  making  a  killing  at  their  expense.  No
consumers' organisation had come forward to voice any grievance against  the
said provisions. Clause (e) of the proviso to sub-section (2) of Section 11-
B does provide for the buyer of the goods, to whom the burden  of  duty  has
been passed on, to apply for refund of duty to him,  provided  that  he  has
not in his turn passed on the duty to others. It is, therefore, not  correct
to suggest that the Act does not provide for refund of duty  to  the  person
who has actually borne  the  burden.  There  is  no  vice  in  the  relevant
provisions of the Act. Rules cannot be relied upon to  impugn  the  validity
of an enactment, which must stand or fall on its own  strength.  The  defect
in the Rules, assuming that there is any, can always  be  corrected  if  the
experience warrants it. The Court too may indicate the modifications  needed
in the Rules. The Government is always  prepared  to  make  the  appropriate
changes in the Rules since it views the  process  as  a  “trial  and  error”
method — says Shri Parasaran”.
20.   There was a further  submission  which  was  considered  in  the  said
judgment about the convenience/difficulty for the ultimate consumer to  make
applications for refund.  In that connection it was held as follows:-
“99. We agree with Shri Parasaran that so far as the provisions of  the  Act
go, they are  unexceptionable.  Section  12-C  which  creates  the  Consumer
Welfare  Fund  and  Section  12-D  which  provides  for  making  the   Rules
specifying the manner in which the money  credited  to  the  Fund  shall  be
utilised cannot be faulted on any ground. Now, coming to the  Rules,  it  is
true that these Rules by themselves do not contemplate refund of any  amount
credited to the Fund to the consumers who may have  borne  the  burden;  the
Rules  only  provide  for  “grants”  being  made  in  favour   of   consumer
organisations for being spent on welfare of consumers. But, this is  perhaps
for the reason that clause (e) of the proviso to sub-section (2) of  Section
11-B does provide for the purchaser of goods applying for and obtaining  the
refund where he can satisfy that the burden of the duty has  been  borne  by
him alone. Such a person can apply within six  months  of  his  purchase  as
provided in clause (e) of Explanation B appended to Section  11-B.   It  is,
therefore, not correct to  contend  that  the  impugned  provisions  do  not
provide for refunding the tax  collected  contrary  to  law  to  the  person
really entitled thereto. A practical  difficulty  is  pointed  out  in  this
behalf by the learned counsel for appellants-petitioners: It is pointed  out
that the manufacturer would have paid the duty at the place of “removal”  or
“clearance” of the said goods but the sale may have taken  place  elsewhere;
if the purchaser wants to apply for refund — it is submitted — he has to  go
to the place where the duty has been paid  by  the  manufacturer  and  apply
there. It is also pointed out that purchasers may be spread all  over  India
and it is not convenient or practicable for all of them to go to  the  place
of “removal” of goods and apply for refund. True it is that  there  is  this
practical inconvenience but it must also  be  remembered  that  such  claims
will be filed only  by  purchasers  of  high-priced  goods  where  the  duty
component is  large  and  not  by  all  and  sundry/small  purchasers.  This
practical inconvenience or hardship, as it is called,  cannot  be  a  ground
for holding that the provisions introduced by the 1991 (Amendment)  Act  are
a “device” or a “ruse” to  retain  the  taxes  collected  illegally  and  to
invalidate them  on  that  ground  —  assuming  that  such  an  argument  is
permissible in the case of a taxing enactment made by Parliament.  (See R.K.
Garg [(1981) 4 SCC 675 : 1982 SCC (Tax) 30 : AIR 1981  SC  2138]  and  other
decisions cited in paras 87 and 88.)”
21.   That a consumer can make an  application  for  refund  is  clear  from
paras 98 and 99 of  the  judgment  of  this  Court  in  Mafatlal  Industries
(supra).  We are bound by the said  findings  of  a  Larger  Bench  of  this
Court.  The word ‘buyer’ in Clause (e) to proviso to  Section  11-B  (2)  of
the Act cannot be restricted to  the  first  buyer  from  the  manufacturer.
Another submission which remains to be  considered  is  the  requirement  of
verification to be done for the purpose of finding out who  ultimately  bore
the burden of excise duty.  It  might  be  difficult  to  identify  who  had
actually borne the burden but such verification would definitely assist  the
Revenue in finding out whether  the  manufacturer  or  buyer  who  makes  an
application for refund are being unjustly enriched.  If it is  not  possible
to identify the person/persons who  have  borne  the  duty,  the  amount  of
excise duty collected in excess will  remain  in  the  fund  which  will  be
utilized for the benefit of the consumers as provided in Section 12-D.
22.   The High Court proceeded on an erroneous assumption of fact  as  well.
It was held by the High Court that there is  no  unjust  enrichment  as  the
burden has not been passed on. The High Court’s  interpretation  of  Section
11-B is also not correct.
23.   In view of the above findings, the  judgment  of  the  High  Court  is
liable to be set aside.  The Assessee is not entitled to refund as it  would
result in unjust enrichment.  The Appeal is allowed and the judgment of  the
High Court is set aside.

Special Leave Petition (C) Nos.  18426,  23722,  18423,  18425 of  2015  and
12282, 16141 and 16142 of 2016.

Leave granted.

24.   Civil Appeals arising out of Special Leave Petition  (C)  Nos.  18426,
23722, 18423 and 18425 of 2015 are filed by Commissioner of Central  Excise,
Vishakapatnam, challenging the legality of judgment dated  19.02.2014  of  a
Division Bench of the High Court of Andhra Pradesh in Central Excise  Appeal
Nos. 51 of 2004 and 10, 9 and 21 of 2005. Civil Appeals arising out  of  SLP
(C) Nos.  12282, 16141 and 16142 of 2016 are filed by  the  Commissioner  of
Central Excise, Vishakapatnam against the judgment  dated  01.07.2015  of  a
Division Bench of the High Court of Andhra Pradesh in Central Excise  Appeal
Nos. 44 and 38 of 2004 and 18 of 2005. These three appeals were disposed  of
by the High Court in terms of its earlier judgment dated 19.02.2014.
25.   The Assessee i.e. Andhra Pradesh Paper Mills Ltd.  manufactures  Paper
and Paper boards.  There is no dispute that  excise  duty  is  paid  by  the
Assessee and the same is passed on to its buyers.  Applications  were  filed
by the Assessee for refund of amounts  towards  trade  discounts  that  were
given to its buyers.  The refund claim is  on  the  basis  of  credit  notes
raised by the Assessee subsequent to the sale/removal of goods.  The  credit
notes that were raised by the Assessee were towards  trade  discounts  which
included the component of excise duty.  The refund claims of  the  Assessees
were rejected by the Assistant Commissioner of Central  Excise,  Rajahmundry
Division. The  Commissioner  Customs,  Central  Excise  (Appeals)  Hyderabad
confirmed the said orders  in  the  appeals  filed  by  the  Assessee.   The
Customs, Excise and Service Tax Appellate Tribunal,  South  Zonal  Division,
Bangalore dismissed the appeals filed by the Assessee.
26.   The Assessee approached the High Court of  Andhra  Pradesh  by  filing
Central Excise Appeals. By a judgment dated 19.02.2014, the  High  Court  of
Andhra Pradesh allowed the Central Excise Appeal Nos. 9, 10 and 51  of  2004
and 21 of 2005. The appeals were allowed, as being squarely covered  by  the
judgment of the Madras High Court in Addison and Company  Ltd.,  Madras  Vs.
Collector of Central Excise, Madras reported in (1997) 5 SCC 763.
27.   The Revenue  has  filed  Special  Leave  Petitions  against  the  said
judgment dated 19.02.2014. Special Leave Petition (C) Nos. 12282, 16141  and
16142 of  2016  were  filed  by  the  Revenue  against  the  judgment  dated
01.07.2015 of the Division Bench of the  Andhra  Pradesh  High  Court  which
followed its earlier judgment dated 19.02.2014.  The issues involved in  the
above Civil Appeals are similar to that of Civil Appeal No. 7906 of 2002.
28.   The Appeals filed  by  the  Revenue  are  allowed,  in  terms  of  the
judgment in Civil Appeal No. 7906 of 2002.

Civil Appeal No. 14689 of 2015

29.   The above Civil Appeal is filed by the Commissioner of Central  Excise
and Customs challenging the judgment of the Andhra  Pradesh  High  Court  in
Central Excise Appeal No. 21 of 2004. The  Respondent-Assessee  manufactures
Pesticide formulations which are used as pesticides in  agricultural  farms.
The Pesticides are sold at the factory gate and  also  through  depots.  The
Assessee submitted an application for  refund  towards  allowable  discounts
after the removal of goods from the factory.  Credit notes  were  issued  by
the Assessee in favour of the buyers  towards  trade  discounts  which  also
contained a component of the excise duty.  There  is  no  dispute  regarding
the fact of payment of the excise duty originally by the manufacturer  being
passed on to his buyers.  The refund claim of the Assessee was  rejected  by
the  Deputy  Commissioner  vide  Order-in-Original  No.  58  of  2002  dated
30.12.2002.  The above said  order  was  reversed  by  the  Commissioner  of
Customs and Central Excise by his order dated 12.03.2003.
30.   The Revenue filed an appeal before the  Customs,  Excise  and  Service
Tax Appellate Tribunal, South Zonal Division, Bangalore which  was  allowed.
The Assessee preferred an appeal to the High Court aggrieved  by  the  order
of the Customs, Excise and  Service  Tax  Appellate  Tribunal,  South  Zonal
Division, Bangalore. The High Court following its  own  judgment  in  Andhra
Pradesh Paper Mills Vs. Commissioner of Central Excise allowed  the  appeal.
The point in this appeal is identical to the issue in Civil Appeal No.  7906
of 2002. The Appeal filed  by  the  Revenue  is  allowed  in  terms  of  the
judgment in Civil Appeal No. 7906 of 2002.
Special Leave Petition (C) No. 25055 of 2009

      Leave granted.

31.   The Assessee is engaged in the processing of man-made fibre. Prior  to
11.06.2001 the CENVAT credit admissible on the declared inputs used  in  the
manufacture of process of man-made fibre was 45  per  cent.   The  net  duty
payable on the fibre was 55 per cent of the effective duty.  On  11.06.2001,
a notification was issued increasing CENVAT credit from 45 per  cent  to  50
per cent which resulted in the net duty payable  being  50  per  cent.   The
Assessee continued to pay the effective duty at 55  per  cent  for  a  short
period between 11.06.2001 to 13.06.2001.  The effective duty  of  excise  is
16 per cent and the duty payable from the personal ledger account  prior  to
the notification dated 11.06.2001 was 8.8 per cent and after 11.06.2001  the
duty payable is 8 per cent.  The Assessee made an application for refund  of
Rs. 61,146/- paid in excess on 31.07.2001.  The said application for  refund
was rejected by an  Order-in-Original  dated  12.08.2002  by  the  Assistant
Commissioner, Bhilwara on the ground that the  Assessee  was  a  job  worker
engaged in the processing of grey  fabric  and  that  the  said  fabric  was
returned to the owners of the fabric who sold the processed  fabric  in  the
market.  It was also held that the incidence of the duty was  passed  on  to
the ultimate customers/consumers before the debit notes were raised  by  the
owners of the fabric.  As the duty paid at 8.8 per cent  was  passed  on  by
the owner of the fabric to the  ultimate  consumer  the  processor  was  not
entitled for a refund.
32.   The  Assessee  approached  the  Commissioner  Appeals,  II  Customs  &
Central Excise, Jaipur by filing an appeal which was rejected  by  an  order
dated 27.02.2003.  The Central Excise and Service Tax Appellate Tribunal  by
its order dated 11.05.2005 allowed the appeal filed by the Assessee  on  the
ground that the incidence of duty was not passed on by the Assessee  to  the
customers. The customers protested to the charging of the net  duty  payable
at 8.8 per cent instead of 8 per cent in spite of  the  notification  issued
on 11.06.2001.  This protest was made without any delay so the  question  of
passing the incidence  of  duty  by  the  owners  of  the  fabric  to  their
customers does not arise.
33.   In Central Excise Appeal No.  34 of 2005 filed by the Union  of  India
through  Commissioner  of  Central  Excise,  Jaipur,  the  High   Court   of
Judicature for Rajasthan at Jodhpur  confirmed  the  order  of  the  Central
Excise and Service Tax Appellate Tribunal. Challenging the said judgment  of
the High Court dated 26.11.2008, the Union of  India  has  filed  the  above
Appeal.  The  contention  raised  by  the  Revenue  before  the  High  Court
regarding the presumption under Section 12-B of the Act was rejected by  the
High Court by holding that once the Assessee shows that he  has  not  passed
on the duty to his buyer, then  the  burden  shifts  to  the  Revenue.   The
submission that there is a presumption of the duty being passed  on  to  the
ultimate consumer was not accepted by the High Court.  The High  Court  held
that the claim for refund should be accepted once the  Assessee  shows  that
he has raised a credit note regarding the excess duty.  The High  Court  had
further held that passing on the burden  of  excise  duty  to  the  ultimate
buyer cannot be left in the realm of presumption.
34.   In Civil Appeal No. 7906 of 2002, we have already  held  that  in  the
claim for refund of excess duty paid can be allowed only in case  where  the
burden of duty has not been passed on to any other  person,  which  includes
the ultimate consumer as well. The findings  in  the  Order-in-Original  and
the Order-in-Appeal are that the excise duty paid originally at the rate  of
8.8 per cent was passed on from the Assessee-processor to the owner  of  the
fabric and later to  the  customers.  The  point  in  this  Appeal  is  also
identical to that of Civil Appeal No. 7906 of 2002.   The  above  appeal  of
the Revenue is allowed.

Civil Appeal No.  8488 of 2009

35.   The respondent-Assessee is a 100 per cent Export Oriented  Unit  (EOU)
manufacturing cotton yarn.  The respondent filed an application  for  refund
of an amount of Rs. 2,00,827/- on 14.08.2002 on the ground that it had  paid
excess excise duty at the rate of 18.11 per cent instead of 9.20  per  cent.
The Assessee initially passed  on  the  duty  incidence  to  its  customers.
Later the Assessee returned the excess duty amount to its buyers  which  was
evidenced  by  a  certificate  issued  by  the   Chartered   Accountant   on
02.08.2002.  The refund claim was rejected by  the  Deputy  Commissioner  of
Central Excise, Kolhapur Division vide an  order  dated  24.09.2002  on  the
ground that the Assessee did not submit  either  the  credit  notes  or  the
Chartered  Accountant’s  certificate  at  the  time  of  filing  the  refund
application. Not satisfied with the genuineness of the documents the  Deputy
Commissioner rejected the refund claim.  The Commissioner (Appeals)  Central
Excise, Pune allowed the appeal filed by the Assessee by taking note of  the
certificate issued by the Chartered Accountant and the  credit  notes  dated
29.07.2002. The Appellate Authority accepted the Assessee’s contentions  and
held that there was no reason to doubt  the  genuineness  of  the  documents
produced. The Appellate Authority allowed the appeal  of  the  Assessee  and
the said  order  was  confirmed  by  the  Central  Excise  and  Service  Tax
Appellate Tribunal vide judgment  and  order  dated  06.10.2005.   The  said
order of Central Excise and  Service  Tax  Appellate  Tribunal  was  further
confirmed by the High Court  of  Judicature  at  Bombay  in  Central  Excise
Appeal No. 100 of 2008 filed by the Revenue.   The  Revenue  has  filed  the
above Civil Appeal challenging the validity of  the  judgment  of  the  High
Court in Central Excise Appeal No. 100 of 2008.
36.   Except for a factual dispute about the genuineness of the  certificate
issued by the Chartered Accountant  and  the  credit  notes  raised  by  the
Assessee regarding the return of the  excess  duty  paid  by  the  Assessee,
there is no dispute in this case of the duty being passed on  to  any  other
person by the buyer.  As it is clear that the Assessee has borne the  burden
of duty, it cannot be said that it is not entitled for  the  refund  of  the
excess duty paid.  In view of the facts of this case  being  different  from
Civil Appeal No.  7906 of 2002, the  appeal  preferred  by  the  Revenue  is
dismissed.
37.   As held above, Civil Appeal Nos.  7906 of 2002 and 14689 of  2015  are
allowed. Civil Appeals arising out of Special Leave Petition (C) Nos.  18426
of 2015, 18423 of 2015, 18425 of 2015, 23722 of 2015, 12282 of  2016,  16142
of 2016, 16141 of 2016 and 25055 of 2009 are also allowed in  terms  of  the
judgment in Civil Appeal No. 7906 of 2002.  Civil Appeal No.  8488  of  2009
is dismissed.   No order as to costs.
        ................................J.
                                                 [ANIL R. DAVE]

                                        ................................J.
                                                  [AMITAVA ROY]


                     ................................J.
                                                     [L. NAGESWARA RAO]
New Delhi,
August 29, 2016

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