TaxTMI 
TaxTMI 
2021 (2) TMI 94
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....der. 3. The aforesaid amount of Rs. 88,44,510/- was paid by the petitioner on 21.03.2001 "under protest" pending disposal of the above appeals before the Hon'ble Supreme Court in C.A.Nos.3558 and 3559 of 2000 as the Hon'ble Supreme Court had merely ordered notice on the respondents while admitting the appeal on 17.07.2000. The stay petition filed by the petitioner against Final Order Nos. 203-205 dated 07.02.2005 of the CEGAT was also dismissed on 6.11.2000. 4. Under these circumstances, a recovery notice was issued on 29.09.2000 to the petitioner, which called upon the petitioner to pay the aforesaid amount. Therefore, the petitioner paid the aforesaid amount "under protest" on 21.03.2001. Eventually, the Hon'ble Supreme Court allowed the appeal filed by the Petitioner on 07.04.2005. Under these circumstances, the petitioner approached the respondents and thereafter before this Court in the present writ petition. 5. The facts relevant to the present case are detailed hereinafter. The petitioner had earlier imported certain machineries for its printing purpose and availed the benefit of Customs Notification No.114/1980-Cus dated 19.6.1980. 6. The petitioner file....
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.... inconsistent stand. From the narration of facts it is clear that the Commissioner had proceeded on the basis of the capacity of the imported machines and not their actual production. The show cause notice had also been issued on this basis. The Tribunal, on the other hand, has categorically rejected the "capacity test" and has come to the conclusion that the capacity was irrelevant. It held that the interpretation of the notification in fact shows that the only test was whether the output of a machine in one hour was 30,000 copies per hour in actuality and not whether the machine was designed or capacity of X or Y at speeds P & Q." 14. Pursuant to the favourable disposal of the above appeals on 31.03.2005 by the Hon'ble Supreme Court, the petitioner preferred a refund claim before the 2nd respondent on 18.05.2005. The office of the Deputy Commissioner of Customs therefore issued letter dated 06.01.2006 and called upon the petitioner to furnish their books of account from the date of payment of aforesaid amount till date for ruling out bar of unjust enrichment under Section 27 of the Customs Act, 1962. 15. The petitioner resisted the aforesaid attempt and tried to establi....
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.... will not be absorbed during single financial year as would in the case of any raw material; hence the argument of payment of duty at later date holds no good." 20. Under these circumstances, the petitioner filed an appeal before the 1st respondent Commissioner of Customs (Appeals). Vide impugned order in Appeal No.C.CUS.844/06 dated 21.11.2006 bearing reference No.C3/659/R/2006-SEA, the 1st respondent remanded the case back to the 2nd respondent to decide the issue de novo on the ground as to whether the incidents customs duty had been passed on to the consumer or not. 21. Pursuant to Order-in-Appeal No.C.CUS.844/06 dated 21.11.2006 bearing Reference No.C3/659/R/2006-SEA of the 1st respondent Commissioner of Customs (Appeals), the office of the Deputy Commissioner of Customs (Refunds) vide communication dated 29.11.2006 also called upon the petitioner to produce documentary evidence to substantiate that there was no "unjust enrichment". 22. Aggrieved by the impugned Order in Appeal No.C.CUS.844/06 dated 21.11.2006 bearing Reference No.C3/659/R/2006-SEA passed by the 1st respondent, the petitioner has filed this writ petition to quash the order of the 1st respondent and to....
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....ai, 2003 (157) E.L.T. 123 (Tri. - Chennai) xiv.SRF Ltd Vs Commissioner of Customs, Chennai, 2006 (193) E.L.T. 186 (Tri. - LB) xv.Commissioner of Central Excise, Chennai Vs Grasim Industries, 2015 (318) E.L.T.594 (S.C.) xvi.ModipinFibre Co., Vs Commissioner of Central Excise, Ghaziabad, 2004 (173) E.L.T. 168 (Tri. - Del.) xvii.Plas Pack Industries Vs Commissioner of Customs & Central Excise, Ahmedabad, 2004 (167) E.L.T 422 (Tri. - Mumbai) xviii.Silwester Textiles Pvt. Ltd., Vs Commissioner of Central Excise, Mumbai, 2003 (156) E.L.T. 216 (Tri. - Mumbai) xix.Commissioner of Customs, Ahmedabad Vs Mahalaxmi Exports, 2009 (233) E.L.T. 105 (Tri. - Ahmd.) xx.Commissioner of Customs Vs Mahalaxmi Exports, 2010 (258) E.L.T. 217 (Guj.) xxi.Commissioner of Central Excise, Pune Vs Rocket Engineering Corporation Ltd., 2014 (306) E.L.T. 33 (Bom.) xxii.Commissioner of Central Excise, Chandigarh Vs Modi Oil & General Mills, 2007 (210) E.L.T. 342 (P & H) xxiii.Commissioner of Customs, Cochin Vs Shree Simandar Enterprises, 2012 (283) E.L.T. 369 (Ker.) 26. He also referred to the few other decisions of this Co....
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.... to the amounts paid by the petitioner pending the appeals. 34. It is submitted that the petitioner had not claimed refund of any amount that was paid as duty under Section 12 of the Customs Act, 1962 but refund of amount paid pending disposal of the appeals before the Hon'ble Supreme Court, as the Hon'ble Supreme Court had declined to grant stay in Civil Appeal Nos.3558-3559 of 2000 vide order dated 06.11.2000. 35. He therefore submits that the amount paid by the petitioner vide Miscellaneous Challan on 21.03.2001 was not a "refund of duty or interest" under Section 27 of the Customs Act, 1962 during the material time and therefore the question of invoking unjust enrichment did not apply. 36. It was further submitted that it was not even necessary to file an application for refund as per circular dated 02.01.2002 bearing reference No.C.B.E. & C Circular F. No.275/37/2000-CX.8A of the Central Board of Excise and Customs. 37. The learned counsel for the respondent Mrs.Apaarna Nandakumar submits that the amount which was paid by the petitioner in the year 2001 was not a pre-deposit within the meaning of Section 129E of the Customs Act, 1962 and therefore the amoun....
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....g an application within six months from the relevant date except in cases where duty was paid under protest in terms of the proviso. However, even in such cases, the person claiming refund had to pay the duty under protest in terms of prescribed rules. A bare reading of Section 11B(1), therefore, shows that it refers to claim for refund by the proper officer under Rule 9B. 40. She also drew my attention to the decision of the Gujarat High Court in Ajni Interiors Vs. Union of India and Ors., MANU/GJ/1628/2019. She submits that the Gujarat High Court has taken a contra view while dealing with a similar circumstances. She submits that view was recently affirmed by the Hon'ble Supreme Court by its order dated 20.2.2020 while dismissing the appeal of the assessee therein in SLP (Civil) Diary No.3952 of 2020 reported. She therefore submits that the decision of the Gujarat High Court in Gujarat Insecticides Ltd., Vs. Union of India, 2005 (183) E.L.T. 9 (Guj.) though affirmed by the Hon'ble Supreme Court earlier cannot be taken as a binding precedent. 41. The learned counsel for the respondent therefore submitted that the amount that was paid during the pendency of the appea....
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....r to issue prerogative writ petition under Article 226 of the Constitution of India is plenary in nature and cannot be curtailed by other provisions of the Constitution or a Statute. 48. Thus, this Court has jurisdiction to entertain a writ petition even if it is assumed that provisions of the Section 27 of the Customs Act, 1962 are attracted or an alternate remedy exist. It would be unfair to relegate the petitioner to an alternate remedy at this distant point of time after a lapse of 13 years since the filing of this writ petition either to CESTAT or to the 2nd respondent to comply with the directions of the 1st respondent in the facts of this case. Hence, this case is examined on merits and disposed. 49. Before dealing further, I shall proceed to deal with the objection of the learned counsel for the respondents based on the decision of the Gujart High Court in Ajni Interior Vs. Union of India MANU/GJ/1628/2019. 50. The Court there dealt with a facts situation where the amount was deposited pending investigation and not during the pendency of the appeal. The amount was not paid "under protest". Therefore, the Hon'ble Gujrarat High Court rejected the prayer for refund....
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.... actually suffered loss or prejudice would fight the levy and apply for refund in case of success. Secondly, in a competitive market economy, as the one we have embarked upon since 1991-92, the manufacturer's self interest lies in producing more and selling it at competitive prices - the urge to grow. A favourable decision does not merely mean refund; it has a beneficial effect for the subsequent period as well. It is incorrect to suggest that the disputes regarding classification, valuation and claims for exemptions are fought only for refund; it is for more substantial reasons, though the prospect of refund is certainly an added attraction. It may, therefore, be not entirely right to say that the prospect of not getting the refund would dissuade the manufacturers from agitating the questions of exigibility, classification, approval of price lists or the benefit of exemption notifications. The disincentive, if any, would not be significant. In this context, it would be relevant to point out that the position was no different under Rule 11, or for that matter Section 11- B, prior to its amendment in 1991. Sub-rules (3) and (4) of Rule 11 (as it obtained between 6-8-1977 and 17-....
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....money for fighting the litigation, says the counsel. Shri Sorabjee and Shri Salve too emphasised this aspect and said that this situation would lead to many an undesirable consequence. The assessing/approving officer (original authority) would become the monarch; whatever he says would be the law since there would be nobody interested in challenging his order. Illegal levies would become the order of the day. Such a situation, the learned counsel point out, is neither in the interest of law nor in the interest of consumer or the larger public interest. It is accordingly submitted that it would be just and proper that the amended Section 11-B is held not to take in refund claims arising as a consequence of appellate or a superior court order. 56. It must be also recalled in the aforesaid decision of the Gujarat High Court in Ajni Interior Vs. Union of India, MANU/GJ/1628/2019 referred to supra, the decision of the Hon'ble Supreme Court in Mafatlal Industries Ltd Vs. UOI, 1997 (98) ELT 247 : (1997) 5 SCC 536 has not been taken note, wherein, it has clearly held that "Now, where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would ....
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....26(Mad) and few other decisions, wherein, it has been held that refund of pre-deposit made pending appeal were outside the purview of Section 27 of the Customs Act, 1962 and 11B of the Central Excise Act, 1944 would have to be construed as having passed contrary to decision of the Hon'ble Supreme Court in Mafatlal Industries Ltd Vs. UOI, 1997(98) ELT 247 : (1997) 5 SCC 536. 61. In Suvidhe Ltd. Vs. Union of India, (1996) 82 ELT 177 (Bom), the Bombay High Court had held that the claim raised by the Department in the show cause notice is thoroughly dishonest and baseless. It held that in respect of a deposit made under Section 35-F, provisions of Section 11-B can never be applicable. A deposit under Section 35-F is not a payment of duty but only a pre-deposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief. 62. The decision of the Bombay High Court was challenged before the Hon'ble Supreme Court. The view was followed / approved in Mahavir Aluminium Vs. CCE, (1999) 6 SCC 65 , in Commr. of Customs (Import) Vs. Finacord Chemicals (P) Ltd., (2015) 15 SCC 697, in Commr. of Customs (Import) Vs. Finacord Che....
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....nt finally succeeding in the appeal, and, ii. the refunds so claimed are covered under the provisions of Section 11B of the Act and are governed by the parameters applicable to the claim of refund of duty as the amount is deposited under Section 35F of the Central Excise Act, 1944. The Hon'ble Supreme Court vide its order dated 26.11.2001 dismissed the appeal. Even though the Apex Court did not spell out the reasons for dismissal, it can well be construed in the light of its earlier judgment in the case of Suvidhe Ltd. and Mahavir Aluminium that the law relating to refund of pre-deposit has become final. 3. In order to attain uniformity and to regulate such refunds it is clarified that refund applications under Section 11 B( 1) of the Central Excise Act,1944 or under Section 27(1} of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested xerox copy of the order-in-appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested xerox copy of the Challan in Form TR 6 evidencing the payment of the amount of such d....
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....initiated against the concerned defaulting officers. All concerned are requested to note that default will entail an interest liability, if such liability accrues by reason of any orders of the CESTAT/Court, such orders will have to be complied with and it may be recoverable from the concerned officers. 67. The observations of the Hon'ble Supreme Court in Mafatlal Industries Ltd Vs. UOI, 1997(98) ELT 247 : (1997) 5 SCC 536 in paragraph 91 and 92 were made without considering the operations of other provisions of the Act and therefore cannot construed as having laid down the law. It cannot be said that the Hon'ble Supreme Court has laid down a proposition of law on the other provisions of the respective Acts. 68. No order was required either under Section 129E or Section 35F of the respective enactments for deposit the disputed duty or penalty as a condition for hearing the appeal. Only when a person seeks for waiver or partial waiver, an order was required to be passed. These provisions have been liberalized in 2014. Now the maximum amount of pre-deposit has now been capped to 7.5% at the stage of first appeal and 10% at the stage of second appeal before the CESTAT. 69. Wh....
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....ot put such order/decision to jeopardy by way of an appeal or reference. 77. Thus, if such payments are made pending appeal for want of stay order, it has to be considered as pre-deposit akin to the amounts deposited under Section 129E of the Customs Act, 1927/Section 35F of the Central Excise Act, 1944. Therefore, the amount that was paid by the petitioner pending its appeal was not "duty" though miscellaneous challan slows payment of duty, nevertheless it has to be considered as amount paid for the purity of Section 131 of the Customs Act, 1962. 78. This Court is therefore of the considered view that the amounts paid during the pendency of the appeals before the Hon'ble Supreme Court has to be construed as having paid "under protest" for the purpose of Section 131 of the Customs Act, 1962 in a similar manner under Section 265 of the Income Tax Act, 1961 and refund of such amounthas to be considered outside the purview of sting of "unjust enrichment" in Section 27 of the Customs Act, 1962. 79. Further, the question of subjecting a person to the rigours of "unjust enrichment" under the aforesaid provisions of the Customs Act, 1962 is attracted only where a refund claim is ....
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....nder sub-rule (5) of Rule 9-B will not be governed by Section 11-A or Section 11-B, as the case may be . However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11-B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9-B(5) reagitating the issues already decided under Rule 9-B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11-B. It follows logically that position would be the same in the converse situation. 85. In order to get over the situation arising out of observation in paragraph No.104 of Mafatlal Industries Ltd. case referred to supra, the Central Government brought an amendment to Sub-Rule (5) of Rule 9B of the Central Excise Rules,1944 vide Notification No.45/99-CE (NT) dated 25-6-1999, by adding a proviso thereto. 86. The effect of the proviso was that ev....
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....of the department by observing "In our judgment, the claim raised by the Department in the show-cause notice is thoroughly dishonest and baseless." 93. The above ratio of the Hon'ble Supreme Court will equally apply to amounts paid in terms of Section 131 of the Customs Act, 1962 or under Section 35N of the Central Excise Act, 1944 as amounts that paid under these provisions are pre-deposit pending appeals though not paid as a condition for filing appeal under Section 129E of the Customs Act,1962 and Section 35F of the Central Excise Act, 1944. 94. It must be also recalled that the Hon'ble Supreme Court in Mafatlal Industries Ltd Vs. UOI, 1997 (98) ELT 247 : (1997) 5 SCC 536 was only concerned with the constitutional validity of the twin amendments to Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1962 in 1991. 95. The Hon'ble Supreme Court was really not concerned with the assessment procedures under the respective enactments. However, in the course of discussion while upholding the constitutional validity of the amendments to Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1927, the Hon'ble Supreme Court has ....
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....o be noted that it is not relevant as the question of law involved in said civil appeal before the Court was as follows:- "Whether a claim for refund after final assessment is governed by Section 11-B of the Central Excise Act, 1944?" 101. The above decision was rendered in the context of the above question that fell for consideration before the Hon'ble Supreme Court. It was in that context, the Hon'ble Supreme Court made few observations. Therefore, the said decision cannot be relied by the respondent in this case. 102. The above decision is not an authority for amounts pre-deposited under Section 129E or under Section 131 of the Customs Act, 1962 or under the akin provisions under Section 35F and 35N of the Central Excise Act, 1944. 103. A supplementary issue which fell for consideration was whether the doctrine of "unjust enrichment" in Section 11B of the Central Excise Act 1994 was applicable to the facts of the case in CCE Vs. Allied Photographics India Ltd., (2004) 4 SCC 34, having regard to the fact that manufacturer had paid the differential disputed excise duty "under protest" from 01.03.1974 to 31.10.1984 after the assessment was finalized in favour i....
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....er provisional assessment was on his own account. The accounts of the manufacturer are different from the accounts of a buyer (distributor). Consequently, there is no merit in the argument advanced on behalf of the respondent that the distributor was entitled to claim refund of "on-account" payment made under protest by the manufacturer without complying with Section 11-B of the Act. 105. Thus, the decision of the Hon'ble Supreme Court in CCE Vs. Allied Photographics India Ltd., (2004) 4 SCC 34 is not applicable to the facts of the case and has not relevance. The decision of the Gujrat High Court in Ajni Interior Vs. Union of India, MANU/GJ/1628/2019 as affirmed by the Supreme Court is to be viewed having rendered contrary to the law in Union of India Vs. SuvidheLtd., (2016) 11 SCC 808. 106. Further, from a reading of the provisions, it is clear that only refund of "duty" or "interest thereon" under Section 27 of the Customs Act, 1962 are governed by the doctrine of "unjust enrichment" under Section 27 of the Customs Act, 1962. 107. Pre-deposits as a condition under Section 129E of the Customs Act, 1962 or under Section 35F of the Central Excise Act, 1944 are not governed ....
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....t, 1962 and was incorporated only in 1991, nevertheless, indicates that only refund of excess customs duty paid or interest borne thereon as the case may be pursuant to an order of assessment was to be refunded under Section 27 of the Customs Act, 1962. 115. Only if excess duty was paid pursuant to an order of assessment under Section 17 , Section 18 or under Section 19 of the Customs Act, 1962, refund of such duty would subject to compliance of Section 27 of the Customs Act, 1962 and not the amount paid as a consequence of recovery proceeding arising out of an order passed under Section 28 of the of the Customs Act, 1962 at the appellate stage in terms of Section 131 of the Act. 116. In this case, it cannot be said that the amount that was paid pending the appeals was pursuant to an order of assessment before clearance of the goods from the customs barriers. The imported goods were not assessed to duty provisionally under Section 18 of the Customs Act, 1962 and cleared later. Imported machines were assessed to duty under Section 17 and cleared on the duty assessed by the proper officer. 117. The amount that was paid by the petitioner was the amount that was affirmed as pa....