CX - Revenue's attempt to recover refunded amount on ground of unjust enrichment and irrelevant SC order - Party appeal allowed with costs: SC
NEW DELHI : THIS case hardly involves any legal issue but the Supreme Court felt more concerned about the hard luck of the appellant, a manufacturer of PVC Coal Conveyor Belting made from imported Nylon Yarn.
The history of the case is mind-boggling. The issue relates to the duty on Nylon Yarn imported by the appellant. The Tribunal in 1991 ordered refund of the duty paid under protest by the appellant. The appellant filed a refund claim for Rs. 17.35 lakhs. As no action was forthcoming from the Revenue, the appellant filed a writ petition in the High Court. By an order dated 19th April, 1994, the High Court directed the Revenue to take appropriate action for making payment of the refund of Rs.17.35 lacs within three months from the date of the order to the appellant. The Assistant Commissioner issued a Show Cause Notice proposing to reject the refund on the ground of unjust enrichment. In adjudication, the Assistant Commissioner held that:
i) The refund claim is admissible on merit;
ii) The refund claim is also admissible on the limitation period;
iii) Also the excess duty incidence has not been passed on by the assessee on their buyers.
But strangely, the Assistant Commissioner in his order portion wrote:
"I hereby sanction the refund u/s 27 of C.A. 1962 claim for Rs.17 ,35,119 /- with a condition that the party should give an undertaking that they will pay back money to the Government in case Supreme Court decides the SLP No.2332/92 U.O.I. Vs. M/s. Solar Pesticides Pvt. Ltd. in favour of the Department."
Ultimately, this Court decided SLP No.2332/92, Union of India vs. M/s. Solar Pesticides Pvt. Ltd - (2002-TIOL-57-SC-CX-LB) . and the judgment was in favour of the Department. BUT THIS CASE WAS IN RELATION TO APPLICATION OF UNJUST ENRICHMENT IN CASE OF CAPTIVE CONSUMPTION.
By a show cause notice dated 3rd March, 2003 the appellant was called upon to pay the amount which had been refunded to the appellant in pursuance of the undertaking filed by the appellant as per order dated 5th April, 1995 passed by the Deputy Collector, Central Excise and Customs, Aurangabad. The aforestated show cause notice dated 3rd March, 2003 was replied to by the appellant on 3rd April, 2003 and thereupon by an order dated 14th July, 2003 the said show cause notice had been dropped. The order dated 14th July, 2003, whereby the show cause notice dated 3rd March, 2003 had been dropped, was taken into review and by an order dated 31st March, 2004 the said review was allowed and thereby once again the appellant was asked to pay the amount which had already been refunded to it.
The said order dated 31st March, 2004 was challenged by the appellant before the Tribunal and the Tribunal was pleased to dismiss the said appeal and the impugned order of dismissal dated 6th September, 2004 is challenged by the appellant in this appeal.
The Supreme Court observed,
It is very clear that it is an admitted fact that the amount of duty paid by the appellant had never been passed over to the purchasers and the said fact has been duly recorded by the Deputy Collector, Central Excise and Customs, Aurangabad in his order dated 5th April, 1995. The said order has attained finality as nobody challenged the said order.
An undertaking, though strictly not required to be given, was given by the appellant as demanded under the aforestated order dated 5th April, 1995 and ultimately the amount had been refunded to the appellant.
In our opinion, there is no question of demanding the said amount again, especially when the facts which had been disputed by the Revenue before the Tribunal had already been admitted in the proceedings which had been initiated by the Deputy Collector, Central Excise and Customs, Aurangabad in his order dated 5th April, 1995.
We are not in agreement with the findings arrived at by the Tribunal which are contrary to the facts recorded by the Deputy Collector, Central Excise and Customs, Aurangabad. Unfortunately, the said order has not been referred to at all by the Tribunal.
Without disturbing the findings arrived at by the Deputy Collector, Central Excise and Customs, Aurangabad in his order dated 5th April, 1995, the Revenue could not have come to an altogether different conclusion on facts.
In our opinion, due efforts were made to find out whether the amount of duty had been passed over to the purchasers, who are either government Companies or Corporations controlled by the Government. It has been clearly stated in the aforestated order dated 5th April, 1995 that even the purchasers had admitted the fact that the amount of duty paid by the appellant had not been passed over to the said purchasers or in other words, the said amount of duty had not been recovered from the said purchasers.
We fail to understand as to how the judgment delivered in U.O.I. Vs. M/s. Solar Pesticides Pvt. Ltd is applicable to the case of the appellant. Neither this is a case of captive consumption nor is a case of unjust enrichment.
The Supreme Court quashed the impugned order passed by the Tribunal dated 6th September, 2004. The appeal is allowed with costs of Rs. 25,000/-.
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