TaxTMI 
TaxTMI 
2005 (12) TMI 109
X X X X Extracts X X X X
X X X X Extracts X X X X
....') made an application on November 1, 1999 claiming refund arising on finalisation of the provisional assessment. The assessing officer rejected the application by applying the principles of unjust enrichment contained in Section 11B of the Central Excise Act, 1944 (the 'Excise Act' for short). However, both the appellate authorities below, relying upon the decisions of the Apex Court in the case of Mafatlal Industries Limited v. Union of India reported in 1997 (89) E.L.T. 247 (S.C.) and the decision in the case of Commissioner of Central Excise v. T.V.S. Suzuki Limited reported in 2003 (156) E.L.T. 161 (S.C.) have held that the assessee is entitled to the refund and that the principles of unjust enrichment is not applicable to the present case. Hence, the revenue has filed this appeal under Section 35G of the Central Excise Act, 1944. 3. The assessee is engaged in the manufacture of metal containers on job work basis on behalf of M/s. Bharat Petroleum Corporation Limited (BPCL) and M/s. Hindustan Petroleum Corporation Limited (HPCL). During the period from July, 1991 to March, 1992, the assessee had filed price list for metal containers at the rate of Rs. 204.77 ps.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated November 1, 1999 called upon the Revenue to comply with its statutory obligation in refunding the amount due to the assessee on finalisation of the provisional assessment. 7. On receipt of the said application, the Superintendent of Central Excise, however, issued a show cause notice on October 31, 2000 calling upon the assessee to show cause as to why the refund claim should not be rejected on the ground of unjust enrichment. The assessee objected to the denial of refund and submitted that the principles of unjust enrichment contained in Section 11B of the Excise Act is not applicable in the present case. However, by an order dated August 30, 2001 the Assistant Commissioner of Central Excise held that the assessee has not disputed that the differential duty has been collected from the customer and, accordingly, rejected the assessee's refund claim by applying the principles of unjust enrichment. 8. The assessee filed an appeal against the said order dated August 30, 2001 and the Commissioner of Central Excise (Appeals), by his order dated December 31, 2001 allowed the appeal by following the judgment of the Apex Court in the case of Mafatlal Industries Limited (supr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Central Excise Rules was inserted with a view to overcome the interpretation put on Rule 9B(5) by the Apex court in the case of Mafatlal Industries Limited (supra). Since, the application for refund was made by the assessee on November 1, 1999 i.e. after the amendment to Rule 9B(5), it was submitted that the principles of unjust enrichment was applicable to the refund claim made by the assessee. 12. Relying upon the decisions of the Apex Court in the case of The Nawabgunj Sugar Mills Co. Limited & Others v. The Union of India & Others reported in AIR 1976 S.C. 1152, M/s. Shiv Shankar Dal Mills etc. etc. v. State of Haryana & Others reported in AIR 1980 S.C. 1037, U.P. State Electricity Board v. City Board, Mussoorie & Others reported in AIR 1985 S.C. 883 and Full Bench decision of this Court in the case of New India Insurance Limited v. Union of India reported in 1990 (46) E.L.T. 23 (Bom.), Mr. Rana submitted that even if there was no statutory provision, a person can not claim or retain undue benefit and enrich himself unjustly. Relying upon the decision of the Apex Court in the case of Sahakari Khand Udyog Mandal Limited v. Commissioner or Central Excise & Customs reported in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pra). Mr. Bhatt strongly relied upon para 95 and 104 of the Apex Court in the case of Mafatlal Industries Limited (supra) which reads as under : 95. Rule 9B provides for provisional assessment in situations specified in clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that "when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be". Any recoveries under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as orders passed under sub-rule (5) are appealed against-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....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In the light of the aforesaid judgments of the Apex Court, Mr. Bhatt submitted that in the present case refund accrued to the assessee on finalisation of the provisional assessment on June 8, 1999 and as per Rule 9B(5) prevailing on June 8, 1999, the Revenue was bound to grant refund due to the assessee without applying the principles of unjust enrichment contained in Section 11B of the Excise Act. This right to get refund without the application of the principles of unjust enrichment was a vested right and that vested right cannot and does not get defeated on account of the delay on the part of the Revenue in refunding the amount due to the assessee. Therefore, whether an application for refund was made or not, the revenue was bound to refund the amount accrued to the assessee on finalisation of the provisional assessment on June 8, 1999 without applying the principles of unjust enrichment. In support of his submission, Mr. Bhatt relied upon the decision of the Apex Court in the case of T.V.S. Suzuki Ltd. (supra) and submitted that the amendment to Rule 9B(5) is prospective and not retrospective and, therefore the principles of unjust enrichment made applicable to the refunds ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....provisional assessment prior to June 25, 1999. Mr. Bhatt submitted that in the case of Mafatlal Industries Limited (supra), TVS Suzuki Limited (supra) and Allied Photographics India Limited (supra), the Apex Court was directly concerned with the refunds arising on finalisation of the provisional assessment under Rule 9B(5) whereas in the case of Sahakari Khand Udyog Mandal Limited (supra) the Apex Court was not at all dealing with the refunds arising on finalisation of provisional assessment. Accordingly, Mr. Bhatt submitted that the decision of the Apex Court in the case of Sahakari Khand Udyog Mandal Limited has no relevance to the facts of the present case and in the light of the decisions of the Apex Court in the case of Mafatlal Industries Limited, TVS Suzuki Ltd., and Allied Photographics India Limited referred to hereinabove, the Tribunal was justified in holding that the bar of unjust enrichment is not applicable to the refunds accrued to the assessee on finalisation of the provisional assessment on June 8, 1999. 19. Mr. Bhatt fairly stated that in the present case, the assessee had collected from its customers the excise duty paid on goods cleared on provisional assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upra) after considering the scope and ambit of Section 11B of the Excise Act as well as Rule 9B(5) of the Central Excise Rules held that the procedure of establishing under Section 11B of the Excise Act that the burden of duty has not been passed on by the claimant was not applicable to the refunds arising on finalisation of the provisional assessment. Accordingly, it was held that, any recoveries or refunds consequent upon the adjustment under sub-rule 5 of Rule 9B will not be governed by Section 11A or Section 11B of the Excise Act, as the case may be. 22. Subsequent to the decision of the Apex Court in the case of Mafatlal Industries Limited (supra), the legislature by Act 21 of 1998, has further amended Section 11B of the Excise Act with effect from August 1, 1998 by inserting clause (eb) to Explanation B in Section 11B of the Excise Act. Relevant portion of Section 11B after insertion of clause (eb) with effect from August 1, 1990 read as follows : "11B. Claim for refund of duty. - (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Exc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e that while amending Section 11B with effect from August 1, 1998, similar amendments were not carried out to Rule 9B of the Excise Rules to the effect that the refunds arising on finalisation of the provisional assessment would be governed by the provisions contained under Section 11B of the Excise Act. It is only on June 25, 1999, the Central Government in exercise of its powers conferred under Section 37 of the Excise Act, amended Rule 9B(5) by inserting a proviso to the effect that the refunds arising on finalisation of the provisional assessment shall be given only after following the procedure established under Section 11B(2) of the Excise Act. In our opinion, the amendment effected to Rule 9B(5) on June 25, 1999 is merely clarificatory in nature as it merely reiterates the existing statutory provisions contained in Section 11B of the Excise Act from August 1, 1998. The Central Excise Rules, 1944 were framed by the Central Government in exercise of the powers conferred by Sections 6, 12 and 37 of the Central Excise & Salt Act, 1944 to carry into effect the purposes of the Excise Act. Thus, the Excise Rules have to be read in the light of he Excise Act and in case of conflict ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cannot be read in isolation and has to be read in consonance with the amended Section 11B. 27. Relying upon the decision of the Apex Court in the case of Mafatlal Industries Ltd. (supra), it was contended by the counsel for the assessee that the amendment to Section 11B by Act 21 of 1998 applies only to the claim of refund made in excess of what is due on finalisation of the provisional assessment. In other words, according to the counsel for the assessee, amendment to Section 11B by Act 21 of 1998 does not apply to the refund arising on finalisation of the provisional assessment and it applies only to refunds, if any, claimed by the assessee over and above the refund arising on finalisation of the provisional assessment. To illustrate, if Rs. 10/- is the refund arising on finalisation of the provisional assessment and if the assessee considers that over and above Rs. 10/- the assessee is entitled to additional refund of Rs. 5/- then, to claim that amount of Rs. 5/- the procedure prescribed under Section 11B has to be followed as per the amendment effected by Act 21 of 1998. In our opinion, there is no merit in thin contention, because, firstly, there is nothing in clause (eb) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he claim for refund dated July 5, 1996, the amendment to Rule 9B(5) had come in to force with effect from June 25, 1999 and, therefore, the pending refund application dated July 5, 1996 has to be decided as per the amended Rule 9B(5). In that context, the Apex Court in the case of TVS Suzuki Limited held that merely because the departmental authorities took a long time to process the application for refund, the right of the assessee therein does not get defeated by the subsequent amendment to Rule 9B(5). Thus, in the case of TVS Suzuki Limited (supra) refund on finalisation of the provisional assessment had accrued to the assessee therein, prior to the amendment of Section 11B on August 1, 1998, where as, in the present case, refund on finalisation of the provisional assessment accrued to the assessee after August 1, 1998. Moreover, in the case of TVS Suzuki Limited, the Apex Court was not called upon to consider the scope and effect of the amendment to Section 11B with effect from August 1, 1998, because, the issue in that case was relating to the refund arising on finalisation of the provisional assessment prior to August 1, 1998. The ratio laid down by the Apex Court in the case....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... governed by the procedure prescribed under Section 11B of the Excise Act and the amendment to Rule 9B(5) on June 25,1999 merely clarifies the legal position existing from August 1, 1998. In the present case, refund accrued to the assessee after August 1, 1998 and moreover claim for refund was admittedly made after the amendment to Rule 9B(5) and , therefore, the principles of unjust enrichment is squarely applicable to the facts of the present case. 32. Accordingly, we hold that in the facts of the present case, the Assessing Officer was justified in invoking the principles of unjust enrichment to the refund arising on finalisation of the provisional assessment on June 8, 1999 and that the refund claimed by the assessee by application dated November 1, 1999 was governed by the provisions of Section 11B of the Excise Act. In the present case, admittedly the assessee has recovered from its customers the duty paid on goods cleared on provisional assessment. Therefore, the Assessing Officer was justified in rejecting the refund claim of the assessee. Both the appellate authorities below, in our opinion, were in error in relying upon the decisions of the Apex Court which were render....