ORDER
D.C. Mandal, Member (T)
1. In this case, the appellants paid central excise duty and cleared the goods. Subsequently, they claimed refund of duty to the extent of Rs. 1,63,687.67 for the period April, 1982 to September, 1982 on the ground that no duty was payable during the period in terms of Notification No. 80/80-CE. Assistant Collector of Central Excise, Calcutta-XI Division, rejected the refund claim on the ground that the value of their clearances in the preceding financial year exceeded Rs. 15 lacs. The appeal filed by them was also rejected by the Collector of Central Excise (Appeals) by the impugned order, but on a different ground. He has held that the Appellants’ contention that their clearance value is Rs. 13.39 lacs had to be accepted and their entitlement to the exemption Notification No. 80/80-CE during the period April to September, 1982 is admitted. But as the appellants paid duty knowing fully well that they were entitled to the exemption under the above notification and they had chosen out of the exemption notification, they were not at liberty to claim the benefit of the notification at a later date. In this connection, his findings and discussions as recorded in paragraph 3 of the impugned order are reproduced below :-
“This is a case where the appellants, fully knowing that they are entitled to the exemption had paid the excise duty and realised the same from their customers as a part of their sale price. Now they want to get back the excise duty portion a refund. In other words, they are trying to make double benefit out of Central Excise Duty. Once having received from the Customers and again getting back from the Government. On merits the submission of Mr. A. Talukdar are correct that for the purpose of determination of eligibility to the exemption under Notification No. 80/80 the clearance value of an assessee has to be determined exclusive of the excise duty. Therefore, their contention that their clearance value is Rs. 13.39 lakhs had to be accepted and their entitlement to the exemption notification during the period April to September, 82 is admitted. The appellants fully knowing well that they are entitled to the exemption had voluntered to pay the excise duty in order to realise it from thier customers. Exemption is a special facility and concession granted by the Legislature on one reason or another. When the concession is not availed of at the right time, the same cannot be claimed at a latter date. The appellants would have cleared their products without payment of duty. However, they preferred to pay the duty so that their sale prices can go up. Since payment of excise duty in this case was voluntary and the appellants had chosen to opt out of the exemption notification they are not at liberty to go back at a latter date and claim to avail the exemption. They were bound by their earlier conscious and intentional act of not availing of the exemption. They cannot now get back the excise duty as a refund. On this ground I reject the appeal.”
2. During the hearing before us, Shri Gopal Prasad for the appellants has argued that the appeal was rejected by the Collector (Appeals) on the ground of undue enrichment by the appellants. The benefit of notification could not be denied on this ground in view’ of the decision reported in 1986 (24) ELT 73 (Tribunal) in the case of Collector of Central Excise, Rajkot v. Decora Ceramics Private Limited, Rajkot and in 1985 (22) ELT 539 (Tribunal) in the case of Collector of Central Excise, Guntur v. Andhra Asphalt (P) Ltd., Visakhapatnam. He has also stated that the appellants were under the impression that their clearances would exceed Rs. 15 lacs and that is why they did not initially claim the benefit of Notification No. 80/80-CE. Arguing for the Revenue, Smt. Zutshi has stated that as required under paragraph 3 of the aforesaid notification, the appellants were to file a declaration stating that the value of the clearances will not exceed Rs. 15 lacs. Once the declaration is given, the Department becomes altert. In this case, the appellants did not follow the said procedure. They did not claim the benefit of the notification in the classification list. According to her, two decision cited by Shri Gopal Prasad could be followed in the other types of notifications where declaration is not involved. In reply to the arguments of Smt. Zutshi, Shri Gopal Prasad has stated that declaration as per paragraph 3 of the aforesaid notification was required to be filed by those manufacturers who had not cleared any specified goods in the preceding financial year or had cleared any such goods for the first time on or after 1st day of August in the preceding financial year. He has argued that no such declaration was required to be filed by the appellants herein.
3. We have considered the records of the case and the arguments of both sides. The Collector (Appeals) has accepted the contention of the appellants that their clearance value was Rs. 13.39 lacs. He has also admitted the entitlement of the appellants to the exemption notification during the period April to September, 1982. In the Cross-Objection filed by the Revenue, it has been stated that the appellants were not required to pay Central Excise Duty in terms of the Notification No. 80/80-CE., dated 19-6-1980 and as such, duty paid by them was not Central Excise Duty. According to the Cross-Objection, the amount of Central Excise duty should not be deducted from the value of the clearances for the purposes of above notification. Based on the value calculated on the above basis, the appellants crossed the exemption limit of Rs. 15 lacs w.e.f. 25-3-1982 and hence, they were not eligible for the above notification in the financial year 1982-83. The Collector (Appeals) has not agreed to this view of the Revenue. He has held that for the purpose of determination of eligibility to the exemption under Notification No. 80/80 the clearance value of an assessee has to be determined exclusive of the excise duty. We observe from the Explanation-Ill to the notification that for the purposes of this notification expression ‘value’ means either the value as determined in accordance with the provisions of Section 4 of the Central Excises and Salt Act, 1944 or, as the case may be, according to the tariff value fixed under Section 3 of the said Act. There was no fixed tariff value for the goods in question. The value as per Section 4 of the Central Excises and Salt Act, was, therefore, applicable for determining the value of clearances. Under the provisions of Section 4(4)(d)(ii) of the Central Excises and Salt Act, the value does not include the amount of excise duty. We, therefore, agree with the finding of the Collector (Appeals) that the value for the purposes of the aforesaid notification should be exclusive of the excise duty. The contention raised in the Cross Objection is, therefore, rejected by us.
4. Smt. Zutshi has raised the contention that the appellants did not file a declaration as required under paragraph 3 of the notification. Shri Gopal Prasad has argued that declaration under paragraph 3 of the notification was not required to be filed by the appellants. He has also stated the reasons therefor. From the statement of the facts given in the appeal memorandum filed by the appellants, we observe that the appellants had L-4 licence bearing No. 45-SF/68 for the manufacture of steel furniture falling under Tariff Item 40. Paragraph 9 of the order-in-original of the Assistant Collector shows that the appellants cleared the goods from the period 1-4-1981 to 20-9-1981. In the circumstances, in our view, declaration under paragraph 3 of the notification was not required to be filed by the appellants. Accordingly, the contention of Smt. Zutshi regarding declaration is rejected.
5. The learned Consultant for the appellants has relied on two decisions of this Tribunal. In the decision reported in 1986 (24) E.L.T. 73 (Supra), it was held by this Tribunal vide paragraph 10 of the order that “Unlike Court of Law (the High Courts and the Supreme Court) which, in their extraordinary jurisdiction, may decline to grant relief on the ground that it would amount to unjust enrichment of the claimant, the Tribunal, acting within the statute, has no power to deny relief on this ground, if relief is due on the merits of the dispute before it. The Central Excise Law does not authorise denial of relief on the score of unjust enrichment nor does it make refund of duty conditional on the relief being passed on to the ultimate consumer”. In the decision reported in 1986 E.C.R. 40 (Cegat), this Tribunal held that “The theory of unjust enrichment has been involved in considering claims coming up before the High Courts and/or the Supreme Court in exercise of their extraordinary jurisdiction under Article 226/Article 32 of the Constitution… that it is a factor being kept in view by the High Courts/Supreme Court in exercising writ jurisdiction does not lead to an inference that such a consideration has a place in dealing with a claim for refund of duty under Section 11B of the Central Excises & Salt Act, 1944. We hold the same view as earlier held by the Tribunal in the aforesaid two decisions. Accordingly, we hold that the denial of the benefit of the notification by the Collector (Appeals) on the ground of undue enrichment is not correct. He has clearly admitted the entitlement of the appellants to the benefit of the notification on the basis of the value of clearances. Accordingly, we hold that the benefit of Notification No. 80/80 should be allowed to the appellants for the clearances of the goods during the period April, 1982 to September, 1982. In the result, we set aside the impugned order and allow this appeal.
6. The Cross-Objection filed by the Revenue is dismissed for the reasons already stated in our order earlier.
G.P. Agarwal, Member (J)
7. I have had the advantage of reading the erudite judgment prepared by my learned Brother Shri D.C. Mandal, Technical Member and agreed to by the learned Sr. Vice President. While agreeing with the conclusion I feel duty bound to state as under.
8. The present case is admittedly going to be a case of unjust enrichment. In the instant case it is admitted to the appellants that at no stage they claimed benefit of Notification No. 80/80 but happily and merrily paid the excise duty in order to realise it from their customers. In fact the appellants admitted that they did realise the excise duty so paid by them from their customers. Now after paying the excise duty and realising it from their customers the appellants claimed the refund of the excise duty so paid on the ground that they were eligible to the exemption from the excise duty under Notification No. 80/80. So far as their eligibility to the exemption under Notification No. 80/80 is concerned there is no dispute. However, both the authorities below have rejected the claim of the appellants on the ground of unjust enrichment. While confirming the order of the Assistant Collector rejecting the claim of the appellants for refund of excise duty the Collector (Appeals) has stated as follows :-
“…This is a case where the appellants, fully knowing that they are entitled to the exemption had paid the excise duty and realised the same from their customers as a part of their sale price. Now they want to get back the excise duty portion a refund. In other words, they are trying to make double benefit out of Central Excise Duty. Once having received from the Customers and again getting back from the Government….The appellants fully knowing well that they are entitled to the exemption had volunteered to pay the excise duty in order to realise it from their customers. Exemption is a special facility and concession granted by the Legislature on one reason or another. When the concession is not availed of at the right time, the same cannot be claimed at a latter date. The appellants would have cleared their products without payment of duty. However, they preferred to pay the duty so that their sale prices can go up. Since payment of excise duty in this case was voluntary and the appellants had chosen to opt out of the exemption notification they are not at liberty to go back at a latter date and claim to avail the exemption. They were bound by their earlier conscious and intentional act of not availing of the exemption. They cannot now get back the excise duty as a refund. On this ground I reject the appeal.”
9. Now the question before us is as to whether the appellants can be allowed to enrich themselves when they have already passed on the incidence of the excise duty on the purchasers.
10. In the case of State of Madhya Pradesh v. Vyankatlal, AIR 1985 SC 901 the Hon’ble Supreme Court after referring to its earlier decisions in Orient Paper Mills v. State of Orissa, AIR 1961 SC 1438; Shiv Shankar Dal Mills v. State of Haryana, AIR 1980 SC 1037; Sales Tax Officers, Banaras v. Kanhaiya Lal Mukundlal Saraf, AIR 1959 SC 135 and Amar Nath Om Prakash v. State of Punjab, AIR 1985 SC 218 held that merely because the assessee has paid the money, that by itself is no ground for directing payment to the assessee, if in fact the assessee has not paid out of his own pocket but ultimately passed it on to its purchaser. The same may be reproduced with advantage as below :-
“14. The principles laid down in the aforesaid cases were based on the specific provisions in those Acts but the same principles can safely be applied to the facts of the present case inasmuch as in the present case also the respondents had not to pay the amount from thier coffers. The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund was created, namely, development of sugarcane. There is no question of refunding the amount to the respondents who had not eventually paid the amount towards the Fund. Doing so would virtually amount to allow the respondents unjust enrichment.”
(Emphasis supplied)
11. Recently a Division Bench of the Bombay High Court in the case of Roplas (India) Ltd. v. Union of India, 1988 (38) ELT 27 after observing that the payment of excise duty was made under a mistake of law and that all the claims for the refund were within time held in paragraph 5 of the judgment as follows :-
“5. We are of the view that since the Petitioners have already recovered from their customers the whole of the duty, they are not entitled to its refund. Their claim for such refund amounts to a fraud on consumers, and the society. Any indulgence in their favour will amount to helping them to enrich themselves unjustly. They are not entitled to claim the refund even under Section 72 of the Contract Act. Much less can they therefore, invite this Court to exercise its extraordinary, equitable and discretionary writ jurisdiction under Article 226 of the Constitution in their favour. The law laid down by the Supreme Court on this subject is very clear and has been reiterated from time to time.” (Emphasis supplied)
12. It is significant to note that under somewhat similar circumstances the Hon’ble Supreme Court in Newabganj Sugar Mills v. U.O.I., AIR 1976 SC 1152 devised a new procedure to deal with such a situation and evolved its own scheme for the refund of the amount to the ultimate consumers and observed that the money charged in excess should go to the consumers who had ultimately paid the same. In that case the State Government had reduced the prices of levy sugar and the sugar mill owners challenged the validity of the said order by filing writ petitions before the Allahabad High Court. The High Court had admitted the petitions and granted stay of the operation of the order, on the mills giving bank guarantees for the excess prices that they would recover because of the stay order. As expected, the mills sold the levy sugar at free market rates because of the stay order. The High Court subsequently upheld the State Government’s order controlling the prices and directed its Registrar to encash the bank guarantees and pay the amount to the State Government. The State Government was also directed to keep the amount in a separate account and the mill owners were ordered to furnish to the State Government a list of all such persons to whom they had sold the sugar together with the quantum of sugar sold to and the amount of the excess price charged to them. The State Government was further directed to refund to the persons concerned the excess amounts from whom they were realised by the mills. Against this order, the mills preferred an appeal to the Supreme Court and the Court while confirming the direction given by the High Court evolved its own scheme for the refund of the amount to the ultimate consumers, as stated above.
13. More recently a Division Bench of the Calcutta High Court also in th6 case of Assistant Collector of Central Excise v. Madura Coats Ltd. -1988 (33) E.L.T. 29 (Cal.) held that the principle of “unjust enrichment” applies equally against the Department when it refuses to refund the duty collected without jurisdiction, and against manufacturers who claim a refund of the duty paid inspite of having collected the amount from their customers and observed as follows :-
“17. In our opinion there is no reason why the principles of ‘unjust enrichment’ by the assessee cannot be extended in the case of excise duty. Excise duty is an indirect tax and generally it is passed to the buyer. The law is well settled that in a case where collection of duty or tax is ultimately found to be illegal and without jurisdiction, the Government cannot hold on the same and the Government is bound to refund the same. Otherwise it would amount to “unjust enrichment” by Department. However, the principles of “unjust enrichment” is to be applied not only against the Department only but against the assessee also e.g. where though assessee had paid the fee or duties initially, but he had passed the burden to his purchaser and he himself has not suffered any loss or prejudice in fact….”
14. After observing as aforesaid, the court further evolved its own scheme for the refund of the amount to the ultimate consumers by appointing the Receivers/Special Officer on the lines of the procedure adopted in the case of Newabgunj Sugar Mills v. U.O.I., supra and in accordance with the guidelines and direction given by the Hon’ble Supreme Court in the case of Shiv Shankar Dal Mills v. State of Haryana, supra.
15. Thus, from the above it is clear that the appellants who have already recovered from their customers the whole of the excise duty are not entitled to its refund since their claim for such refund in the words of the Bombay High Court, supra would amount to a fraud on consumers, and the society.
16. However, the controversy does not rests here. The further question that arises for consideration is as to whether the excise authorities or the Tribunal can decline to grant relief on the ground that it would amount to unjust enrichment. In my considered opinion the Law is clear that under the Central Excises and Salt Act this Tribunal acting within the statute has no power to deny relief on this ground, if relief is due on the merits of the dispute before it as held by this Tribunal in the case of Collector of Central Excise v. Decora Ceramics Private Limited., 1986 (24) ELT 73 wherein it was held that unlike Courts of law (the High Courts and the Supreme Court) which, in their extraordinary jurisdiction, may decline to grant relief on the ground that it would amount to unjust enrichment of the claimant, this Tribunal, acting within the statute, has no power to deny relief on this ground, if relief is due on the merits of the dispute before it. Central Excise Law does not authorise denial of relief on the score of unjust enrichment nor does it make refund of duty conditional on the relief being passed on to the ultimate consumer. In the case of Miles India Limited v. Assistant Collector of Customs, 1987 (30) E.L.T. 641 (S.C.) the Hon’ble Supreme Court also observed that the Customs Authorities, acting under the Customs Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefor, under Section 27(1) of the Customs Act, 1962. If further, observed that if really the payment of the duty was under a mistake of law, the aggrieved party may seek recourse to alternative remedy as it may be advised. The Hon’ble Supreme Court reiterated the same view in the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills, 1988 (37) E.L.T. 478.
17. In view of the above there is no alternative but to allow the appeal since neither the Tribunal has the power to reject the claim for refund of the excise duty on the ground of unjust enrichment nor it has any power to evolve its own scheme for the refund of the amount to the ultimate consumers as done by the Hon’ble Supreme Court and the Calcutta High Court in the aforesaid cases. However, it may be observed that it is the high time when the Legislature should step in to check such a fraud on consumers and the society when such a claim is made for the refund of the excise duty which the manufacturers have already recovered from their customers.