The amended section 11-B of the Central Excise Act, 1944, which provides for a procedure for preventing unjust enrichment while granting refund, is not applicable in cases where the question of unjust enrichment has already been gone into and the assessee has established that he has not passed on the burden of the duty to others.

Headnote:
CENTRAL EXCISE - REFUND - NOTIFICATION GRANTING PARTIAL EXEMPTION FROM CENTRAL EXCISE DUTY TO LIGHT COMMERCIAL MOTOR VEHICLES - PETITIONERS SATISFIED ALL CONDITIONS LAID DOWN IN NOTIFICATION - ENTITLED TO REFUND OF EXCESS EXCISE DUTY PAID - ORDER OF ASSISTANT COLLECTOR REJECTING REFUND CLAIM QUASHED - ORDER OF COLLECTOR (APPEALS) ALLOWING APPEAL AND DIRECTING REFUND UPHELD - AMENDED SECTION 11-B OF CENTRAL EXCISE ACT, 1944 - NOT APPLICABLE - REFUND GRANTED.
Fact of the Case:

Petitioners, manufacturers of light commercial vehicles, claimed refund of excess excise duty paid by them between 9th December 1986 and 12th June 1987, on the ground that they were entitled to concessional rate of duty under a notification granting partial exemption from central excise duty to light commercial motor vehicles. The Assistant Collector rejected the refund claim, but on appeal, the Collector (Appeals) allowed the appeal and directed the refund. The department filed a writ petition challenging the order of the Collector (Appeals).
Finding of the Court:

The Court held that the petitioners had satisfied all the conditions laid down in the notification and were entitled to the refund of excess excise duty paid by them. The Court further held that the order of the Assistant Collector rejecting the refund claim was erroneous and the order of the Collector (Appeals) allowing the appeal and directing the refund was correct. The Court also held that the amended section 11-B of the Central Excise Act, 1944, which provides for a procedure for preventing unjust enrichment while granting refund, was not applicable in the present case as the question of unjust enrichment had already been gone into and the petitioners had established that they had not passed on the burden of the duty to others.
Issues: Whether the petitioners were entitled to refund of excess excise duty paid by them.
Ratio Decidendi: The Court held that the petitioners were entitled to refund of excess excise duty paid by them as they had satisfied all the conditions laid down in the notification granting partial exemption from central excise duty to light commercial motor vehicles. The Court further held that the order of the Assistant Collector rejecting the refund claim was erroneous and the order of the Collector (Appeals) allowing the appeal and directing the refund was correct. The Court also held that the amended section 11-B of the Central Excise Act, 1944, was not applicable in the present case as the question of unjust enrichment had already been gone into and the petitioners had established that they had not passed on the burden of the duty to others.
Final Decision: The Court allowed the writ petition and directed the department to refund the amount of Rs. 1,13,53,580/- to the petitioners within 12 weeks from the date of the order. In the event of the department failing to refund the amount, the department was directed to pay interest at the rate of 18% p.a. after 12 weeks from the date of the order.

JUDGMENT - N.D. VYAS, J. :---Both the above matters can be conveniently disposed of by a common order as they are inter-connected. The petitioners in Writ Petition No. 4152 of 1988 are challenging the legality and validity of the order dated 23rd June 1988 passed ex-parte by the 2nd respondent rejecting the application of the petitioners for refund of an amount of Rs. 1.66, 34, 080.00. By the Writ Petition No. 1389 of 1990, the petitioners have challenged the legality and validity of the subsequent order dated 3rd January 1990 passed by the 2nd respondent, rejecting the application for refund in respect of the very same amount after hearing the parties. It may be pointed out that after the Writ Petition No. 1389 of 1990 was filed in this Court, the petitioners had preferred an appeal to the Collector. Central Excise (Appeals) against the said order dated 3rd January 1990 impugned in the said petition. By an order dated 11th February 1991 the appeal was allowed during the pendency of the writ petition. The petition was allowed by us to be amended and the said order dated 11th February 1991 passed in the said appeal has been brought on record. According to the petitioners both the petitions could be taken as disposed of in view of the last order dated 11th February 1991. However, in view of the contentious stand taken on behalf of the respondents, it has become necessary for us to go into the merits of both the writ petitions.

2.Briefly stated, the facts giving rise to the present petitions are as follows:

(a) The petitioners are engaged in the manufacture inter alia of a range of Light Commercial Vehicles of various models at their factory at Nasik. The petitioners manufacture such models both in the form of Cowl and Chassis or as fitted with various types of bodies to render them suitable for transport of goods or transport of persons or as ambulances. The petitioners generally sell the said vehicles to the distributors who are wholesale buyers wholly independent of the petitioners. Some sales are also effected under rate contracts to Government Agencies and to actual users.

(b) On 9th December 1986, the Central Government issued a Notification bearing No. 463 of 1996 in exercise of the powers conferred under Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the "said Rules"). By the said notification, the Central Government granted partial exemption from Central Excise Duty to light commercial motor vehicles of a pay-load not exceeding 4.000 Kgms. employing indirect injection diesel engine and falling within Chapter 87 of the Schedule to the Central Excise Tariff Act, 1985, provided that the said motor vehicles were manufactured under a programme approved both by the Ministry of Industry and the Industrial Advisor of the Directorate General of Technical Development. The effect of the said notification was that if a manufacturer satisfied all the conditions provided therein, the excise duty payable would be only 10%. The said Notification as originally enacted was to remain in force only upto 31st December 1986 but was subsequently extended from time to time and was in force till 30th September 1988.

(c) It is the petitioners case that they were manufacturing Light Commercial Vehicles duly approved both by the Ministry of Industry and the Industrial Adviser. It is the petitioners further case that they satisfied all the conditions laid down in the said Notification and were thus eligible to concessional rate of 10% duty and, therefore, they on or about 23rd December 1986 submitted a Classification List claiming benefit of the said Notification in respect of their Light Commercial Vehicles including Cowl and Chassis. The then Assistant Collector Central Excise, by his letter dated 18th February 1987 approved the Classification List but denied the benefit of the said Notification altogether to all the vehicles on the ground that sufficient evidence was not produced before him to establish that the conditions

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1996 Supreme(Bom) 144

Cases Referred (3)

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