2015 (9) TMI 727 - SC - Central Excise

Pre-1991 refund orders exempt from unjust enrichment principle under Central Excise Act

Commissioner of Central Excise, Tiruchirapalli Versus M/s. Dalmia Cement (Bharat) Ltd.

Commissioner of Central Excise, Tiruchirapalli Versus M/s. Dalmia Cement (Bharat) Ltd. - 2015 (323) E.L.T. 647 (SC), [2016] 36 GSTL (EC) 248 (SC), 2016 36 ... Issues Involved:1. Applicability of amended Section 11B of the Central Excise Act, 1944 to pending refund orders.2. Interpretation of the doctrine of 'unjust enrichment' under the amended Section 11B.3. Finality of refund orders passed before the amendment of Section 11B.4. Jurisdiction of authorities to revisit the issue of unjust enrichment after the amendment.Issue-wise Detailed Analysis:1. Applicability of amended Section 11B of the Central Excise Act, 1944 to pending refund orders:The primary question referred to the High Court was whether the amended Section 11B of the Central Excise Act applies to cases where an order directing a refund has been passed but its implementation is pending. The High Court ruled in favor of the assessee, stating that the proceedings under the old Section 11B had attained finality, and the amended provision, particularly the proviso to sub-section (1), would not apply. The principle of 'unjust enrichment' introduced by the amendment in 1991 would not be applicable as the proceedings under the unamended Section had already concluded with a refund order.2. Interpretation of the doctrine of 'unjust enrichment' under the amended Section 11B:The amended Section 11B, effective from 20.09.1991, introduced the principle of 'unjust enrichment,' requiring the Assistant Collector to ascertain whether the incidence of duty had been passed on to another person. If so, the refund application could be rejected. The proviso to sub-section (1) of the amended Section 11B deemed that applications filed before the amendment but still pending should be treated under the amended provision. However, the Supreme Court clarified that this proviso applies only to pending applications, not to cases where refund orders had already been passed before the amendment.3. Finality of refund orders passed before the amendment of Section 11B:The Supreme Court emphasized that refund proceedings that had concluded before the 1991 amendment, with no pending applications, could not be reopened under the amended Section 11B. The Court referred to the majority opinion in the Mafatlal Industries Ltd. case, which held that the amended provisions would apply to pending refund proceedings but not to those that had attained finality before the amendment. The Court reiterated that orders passed before the amendment should be implemented without revisiting the issue of unjust enrichment.4. Jurisdiction of authorities to revisit the issue of unjust enrichment after the amendment:The Supreme Court rejected the appellant's argument that the Assistant Commissioner could still examine the issue of unjust enrichment at the implementation stage of a pre-amendment refund order. The Court held that once a refund order had been passed under the unamended provision, the Assistant Commissioner had no jurisdiction to invoke the amended Section 11B to reassess unjust enrichment. The Court noted that the High Court's order directing the Assistant Commissioner to consider the amended provision was based on the counsel's statement and did not confer jurisdiction where none existed.Conclusion:The Supreme Court upheld the High Court's decision, affirming that the amended Section 11B, including the principle of unjust enrichment, does not apply to refund orders passed before the amendment. The Court dismissed the appeal, confirming that the authorities must implement pre-amendment refund orders without revisiting the issue of unjust enrichment.