Amar Dye Chem Ltd. vs Union of India

M.L. Pendse, J.—Rule returnable forthwith. Shri Desai waives service. Heard counsel.

The petitioners re-submitted refund application dated April 13, 1988 in accordance with the order passed by Collector of Central Excise (Appeals) dated November 18, 1987. The petitioners claimed refund of Rs. 64,22,994.18 in respect of excess duty recovered by the Department for the period commencing from March 1, 1984 to August 31, 1984 the petitioners also claimed refund of duty of Rs. 62,05,917.49 in respect of period commencing from September 1, 1984 and ending with February 28, 1986. Few facts which gave rise to these refund applications are as follows :

The petitioners manufacture "Naphthals" and "fast colour base" falling under Tariff Item No. 68 of First Schedule to the Central Excises and Salt Act (hereinafter referred to as the ''Act''). The petitioners filed Classification Lists but the Superintendent of Excise directed the petitioners to pay duty under Item No. 14-D of the First Schedule by order dated November 21, 1985. The petitioners carried appeal before the Collector, Central Excise and that appeal was allowed by order dated November 18, 1987 holding that the goods manufactured by the petitioners are liable to payment of duty under Tariff Item No. 68. Consequent upon the decision, the petitioners re-submitted the applications for refund which were filed earlier.

By order dated May 25, 1989, the applications for refund were turned down by reliance upon judgment of this Court in the case of Roplas (India) Ltd. and another Vs. Union of India and another, . The order of the Assistant Collector proceeded on the basis that as the petitioners have recovered duty from the customers during the relevant period, the claim for refund is not maintainable. The petitioners carried appeal against the order of the Assistant Collector and the appeal was allowed by the Collector of Central Excise (Appeals) by order dated October 26, 1989. The Collector held that the doctrine of unjust enrichment is not applicable and cannot be resorted to by the authorities created under the Statute and the order of refund must follow. The Department carried appeal against the order of Collector before the Customs, Excise and Gold (Control) Appellate Tribunal but the appeal ended in dismissal by order dated May 7, 1990. Customs, Excise & Gold (Control) Appellate Tribunal reiterated the earlier view in the case of 1989 (23) ECR 1 54 . The Tribunal directed the Excise authorities not to decline refund on the ground of unjust enrichment.

The petitioners complained that in spite of the decisions of the authorities constituted under the Excise Act, the amount of refund is not paid. Shri Setalvad, learned counsel appearing on behalf of the petitioners, relies upon the decision of the Division Bench of this Court recorded on August 23, 1990 in Writ Petition No. 4888 of 1989. This Court has observed that it is not permissible for the Excise authorities to decline refund sought by the petitioners by reference to the doctrine of unjust enrichment. The decision of CEGAT was approved by the Division Bench. It is, therefore, obvious that the Department cannot postpone the payment of refund. Shri Setalvad is also right in his submission that the excess duty was paid in the present case under protest and apart from that fact when provisions of Section 11B(3) are attracted, then the Department cannot decline to pay refund either on the ground of limitation or on the ground that the doctrine of unjust enrichment is attracted. In our judgment, the Department is duty bound to refund the amount to the petitioners in accordance with refund applications.

Shri Desai, learned counsel appearing on behalf of the Department, submitted that the Department has not yet decided as to whether an appeal should be preferred against the decision of CEGAT to the Supreme Court and till that decision is taken, the Department is not liable to make refund. The submission cannot be accepted. Merely because the Department intends to approach the Supreme Court, that is no ground to decline refund. Shri Desai also submitted that the decision of CEGAT that principle of unjust enrichment is not available to the Excise authorities is not correct. The submission is not open to examination in view of the decision of the Division Bench of this Court and to which one of us (Pendse, J.) was a party. In our judgment, the petitioners are entitled to the relief.

Accordingly, respondents are directed to examine the refund applications filed by the petitioners and pass appropriate orders of refund and refund the said amount within 8 weeks from today. In case, the amount is not refunded within the stipulated period, then the Department would be liable to refund the amount along with interest to be calculated at the rate of 15% per annum and payable from this date to the date of actual payment. The respondents shall pay the costs of the petition.