2003 (2) TMI 67 - SC - Central Excise

Supreme Court allows appeal on excise duty refund, overturns Tribunal decision. Section 11B does not apply.

The Supreme Court allowed the appeal in the case involving excise duty refund, setting aside the Tribunal's order confirming demands made by the Assistant ... Whether the principles of 'unjust enrichment' as incorporated in amended provisions would be applicable to the facts of the present case? Held that:- Admittedly, refund of the excise duty paid in excess was granted in 1989. Thereafter, sub-section (2) of Section 11B which incorporates the principle of 'unjust enrichment' had come into force w.e.f. 20-9-1991, which inter alia provides that duty of excise paid in excess would be refunded if the manufacturer had not passed on the incidence of such duty to any other person. This provision is not at all attracted. There is basic error in approach by the Authorities below as the assessee has not filed any application under Section 11B of the Act for refund of the excise duty paid by him. There is no question of application of principles of unjust enrichment as incorporated in Section 11B. In favour of assessee. Issues:1. Erroneous refund of excise duty.2. Application of principles of unjust enrichment.3. Interpretation of Section 11A, 11B, and 11D of the Central Excise Act, 1944.4. Reopening of past finalized transactions.5. Applicability of Rule 173-I of the Central Excise Rules.Analysis:1. The case involved M/s. Hindustan Metal Pressing Works, which removed excisable goods at a duty rate awaiting approval of their classification list. The Range Superintendent later granted a refund of excise duty for certain months. However, a show-cause notice was issued for recovering the refunded amount on the grounds of erroneous refund.2. The appellant argued that the orders by the authorities were illegal and not in line with statutory provisions. They contended that the refund was not erroneous as it was based on the assessment of RT-12, and there was no mistake in the assessment or refund. The question of unjust enrichment was raised concerning the excess duty paid and subsequently refunded.3. The issue of unjust enrichment was further analyzed in light of Section 11B of the Act, which came into force in 1991. The appellant had not filed any application for refund under this section, and it was argued that the principles of unjust enrichment were not applicable in this case. Section 11D, which requires the excess amount collected to be paid to the Central Government, was also discussed in the context of the refund granted in 1989.4. The Court considered whether past finalized transactions could be reopened based on the claim of erroneous refund and unjust enrichment. Reference was made to Rule 173-I of the Rules, emphasizing the assessment process and the adjustment of duty paid by the assessee.5. Precedents such as Serai Kella Glass Works Pvt. Ltd. v. Collector of Central Excise and Mafatlal Industries Ltd. v. Union of India were cited to support the argument that the provisions of Section 11B do not apply where a refund has been made unconditionally. The Court also referred to Sinkhai Synthetics & Chemicals (P) Ltd. v. Collector of Central Excise to highlight similar judgments in related matters.In conclusion, the Supreme Court allowed the appeal, setting aside the Tribunal's order confirming the demands made by the Assistant Collector and the Collector (Appeals). No costs were awarded in this matter.