ORDER
A.C.C. Unni, Member, (J)
1. These three Appeals arise from Order in-Appeal Nos. 714-716-CE/BPL/99/1 dated 24-5-99 passed by the Commissioner (Appeals), Bhopal allowing Revenue Appeals against the Asst. Commissioner’s Orders allowing refund claims to the present appellants. By the impugned order, the Commissioner (Appeals) allowed the appeals filed before him by the Revenue for recovery of refund of Rs. 14,63,047/- sanctioned by the Asstt. Commissioner for the period 20-11-86 to 13-11-89 of duty paid on HDPE tapes/strips captively consumed in the manufacture of the final products of HDPE sacks.
2. The matter was argued for the appellants before us by Shri R. Swaminathan, ld. Consultant and for the Revenue by Shri Mewa Singh, ld. SDR.
3. Ld. Counsel explaining the facts submitted that HDPE tapes/strips were made out of HDPE/PP granules. They were classifiable under Chapter sub-heading 5406.90. Fabrics made therefrom were classifiable under Chapter sub-heading 5408. However, sacks made therefrom were classified under 6301. Prior to 20-11-1986, no duty was payable on HDPE sacks. After HDPE sacks became excisable from 20-11-86 they started paying duty thereon. Appellants were also paying duty on HDPE tapes/strips captively consumed in the manufacture of sacks. The appellants contention that no duty was leviable on tapes/strips in terms of Rules 9 and 49 of the Central Excise Rules since such tapes/strips were captively consumed, was not accepted by the Department. Pursuant to SCNs issued to the appellants, the demands were confirmed in Order-in-Appeal passed by the Commissioner (Appeals). When the matter came up before the Tribunal, by Final Order dated 22-1-1997 [(Final Order No. 76/97-D, dated 22-1-1997 -1997 (94) E.L.T. 86 (Tribunal)], the orders of the lower authorities were set aside and the claim made by the appellants that no duty was payable on tapes /strips captively consumed was upheld. In the meantime, the appellants were paying duty on tapes/strips under protest. Subsequently, on 9-8-1988 appellants claimed the benefit of Notification No. 223/86 on HDPE sacks. This was denied by the Asst. Commissioner vide his order dt. 14-5-1991. When the matter was taken up in appeal, the Commissioner (Appeals) by -in-Appeal dated 14-6-1994 set aside the said order and remanded the matter to the Asst. Commissioner holding that sacks are to be classified under Heading 39.22 and the matter is to be examined in the light of classification under Chapter 39 and in accordance with the judgment of the M.P. High Court in the case of Raj Packwell Ltd. (supra). In the meantime, the appellants filed a claim for refund of the duty paid under protest on tapes/strips consequent on the classification of sacks under Chapter 39 since they would be entitled to the benefit of .Notification No. 217/86. The Asstt. Commissioner by order dt. 13-7-1995 allowed classification of the products under Chapter 39 and allowed the exemption under Notfn. No. 217/86.
4. The refund orders were challenged by the Department before the Commissioner (Appeals). The Department’s contention was that the remand order was only with regard to the classification of sacks and not tapes/strips. It was the Department’s case that the Asstt. Commissioner could have passed an order only in respect of sacks, and that too prospectively. The Department also challenged the finding of the Asstt. Commissioner as time barred. The other ground taken by the Department in the appeal before the Commissioner (Appeals) was that the M.P. High Court judgment in Raj Packwell case had been challenged by the Revenue before the Supreme Court and it was still pending. The Commissioner (Appeals) while allowing the Departmental appeals held that the order passed by the adjudicating authority was not well reasoned and that there were many gaps in it.
5. The appellants’ contention now is that the refund in question had been allowed in terms of Notification No. 217/86 which exempts specified goods manufactured in a factory and used within the factory of production in or in relation to the manufacture of final products which were cleared on payment of duty. In the case of the appellants, HDPE tapes/strips which were manufactured out of duty paid HDPE granules were consumed in the manufacture of HDPE sacks and therefore wholly exempt from duty. Onlybecause of the insistence of the Revenue, appellants were paying duty on HDPE tapes/strips, under protest. In these circumstances duty paid on HDPE tapes/strips during the period 20-11-86 to January 1990 was admissible and therefore refund allowed by Asst. Collector was correct and in accordance with law. Further, following the decision in Raj Packzvell case, HDPE tapes, fabrics and sacks have been classified under Chapter 39 and this classification has been upheld by the Tribunal in a number of cases like (a) 1998 (103) E.L.T. 108, (b) 1998 (104) E.L.T. 70 and (c) 1997 (94) E.L.T. 669. Besides, the appellants had been paying duty on HDPE tapes under protest and therefore their refund claim was not barred by limitation. The aforesaid refund was also not effected by the bar of unjust enrichment since the duty paid was on intermediate product consumed captively by the appellants in the manufacture of final products. The Bombay High Court judgment in Solar Pesticides v. U.O.I. [1992 (57) E.L.T. 201 (Bom.)] had held that duty paid on the product consumed captively will not be subjected to the bar of unjust enrichment.
6. Ld. SDR reiterated the findings of the Commissioner (Appeals) in the impugned order. He further stated that the Bombay High Court judgment in Solar Pesticides case has been over-ruled by the Apex Court in its recent judgment in U.O.I, v. Solar Pesticides (P) Ltd. and Anr. reported in 2000 (37) RLT 251 (S.C).
7. We have considered the submissions. We find that the case of the appellants has merit and is well founded. The conclusions of the Commissioner (Appeals) in the impugned order cannot be sustained in view of the case law relied on by the ld. Counsel. It is seen that the Commissioner (Appeals) order dated 14-6-1994 directing the Asst. Commissioner to decide the classification issue in the light of Raj Packwell case had not been appealed against by the Department and it had therefore become final. Further, the Asst. Commissioner’s order dated 13-7-1995 classifying the products under Chapter 39 and allowing exemption under Notification No. 217/86 had also attained finality as no appeal had been filed against it. Even assuming that the Asst. Commissioner’s order had exceeded the terms of the remand order, the appellants cannot be denied the benefit of Notification No. 217/86, as the appellants had cleared their final products namely, HDPE sacks on payment of appropriate duty and exemption on duty paid on HDPE tapes consumed captively was admissible to them in terms of Notification 217/86. The refund claim cannot also be rejected on the ground of limitation since the duty had been paid under protest and recorded in the relevant gate passes.
8. However, with regard to the question of unjust enrichment, we find that the refund claim will have to be examined afresh in the light of the Apex Court judgment in U.O.I, v. Solar Pesticides and Anr. (supra).
9. Since the only surviving issue in this appeal is the question of unjust enrichment, that matter is remanded to the original adjudicating authority to examine the appellants’ claim for refund of the disputed amount in the light of decision of the Apex Court in Solar Pesticides case.
10. The three Appeals are accordingly allowed in the above terms by way of remand.