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1995 Supreme(Gau) 161
GAUHATI HIGH COURT
J.N.Sarma, J.
Jayshree Tea and Industries Ltd. -Appellant
Versus
Union of India -Respondent
Civil Rule No. 343 of 1992
Decided On : 27-07-1995
R.Gogoi, S.Mitra, K.N.Choudhary, J.P.Bhattacharjee, D.N.Mehta, A.Dutta
UF and PF solutions manufactured and captively consumed by the petitioner company in the factory at Marioni are none dutiable items and the petitioner is not entitled to the refund as claimed as the same will amount to unjust enrichment.
Headnote:
CENTRAL EXCISE - CLASSIFICATION - UF AND PF SOLUTIONS - REFUND - JUSTIFICATION - HELD THAT THE UF AND PF SOLUTIONS MANUFACTURED AND CAPTIVELY CONSUMED BY THE PETITIONER COMPANY IN THE FACTORY AT MARIONI ARE NONE DUTIABLE ITEMS AND THE PETITIONER IS NOT ENTITLED TO THE REFUND AS CLAIMED AS THE SAME WILL AMOUNT TO UNJUST ENRICHMENT.
Fact of the Case:
The petitioner company, engaged in the manufacture of plywood, used UF and PF solutions as glue compounds in its factory. The said solutions were assessed to central excise duty by classifying them under Tariff Item 15 A (i) of the First Schedule to the Central Excise and Salt Act, 1944. The petitioner company stopped payment of duty on the said products with effect from 16.9.82 and filed three refund claims for a total of Rs.51,33,004.71 being the duty realised during the period 1.10.77 to 15.9.82. The Assistant Collector of Customs and Central Excise, Jorhat rejected the refund claims. On appeal, the learned Collector (Appeal), Central Excise, Calcutta set aside the order of the learned Assistant Collector with the further direction to the authority to determine the case afresh in accordance with law after reducing of the samples of the goods in question. Thereafter, the departmental authority took sample of the goods in question for testing of the same. The impugned order dated 12.11.91 was passed by the Assistant Collector Customs and Central Excise, Jorhat. The learned Assistant Collector found that the subject products are excisable and liable to duty under a tariff entry.
Finding of the Court:
The Court held that the UF and PF solutions manufactured and captively consumed by the petitioner company in the factory at Marioni are none dutiable items and the petitioner is not entitled to the refund as claimed as the same will amount to unjust enrichment.
Issues: Whether the UF and PF solutions manufactured and captively consumed by the petitioner company in the factory at Marioni are dutiable items.
Ratio Decidendi: The Court relied on the following precedents: 1. Union of India vs. Kamlakshi Finance Corporation Ltd. (1991 (55) ELT 433 (SC)): The Court held that it is of utmost importance that, in disposing of the quasi-judicial issuer before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding diction of the Tribunal. 2. Ramesh Occhavlal Shah vs. Union of India (1992 (62) ELT 280 (Bom)): The Court held that under Article 141 of the Constitution, the law declared by the Supreme Court is binding on all. No attempt, therefore, should be made to side track the binding decision of the Supreme Court on any pretext or pretence or to whittle down, wish away or be unbound by the ratio thereof. 3. Solar Pesticides Pvt. Ltd. vs. Union of India (1992 (57) ELT 201 (Bom)): The Court held that the doctrine of unjust enrichment, which is the genesis of the amendment, has no application in cases where the imported goods are either consumed by the importer or are used by him in the manufacture of other products. 4. Moti Laminates Pvt. Ltd. vs. Collector of Central Excise, Ahmedabad (1995 (57) ECR 1 (SC)): The Court held that even if the resin produced by the appellants are resols as mentioned in item 15A it could not be subjected to duty. The purpose of specifying the goods in the Schedule is two fold, one, the rate on which the duty would Be charged and other that if the goods satisfy the description and are covered in the entry then they are liable to pay excise duty. But even in respect of specified goods it could be established that it was not marketable or capable of being marketed, therefore, no duty was leviable on it. 5. The Union Carbide India Limited vs. Union of India & others (1986 (8) CEC 185 (SC)): The Court held that goods must refer to article which are capable of being sold.
Final Decision: The writ application was partially allowed holding that the UF and PF solutions manufactured and captively consumed by the petitioner company in the factory at Marioni are none dutiable items and the petitioner is not entitled to the refund as claimed as the same will amount to unjust enrichment.
2. At the time of admission, this Court passed an interim order to the following effect:
“ In the meanwhile the operation of the impugned order at Annexure 6 in so far as it relate to recovery of excise duty from September, 1982 onwards is stayed.”
3. The brief facts of the case are as follows :
That the goods in question namely, UF solution and PF solution used as adhesive agents by the petitioner company in its factory unit at Mariani have been assessed all along to central excise duty by classifying the said goods under Tariff Item ISA (i) and on the assumption that the said goods are dutiable under the aforesaid item and the petitioner company continued to pay duty at the appropriate rate on the basis of such classification. On 22.10.80, there was a decision by the Delhi High Court holding that solution in question did not fall under the Tariff Item ISA (i) and the same were not dutiable item. After that on 11.4.81, the petitioner company wrote a letter on the basis of that judgment that the collection and levy of duty on the solution in question from the petitioner company had been illegal and unauthorised. Accordingly, the petitioner company stopped payment of duty of these goods in question with effect from 16.9.82 and on 20.11.82 filed three refund claims for a total of Rs.51,33,004.71 being the duty realised during the period 1.10.77 to 15.9.82. The respondent No.4 i.e. the Assistant Collector of Customs and Central Excise, Jorhat by a adjudication order dated 20.8.83 was pleased to reject the contention and claim of the petitioner. An appeal was filed before the learned Collector (Appeal), Central Excise, Calcutta who, by its judgment and order dated 17.9.83 was pleased to set aside the order of the learned Assistant Collector with the further direction to the authority to determine the case afresh in accordance with law after reducing of the samples of the goods in question. On 27.2.87 the respondent No.4 passed an order holding the solution in question to be classifiable under Tariff Item No. ISA (i) and dismissed the refund claims of the petitioner company. As against the aforesaid adjudication another appeal was filed and by order dated 22.7.87, that appeal was allowed and the matter was remanded with the direction that the said authority shall decide the case afresh examining of the sample as requested by the petitioner company. Thereafter, the departmental authority took sample of the goods in question for testing of the same. It is contended that in the meantime, this question came before different Courts and the authority and in has consistently been held that the UF and PF solution in question manufactured for the purpose of captive consumption do not attract Central Excise duty and the same are not dutiable items.
5. A Civil Rule being Civil Rule No.3499 of 1991 was filed before this Court praying for a direction to the respondents to classify the solution in question under the appropriate tariff item in accordance with the judgment of this Court and to grant necessary refund of the amount collected by the department on the basis that the goods in question were not liable to payment of central excise du
