2004 Supreme(SC) 341

2004(5) Supreme 230
SUPREME COURT OF INDIA
(From Central Excise, Customs and Gold (Control) Appellate Tribunal, West Regional Bench, Mumbai)
V.N. Khare, CJI., S.B. Sinha & S.H. Kapadia, JJ.
Commissioner of Central Excise, Mumbai-II -Appellant
versus
M/s. Allied Photographics India Ltd. -Respondents
Civil Appeal No. 2687 of 2001
Decided on 18-3-2004
Counsel for the Parties :
For the Appearing Parties : A.K. Ganguli, S. Ganesh, Dushyant A. Dave, Sr. Advocates, Dileep Tandon, G. Venkatesh Rao, B. Krishna Prasad, Sandeep Narain, Shri Narain, Ms. Anjali, Ms. Rohina Nath, Umesh Kumar Khaitan, Ms. Kumkum Sen, Advocates.

IMPORTANT POINT
There is a basic difference between duty paid under protest and duty paid under rule 9B of the Central Excise Rules as the duty paid under protest falls under Section 11B of the Central Excise Act whereas duty paid under provisional assessment falls under rule 9B of the Rules.

Headnote:Central Excise Act, 1944-Section 11B, Rule 9B-Refund claim-Maintainability after final assessment-Doctrine of unjust enrichment-Applicability-Payment of duty under protest and payment of duty under provisional assessment-Distinction-New India Industries Ltd. (NIIL) carrying on business of manufacturing photographic printing paper, chargeable to excise duty-NIIL entered into distribution agreement with a firm, M/s AGIL for supply of goods-Notice of demand directing NIIL to pay excise duty on prices charged by M/s AGIL to its dealers-NIIL paid the demanded excise duty under protest-From 1-11-1984, NIIL started paying excise duty on ex-factory price charged by NIIL to M/s AGIL and not on price charged by M/s AGIL to its dealers-NIIL filed refund claims for recovery of excise duty between the period 1-11-1981 to 31-10-1984-Whether NIIL was entitled to refund-Whether doctrine of unjust enrichment in Section 11B of the Act is applicable to the facts of this case as NIIL (manufacturer) had paid the differential disputed excise duty when assessment was finalized in favour of NIIL.

       Held : Under the amended section 11B(3) of the said Act, notwithstanding anything to the contrary in any judgment, decree, order or direction of the appellate Tribunal or any Court, no refund was to be made except in accordance with section 11B(2) of the said Act. Further, there was substitution of sub-clause (e) to explanation B to section 11B(1) by which the original sub-clause (e) was deleted and substituted by new sub-clause (e) under which in cases where duty has been passed on by the manufacturer to the buyer, the relevant date for computing the period of limitation would commence from the date of purchase of goods by the buyer. At this stage, it is important to note that although sub-clause (e) as it stood prior to 20.9.1991 dealt with the period of limitation in cases of refund of duty paid under provisional assessment, the substantive provision for provisional assessment of duty was rule 9B. Therefore, even with the deletion of old sub-clause (e), rule 9B continued during the relevant period. The deletion of sub-clause (e) and continuation of rule 9B shows that the section 11B (as amended) applied to claiming of refunds where the burden was on the applicant to apply within time and prove that the incidence of duty has not been passed on whereas rule 9B covered cases of ordering of refund/making of refund, where on satisfaction of the conditions, the concerned officer was duty bound to make the order of refund and in which case question of limitation did not arise and, therefore, there was no requirement on the part of the assessee to apply under section 11B. Lastly, rule 9B referred to payment of duty on provisional basis by the assessee on his own account and, therefore, in cases where the manufacturer has been allowed to invoke this rule and refund accrues on adjustment under rule 9B(5) that refund is on the account of the manufacturer and not on the account of the buyer. If one reads section 11B on one hand and rule 9B on the other hand, both indicate payment by the assessee on his own account and refund becomes due on that account alone. (Para 9)

       There is a basic difference between duty paid under protest and duty paid under rule 9B. The duty paid under protest falls under section 11B whereas duty paid under provisional assessment falls under rule 9B. That section 11B deals with claim for refund whereas rule 9B deals with making of refund, in which case the assessee has not to comply with section 11B. Therefore, section 11B and rule 9B operate in different spheres and, consequently, in para 104 of the said judgment, it has been held that in cases where duty is paid under rule 9B and refund arises on adjustment under rule 9B(5), then such refund will not be governed by section 11B. In the said para, it has been clarified that if an independent refund claim is made after adjustment on final assessment under rule 9B(5), agitating the same issues, then such claim would attract section 11B. This is because when the assessee makes an independent refund claim after final orders under rule 9B(5), such application represents a claim for refund and, it would not come in the category of making of refund and therefore, the bar of unjust enrichment would apply. Hence, there is no merit in the contention of the respondent M/s APIL that although in this case duty was paid under protest, there was no difference between such payment and duty paid under provisional assessment under the said Act. This argument was obviously advanced because unless the two payments are equated as contended, the respondent M/s APIL was required to comply with section 11B. In this matter, duty has been paid under protest. (Para 12)

       In the present case, the refund claim is made by a buyer and not by the manufacturer. The buyer says that he has not passed on the burden to its dealers. The buyer has bought the goods from the manufacturer paying the purchase price which included cost of purchase plus taxes and duties on the date of purchase. In such cases, cost of purchase to the buyer is a relevant factor. None of the authorities below have looked into this aspect. Even the appellate Tribunal has not gone into this relevant factor. It has merely quoted the passages from the order of the lower authority, whose order was impugned before it. Costing of the goods in the hands of the distributor, the cost element and the treatment given to purchases by the buyer in his own account were relevant circumstances which the Authorities below failed to examine. (Para 17)