Refund claims of duty under unfair enrichment principles are not applicable when classification matters remain provisional.

JUDGMENT:

(per Hon’ble Sri Justice Narsing Rao Nandikonda)

This appeal has been filed under Section 35G of the Central Excise Act, 1944 (for short, ‘the Act, 1944’) against the Final Order No.731 of 2007, dated 28.06.2007, in Appeal No.E/408/2005 on the file of Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, whereunder and whereby, the appeal filed by the appellant for refund of claim for an amount of Rs.1,12,30,127/- for the period from 01.03.1986 to 30.09.1994, was rejected in respect of excess of duty paid by it on printed shells used as inputs in manufacture of Cigarettes packed in packets

2. Heard Ms.L.Maithili, learned counsel for the appellant and Sri. A.Ramakrishna Reddy, learned Standing Counsel for CDEC, appearing for the respondents.

3. Brief facts of the case are that the appellant is a limited company registered under the Hyderabad Companies Act, IV of 1320 Fasli, having its Registered Office and Factory at Azamabad, Hyderabad. It manufactures cigarettes falling under Chapter 24 of the Central Excise Tariff Act, 1985 (for short, the Act, 1985’). It also manufacture shells which are consumed captively in packing of cigarettes, which are sold in packets of 10s or 20s on the basis of MRP printed on such packets. As per the Act, 1985, the appellant sought classification of shells under Chapter 49 and filed a classification list accordingly on 03.03.1986. Upon which, the jurisdictional Assistant Commissioner vide its letter C.No.V/48/17/12/86-Vo.II, dated 14.03.1986 classified that under Chapter sub-heading 4818.13, for which the appellant vide its letter, dated 14.03.1986 agreed to pay duty @15% advance, applicable to Chapter sub-heading 4818.13 under protest subject to the final outcome of the appeal pending on the issue of classification, which according to the appellant should be under Chapter 49. It is the further case of the appellant that since the classification issue was not decided finally till 1995 and as prices were based on costing method under Rule 6(b)(ii) of the then Central Excise Valuation Rules, 1975, no final assessment was done. Therefore, the appellant challenged the Department’s classification by filing appeal before the Commissioner (Appeals), who upheld the stand of the Department. Aggrieved by the said order, the appellant filed appeal before the Customs Excise & Gold (Control) Appellate Tribunal (CEGAT), New Delhi. On 31.08.1995, CEGAT disposed of the appeal vide Final Order Nos.253 to 256/95C holding that the disputed items were classifiable under sub-heading 4848.90 upto 29.02.1988 and under sub- heading 4823.90 from 01.03.1988 onwards. The said classification was accepted by the appellant and sought for refund of excess duty paid by it by addressing letter, dated 26.12.1995 to the Assistant Commissioner of Central Excise, Division V, Hyderabad. In the said letter it is stated that since the dispute between the company and the Department has been finally resolved by CEGAT, the work sheets based on reclassification of shells have been constructed for the periods from 01.03.1986 to 30.09.1994 i.e., from the date of introduction of Act, 1985 till the closure of shells manufacturing activity in respondent factory premises, and a differential duty of Rs.1,12,30,127.47 representing the difference between the duties paid and the duty payable in terms of CEGAT order. In response to the said letter, the Superintendent (Tech), Central Excise, Hyderabad-V Division, gave reply vide, letter, dated 03.01.1996 asked the respondent-company to furnish documents i.e.,