2004 (3) TMI 63 - SC - Central Excise

Refund Claim Denied: APIL's Application Time-Barred and Duty Incidence Passed to Dealers.

COMMISSIONER OF C. EX., MUMBAI-II Versus ALLIED PHOTOGRAPHICS INDIA LTD.

The Court concluded that M/s. APIL's refund claim was subject to Section 11B of the Central Excise Act, 1944, and the application dated 11-2-1997 was ... Whether M/s. AGIL in turn had passed on the duty burden to its dealers as alleged. Held that:- In the present case, the refund claim is made by a buyer and not by the manufacturer. The buyer says that he has not passed on the burden to its dealers. The buyer has bought the goods from the manufacturer paying the purchase price which included cost of purchase plus taxes and duties on the date of purchase. In such cases, cost of purchase to the buyer is a relevant factor. None of the authorities below have looked into this aspect. Even the Appellate Tribunal has not gone into this relevant factor. In the present case, we are concerned with the distributor buying the products from the manufacturer and reselling them to its dealers. Hence, the cost of purchase is a relevant factor. The facts of the cases before the Tribunal deal with sale by manufacturer to the consumer. They deal with assessees' invoice bearing a composite price. They are the cases which dealt with the claim of refund by the manufacturer. They did not deal with claim of refund by the buyer. Hence, they have no bearing on the facts of the present case. Before concluding, we may state that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. Hence, even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact. Issues Involved:1. Applicability of Section 11B of the Central Excise Act, 1944 to refund claims after final assessment.2. Difference between provisional assessment under Rule 9B and payment of duty under protest.3. Doctrine of unjust enrichment in Section 11B.4. Entitlement of a purchaser to claim refund without complying with Section 11B.5. Interpretation of relevant legal provisions and precedents.Issue-wise Detailed Analysis:1. Applicability of Section 11B of the Central Excise Act, 1944 to refund claims after final assessment:The core issue referred to the Larger Bench was whether a claim for refund after final assessment is governed by Section 11B of the Central Excise Act, 1944. The Court found that Section 11B, which deals with claiming refunds, is distinct from Rule 9B, which deals with making refunds. Section 11B applies to claims for refunds, requiring the claimant to prove that the incidence of duty has not been passed on to another person. Rule 9B pertains to provisional assessments and subsequent adjustments, where refunds are made automatically without the need for a separate claim under Section 11B.2. Difference between provisional assessment under Rule 9B and payment of duty under protest:The Court highlighted the fundamental difference between provisional assessment under Rule 9B and payment of duty under protest. Provisional assessment under Rule 9B involves an 'on account' payment adjustable upon final assessment, while payment under protest falls under Section 11B. Consequently, refunds arising from provisional assessments are not governed by Section 11B, whereas refunds for duties paid under protest must comply with Section 11B.3. Doctrine of unjust enrichment in Section 11B:The Court reiterated that the doctrine of unjust enrichment, introduced by the 1991 amendment to Section 11B, prevents refunds if the incidence of duty has been passed on to another person. This doctrine applies to claims for refunds under Section 11B but not to refunds made under Rule 9B following provisional assessments. The Court clarified that the bar of unjust enrichment applies to claims made after final orders under Rule 9B if the claimant files an independent refund application.4. Entitlement of a purchaser to claim refund without complying with Section 11B:The Court rejected the argument that a purchaser (M/s. APIL) could claim a refund without complying with Section 11B by stepping into the shoes of the manufacturer (NIIL) who paid the duty under protest. It was emphasized that the purchaser's right to claim a refund is distinct from the manufacturer's right, and the purchaser must independently prove that the incidence of duty was not passed on to another person, as required by Section 11B.5. Interpretation of relevant legal provisions and precedents:The Court examined various judgments, including Mafatlal Industries Ltd. v. Union of India, Sinkhai Synthetics and Chemicals Pvt. Ltd. v. Collector of Central Excise, and Collector of Central Excise v. T.V.S. Suzuki Ltd. The Court clarified that the interpretation in Sinkhai Synthetics was incorrect as it conflated payment under protest with provisional assessments. The Court also noted that the judgment in National Winders v. Commissioner of Central Excise, which allowed a purchaser to claim a refund without complying with Section 11B, was per incuriam.Conclusion:The Court concluded that M/s. APIL was bound to comply with Section 11B for its refund claim and that the refund application dated 11-2-1997 was time-barred. The Court also found that M/s. APIL had failed to prove that it had not passed on the incidence of duty to its dealers, thus failing to make a case for a refund on merits. The appeal was allowed, and the order of the Customs, Excise and Gold (Control) Appellate Tribunal was set aside.