ORDER
P.G Chacko
1. This appeal filed by M/s Neoli Sugar Factory is against the orders of the lower authorities rejecting a refund claim of the appellants on the grounds of time-bar and unjust enrichment.
2. The appellants are engaged in the manufacture of cane sugar. During the period 1978-79 and 1979-80, they had paid duty and valorem on the levy sugar on the basis of the price fixed by the Central Government as per orders issued under Section 3(3)(c) of the Essential Commodities Act, 1955. They, along with many other sugar manufacturers, challenged the price fixation before the Allahabad High Court in writ petitions and the High Court, by interim order dated 21.01.1980, fixed the prices for different grades of levy sugar. The appellants paid duty on the levy sugar for the aforesaid period on the basis of the price so fixed by the High Court. The High Court’s decision was taken up in appeal before the Supreme Court. The apex court, by its judgement dated 22.09.1993, directed the Central Government to refix the price of levy sugar for the above periods. Accordingly, the Central Government issued orders dated 22.02.1995 fixing the prices of various grades of levy sugar for the periods 1978-79 and 197-80. Since the prices fixed under these orders were lower than the prices fixed by the High Court on the basis of which the appellants had paid duty for the aforesaid periods, there was an excess payment to the tune of Rs. 3,53,502.47. The appellants claimed refund of this amount by filing application in the prescribed format on 16.10.1995. The Department, by show-cause notice (SCN), asked the party to show cause why the refund claim should not be rejected on the grounds of time-bar and unjust enrichment. The appellants contested the notice. The jurisdictional Assistant Commissioner rejected the refund claim on both the grounds. The appeal preferred by the aggrieved party to the Commissioner (Appeals) against the Assistant Commissioner’s order was also rejected. Hence the appeal before the Tribunal.
3. Heard both sides. Ld. Advocate Shri M.P. Devnath for the appellants submitted that, as the excess duty had been paid pursuant to the High Court’s order, the payment ought to have been considered as one made under protest, in which case there was no question of applying the time limit prescribed under Section 11B(1) of the Central Excise Act to the appellants’ refund claim. He drew support to this contention from the Supreme Court’s decision in the case of Mafatlal Industries Ltd. Vs Union of India [1999 (89) E.L.T. 247 (SC)]. Ld. Counsel further argued that the assessment of duty on levy sugar for the aforesaid period should be considered as provisional assessment, having regard to the fact that the question of fixing the price of levy sugar was sub judice. The provisions of unjust enrichment under Section 11B(2) were not applicable to a case of provisional assessment, Counsel submitted. In this connection, he relied on the Tribunal’s decisions in the cases of CCE, Chennai Vs T.V.S. Suzuki Ltd [1999 (34) RLT 668] and G.K.N. Invel Transmissions Ltd. Vs Commissioner of Customs [2001 (42) RLT 711]. Therefore, according to ld. Advocate, the refund claim of the appellants was not to be rejected on either of the two grounds.
4. Ld. JDR Shri Swatantra Kumar reiterated the findings of the Assistant Commissioner and the Commissioner (Appeals). With particular reference to unjust enrichment, the JDR submitted that the appellants themselves have offered to pass on the incidence of duty on the levy sugar to their customers, namely, the Government and Government-nominated bodies. This reference of the JDR, was to the following averment contained under Ground ‘E’ of the present appeal:
“Further the excise duty difference on this also will be paid by the appellants to the Government or government nominated bodies to whom they have sold the sugar during the period in question.”
On the above basis, JDR submitted that the refund claim of the appellants was hit by unjust enrichment under Section 11B(2) of the Act. He also submitted that the relevant date, for purposes of the refund claim in question, under Section 11B(1) was the date of notification of the Government orders refixing the price of levy sugar in terms of the apex Court’s directions. That date was 22.02.1995. The refund claim under Rule 173-S read with Section 11B was filed only on 16.10.1995, which was beyond the period of limitation of six months prescribed under that Section. Since Rule 233-B providing for the procedure for payment of duty under protest was not in force during the material period (1978-80), the appellants’ case would not get excluded from the applicability of the limitation provision. Therefore, according to ld. JDR, there was no reason to interfere with the orders of the Departmental authorities rejecting the refund claim.
5. Considered the submissions. The primary question arising for consideration is whether the limitation provisions of Section 11B of the Act were applicable at all to the appellants’ case. The payment of duty at the higher rate on levy sugar was made by the appellants for the material period in pursuance of the interim order passed in January 1980 by the Allahabad High Court. The Central Government refixed the price of levy sugar for the said period pursuant to directions of the apex Court. It was consequent upon such refixation of price that the payment made by the appellants for the said period turned out to be in excess by an amount of Rs. 3,53,502.47. The refund claim was filed on 16.10.1995 for this amount. These facts are not in dispute. In Mafatlal Industries (supra), the apex Court specifically held that when duty was paid under the orders of Court (whether by way of an order granting stay, suspensions, injunction or otherwise) pending an appeal/reference/writ petition, it would certainly be a payment under protest and, in such a case, it would not be necessary to lodge the protest as provided by Rule 233(B). Applying this ruling of the apex Court to the appellants’ case, I find that the payment of excess duty for the material period pursuant to the High Court’s interim order [passed in pending writ petitions] was a payment made under protest and, therefore, the limitation provisions of Section 11B(1) of the Act were not applicable to the case. it is pertinent to note that Rule 233-B itself was not inforce when the appellants paid duty and that, in such situation, the ruling of the apex Court would apply a fortiori to their case.
6. The lower appellate authority appears to have accepted the plea of payment under protest. However, that authority would not extend the benefit of payment under protest to the appellants as in that authority’s view, such benefit was available to a case of the period of limitation of six months running from the date of payment of duty and not to a case like the appellants’ where any period of limitation should run from the date on which the Government re-fixed the price of levy sugar. This view of the lower appellate authority does not stand to reason. Once the payment of duty is accepted to be a payment under protest for any purpose of Section 11B of the Act, it would be a payment under protest for all purposes of that Section. One of the provisos to Section 11-B(1), which is there in the statute book ever since the Section itself came into force, enacts that the limitation of six months shall not apply where any duty has been paid under protest. In the appellants’ case, the payment of duty was under protest in view of Mafatlal Industries (supra). The ‘under protest’ nature of the payment has been accepted by the Commissioner (Appeals) too. Therefore, the period of limitation prescribed under Section 11-B(1) was not applicable to the appellants’ refund claim. The decision of the departmental authorities rejecting the refund claim as time-barred is not sustainable.
7. Relying on para 95 of the apex Court’s judgment in Mafatlal Industries (supra) as also on the Tribunal’s decisions (supra), ld. advocate submitted that the payment of duty in terms of the High Court’s interim order should be treated as payment based on provisional assessment under Rule 9B(1) of the Central Excise Rules, 1944 and the differential duty paid on the difference between the ‘provisional’ price and the ‘final’ price (refixed by Government) should be sanctioned under Rule 9B(5) without applying the doctrine of unjust enrichment. I am not inclined to accept this argument. While arguing on the limitation aspect, Counsel was banking on the provisions of Section 11-B. Now, on the point of unjust enrichment, he has given a go-by to that Section and has taken shelter under Rule 9B. The appellants cannot be allowed to approbate and reprobate like this. The refund claim was filed under Rule 173-S read with Section 11-B. The appellants have already taken the benefit of one of the provisos to Sub-section (1) of Section 11-B. They cann’t escape the operation of the proviso to Sub-section (2) of that Section, which stipulates, inter alia, that, for a refund in cash of any duty paid in excess by any manufacturer, he should prove that he has not passed on the incidence of such duty to any other person. The appellants did not discharge this burden of proof. On the other hand, the averments under Ground ‘E’ of the appeal (quoted by ld. DR) are a virtual admission that the incidence of duty had not been passed on to the buyers of the levy sugar. Therefore, the claim for cash refund is hit by unjust enrichment.
8. In view of the findings already recorded, the refund claim is allowed. But the amount will be credited to the Consumer Welfare Fund. The orders of the authorities below are set aside and the appeal is allowed to the above extent.