# TIRUCHIRAPALLI v. M/S. DALMIACEMENT(BHARAT) LTD

- **Citation:** [2015] 9 S.C.R. 257
- **Court:** Supreme Court of India
- **Decided:** 2015-09-02
- **Case number:** Civil Appeal No. 3600 of 2006
- **Bench:** A. K. Sikri, R. F. Nariman
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tiruchirapalli-v-m-s-dalmiacement-bharat-ltd-30666
- **Pages:** 32

## Headnote

Central Excise Act, 1944-s. 118 (as amended)-Claim c
for refund of duty - Applicability of s. 11 B, to cases where
though an order has been passed directing refund,
implementation of the orderis pending - Held: If the order
for refund on such an application had already been passed
before coming into force the amended provision and no D
application was pending at the commencement of the Central
Excise and Customs Laws (Amendment) Act, 1991 before
the Assistant Commissioner, the question of applying the said
proviso and going into the issue as to whether incidence of
such duty had been passed by the applicant to any other E
person or not would not arise - Thereafter, order passed on
the application is only to be implemented by giving the refund
as per that order- The Officer, at the time of carrying out the
orders for refund, which have already been passed, cannot
F
/.le invested with the powers to go into the question of unjust
enrichment by invoking the proviso to sub-section (1) of
s. 11 B - Doctrine of unjust enrichment'- Central Excise and
Customs Laws (Amendment) Act, 1991.
Dismissing the appeal, the Court
G
..
HELD: 1.1 Proviso to sub-section (1) of Section 11 B
of the Central Excise Act, 1944, as amended, would be
applicable in a situation where an application for refund
made before the said amendment was still pending at H
-
257
258
SUPREME COURT REPORTS
[2015] 9 S.C.R.
A the time when the provislons of s. 118 were amended.
Once it is found that no such application was pending
and the orders on the said application had already been
passed, the proviso ceases to have any application.
Section 118 relates to claim for refund of duty and the
B procedure for such a refund is stipulated in this Section.
As per sub-section (1) thereof, any person claiming
refund of any duty of excise has to move an application
for refund of such duty to the Assistant Commissioner
of Central Excise. Once such an application is made, the
C same is to be considered in accordance with this
provision. Under the unamended provision, the Assistant
Commissioner was not required to go into the question
as to whether incidence of such duty had been passed
D on by the applicant claiming refund to any other person
or not. However, if the application was not decided till
the time amendment was incorporated in the year 1991,
as per the proviso, while dealing with such an application
for refund, the Assistant Commissioner is still
E empowered to go into this question even when the
application was filed before the commencement of the
amended provision. This situation would prevail only
when there is a pending application before the Assistant
Commissioner of Central Excise, which is yet to be
F decided. If the order for refund on such an application
had already been passed before coming into force the
amended provision and no application was pending at
the commencement of the Central Excise and Customs
Laws (Amendment) Act, 1991 before the Assistant
G Commissioner and, therefore, question of applying the
said proviso and going into the issue as to whether
incidence of such duty had been passed by the applicant
to any other person or not would not arise. Thereafter,
order passed on the application is only to be
H implemented by giving the refund as per that order. By
..
-
-
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
259
DALMIA CEMENT (BHARAT) LTD.
no stretch of imagination, the Officer, at the time of A
carrying out the orders for refund, which have already
been passed, can be invested with the powers to go into
the question of unjust enrichment by invoking the
proviso to sub-section (1) of Section 11 B. It clearly
follows that before the amendment of Section 11 B of the B
Act, principle of unjust enrichment was no~ incorporated
under the unamended provision. In fact that was
precisely the reason for amending the provision so that
this doctrine of "unjust enrichment" is incorporated, viz.,
to take care of the mischief that was prevailing under C
the unamende

## Text

_Characters 0–39,855 of 60,524. This is a partial read: ask again with offset=39855 for what follows._

[2015] 9 S.C.R. 257
COMMISSIONER OF CENTRAL EXCISE,
A
TIRUCHIRAPALLI
v.
M/S. DALMIACEMENT(BHARAT) LTD.
(Civil Appeal No. 3600 of 2006)
B
SEPTEMBER 02, 2015
[A. K. SIKRI AND R. F. NARIMAN, JJ.]
Central Excise Act, 1944-s. 118 (as amended)-Claim c
for refund of duty - Applicability of s. 11 B, to cases where
though an order has been passed directing refund,
implementation of the orderis pending - Held: If the order
for refund on such an application had already been passed
before coming into force the amended provision and no D
application was pending at the commencement of the Central
Excise and Customs Laws (Amendment) Act, 1991 before
the Assistant Commissioner, the question of applying the said
proviso and going into the issue as to whether incidence of
such duty had been passed by the applicant to any other E
person or not would not arise - Thereafter, order passed on
the application is only to be implemented by giving the refund
as per that order- The Officer, at the time of carrying out the
orders for refund, which have already been passed, cannot
F
/.le invested with the powers to go into the question of unjust
enrichment by invoking the proviso to sub-section (1) of
s. 11 B - Doctrine of unjust enrichment'- Central Excise and
Customs Laws (Amendment) Act, 1991.
Dismissing the appeal, the Court
G
..
HELD: 1.1 Proviso to sub-section (1) of Section 11 B
of the Central Excise Act, 1944, as amended, would be
applicable in a situation where an application for refund
made before the said amendment was still pending at H
-
257
258
SUPREME COURT REPORTS
[2015] 9 S.C.R.
A the time when the provislons of s. 118 were amended.
Once it is found that no such application was pending
and the orders on the said application had already been
passed, the proviso ceases to have any application.
Section 118 relates to claim for refund of duty and the
B procedure for such a refund is stipulated in this Section.
As per sub-section (1) thereof, any person claiming
refund of any duty of excise has to move an application
for refund of such duty to the Assistant Commissioner
of Central Excise. Once such an application is made, the
C same is to be considered in accordance with this
provision. Under the unamended provision, the Assistant
Commissioner was not required to go into the question
as to whether incidence of such duty had been passed
D on by the applicant claiming refund to any other person
or not. However, if the application was not decided till
the time amendment was incorporated in the year 1991,
as per the proviso, while dealing with such an application
for refund, the Assistant Commissioner is still
E empowered to go into this question even when the
application was filed before the commencement of the
amended provision. This situation would prevail only
when there is a pending application before the Assistant
Commissioner of Central Excise, which is yet to be
F decided. If the order for refund on such an application
had already been passed before coming into force the
amended provision and no application was pending at
the commencement of the Central Excise and Customs
Laws (Amendment) Act, 1991 before the Assistant
G Commissioner and, therefore, question of applying the
said proviso and going into the issue as to whether
incidence of such duty had been passed by the applicant
to any other person or not would not arise. Thereafter,
order passed on the application is only to be
H implemented by giving the refund as per that order. By
..
-
-
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
259
DALMIA CEMENT (BHARAT) LTD.
no stretch of imagination, the Officer, at the time of A
carrying out the orders for refund, which have already
been passed, can be invested with the powers to go into
the question of unjust enrichment by invoking the
proviso to sub-section (1) of Section 11 B. It clearly
follows that before the amendment of Section 11 B of the B
Act, principle of unjust enrichment was no~ incorporated
under the unamended provision. In fact that was
precisely the reason for amending the provision so that
this doctrine of "unjust enrichment" is incorporated, viz.,
to take care of the mischief that was prevailing under C
the unamended provision which was removed by making
amendment, popularly known as Haydon's Mischief
Rule. [Paras 14, 15, 16] [286-C-H; 287-A-F]
1.2 In the instant case, the order on the refund D
application of the respondent had been passed on
06.06.1989, which was much before the amended
provision came into operation. In fact, even after the order
of refund was passed, the appellant had not refunded
the amount and it is in these circumstances that writ E
petition was filed in the High Court tor initiation of
contempt proceedings against the defaulting officers. In
such proceedings, the High Court had passed the order
dated 18.07.1995. In this order, no doubt, the Court F
observed that the Assistant Commissioner would go into
the question if the respondent should be granted the
refund in spite of Section 11 B of the Act. However, merely
because of such observations, it cannot be said that the
Assistant Commissioner was entitled to look into the G
issue of unjust enrichment when if, otherwise, he had
no jurisdiction .to do so in the facts of the instant case.
Such observations were given in view of the statement
of the counsel for the Government who brought to the
notice of the Court the amended provisions contained H
260
SUPREME COURT REPORTS
[2015] 9 S.C.R.
A in sub-section (3) of Section 118 of the Act. The High
Court did not go into the issue as to whether such a
course of action was permissible or not. Further, the
interpretation that is to be accorded to the amended
provision had not been decided by this Court till. that time
B and the law on this issue came to be settled ir) the year
1997 only when the judgment in Mafatlal lndustf;es Ltd.
was pronounced by this Court. Thus, when the Order of
the Assistant Commissioner was challenged and the
matter came before the tribunal, the tribunal was duty
C bound to apply the law laid down in Mafatla/ Industries
Ltd., which it did. Similar exercise is done by the High
Court in the impugned judgment. Thus, the view taken
by the High Court is in consonance with the law laid
D down by this Court in Mafat/a/'s case. There is no scope
to interfere with the decision of the High Court. [Paras
16, 17, 18) (287-F-G; 288-A-F]
E
F
G
Mafatlal Industries Ltd. and Ors. v. Union of India and
Others 1996 (10) Suppl. SCR 585: (1997) 5 SCC 536
-followed.
Case Law Reference
1996 (10) Suppl. SCR 585
followed.
Para 17
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3600 of2006
From the Judgment and Order dated 08.12.2005 of the
High Court of Delhi at Delhi in CEAR No. 3/2001.
Guru Krishna Kumar, Rupesh Kumar, Awadhesh Kumar
Singh, Ritesh Kumar, Jitin Singhal, B. Krishna Prasad for the
•
Appellant.
H
K. V. Viswanathan, Ramesh Singh, Sabyasachi Patra,
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
261
DALMIACEMENT(BHARAT) LTD.
Abhishek Kaushik, Sanjeev K. Kapoor, Ashwini Chawla,
A
Khaitan & Co. for the Respondent.
The Judgment of the Court was delivered by
A. K. SIKRI, J. 1) On an application under Section 35G(3)
8
of the Central Excise Act, 1944 (hereinafter referred to as the
'Act'), the Customs Excise and Gold (Control) Appellate
Tribunal (hereinafter referred to as the 'CEGAT') referred the
following question to the High Court of Delhi for its opinion :-
"Whether Section 11 B of the Central Excise Act, as
amended, applies to cases where though an order has
been passed directing refund, implementation of the
order is pending?"
c
2) The High Court has answered the aforesaid question D
in favour of assessee holding that since the proceedings under
the old Section 11 B oftheAct had attained finality, the amended
provision of Section 11 B of the Act, in particular, proviso to
sub-section (1) shall not apply. In other words, the principle of
'unjust enrichment' which was introduced by way of amendment
E
of Section 11 B in the year 1991 shall not be attracted in the
instant case as the proceedings under the unamended Section
stood finalised with the direction in the application filed under
unamended Section 11 B of the Act to refund the excise duty F
that was paid by the respondent/assessee. To put it pithily,
the High Court has held that merely because implementation
of the aforesaid order was pending, in the sense that direction
to refund the amount had not been carried out, the authority
could not go into the question of unjust enrichment by invoking G
the proviso to sub-section ( 1) of Section 11 B. of the Act that
had been introduced by that time by way of amendment in
Section 11 B of the Act. Therefore, it was not open to the
concerned officer, who was only supposed to carry out the
implementation of the order, to go into the question as to H
262
SUPREME COURT REPORTS
[2015] 9 S.C.R.
A whether there was any unjust enrichment on the part of the
assessee or not. In coming to this conclusion, the High Court
has extensively referred to a 9-Judge Bench of this Court in
the case of Mafatlal Industries Ltd. and Others v. Union of
India and Others1.
B
3) It is not disputed before us that the law laid down in the
aforesaid judgment would be applicable. However, the
appellant contends that there is a small window left open in
the said judgment which would cover the situation that has
C arisen in the present case. As per the case set up by the
appellant, even where order is yet to be implemented, though
passed under the unamended provision, at this stage of
implementation as well the question of unjust enrichment can
D
be gone into by the concerned authority.
4) We may point out at this stage itself that Section 11 B,
as it existed prior to its amendment in the year 1991, did not
contain any provision of unjust enrichment. Thus, if the
assessee was entitled to refund of duty under the Act, it could
E make an application for such a refund to the Assistant Collector
of Central Excise before the expiry of six months from the refund
date and the procedure how such application is to be dealt
with was stipulated in the said provision. This Section was
. amended with effect from 20.09.1991 by Central Excise and
F
Customs Laws (Amendment) Act, 1991. Under the amended
provision, while considering the application for refund, the
Assistant Collector of Central Excise is empowered to go into
the question as to whether incidence of such duty has been
passed on by the person claiming refund to any other person.
G If the claimant has passed on the incidence of excise duty to
other person then the application for refund can be rejected
· on the ground that" it would amount to unjust enrichment to that
· person who is not out of pocket even when the excise duty
H
1· (1997) s sec 536
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
263
DALMIACEMENT (BHARAT) LTD. [A. K. SIKRI, J.]
was paid in excess etc. Proviso to this sub-section (1) further A
provides that even when application for refund was filed before
the amendment of this Section and still pending, it shall be
deemed that such an application made under amended subsection ( 1) of Section 11 B of the Act and is to be dealt with in
accordance with the provisions of sub-section (2), substituted
B
by the amendment. Thus, the applications even filed under
the unamended Act, if not disposed of and still pending, are to
be treated as filed under the amended Section 11 B and the
consequence thereof is that even in respect of such
applications doctrine of "unjust enrichment" would be C
applicable. In this scenario, when an application was not
pending, in the sense that orders thereon had already been
passed directing refund but the amount had not been refunded
so far, we have to determine as to whether such a situation D
has also to be dealt with under the amended section thereby
bringing into operation the doctrine of "unjust enrichment"? As
mentioned above, the High Court has answered this question
in the negative and this Court is called upon to decide the
veracity of the said view taken by the High Court in the instant E
appeal.
5) The facts which need to be noted for the purposes of
this appeal do not need a large canvass and are recapitulated
in brief, as under:
F
6) The period involved for which the respondent wanted
refund of the excise duty paid by it is 1970-1978. It may be
mentioned that there was a dispute regarding the assessable
value of cement cleared by the assessee during the aforesaid
period, when excise duty of cement was ad valorem. The G
dispute related to freight involved in the dispatch of the cement
to various destinations. The Department had included the cost
of freight as well while determining the assessable value in
terms of Section 4 of the Central Excise and Salt Act, 1944 H
(hereinafter referred to as the 'Act'). It was decided in favour
264
SUPREME COURT REPORTS
[2015] 9 S.C.R.
A
of the assessee vide order dated 06.06.1989 passed by the .
CEGAT. In spite of this decision, amount was not refunded_.
This prompted respondent to file Civil Writ No. 3225 of.1991
in the High Court of Delhi seeking writ, order or direction for
initiating contempt of court proceedings against the Collector
B of Central Excise, Tiruchirapalli and Assistant Collector of
Central Excise, Tiruchirapalli for not granting the refund despite
the order of the CEGAT. The said writ petition was disposed
of on 18.07.1995. Taking note of the statement of counsel for
both the parties that a date may be fixed before the Collector/
C Assistant Collector to go into the question if the appellant
should be granted refund in spite of Section 11 B of the Act,
direction was given to appear before the Collector/Assistant
Collector on 22.09.1995 and the writ petition was disposed
D of. Pursuant to the said direction, hearing was granted by the
Assistant Commissioner who passed orders dated
28.03.1996 holding that assessee was not eligible to get the
refund as per amended provisions of Section 11 B of the Act
and directed that this amount be credited to the Consumer
E Welfare Fund established under Section 12C of the Act. The
reason for rejecting the claim of the assessee was that the
case of the respond~nt fell within the four walls of the concept
of "unjust enrichment". Feeling aggrieved by this order, appeal
was filed before the Commissioner of Customs and Central
F Excise (Appeal) which was dismissed on 20.12.1996. Further,
appeal was preferred before the CEGAT and in this attempt
the assessee triumphed inasmuch as Tribunal decided the
case in favour of assessee holding that since no proceedings
were pending before the Assistant Commissioner as far as
G application for refund is concerned and it was only the
execution of the order of refund that was passed much prior to
1991, amended provision of Section 11 B would not be
attracted. The appellant filed rectification application which was
dismissed by the Tribunal on 20.02.2002. Thereafter, appellant
H filed reference application before the High Court of Delhi in
terms of 35G(3) of the Act raising the question of law which
COMMNR. OF CENTRAL EXCISE, TIRlJCHIRAPALLI v.
265
DALMIACEMENT(BHARAT) LTD. [A. K. SIKRI, J.]
has already been reproduced in the earlier part of this A
judgment. Again, as pointed out above, the High Court has
answered this question in favour of assessee, recording the
following findings:
·
"(a) It has been held that there are no merits in this
reference, as the question involved is clearly settled by
the 9-Judge Bench decision of this Hon'ble Court in the
case of Mafatlal Industries Ltd. (supra) wherein this
Hon'ble Court held that if an application for refund has
been disposed off, and the order had become final before
the 1991 amendment to Section 11 B came into force,
the principles of unjust enrichment will not apply.
(b) Section 11-B, after the 1991 amendment, stated that
the party applying for refund had to establish that the
incidence of such duty had not been passed on by him to
any other person. It follows, therefore, that Parliament did
not apply the principles of unjust enrichment to cases
covered by the unamended Section11 Band it was the
reason that the amendment was made in Section 11-B
in 1991."
B
c
D
E
7) On the basis of what is pointed out above, it is clear
that the exercise to be undertaken is to find out the ratio laid
down in Mafat/a/ Industries Ltd. (supra) in the given situation.
Before we advert to the same, we deem it appropriate to refer F
to, at this stage, unamended and amended provisions of
Section 11B.
"Section 118: 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
Collector of Central Excise before the expiry of six months
from the relevant date.
Provided that the limitation of six months shall not apply
where any duty has been paid under protest.
G
H
266
A
8
c
D
E
F
G
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SUPREME COURT REPORTS
[2015] 9 S.C.R.
(2) If on receipt of any such application, the Assistant
Collector of Central Excise is satisfied that the whole or
any part of the duty of excise paid by the applicant should
be refunded to him, he may make an order accordingly.
(3) Where as a result of any order passed in appeal or
revision under this Act refund of any duty of excise
becomes due to any persons the Assistant Collector of
Central Excise may refund the amount to such person
without his having to make any claim in that behalf.
( 4) Save as otherwise provided by or under this act, no
claim for refund of any duty of excise shall be entertained.
(5) Notwithstanding anything contained in any other law,
the provisions of this Section shall also apply to a claim
for refund of any amount collected as duty of excise made
on the ground that the goods in respect of which such
amount was collected were no excisable or were entitled
to exemption from duty and no court shall have any
jurisdiction in respect of such claim."
8) After 1991 amendment, the material part of Section 118
reads as follows:
"118. Claim for refund of duty and interest, if any, paid on
such duty.-(1) Any person claiming refund of any duty of
excise and interest, if any, paid on such duty may make
an application for refund of such [duty and interest, if any,
paid on such duty to the Assistant Commissioner of
Cent~al Excise or Deputy Commissioner of Central
Excise before the expiry of 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 and interest,
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
DALMIACEMENT (BHARAT) LTD. [A. K. SIKRI, J.]
if any, paid on such duty in relation to which such refund
is claimed was collected from, or paid by, him and the
incidence of such duty and interest, if any, paid on such
duty had not been passed on by him to any other person:
Provided that where an After 1991 amendment, the
material part of Section 11 B reads as follows:application
for refund has been made before the commencement of
the Central Excises and Customs Laws (Amendment)
Act, 1991 (40of1991 ), 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:
Provided further that the limitation of one year shall not
apply where any duty and interest, if any, paid on such
· 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 and interest, if any,
paid on such duty paid by the applicant is refundable, he
may make an order accordingly and the amount so
determined shall be credited to the Fund:
Provided that the amount of [duty of excise and interest,
if any, paid on such duty 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;
267
A
B
c
D
E
F
G
H
268
A
B
c
D
E
F
G
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SUPREME COURT REPORTS
[2015] 9 S.C.R.
(b) unspent advance deposits lying in balance in the
applicant's account current maintained with the
Commissioner of Central Excise or Commissioner 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.After 1991 amendment, the material
part of Section 11 B reads as follows: under this Act;
(d) the duty of excise and interest, if any, paid on such
duty paid by the manufacturer, if he had not passed on
the incidence of such duty and interest, if any, paid on
such duty to any other person;
(e) the duty of excise and interest, if any, paid on such
duty borne by the buyer, if he had not passed on the
incidence of such duty and interest, if any, paid on such
duty to any other person;
••
(f) the duty of excise and interest, if any, paid on such
duty 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 and interest,
if any, paid on such 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 or 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).
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
DALMIACEMENT (BHARAT) LTD. [A. K. SIKRI, J.]
(4) Every notification under clause (f) of the first 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 reassembly, and the Central Government shall
seek the approval of Parliament 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 Parliament 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 modified form or
be of no effect, 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 notification issued under clause (f) of the first proviso
·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.-Forthe purposes of this section,-
(A) "refund" includes rebate of duty of excise on excisable
269
A
B
c
D
E
goods exported out of India or on excisable materials
F
used in the manufacture of goods which are exported
out of India;
(B) "relevant date" means,-
( a) in the case of goods exported out of India where a
refund of excise duty paid is available in respect of the
goods themselves or, as the case may be, the excisable
materials used in the manufacture of such goods,-
G
H
270
SUPREME COURT REPORTS
[2015] 9 S.C.R.
A
(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) ifthe goods are exported by land, the date on Which
B
such goods pass the frontier, or
"'
c
D
E
F
G
H
(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
forthe purposes aforesaid;
(c) in the case of goods to which banderols are required
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
on 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 manufacturer,
the date of purchase of the goods by such person;
(ea) in the case of goods which are exempt from payment
of duty by a special order issued under sub-section (2)
of section 5A, the date of issue of such order;
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
271
DALMIACEMENT (BHARAT) LTD. [A. K. SIKRI, J.]
(eb) in case where duty of excise is paid provisionally
A
under this Act or the rules made thereunder, the date of
adjustment of duty after the final assessment thereof;
(ec) in case where the duty becomes refundable as a
consequence of judgment, decree, order or direction of
B
appellate authority, Appellate Tribunal or any court, the
date of such judgment, decree, order or direction;
(f) in any other case, the date of payment of duty."
f
9) We have already narrated the facts and events in the c
instant case in detail above. However, it is pertinent to keep in
mind that applications for refund of excise which were preferred
by the assessee had already been allowed finally by the orders
of CEGAT dated 01.06.1989 and 06.06.1989. This obviously D
happened before the amendment in the Section in the year
1991. At the same time, the refund had not been actually paid
to the assessee till 1991 when the provisions of Section 11 B
came to be amended. We now advert to the decision in the
case of Mafat/al Industries Ltd. (supra).
E
10) It is a nine Judge Bench decision. Majority opinion
was delivered by B.P. Jeevan Reddy, J. for himself and on.
behalf offour other Judges. K.S. Paripoornan, J. and S.C.Sen,
••
J. wrote their separate opinions. Hansaria, J. agreed with the F
conclusions and reasoning of Paripoornan, J. However, insofar
as issue at hand is concerned, they concurred with the majority
opinion rendered by B.P. Jeevan Reddy, J. Thus, eight out of
nine Judges have taken the same view. A.M. Ahmadi, the then
Chief Justice, was the only dissenting Judge, who took contrary G
view on this particular issue. With this background in mind,
we reproduce the following relevant portions from the opinion
of B.P. Jeeven Reddy, J.:
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[2015] 9 S.C.R.
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"57. The first decision of this Court to consider the
amended Section 11-8 is in Union of India v. Jain
Spinners Ltd(1992) 4 SCC 389 The validity of the 1991
(Amendment) Act was, however, neither raised nor
considered by the court. The impugned orders of the High
8
Court, made before the coming into force of the 1991
(Amendment) Act, directing refund of the excess duty
collected to the manufacturers, this Court held, would
defeat the provisions of amended Section 11-8 which
c
had come into force during the pendency of the refund
proceedings. The Court held that so long as the refund
'
proceedings are pending, the amended provisions get
attracted and disentitle the manufacturer-payer from
claiming any refund contrary to the said provisions. In
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other words, the contention of the manufacturers that the
amended Section 11-8 applies only to claims of refund
arising after the coming into force of the said Amendment
Act was rejected.
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96. There is yet another circumstance: Section 12-8 does
not create anew presumption unknown till then; it merely
gives. statutory shape to an existing situation, as
explained herein before. At the most, it can be said that
·there were two views on the subject and Section 12-8
F
affirms one of them. Even without Section 12-8, the true
position is the same, as held by us in the earlier part of
...
this judgment. The obligation to prove that duty has not
been passed on to another person is always there as a
precondition to claim of refund. It cannot also be said
G
that by giving retrospective effect to Section 11-8, any
vested rights or substantive rights are being taken away.
The deprivation, if at all, is not real. The manufacturer
has already collected the duty from his purchaser and
has thus reimbursed itself. By applying for refund yet, he
H
is trying to reap a windfall; deprivatio~ of that cannot be
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
273
DALMIACEMENT (BHARAT) LTD. [A. K. SIKRI, J.]
said to be real or substantial prejudice or loss. A
A
manufacturer had no vested legal right to refund even
when he had passed on the burden of duty to others. No
law conferred such a right in him -
not Article 265, nor
Section 11-B. It was only on account of an incorrect view
of law taken in Kanhaiya Lal 1959 SCR 1350 : AIR 1959
B
SC 135: (1958) 9 STC 747 and that cannot be treated
as a vested legal right. Correction of judicial error does
not amount to deprivation of vested/substantive ri_ghts,
even though a person may be deprived of an _c
unwarran_ted advantage he had under the overruled
decision. In cases, where the burden is not passed on,
there is no prejudice; he can always get the refund.
97. There is yet another circumstance: Section 12-B does
not create a new presumption unknown till then; it merely
D
gives statutory shape to an existing situation, as
explained hereinbefore. At the most, it can be said that
there were two views on the subject and Section 12-B
affirms one of them. Even without Section 12-B, the true
E
..
position is the same, as held by as in the earlier part of
this judgment. The obligation to prove that duty has not
been passed on to another person is always there as a
precondition to claim of refund. It cannot also be said
that by giving retrospective effect to Section 11-B, any
F
vested rights or substantive rights are being taken away.
The deprivation, if at all, is not real. The manufacturer
has already collected the duty from his purchaser and
has thus reimbursed itself. By applying for refund yet, he
is trying to reap a windfall; deprivation of that cannot be
G
said to be real or substantial prejudice or loss. A
•
manufacturer had no vested legal right to refund even
when he had passed on the burden of duty to others. No
law conferred such a right in him -
not Article 265, nor
__.
Section 11-B. It was only on account of an incorrect view
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[2015] 9 S.C.R.
A.
of law taken in Kanhaiya Lal 1959 SCR 1350 : AIR 1959
-.
SC 135: (1958) 9 STC 747 and that cannot be treated
as a vested legal right. Correction of judicial error does
not amount to deprivation of vested/substantive rights,
even though a person may be deprived of an
B
unwarranted advantage he had under the overruled
decision. In cases, where the burden· is not passed on,
there is no prejudice; he can always get the refund.
98. A major attack is mounted by the learned counsel for
c
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
D
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 12-D, it is pointed out, even a consumer, who
E
has really borne the burden of tax and is in a position to
establish that fact, is yet not entitled to apply for refund of
the duty since the Rules do not provide for such a situation.
The Rules contemplate only grants being made to
· Consumer Welfare Societies. Even in the matter of
F
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
G
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
H
manufacturers/assessees to espouse the cause of
•
..
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
275
DALMIACEMENT(8HARAT) LTD. [A. K. SIKRI, J.]
consumers, when all the while they.had been making a
A
killing at their expense. No consumers' organisation-had
come forward to voice any grievance against the said
provisions. Clause (e) of the proviso to sub-section (2)
of Section 11-8 does provide for the buyer of the goods,
to whom the burden of duty has been passed on, to apply
8
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.
c
There is no vice in the relevant provi~ions of the Act. Rules
cannot be relied upon to impugn the validity of an
enactment, which must stand or fall on its own strength.
The defect in the Rules, assuming that there is any, can
alw.ays be corrected if the experience warrants it. The
D
Court too may indicate the modifications 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.
E
105. It would be evident from the above discussion that
the claims for refund under the said two enactments
constitute an independent regimen. Every decision
favourable to an assessee/manufacturer, whether on the
F
question of classification, valuation or any other issue,
does not automatically entail refund. Section 11-8 of the
Central Excises and Salt Act and Section 27 of the
Customs Act, whether before or after the 1991
Amendment- as interpreted by us herein -
make every
G
refund claim subject to proof of not passing on the burden
of duty to others. Even if a suit is filed, the very same
condition operates. Similarly, the High Court while
examining its jurisdiction under Article 226 -
and this
Court while acting under Article 32 -
would insist upon
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[2015] 9 S.C.R.
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the said condition being satisfied before ordering refund.
Unless the claimant for refund establishes that he has
not passed on the burden of duty to another, he would
not be entitled to refund, whatever be the proceeding and
whichever be the forum. Section 11-B/Section 27 are
B
constitutionally valid, as explained by us hereinbefore.
They have to be applied and followed implicitly wherever
they are applicable.
108. The discussion in the judgment yields the following
c
propositions. We may forewarn that these propositions
7
are set out merely for the sake of convenient reference
and are not supposed to be exhaustive. In case of any
doubt or ambiguity in these propositions, reference must
be had to the discussion and propositions in the body of
D
the judgment.
(1) Where a refund of tax/duty is claimed on the ground
that it has been collected from the petitioner/plaintiffwhether before the commencement of the Central
E
Excises and Customs Laws (Amendment) Act, 1991 or
thereafter -
by misinterpreting or misapplying the
provisions of the Central Excises and Salt Act, 1944 read
with Central Excise Tariff Act, 1985 or Customs Act, 1962
read with Customs Tariff Act or by misinterpreting or
F
misapplying any of the rules, regulations or notifications
issued under the said enactments, such a claim has
necessarily to be preferred under and in accordance with
the provisions of the respective enactments before the
G
authorities specified thereunder and within the period of
limitation prescribed therein. No suit is maintainable in
that behalf. While the jurisdiction of the High Courts under
Article 226- and of this Court under Article 32 -cannot
be circumscribed by the provisions of the said
H
enactments, they will certainly have due regard to the
•
COMMNR. OF CENTRAL EXCISE, TIRUCHIRAPALLI v.
277
DALMIACEMENT(BHARAT) LTD. [A. K. SIKRI, J.]
•
legislative intent evidenced by the provisions of the said
A
Acts and would exercise their jurisdiction consistent with
the provisions of the Act. The writ petition will be
considered and disposed of in the light of and in
accordance with the provisions of Section 11-B. This is
for the reason that the power under Article 226 has to be
B
exercised to effectuate the rule of law and not for
abrogating it.
The said enactments including Section 11-B of the
Central Excises and Salt Act and Section 27 of the
c
Customs Act do constitute "law" within the meaning of
Article 265 of the Constitution of India and hence, any
tax collected, retained or not refunded in accordance with
the said provisions must be held to be collected, retained
or not refunded, as the case may be, under the authority
D.
of law. Both the enactments are self-contained
enactments providing for levy, assessment, recovery and
refund of duties imposed thereunder. Section 11-B of the
Central Excises and Salt Act and Section 27 of the
Customs Act, both before and after the 1991
E
(Amendment) Act are constftutionally valid and .have to
be followed and given effect to. Section 72 of the Contract
Act has no application to such a claim of refund and
cannot form a basis for maintaining a suit or a writ
F
petition. All refund claims except those mentioned under
Proposition {ii) below have to be and must be filed and
adjudicated under the provisions of the Central Excises
and Salt Act or the Customs Act, as the case may be. It
is necessary to emphasise in this behalfthatAct provides
G
a complete mechanism for correcting any errors whether
of fact or law and that not only an appeal is provided to a
Tribunal-. which is not a departmental organ -
but to
this Court, which is a civil court.
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c
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SUPREME COURT REPORTS
[2015] 9 S.C.R.
(i1) Where, however, a refund is claimed on the ground
that the provision of the Act under which it was levied is
or has been held to be unconstitutional, such a claim,
being a claim outside the purview of the enactment, can
be made either by way of a suit or by way of a writ petition.
This principle is, however, subjectto an exception: Where
a person approaches the High Court or the Supreme
Court challenging the constitutional validity of a provision
but fails, he cannot take advantage of the declaration of
unconstitutionality obtained by another person on another
ground; this is for the reason that so far as he is
concerned, the decision has become final and cannot
be reopened on the basis of a decision on another
person's case; this is the ratio of the opinion of
Hidayatullah, C.J. in Tilokchand Motichand (1969) 1
SCC 110: (1969) 2 SCR 824: AIR 1970 SC 898 and
we respectfully agree with it. Such a claim is maintainable
both by virtue of the declaration contained in Article 265
of the Constitution of India and also by virtue of Section
72 of the Contract Act.