1993 (7) TMI 78 - HC - Central Excise

Court orders refund with interest to petitioners in disobedience case, reserves contempt action

The High Court directed respondent No. 2 to verify and grant the refund claim to petitioners, with interest, under a writ petition. Despite an amendment ... Refund - Contempt of Court - Writ jurisdiction Issues:1. Refund of excise duty and interest claimed by petitioners.2. Alleged deliberate flouting and disobedience of court's writ by respondent No. 2.3. Impact of amendment to Section 11B of Central Excise Act on refund claim verification process.4. Legal implications of Division Bench's refusal to pass orders on respondent's motion.5. Contempt of court allegations against respondent No. 2.Detailed Analysis:1. The petitioners sought a refund of Rs. 20,66,760.21 along with 15% interest per annum from July 30, 1991, based on a writ petition filed under Article 226 of the Constitution. The High Court, through a judgment dated July 30, 1991, directed respondent No. 2 to verify the refund claim within twelve weeks and grant the refund. Failure to comply would result in the respondents being liable to pay interest at the rate of 15% per annum on the refund amount. The petitioners alleged that respondent No. 2 deliberately flouted and disobeyed the court's writ.2. The Parliament later amended Section 11B of the Central Excise Act, requiring an assessee to prove that the excise duty paid was not passed on to purchasers to claim a refund. Respondents filed a motion seeking direction for the petitioners to produce documents to establish this fact. However, the Division Bench declined to pass any order on the motion, which became final as the respondents did not appeal to the Supreme Court. Despite the refusal of relief by the Division Bench, respondent No. 2 did not take steps to comply with the court's writ, leading to the petitioners filing a new motion.3. Counsel for respondents argued that the amendment to Section 11B released them from the obligation to honor the court's writ. The court rejected this argument, stating that once the Division Bench declined relief due to the amendment, respondents could not ignore the writ. The court found that respondents had disobeyed the writ by not making the payment within the stipulated period, despite the alleged futility in seeking a review of the judgment.4. Referring to a decision of the Gauhati High Court, respondents argued that the amendment to Section 11B absolved them of contempt for not obeying court orders. The court disagreed, emphasizing that the writ could not be nullified in such a manner, especially when the department's request for modification was denied. The court reiterated that respondents had clearly disobeyed the court's writ.5. The court directed respondent No. 2 to deposit the refund amount within one week, failing which further orders would be passed. The court indicated its intention to give one more opportunity to respondents to refund the excise duty before considering contempt of court action.