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CASE NO.: Appeal (civil)  5836 of 2005

PETITIONER: Triveni Chemicals Limited

RESPONDENT: Union of India & Anr

DATE OF JUDGMENT: 15/12/2006

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T [Arising out of S.L.P (Civil) No. 2985/2005]

S.B. SINHA,  J :

                Leave granted.

       Appellant is a manufacturer of  ’Adhesive’ falling under Tariff Item  No. 68 of the erstwhile schedule to the Central Excise and Salts Act, 1944.   It was classified as such.  It deposited the excise duty under protest.  A  dispute arose as  it was held to be classifiable under Tariff Entry No. 68 by  an order dated 11.11.1985.  Indisputably, the said order attained finality.   The question which arises for consideration is as to whether the appellant  was entitled to refund of the excess amount of the excise duty paid by it.  An  application therefor was filed on 19.03.1985.  The said application was  rejected.  An appeal was preferred thereagainst before the Collector of  Central Excise (Appeals).  By an order dated 07.09.1989, the said appeal  was allowed stating :

"\005The refund arising due to this order cannot be rejected  on the plea that the department has preferred an appeal  against the order of CEGAT in the case of Nevichem  Synthetic Industries on the basis of which the above  order was passed.  The facts and circumstances of the  appellant’s case and that of Nevichem Industries and  distinguishable.  It is seen that the Asstt. Collector has  not based his conclusion upon the ratio of the said  CEGAT judgment.  A casual reference has been made to  the said CEGAT order by the Asstt. Collector after  reaching a findings on the classification of the impugned  product.  In view of the matter the appeal filed by the  department against the CEGTAT order will have no  effect on the appellants even if it is decided in favour  of  the department."

       Appellant thereafter filed several representations dated 21.09.1989  and 11.07.1991 for refund of the said amount. As despite the said  representations, the amount in question was not refunded, a notice of hearing  was given to it on 06.08.1991.   

       It filed a writ petition.  By reason of the impugned judgment, the writ  petition of the appellant was dismissed, opining :

       "In view of the above, learned Standing Counsel  Shri Malkan for the respondents was very much right in

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submitting that the respondents were not required to file  any reply to such type of petition. He has rightly  submitted that at first instance there was gross delay of  about 2 years in approaching this Court by way of  petition for the claim of their refund and no one had  remained present on 26.8.1991, therefore, the respondent  no. 2 has not passed any order on the refund application  of the petitioner.      He submitted that in absence of any  written order passed by the respondent no. 2, this Court  should not entertain this petition.  There is a lot of  substance in this submission.  If the respondent no.2 had  at all conveyed orally to the representative of the  petitioner on 26.8.1991 that the petitioner was not  entitled for any refund on the ground of  unjust  enrichment then the petitioner could have requested the  respondent No.2 in writing to pass such order in writing.   But, nothing is done and it seems that because of the  delay of 2 years after sending reminder to the respondent  No. 2 for refund, the petitioner approached this Court in  October, 1991 by way of this petition taking advantage of  the letter dtd. 6.8.1991 issued by the respondent No.2.

       In view of the above discussion, this petition fails  and is dismissed.  Rule is discharged.  However, there  shall be no order as to costs."

           Section 11B of the Central Excise Act, 1944,  (for short, ’the Act’) as  was applicable at the relevant point of time,  read  as under :

"Section 11B: Claim for refund of duty.- (1) Any  person claiming of any duty of excise may make an  application for refund of such duty to the Assistant  Collector of Central Excise before the expiry of six  months from the relevant date.

       Provided that the limitation of six months shall not  apply where any duty has been paid under protest.

       (2) If on receipt of any such application, the  Assistant Collector of Central Excise is satisfied that the  whole or any part of the duty of excise paid by the  applicant should be refunded to him, he may make an  order accordingly.

       (3)  Where as a result of any order passed in appeal  or revision under this Act refund of any duty of excise  becomes due to any persons the Assistant Collector of  Central Excise may refund the amount to such person  without his having to make any claim in that behalf."

       It underwent an amendment on or about 20.09.1991 by reason of  Section 3 of the Central Excise and Customs Laws (Amendment) Act, 1991,  which reads as under :

"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 before the expiry of six  months 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

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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  Excise and Customs Laws (Amendment) Act, 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) substituted by the Act.

       Provided further that the limitation of six months  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 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 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 \026

(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)     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 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

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made except as provided in Sub-section (2)"

       The short question which arises for consideration before is as to  whether in the peculiar facts and circumstances of this case, Section 11B, as  amended by Section 3 of the Central Excise and Customs Laws  (Amendment) Act, 1991, would be applicable.

       We have noticed hereinbefore that the application for refund was  rejected by the Assessing Authority.  It was, however, allowed by the  Appellate Authority.  It is not in dispute that no further appeal was taken  therefrom. The said order, therefore, attained finality.  It matters  little as to  whether the application for refund was in the prescribed form or not.  The  respondents herein could raise all contentions before the Appellate  Authority. In fact, before the original authority, a plea of unjust enrichment  was raised.  Such a plea, however,  appears to have not been raised before  the Appellate Authority.  If  no such plea was raised, only because the  appellant herein filed an application to be dealt with on the administrative  side for refund subsequently, the same would not, in our considered view,   attract the provisions of Section 11B as inserted by the Amending Act of  1991.

       The application filed subsequently by the appellant was required to be  filed to proceed with the matter on administrative side.  Appellant had all  along been contending that despite such order, the amount in question had  not been refunded. It was, therefore, obligatory on the part of the concerned  authorities to comply with the order passed by the Collector.  The authorities  were bound to do so in view of the doctrine of judicial discipline.   The same   having not been done, in our opinion, the plea sought to be raised now that it  was for the appellant to prove that the burden of the duty had not been  passed to the customers cannot be accepted.   

       Section 11B was inserted with retrospective effect.  However, the  retrospective effect and retroactive operation given to the said provision  confined only to cases where the applications for refund were pending.  The  said provision did not apply to a case where the proceeding had come to an  end before coming into force of the said amending provision.  

       Reliance placed by the learned Additional Solicitor General upon a  decision in Mafatlal Industries Ltd. and Others v. Union of India and Others  [(1997) 5 SCC 536], in our opinion, is misplaced. Therein this Court  categorically held that the provision of Section 11B as amended in the year  1991 would not apply to a case where proceeding for refund had come to an  end.  B.P. Jeevan Reddy, J. speaking for the  majority,  observed : "(xi) Section 11-B applies to all pending proceedings  notwithstanding the fact that the duty may have been  refunded to the petitioner/plaintiff pending the  proceedings or under the orders of the  Court/Tribunal/Authority or otherwise. It must be held  that Union of India v. Jain Spinners and Union of India v.  I.T.C. [1993] Suppl. 4 S.C.C. 326 have been correctly  decided. It is, of course, obvious that where the refund  proceedings have finally terminated - in the sense that the  appeal period has also expired - before the  commencement of the 1991 (Amendment) Act  (September 19, 1991), they cannot be re-opened and/or  governed by Section 11-B(3) (as amended by the 1991  (Amendment) Act). This, however, does not mean that  the power of the appellate authorities to condone delay in  appropriate cases is affected in any manner by this  clarification made by us."

       K.S. Paripoornan, J. in his separate judgment observed :  

"\005Sections 11B(2) and (3) cannot be made applicable to

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refunds already ordered by the court or the refund  ordered by the statutory authorities, which have become  final. It follows from a plain reading of Section 11B,  Clauses (1) (2) and (3) of the Act. The provisions  contemplate the pendency of the application on the date  of the coming into force of the Amendment Act or the  filing of an application which is contemplated under law,  to obtain a refund, after the Amendment Act comes into  force. I am of the opinion, that if the said provisions are  held applicable, even to matters concluded by the  judgments or final orders of courts, it amounts to stating  that the decision of the court shall not be binding and will  result in reversing or nullifying the decision made in  exercise of the judicial power. The legislature does not  possess such power. The court’s decision must always  bind parties unless the condition on which it is passed are  so fundamentally altered that the decision could not have  been given in the altered circumstances. It is not so  herein. Shri Prithvi Cotton Mills Ltd. and Anr. v. Broach  Borough Municipality and Ors. and Madan Mohan  Pathak v. Union of India and Ors. etc.  "  

       S.C. Sen, J. who delivered the  minority opinion,  observed  :         "I shall now examine the other provisions of the  newly added sections. Sub-section (1) of Section 11B  requires an application for refund to be made. Sub- section (2) requires the Assistant Commissioner to pass  an order of refund provided the conditions set out therein  are fulfilled. Sub-section (3) merely lays down that no  refund shall be made except as provided in Sub-section  (2). There is a non obstante clause that this will operate  notwithstanding anything to the contrary contained in any  judgment, decree, order etc. It is obvious that new  provisions will apply in cases where applications for  refund were made before the new provisions came into  force and also subsequently. Sub-section (3) has no  retrospective effect. When a case has been finally heard  and disposed of and no application for refund need be  made, Sub-section (3) cannot apply. If there is a  judgment, decree or order which has to be carried out, the  Legislature cannot take away the force and effect of that  judgment, decree or order, except by amending the law  retrospectively on the basis of which the judgment was  pronounced."                          We are not oblivious of the fact that this Court therein also dealt with  the applicability of the provisions of  Section 72 of the Indian Contract Act,  1872, but then such a contention was specifically required to be raised.  If  the same had not been raised, the Revenue at a latter point of time could not  be permitted to raise the said plea.

       Strong reliance has been placed on Commissioner of  Central Excise,  Mumbai-II v. Allied Photographics India Ltd. [(2004) 4 SCC 34].  Therein,  the question which arose for consideration was as to whether despite a  concession made by the assessee that it had passed on the burden to its sole  distributor, the provision of Section 11B of the Act was attracted or not.  The  distributor moved an application on 11.02.1997 for refund under Section  11B of the Act.  It was in the aforementioned fact situation, this Court held  that the burden to prove that the incidence of duty was not passed on the  applicant seeking refund.  The said decision cannot be said to have any  application in the instant case.

       For the reasons aforementioned, we are of the opinion that the High  Court was not correct in opining that the appellant was bound to prove that  the incidence of duty was not passed on to its customers.  The impugned

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judgment is set aside.  The appeal is allowed with costs.   Counsel’ fee  assessed at Rs.10,000/-.