# 9 S.C.R. 591 COMMISSIONER OF CENTRAL EXCISE, MADRAS v. M/S. ADDISON & CO. LTD

- **Citation:** [2016] 9 S.C.R. 591
- **Court:** Supreme Court of India
- **Decided:** 2016-08-29
- **Case number:** Civil Appeal No. 7906 of2002
- **Bench:** Anil R. Dave, Amitava Roy, L. Nageswara Rao
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/9-s-c-r-591-commissioner-of-central-excise-madras-v-m-s-addison-co-ltd-31477
- **Pages:** 24

## Headnote

Central Excise Act, 1944:
s.11-B and its proviso - Refund - Unjust enrichment - Refund
claim in respect of turnover discount on the basis of credit notes -
Maintainability of - Held: Maintainable - Turnover discount shall
not be disallowed only because they are not payable at the time of
each invoice - ·However, assessee who did not bear the burden of
the duty, though entitled to claim deduction on the basis of credit
notes raised ·by him towards turnover disCXJunt is not entitled for
refund as he would be unjustly enriched.
s.ll-B(2), proviso - Word 'buyer' - Connotation of- Held: A
plain reading of Clauses (d), (e) and (/) of the proviso to s.11-B (2)
shows that refund to be made to an applicant should be relatable
only to the duty of excise paid by the three categories of persons
menti01{e_d therein i.e. the manufacturer, the buyer and a .class of
applicants notified by the Central Government - Clause (e).to the
proviso refers to the buyer which is not restricted to the first buyer
from the manufacturer - The buyer ·mentioned therein can be a buyer
downstream as well - It might be difficult to identify who hadactually
borne the burden but such verification would definitely assist the
Revenue in finding out whether the manufacturer or buyer who
makes an application for refund are being unjustly enriched.
s.12-B - Statutory presumption under - Held: There is a
statutory presumption u/s.12-B that the duty has been passed on to
the ultimate consumer.
Disposing of the appeals, the Court
HELD:
1. In the instant case, the Assessee has admitted
that the incidence of duty was originally passed on to the buyer •.
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There is no material to show that the buyer to whom the incidence
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·SUPREME COURT REPORTS
[2016] 9 S.C.R.
of duty was passed on by the Assessee did not pass it on to any
other person. There is a statutory presumption under Section
12-B of the Act that the duty has been passed on to the ultimate
consumer. It is clear from the facts that the duty which was
originally paid by the Assessee was passed on. The refund claimed
by the Assessee is for an amount which is part of the excise duty
paid earlier and passed on. The Assessee who did not bear the
burden of the duty, though entitled to claim deduction, is not
entitled for a refund as he would be unjustly enriched. [Para 16)
(604-G-H; 605-AJ
2. The si11e qua 11011 for a claim for refund as contemplated
in Section 11-B of the Act is that the claimant has to establish
that the amount of duty of excise in relation to which such refund
is claimed was paid by him and that the incidence of such duty
has not been passed on by him to any other perso11. Section 11-B
(2) provides that, in case it is found that a part of duty of excise
paid is refundable, the amount shall be credited to the Consumer
Welfare Fund established under Section 12-C. There is a proviso
to Section 11-B (2) which postulates that the amount of excise
duty which is refundable may be paid to the applicant instead of
being credited to the fund, if such amount is relatable to the duty
of excise paid by the manufacturer and he had not passed on the
incidence of such duty to any other person. Clause (e) to proviso
of Section 11-B (2) also enables the buyer to receive the refund if
he had borne the duty of excise, provided he did not pass on the
incidence of such duty to any other perso11. The third category of
a class of applicants who may be specified by the Central
Government by a notification in the official gazette are also entitled
for refund of the duty of excise. A plain reading of Clauses (d),
(e) and (t) of the proviso to Section 11-B (2) shows that refund to
be made to an applicant should be relatable only to the duty of
excise paid by the three categories of persons mentioned therein
·i.e. the manufacturer, the buyer and a class of applicants notified
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by the Central Government. Clause (e) refers to the buyer which
is not restricted to the first buyer from the manufacturer. Th

## Text

_Characters 0–39,985 of 55,303. This is a partial read: ask again with offset=39985 for what follows._

(2016] 9 S.C.R. 591
COMMISSIONER OF CENTRAL EXCISE, MADRAS
A
v.
M/S. ADDISON & CO. LTD.
(Civil Appeal No. 7906 of2002)
AUGUST 29, 2016
[ANIL R. DAVE, AMITAVA ROY AND
L. NAGESWARA RAO, JJ.]
Central Excise Act, 1944:
s.11-B and its proviso - Refund - Unjust enrichment - Refund
claim in respect of turnover discount on the basis of credit notes -
Maintainability of - Held: Maintainable - Turnover discount shall
not be disallowed only because they are not payable at the time of
each invoice - ·However, assessee who did not bear the burden of
the duty, though entitled to claim deduction on the basis of credit
notes raised ·by him towards turnover disCXJunt is not entitled for
refund as he would be unjustly enriched.
s.ll-B(2), proviso - Word 'buyer' - Connotation of- Held: A
plain reading of Clauses (d), (e) and (/) of the proviso to s.11-B (2)
shows that refund to be made to an applicant should be relatable
only to the duty of excise paid by the three categories of persons
menti01{e_d therein i.e. the manufacturer, the buyer and a .class of
applicants notified by the Central Government - Clause (e).to the
proviso refers to the buyer which is not restricted to the first buyer
from the manufacturer - The buyer ·mentioned therein can be a buyer
downstream as well - It might be difficult to identify who hadactually
borne the burden but such verification would definitely assist the
Revenue in finding out whether the manufacturer or buyer who
makes an application for refund are being unjustly enriched.
s.12-B - Statutory presumption under - Held: There is a
statutory presumption u/s.12-B that the duty has been passed on to
the ultimate consumer.
Disposing of the appeals, the Court
HELD:
1. In the instant case, the Assessee has admitted
that the incidence of duty was originally passed on to the buyer •.
B
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There is no material to show that the buyer to whom the incidence
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591
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·SUPREME COURT REPORTS
[2016] 9 S.C.R.
of duty was passed on by the Assessee did not pass it on to any
other person. There is a statutory presumption under Section
12-B of the Act that the duty has been passed on to the ultimate
consumer. It is clear from the facts that the duty which was
originally paid by the Assessee was passed on. The refund claimed
by the Assessee is for an amount which is part of the excise duty
paid earlier and passed on. The Assessee who did not bear the
burden of the duty, though entitled to claim deduction, is not
entitled for a refund as he would be unjustly enriched. [Para 16)
(604-G-H; 605-AJ
2. The si11e qua 11011 for a claim for refund as contemplated
in Section 11-B of the Act is that the claimant has to establish
that the amount of duty of excise in relation to which such refund
is claimed was paid by him and that the incidence of such duty
has not been passed on by him to any other perso11. Section 11-B
(2) provides that, in case it is found that a part of duty of excise
paid is refundable, the amount shall be credited to the Consumer
Welfare Fund established under Section 12-C. There is a proviso
to Section 11-B (2) which postulates that the amount of excise
duty which is refundable may be paid to the applicant instead of
being credited to the fund, if such amount is relatable to the duty
of excise paid by the manufacturer and he had not passed on the
incidence of such duty to any other person. Clause (e) to proviso
of Section 11-B (2) also enables the buyer to receive the refund if
he had borne the duty of excise, provided he did not pass on the
incidence of such duty to any other perso11. The third category of
a class of applicants who may be specified by the Central
Government by a notification in the official gazette are also entitled
for refund of the duty of excise. A plain reading of Clauses (d),
(e) and (t) of the proviso to Section 11-B (2) shows that refund to
be made to an applicant should be relatable only to the duty of
excise paid by the three categories of persons mentioned therein
·i.e. the manufacturer, the buyer and a class of applicants notified
G
by the Central Government. Clause (e) refers to the buyer which
is not restricted to the first buyer from the manufacturer. The
buyer mentioned in the above Clause can be a buyer downstream
as well. The word 'buyer' in Clause (e) to proviso to Section
11-B (2) of the Act cannot be restricted to the first buyer from
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COMMISSIONER OF CENTRAL EXCISE, MADRAS v. M/S.
ADDISON & CO. LTD.
the manufacturer. It might be difficult to identify who had actually
borne the burden but such verification would definitely assist the
Revenue in finding out whether the manufacturer or buyer who
makes an application for refund are being unjustly enriched. If it
is not possible to identify the person/persons who have borne
the duty, the amount of excise duty collected in excess will remain
in the fund which will be utilized for the benefit of the consumers
as provided in Section 12-D. [Paras 19, 21) [606-F-H; 607-A-B;
609-G-H; 610-A-B]
.
Mafatlal Industries Ltd. and Others v. Union of India
And Ors. (1997) 5 SCC 536 : 1996 (10) Suppl. SCR
585 - followed.
Union of India and Others v. Bombay Tyre International
Pvt. Ltd. (1984) 1 sec 467 : 1984 (1) SCR 347; IFB
Industries Ltd. v. State of Ke~ala (2012) 4 SCC 618 :
2012 (4) SCR 802; Addison ~ Company Ltd., Madras
v. Collector of Central Excise, Madras (1997) 5 SCC
763 - referred to.
Case Law Reference
1996 (10) Suppl. SCR 585
191M (1) SCR 347
20~2. (4) SCR 802
followed
Para 10
referred to
Para 11
referred to
Para 11
(1?97) 5 SCC 763
referred to
Para 12
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7906
. of2002.
From the Judgment and Order dated 23.11.2000 of the High Court
of Judicature at Madras, in R. C. No. 1/1999
WITH
C. A. No. 8488 of2009
C.A.No.14689of2015
C. A. Nos. 8382, 8383, 8384, 8385, 8386, 8388, 8390, 8391 of
2016.
Atmaram N. S. Nadkarni, ASG, K. Radhakrishnan, Sr. Adv.,
Ms. Nisha Bagchi, Ms. Binu Tamta, Ms. Meenakshi Grover, Ms. Puma
Bhandari, Ms. Sujeea Shrivastava, Ms. Pooja Shanna, Jai Dehadari,
Amogh Prabhu Desai, Salvador ·S. Rebello, B. Krishna Prasad,
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Mrs. Anil Katiyar, Advs. for the Appellant.
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[2016] 9 S.C.R.
A
N. Venkatraman, Sr. Adv., S. Nandakumar, R. Satish Kumar,
B
Prateek Gupta, P. Srinivasan, V. N. Raghupathy, M. P. Devanath, Anandh
K., Hemant Bajaj, Abhishek Anand, Aditya Bhattarcharje,
Ms. L. Chameye, Sridhar Potaraju,Arjun Singh, Gaichangpou Gangmei,
Ms. Sindoora VNL, Dr. Manish Singhvi, Prasenjit Pritam,
R. Gopalakrishnan, Sandeep Nμrain, Ashok Bannidinni (For M/s. S.
Narain & Co.), Advs. for the Respondents.
The Judgment of the Court was delivered by
L. NAGESWARA RAO, J. 1. The above Appeals have been
listed before us because of an order dated 16.07.2008, by which there
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was a reference to a Larger Bench in view of the importance of the
questions involved.
2. Civil Appeal No. 7906 of2002 arises from the judgment dated
23.11.2000 passed by the Madras High Court in R.C. No. 01of1999.
Civil Appeal No. 14689 of2015 was filed by the Revenue against the
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judgment dated 26.11.2014 in Central Excise Appeal No. 21 of 2009.
E
Special Leave Petition (C) Nos. 18426 of2015, 18423 of2015, 18425 of
2015,23722of2015, 12282of2016, 16142of2016and 16141 of2016
are filed against the judgment of the Andhra Pradesh High Court in
Central Excise Appeal Nos. 21 of2005, 9 of2005, 51 of2004, 10 of
2005, 44 of2004, 38 of2004 and 18 of2005 respectively.
3. Civil Appeal No. 8488 of 2009 is filed against the judgment
dated 20.08.2008 passed by the Bombay High Court in Central Excise
Appeal No. 100 of2008 and Special Leave Petition (C) No. 25055 of
2009 is filed by the Union oflndia against the judgment dated 26.11.2008
of the High Court ofRajasthan at Jodhpur in D.B. Central Excise Appeal
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No. 34 of2007.
4. Civil Appeal No. 7906 of2002 will be taken as the lead matter
as SLP (C) Nos. 18426, 23 722, 18425, 18423 of2015 and 12282, 16 I 41
and 16142 of2016 and Civil Appeal No. 14689 of2015 were disposed of
by the Andina Pradesh High Court by following the Madras High Court's
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impugned judgment in Civil Appeal No. 7906 of2002. Civil Appeal No.
8488 of2009 and SLP No. 25055 of2009 will be dealt with separately
as the facts and the point involved are slightly different.
Civil Appeal No. 7906 of 2002
5. The respondent in the above appeal is a manufacturer of cutting
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tools. The respondent-Assessee filed a refund claim for Rs. 40,22, 133/- on
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. M/S.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
19.07.1988 and a supplementary refund claim for Rs. 5,44,688/- on
15 .06.1989 towards excise duty paid on various taxes and discounts
such as turnover tax, surcharge, additional sales discounts, transitory
insurance, excise discounts, additional discounts and turnover discounts.
The said claim was later on revised to Rs. 40,37,938/-on 17.08.1988.
The claim of the Assessee was that the said amount was deductable
from the excise duty. The Department was of the opinion that the refund
towards turnover discount and additional discount was to be rejected as
the Assessee was not eligible for deduction from the wholesale price for
determination of value under Section 4 of the Central Excises & Salt
Act, 1944. On 23.08.1989 a notice was issued to the respondent to
show cause as to why the refund claim involving turnover discount and
additional discount should not be rejected. After hearing the Assessee,
the Assistant Collector by an order dated 06.12.1989 rejected the refund
claim amounting to Rs.26,3 7 ,462/- and Rs. I 7, I 7,808/- in respect of
turnover discount and additional discount respectively on the ground that
the quantum of discount become known only at the year end. The Collector
of Central Excise Appeals set aside the said order dated 06.12.1989 of
the Assistant Collector by his order in appeal dated 21.02.1990 and held
that the Assessee was entitled to refund.
6. As per the amendment made to Section 11-B of the Central
Excise Act, 1944, (hereinafter referred to as "the Act") an application
filed for refund prior to the Central Excises & Customs Laws
(Amendment) Act 1991 shall be deemed to have been made under the
Amendment Act and considered accordingly. The Assistant Collector
of Excise issued a show cause notice dated 13.02.1992, directing the
Assessee to produce evidence in support of the refund claim. It was
mentioned in the said notice that the burden of proof to show thatthe full
incidence of duty has not passed on to the buyers is on the Assessee as
per Section 12-B of the Act.
7. The Assistant Collector passed an Order-in-Original dated
27. I 0.1992 holding that the Assessee is entitled for the refund claimed
· by him. The Collector of Central Excise by Order-in-Appeal dated
20.10.1993 rejected the appeal filed by the Revenue and upheld the
order dated 27.10.1992 of the Assistant Collector of Central Excise,
Madras V•h Division. The Customs, Excise and Gold (Control) Appellate
Triounal (CEGAT), South Zone Bench of Madras allowed the appeal
filed by the Revenue against the order dated 20. I 0.1993 of the Collector
of Central Excise. The Tribunal held that the Assessee would be entitled
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to grant of refund only if he had not passed on the duty burden to his
buyers. It was also held that the buyer in turn, would be entitled to claim
refund only if he has not passed on the incidence of duty to any other
person. It was further held by the Tribunal that the event which gives
rise to cause of action for refund is payment of duty made in respect of
goods cleared from the factory and once the duty burden has been passed
on to the buyer at the time ofclearance, issuance of credit note at a later.
point of time would not entitle the Assessee to claim any refund. The
Tribunal also held that burden of duty is normally passed by the
manufacturer and the dealer to the ultimate consumer.
8. The Assessee filed an application for reference of questions
arising out of the final order dated 07.12.1996. The Tribunal referred the
following questions for consideration of the High Court by its order dated
28.08.1998, taking note of the fact of the existence of divergent views
on the point.
"1. Whether by passing on the duty element on the
discount to its dealers the applicant had satisfied the
requirements of proviso 'd' to sub Section 11-B (2) of
the Central Excise Act, 1944 and was therefore, entitled
to be paid the amount claimed as refund?
2. Whether the Tribunal after finding that the burden of
duty was passed on by the applicant to its various
dealers by issue of credit notes was right in concluding
that the ingredients of Section 11-B were not satisfied. "
9. The High Court of Madras answered the reference in favour
of the Assessee by its judgment dated 23.11.2000. The High Court held
that the refund towards deduction of turnover discount cannot be denied
on the ground that there was no evidence to show who is the ultimate
consumer of the product and as to whether the ultimate consumer had
borne the burden of the duty. According to the High Court, Section 11B of the Act cannot be construed as having reference to the ultimate
Consumer and it would be sufficient for the claimant to show that he did
not pass on the burden of duty to any other person. It was further held
by the High Court that the claim for refund made by the manufacturer is
not dependent on the identification of the ultimate consumer. The word
'buyer' used in Section 12-B of the Act does not refer to ultimate
consumer and has reference only to the person who buys the goods
from the person who has paid duty i.e. the manufacturer. The High
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. MIS.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
Court concluded that the Tribunal committed an error in holding that the
Assessee was not entitled for refund despite the Assessee proving that
the duty was not passed on to its buyers. Challenging the legality and
validity of the said judgment of the High Court, the Commissioner of
Central Excise, Madras has filed Civil Appeal No. 7906 of2002.
10. We have heard Mr. Atmaram N. S. Nadkarni, Additional
Solicitor General and Mr. K. Radhakrishnan, Senior Advocate for the
appellant and Mr. N. Venkatraman, Senior Advocate for the respondent.
The learned Additional Solicitor General submitted that a claim for refund
can be entertained only when the claimant has not passed on the duty to
any other person. By referring to the statement of objects and reasons
for the amendment made to the Central Excises & Customs Laws
(Amendment) Act 199 l, the learned Additional Solicitor General submitted
that the Act had given effect to the recommendations of the Public
Accounts Committee whereby the refund of any duty was proposed to
be made only to the person who ultimately bears the incidence of such
duty. He submitted that it would be necessary for a verification to be
done to find out as to who actually bore the burden of duty. According
to him such verification would not stop with the manufacturer and his
buyer but would extend to the ultimate buyer i.e. the consumer. He
submitted that there can be no claim for refund cm the basis of post
clearance transact ions. He further submitted that there is a presumption,
though rebuttable, that the full incidence of the duty has passed on to the
buyerofthe goods. !he learned Additional Solicitor General has strongly
relied upon Mafatlal /11d11stries Ltd. am/ Others Vs. U11io11 offll{/i{I
Anti Ors .. reported in (1997) 5 SCC 536 to suppott his contentions on
unjust enrichment.
11. Mr. N. Venkatraman, Senior Advocate appearing for the
Assessee contended that turnover discount is an admissible deduction,
the scheme of turnover discount was known to the buyer even at the
time of sale, discount was given on the basis of the turnover of sales
made bythe buyer and that the credit notes issued to the buyer contains
the discounts and the duty element. Though there is a confusion from
the pleadings and the order passed by the High Court regarding the
passing of the incidence of duty, Mr. N. Venkatraman had fairly submitted
that the incidence of duty was originally passed on to the buyer. He
submitted that the turnover discount should be allowed to be deducted
from the sale price as held in Union oflndia and Others Vs. Bombay
Tyre International Pvt. Ltd. reported in (1984) 1 SCC 467 and
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(2005) 3 SCC 787. He contends that in the said judgments it was held
that trade discounts should not be disallowed only because they are not
payable at the time of each invoice or deducted from the invoice price.
He also placed reliance on IFB Industries Ltd. Vs. State of Kerala
reported in (2012) 4 sec 618 to support his submission that to qualify
for exemption, discounts need not be shown in the invoice itself.
12. Mr.Venkatraman further submitted that the eligibility of the
Assessee for refund of amounts towards turnover discounts is no longer
in doubt as this Court by its judgment dated 11.03.1997 in Addison &
Company Ltd., Madras Vs. Collector of Central Excise, Madras
reported in (1997) 5 sec 763 had held that turnover discount is an
admissible deduction. He stated that Section 4 read with Section 11-B
of the Act permits the respondent to claim for refund of turnover discount
given after the sale, provided the scheme of discount has been agreed
upon prior to the removal of the goods. The Assessee while issuing a
credit note for the turnover discount has returned the duty component
forming part of the said discount. As the Assessee has not retained the.
duty component of the turnover discount, he does not stand to benefit
from both ends and hence he is entitled for claiming a refund of the
excess duty paid. The refund to which the Assessee is entitled to would
not result in any unjust enrichment. While referring to the relevant
provisions of Section 11-B, 12-Aand 12-B oftheAct,
Mr. Venkatraman
submitted that the buyer mentioned in the said provisions would be the
buyer of the goods from the manufacturer Assessee. He stressed upon
Clauses 'a' to 'f' of the Proviso to Section 11-B (2) in support of his
submission that the only persons eligible to make a claim for refund
would be the manufacturer, his buyer and a class of persons as notified
by the Central Government. On the basis of the above submission, he
states that there is absolutely no necessity for any verification to be
made as to who is the ultimate consumer and as to whether he had
borne the burden of the duty. According to him, ifthe manufacturer is
entitled for a refund towards an admissible deduction, such refund has
to be given to him if he did not retain the benefit. He also stated that the
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judgment of this Court in Mafatlal Industries Ltd. & Ors. Vs. Union
oflndia (supra) which was relied upon by the learned Additional Solicitor
General would, in fact, support his case. He further submitted that the
identity of the Excise duty is lost at the sales conducted downstream as
the duty becomes part of the price.
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13. Jn reply to the submissions of Mr. Venkatraman, Sr. Advocate,
•
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. M/S.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
the Ld. Additional Solicitor General stated that the verification to be
done by the Department to enquire about the ultimate buyer who has
actually paid the duty is not a futile exercise. He stated that the refund
can be granted only to the person who has paid the duty and not to
anyone else. If the ultimate consumer cannot be identified, the amount
would be retained in the Fund and utilized for the benefit of Consumers.
14. We have considered the submissions made by the Counsel
carefully and examined the material on record. The questions that arise
for consideration in this case are whether the Assessee is entitled for a
refund and whether there would be unjust enrichment ifthe said refund
is allowed. It was held by the Special Bench ofCEGAT, New Delhi by
its judgment dated 17.03.1.994 in Collector of Central Excise, Madras
Vs. Addison & Co. Ltd. that the turnover discount is not an admissible
abatement on the ground that the quantum of discount was not known
prior to the removable of the goods. In an appeal filed by the respondentAssessee, this Court by its judgment dated 11.03.1997 in Addison &
Co. Ltd. Vs. Collector of Central Excise, Madras (supra) held
thatthe turnover discount is an admissible deduction. This Court approved
the normal practice under which discounts are given and held that the
discount is known to the dealer at the time of purchase. The Additional
Solicitor General submitted that any credit note that was raised post
clearance wi II not be taken into account for the purpose of a refund by
the Department. We do not agree with the said submission as it was
held by this Court in Union of India Vs Bombay Tyre International
(supra) that trade discounts shall not be disallowed only because they
are not payable at the time of each invoice or deducted from the invoice
price. It is the submission of the Assessee that the turnover discount is
known to the dealer even at the time of clearance which has also been
upheld by this Court. It is clear from the above that the Assessee is
entitled for filing a claim for refund on the basis of credit notes raised by
him towards turnover discount.
l5. The following provisions of Central Excise Act, 1944 are
relevant for appreciating the point of unjust enrichment:-
SECT/ON llB. C/llim for refund of duty. -
"(l) 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 Excise] before the expiry of
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[one year] [from the relevant date] [[in such form and
manner] as may be prescribed and the application shall
be accompanied by such documentary or other
evidence (including the documents referred to in section
12A) as the applicant may furnish to establish that the
amount of duty of excise in relation to which such rejimd
is claimed was collected ji·om, or paid by, him and the
incidence of such duty had not been passed on by him
to any other person :
Provided that where an application for refund has
been made before the commencement of the Central
Excises and Cusioms Lmvs (Amendment) Act, 1991, (40
of 1991), such application shall be deemed to have been
made under this sub-section as amended by the said
Act and the same shall be dealt with in accordance with
the provisions of sub-section (2) as substituted by that
Act:]
[Providedjiirther that] the limitation of [one year]
shall not apply where any duty has been paid under
protest.
* * * *
(2) If, on receipt of any such application, the
[Assistant Commissioner of Central Excise or Deputy
Commissioner of Central Excise] is satisfied that the
whole or any part of the duty of excise paid by the
applicant is refundable, he may 111ake an order
accordingly and the a111ount ·so determined shall be
credited to the Fund :
Provided that the amount of duty of excise as
determined by the [Assistant Commissioner of Central
Excise or Deputy Commissioner of Central Excise]
under the foregoing provisions of this sub-section shall,
instead of being credited to the Fund, be paid to the
·applicant, if such amount is relatable to-
( a) rebate of duty of excise on excisable goods exported
out of India or on excisable materials used in the
manufacture of goods which are exported out of
India;
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. MIS.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
(b) unspent advance deposits lying in balance in the
applicants account current 111aintained with the
[Com111issioner of Central Excise};
(c) refund of credit of duty paid on excisable goods
used as inputs in accordance with the rules made,
or any notification issued, under this Act;
(d) the duty of excise paid by the 111anufacturer, if he
had not passed on the incidence of such duty to any
other person;
(e) the duty of excise borne by the buyer, if he had not
passed on the incidence of such duty to any other
person;
(/) the duty of excise borne by any other such class of
applicants as the Central Government may, by
notification in the Official Gazette, specify :
Provided further that no notification under clause
(f) of the first proviso shall be issued unless in the
opinion of the Central Government, the incidence of
duty has not been passed on by the persons concerned
to any other person.
(3) Notwithstanding anything to the contrary contained
in any judgment, decree, order or direction of the
Appellate Tribunal of any Court in any other provision
of this Act or the rules made thereunder or any other
law for the time being in force, no refund shall be made
except as provided in sub-section (2).
(4) Every notification under proviso to sub-section (2)
shall be laid before each House of Parliament, if it is
sitting, as soon as may be after the issue of the
notification, and, if it is not sitting, within seven days
of its re-assembly, and the Central Government shall
seek the approval of Parlia111ent to the notification by a
resolution moved within a period of fifteen days
beginning with the day on which the notification is so
laid before the House of the People and if Parlia111ent
makes any modification in the notification or directs
that the notification should cease to have effect, the
notification shall thereafter have effect only in such
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A
modified form or be of no e.ffect, as the case may be,
but without prejudice to the validity of anything
previously done thereunder.
(5) For the removal of doubts, it is hereby declared that
any not(fication issued under clause f of the first proviso
B
to sub-section (2), including any such notification
approved or modified under sub-section (4), may be
rescinded by the Central Government at any time by
notification in the Official Gazette.}
[Explanation. -
For the purposes of this section, -
C
(A) .. refund" includes rebate of duty of excise on
excisable goods exported out of India or on excisable
materials used in the manufacture of goods which are
exported out of India;
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(B) "relevant date" means, -
(a) in the case of goods exported out of India where
a refund of excise duty paid is available in re!>pect of
the goods themselves or, as the case may be, the
excisable materials used in the manufacture of such
goods, -
(i) if the goods are exported by sea or air, the date
on which the ship or the aircraft in which such
goods are loaded, leaves India,
or
(ii) if the goods are exported by land, the date on
which such goods pass the frontier,
Or
(iii)if the goods are exported by post, the date of
dispatch of goods by the Post Office concerned
to a place outside India;
(b) in the case of goods returned for being remade,
refined, reconditioned, or subjected to any other similar
process, in any factory, the date of entry into the factory
for the purposes aforesaid;
(c) in the case of goods to which bandero/s are required
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. M/S.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
to be affixed if removed for home consumption but not
so required when exported outside India, if returned to
a factory after having been removed from such factory
for export out of India, the date of entry into the factory;
(d) in a case where a manufacturer is required to pay a
sum, for a certain period, on the basis of the rate fixed
by the Central Government by notification in the Official
Gazette in full discharge of his liability for the duty
leviable 011 his production of certain goods, if after the
manufacturer has made the payment on the basis of such
rate for any period but before the expiry of that period
such rate is reduced, the date of such reduction;
[(e) in the case of a person, other than the 111anufacture1;
the date of purchase of the goods by such person;]
(ea) in the case of goods which are exempt from payment
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of duty by a special order issued under sub-section (2)
D
of section SA, the date of issue of such order;]
(eb) in case where duty of excise is paid provisionally
under this Act or the rules made thereunder, the date of
adjustment of duty after the final assessment thereof;]
(jj in any other case, the date of payment of duty.]
E
SECTION 12A. Price of goods to itulicltte tile t111w1111t
of duty paid tllereon. -
Notwithstanding anything contained in this Act or any -
other law for the time being in force, every person who
is liable to pay duty of excise on any goods shall, at the
time of clearance of the goods, prominently indicate in
all the documents relating to assessment, sales invoice,
and other like documents, the amount of such duty which
will form part of the price at which such goods are to
be sold.
·
SECTION l 2B. Presumption t/lltt. tile inci<lence of tluty
llas been passed 011 to tile buyer. -'-.
Every person who has paid the duty of excise on any
goods under this Act shall. unless the contrm:v is proved
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by him, be deemed to have passed on the full incidence
of such duty to the buyer of such goodY.
SECTION 12C. Consumer Welfare Fund. -
(1) There shall be established by the Central
Government a fund, to be called the Consumer Welfare
Fund.
(2) There shall be credited to the Fund, in such manner
as_ may be prescribed, -
(a) the amount of duty of excise referred to in subsection (2) of section 11 B or sub-section (2) of section
11 C or sub-section (2) of section 11 D;
(b) the amount of duty of customs referred to in subsection (2) of section 2 7 or sub-section (2) of section
28A, or sub-section (2) of section 28B of the Customs
Act, 1?62 (52 of 1962);
(c) any income from investment of the amount credited
to the Fund and any other monies received by the
Central Government for the purposes of this Fund.
SECTION 12D. Utilisation of tile Fund. -
(1) Any money credited to the Fzmd shall be utilised by
the Central Government for the welfare of the consumers
in accordance with such rules as that Government may
make in this behalf
(2) The Central Government shall maintain or, if it thinks
fit, specify the authority which shall maintain, proper
and separate account and other relevant records in
relation to the Fund in such form as may be prescribed
in consultation with the Comptroller and AuditorGeneral of India".
16. In the instant case, the Assessee has admitted that the incidence
of duty was originally passed on to the buyer. There is no material brought
on record to show that the buyer to whom the incidence of duty was
passed on by the Assessee did not pass it on to any other person. There
is a statutory presumption under Section 12-B of the Act that the duty
has been passed on to the ultimate consumer. It is clear from the facts
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. MIS.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
of the instant case that the duty which was originally paid by theAssessee
was passed on. The refund claimed by the Assessee is for an amount
which is part of the excise duty paid earlie.r and passed on. TheAssessee
who did not bearthe burden of the duty, though entitled to claim deduction,
is not entitled for a refund as he would be unjustly enriched.
It will be useful to refer to the relevant para of Mafatlal
Industries Vs. Union of India (supra) in this connection.
'"108. (iii) A claim for refund, whether made under the
provisions of the Act as contemplated in Proposition (i)
above or in a suit or writ petition in the situations
contemplated by Proposition (ii) above, can succeed
only if the petitioner/plaintiff alleges and establishes
that he has not passed on the burden of duty to another
person/other persons. His refund claim shall be allowed/
decreed only when he establishes that he has not passed
on the burden of the duty or to the extent he has not so
passed 011, as the case may be. Whether the claim for
restitution is treated as a constitutional imperative or
as a statutory requirement, it is neither an absolute right
nor an unconditional obligation but is subject to the
above requirement, as explained in the body of the
iudgment. Where the burden of the duty has been passed
on, the claimant cannot say that he has suffered any
real loss or prejudice. The real loss or prejudice is
suffered in such a case by the person who has ultimately
borne the burden and it is only that person who can
legitimately claim its refund. But where such person does
not come forward or where it is not possible to refund
the amount to him for one or the other reason, it is just
and appropriate that that amount is retained by the State,
i.e., by the people. There is no immorality or impropriety
involved in such a proposition.
The doctrine of unjust enrichment is a just and salutary
doctrine. No person can seek to collect the duty from
both ends. In other words, he cannot collect the duty
from his purchaser at one end and also collect the same
duty from the State on the ground that it has been
collected from him contrary to law. The poirer of the
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Court is not meant to be exercised.for unjustly enriching
a person. The doctrine of unjust enrichment is, however,
inapplicable to the State. State represents the people of
the country. No one can speak of the people being
unjustly enriched''.
17. Section 11-8 (2) of the Act contemplates that the amount of
refund determined by the Authorities shall be credited to the fund. The
Proviso to Section 11-8 (2) permits the refund to be paid to the applicant
instead of being credited to the fund if such amount is relatable to the
manufacturer, the buyer or any other such class of applicants as notified
by the Central Government.
18. Mr. Venkatraman interpreted the said provision to mean that
the only persons who were entitled for claim of refund are the
manufacturer, his buyer and any other class of persons as notified by the
Central Government. There is no dispute about the fact that no
notification has been issued by the Central Government as contemplated
in Clause (t) to proviso to Section 11-8 (2) of the Act. He contested
that the claim for refund can be made only by the manufacturer or his'
buyer and any enquiry pertaining to unjust enrichment should be restricted
only to the manufacturer and his buyer. The ultimate buyer/ consumer
will not figure in the scheme of Sections 11-8, 12-A, 12-8 and .12-C of
the Act. This submission was accepted by the High Court in the impugned
judgment. We do not approve the findings of the High Court in this
regard.
19. The sine qua non for a claim for refund as contemplated in
Section 11-8 of the Act is that the claimant has to establish that the
F
amount of duty of excise in relation to which such refund is claimed was
paid by him and that the incidence of such duty has not been passed on
by him to any other person. Section 11-8 (2) provides that, in case it is
found that a part of duty of excise paid is refundable, the amount shall be
credited to the fund. Section 2 (ee) defines Fund to mean the Consumer
Welfare Fund established under Section 12-C. There is a proviso to
G
Section 11-8 (2) which postulates that the amount of excise duty which
is refundable may be paid to the applicant instead of being credited to
the fund, if such amount is relatable to the duty of excise paid by the
manufacturer and he had not passed on the incidence of such duty to
any other person. Clause ( e) to proviso of Section 11-8 (2) also enables
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the buyer to receive the refund if he had borne the duty of excise, provided
COMMISSIONER OF CENTRAL EXCISE, MADRAS v. MIS.
ADDISON & CO. LTD. [L. NAGESWARA RAO, J.]
he did not pass on the incidence of such duty to any other person.
There is a third category of a class of applicants who may be specified
by the Central Government by a notification in the official gazette who
are also entitled for refund of the duty of excise. A plain reading of
Clauses (d), (e) and (f) of the proviso to Section ll-lli{2) shows that
refund to be made to an applicant should be relatable only to the duty of
excise paid by the three categories of persons mentioned therein i.e. the
manufacturer, the buyer and a class of applicants notified by the Central
Government. Clause (e) refers to the buyer which is not restricted to
the first buyer from the manufacturer. The buyer mentioned in the above
Clause can be a buyer downstream as well. While dealing with the
absence of a provision for refund to the consumer in the rules this Court
in Mafatlal Industries Vs. Union oflndia (supra) held as follows:-
"98. A major attack is mounted by the learned counsel
for petitioners-appellants on Section 11-B and its allied
provisions on the ground that real purpose behind them
was not to benefit the consumers by refusing refund to
manufacturers (on the ground of passing on the burden)
but only to enable the Government to retain the illegally
collected taxes. It is suggested that the creation of the
Consumer Welfare Fund is a mere pretence and not an
honest exercise. By reading the Rules framed under
Section I 2-D, it is pointed out, even a consumer, who
has really borne the burden of tax and is in a position
to establish that fact, is yet not entitled to apply for
refand of the duty since the Rules do not provide for
such a situation. The Rules contemplate only grants
bein;; made to Consumer Welfare Societies. Even in the
matter of making grants, it is submitted, the Rules are
so framed as to make it highly difficult for any consumer
organisation to get the grant. There is no provision in
the Act, Shri Nariman submitted, to locate the person
really entitled to refund and to make over the money to
him. "We expect a sensitive Government not to bluff but
to hand back the amounts to those entitled thereto",
intoned Shri Nariman. It is a colourable device -
declaimed Shri Sorabjee -
"a dirty trick" and a
shabby thing". The reply of Shri Parasaran to this
criticism runs ·thus: It ill-becomes the manufacturers/
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Assessees to espouse the cause of consu111ers, when all
the while they had been making a killing at their expense.
No conswners' organisation had come forward to voice
any grievance against the said provisions. Clause (e)
of the proviso to sub-section (2) of Section 11-B does
provide for the buyer of the goods, to whom the burden
of duty has been passed on, to apply for refund of duty
to him, provided that he has not in his turn passed on
the duty to others. It is, therefore, not correct to suggest
that the Act does not provide for refund of duty to the
person who has actually borne the. burden. There is no
vice in the relevant provisions of the Act. Rules cannot
be relied up01i to i111pug11 the validity of an enactment,
which must stand or faff 011 its own strength. The defect
in the Rules, assu111ing that there is any, can always be
corrected if the experience warrants it. The Court too
111ay indicate the 111odifications needed in the Rules. The
Government is always prepared to make the appropriate
changes in the Rules since it views the process as a
"trial and error" method -
says Shri Parasaran ".
20. There was a further submission which was considered in the
said judgment about the convenience/difficulty for the ultimate consumer
to make applications for refund. In that co~mection it was held as
follows:-
"99. We agree with Shri Parasaran that so far as the
provisions of the Act go, they are unexceptionable.
Section 12-C which creates the Consumer Welfare Fund
and Section 12-D which provides for 111aking the Rules
specifying the manner in which the money credited to
the Fund shall be utilised cannot be faulted on any
ground.