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Judgment
Somasundaram, J.—This Writ Appeal is directed against the order in W.P. No. 6260 of 1987 directing the appellants to refund a sum of
Rs. 16,59,721.30 with interest at 12% p.a. from 23-6-1987 to the respondent within four weeks from 8-1-1991.
The respondent herein is a manufacturer of Service Station equipments. The first appellant in his order dated 30-8-1983 confirmed the earlier
order passed by his predecessor and demanded a sum of Rs. 1,15,502.57 towards the differential duty for the period from 10-1-1979 to 31-3-
1980. As against the said order of the first appellant, the respondent filed an appeal before the third appellant and by his order dated 19-11-1083,
the third appellant set aside the order of the first appellant dated 30-8-1983 and remanded the matter to the first appellant with a direction to
approve the price-list based on the sales value at the factory gate u/s 4(1)(a) of the Central Excises and Salt Act (hereinafter called the Act).
Pursuant to the order, dated 19-11-1983 passed by the 3rd appellant, the first appellant by the order, dated 20-10-1984 approved the price-list
u/s 4(1)(a) of the Act i.e., the price at which the goods are sold at the factory gate to the independent buyers. Further, an application for refund of
Rs. 19,83,225.64 was also filed by the respondent before the first appellant. Thereafter, the second appellant filed an appeal against the order of
the first appellant dated 20-10-1984 in Appeal No. 58 of 1986 before the 3rd appellant. By the order dated 12-5-1986, the third appellant set
aside the order dated 20-10-1984 on the ground that the order dated 20-10-1984 is not in conformity with the order passed by the third appellant
dated 19-11-1983. Aggrieved by the order dated 12-5-1986 the respondent filed an appeal before the Customs, Excise & Gold (Control)
Appellate Tribunal. The Customs, Excise & Gold (Control) Appellate Tribunal by the order dated 20-3-1987 allowed the appeal and set aside the
order of the third appellant dated 12-5-1986 on the ground that the department has not filed any appeal against the order of 3rd appellant dated
19-11-1983 and it has become final. In the meantime, by the order dated 30-9-1986, the first appellant rejected the respondent''s claim for refund
of Rs. 19,83,225.64. Against the order of the first appellant dated 30-9-1986, rejecting the respondent''s claim for refund, an appeal was filed in
appeal No. 13 of 1987 before the 3rd appellant. By the order dated 30-4-1987, the third appellant allowed the appeal setting aside the order of
the first appellant dated 30-9-1986 and remanded the matter to the first appellant with a direction to decide the refund claim, if admissible
otherwise, as per Section 11B of the Act. Pursuant to the order of the 3rd appellant dated 30-4-1987, the respondent on 2-5-1987, submitted an
application for refund. Thereafter, the respondent also filed W.P. No. 6260/87 before this court praying for the issue of mandamus directing the
appellants to refund the sum of Rs. 19,83,225.64 together with interest at 12% p.a. from April 1980. Subsequently, on 18-8-1988, the first
appellant passed an order rejecting the refund claims made by the respondent on 2-5-1987. As against the said order dated 18-8-1988, the
respondent filed an appeal before the third appellant who by the order dated 8-5-1989 dismissed the said appeal.
The appellants herein as respondents 1 to 3 in the writ petition 6260/87 filed counter affidavit contending that the assessee/respondent therein
has been making sales to branches and distributors; that refund can be sanctioned only after verifying all the documents of the assessee including
the branch sales invoices, that the first appellant directed the assessee to produce the relevant documents for sanctioning the eligible refund amount
to them, but, the respondent herein has not produced the same before the first appellant; and that the first appellant has taken sincere efforts to
refund the eligible amount, after calling for the relevant branch sales invoices, as the respondent did not produce the same the refund claim was
rejected.
The learned single Judge who heard the writ petition took the view that the assessable value of the goods in question has already been
determined u/s 4(1)(a) of the Act and that the records relating to the branch sales are not necessary. Consequently, the learned single Judge held
that the respondent is entitled to a refund of Rs. 16,59,721.30. As a result the learned single Judge allowed the writ petition and directed the
appellants to refund the said sum of Rs. 16,59,721.30 to the respondent with interest at 12% p.a. from 23-6-1987 within four weeks from 8-1-
1991. This writ appeal is directed against the order of the learned single Judge.
Mr. K. Jayachandran, learned Additional Central Government Standing Counsel appearing for the appellants contended that by reason of
Section 3 of the Central Excise Amendment Act, 1991 (Central Act 40 of 1991), Section 11B of the Act is so amended as to incorporate sub-
section 3 to the effect that notwithstanding anything to the contrary, contained in any judgment, decree, order or direction of the Appellate Tribunal
or any Court or in any other provision of the Act or the Rules made thereunder or any other law for the time being in force, no refund shall be
made except as provided in sub-section 2 and therefore notwithstanding the order of the learned single Judge in W.P. No. 6260 of 1987 directing
the refund to the respondent, no refund can be made to the respondent except as provided in sub-section 2 of the said Act. The learned counsel
for the appellants further submitted that on or from 20-9-1991 i.e., the date on which the Central Act 40/91 came into force, any claim for refund
has to be made only under the amended provision of Section 11B before the competent authority in the form prescribed by the regulations and in
the manner provided by the Rules and that in any case, this Court has no jurisdiction to order refund by virtue of the provisions contained in
Section 11B(3) as amended. There is merit in the contention of the learned counsel for the appellants.
First, let us refer to Section 3 of Central Excise Amendment Act, 1991 (Central Act 40 of 1991) which reads thus :
Amendment of Section 11B :- In Section 11B of the Central Excise Act, -
(a) in sub-section (1) :-
(i) after the words ""from the relevant date"", the following shall be inserted, namely :-
In such form as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents
referred to in Section 12A) as the applicant may furnish to establish that the amount or duty of excise in relation to which such refund is claimed
was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person;
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment)
Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt
with in accordance with the provisions of sub-section (2) substituted by that Act;
(ii) In the existing proviso, for the words ""Provided that"" the words ""Provided further that"" shall be substituted;
(b) for sub-sections (2) to (5), the following sub-sections shall be substituted, namely :-
(2) If on receipt of any such application, the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty of excise paid
by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund;
Provided that the amount of duty of excise as determined by the Assistant Collector of Central Excise under the foregoing provisions of this sub-
section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to :
(a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are
exported out of India;
(b) unspent advance deposits lying in balance in the applicant''s account current maintained with the Collector of Central Excise;
(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;
(d) duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person;
(e) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person;
(f) the duty of excise borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify :
Provided further that no notification under Clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the
incidence of duty has not been passed on by the persons concerned to any other person.
(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any
other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in
sub-section (2).
(4) Every notification under Clause (f) of the first proviso to sub-section (2) shall be laid before each House of Parliament, if it is sitting, as soon as
may be after the issue of the notification, and, if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the
approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is
laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have
effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the
validity of anything previously done thereunder.
(5) For the removal of doubts, it is hereby declared that any notification issued under Clause (f) of the first proviso to sub-section (2), including any
such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the
Official Gazette."";
(c) in the Explanation, in Clause (B), for sub-clause (e), the following sub-clause shall be substituted, namely :-
(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person"";
The amendments introduced by the Central Act 40 of 91 not only regulate the manner of refund and the conditions to be satisfied before claiming
any refund, but also prohibits any refund being ordered by any Tribunal or Court except in accordance with the amended provisions contained in
the Central Excise Amendment Act, 1991. By virtue of the amendment of sub-sections 1 and 2 of Section 11B of the Act, the assessee like the
respondent herein has to make an application in the prescribed form accompanied by such documentary or other evidence as the assessee may
furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from or paid by him and the incidence
of such duty has not been passed on by him to any other person. Sub-section 2 provides for the manner in which the application in the prescribed
form shall be dealt with by the competent authority. It is also provided that the Assistant Collector of Central Excise shall direct refund if such
amount is relatable to duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person. Further, by
virtue of the said amendment any claim for refund has to be made by the assessee before the competent authority in the form prescribed by the
Regulations and in the manner provided in the Rules. Again, the amended Section 11B(3) provides that notwithstanding anything to the contrary
contained in any judgment or order or direction of the Appellate Tribunal or any Court, no refund shall be made except as provided in sub-section
2.
In the present case, when the respondent submitted an application before the first appellant claiming refund for the period from 1-4-1980 to 10-
8-1983, the first appellant by his order dated 30-9-1986, rejected the same. As against the said order dated 30-9-1986, the respondent filed an
appeal before the third appellant, who by the order dated 30-4-1987, set aside the order of the first appellant and remanded the matter to the first
appellant to decide the refund claim, if admissible otherwise, as per Section 11B of the Act. On 2-5-1987, the respondent again submitted his
application before the first appellant claiming refund. The respondent also filed W.P. No. 6260/87 before this court, out of which the present writ
appeal arises, for the issue of a writ of Mandamus directing the appellants to refund a sum of Rs. 19,83,225.64. During the pendency of the above
writ petition, on 18-8-1988, the first appellant passed an order again rejecting the respondent''s claims for refund. The appeal filed by the
respondent against the order of the first appellant dated 18-8-1988 was also dismissed by the 3rd appellant on 8-5-1989. Subsequently, on 8-1-
1991, the learned single Judge allowed W.P. 6260 of 1987 and issued direction to the appellants to refund a sum of Rs. 16,59,721.30 to the
respondent and as against the order of the learned single judge, the appellants have filed the present writ appeal and the same was admitted on 25-
2-1991. Admittedly, during the pendency of the present writ appeal, Section 11B of the Act was amended by the Central Excise Amendment Act,
1991 with effect from 20-9-1991. The Central Excise Amendment Act, 1991 will apply to the facts of the present case because the order of the
learned single Judge passed in W.P. No. 6260 of 1987 has not become final on the date when the Amendment Act, 1991 came into force. The
order in W.P. No. 6260/87 is challenged by the appellants by filing the present writ appeal and when the Central Excise Amendment Act 40 of
1991 came into force, the whole matter was pending in the present writ appeal. As per the amended Section 11B all pending claims for refund on
or from 20-9-1991, that is, the date on which the Amendment Act came into force, will have to be dealt with and disposed of only in accordance
with the Amended provision of law. By reason of the amended Section 11B(3), notwithstanding the direction given by the learned single Judge by
the order made in W.P. No. 6260/87 to refund a sum of Rs. 16,59,721.30 to the respondent, no refund can be made to the respondent except as
provided in sub-section 2 of Act 40/91. As rightly contended by the learned counsel for the appellant, the order of the learned single Judge, under
appeal is subject to Section 11B of the Act as amended by Act 40/91. Therefore, it is for the respondent to seek refund of the concerned amount
from the Assistant Collector as provided in Section 11B(1)(2) of the Act as amended by the Amendment Act 40/91 and in compliance of the
Rules and Regulations framed thereunder. A similar view has been taken by a Division Bench of the Karnataka High Court in The Assistant
Collector of Central Excise, Davangere and Others v. M/s. Southern Asbestos Cement Ltd., Karur, Dharwad District. (W.A. No. 2369 of 1991
of Karnataka High Court, dated 20-1-1992), and in M/s. Brooke Bond India Ltd., Hyderabad v. Union of India & Another (W.P. No. 1047 of
1987 dated 10-10-1991 of High Court of Andhra Pradesh) by a Division Bench of Andhra Pradesh High Court.
Dealing with a similar situation, the Division Bench of the Karnataka High Court in The Asstt. Collector of Central Excise, Davangere v. M/s.
Southern Asbestos Cement Ltd., (W.A. 2369 of 1991 dated 20-1-1992) has held as follows :
Secondly, reliance is placed upon the amendment to the Act subsequent to the order under appeal to cover cases of what has come to be known
as ""unjust enrichment"". By reason of the amendment to Section 11B, sub-section (3) thereof reads thus :
(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in
any other provision of the Act or the Rules made thereunder or any other law for the time being in force, no refund shall be made except as
provided in sub-section (2)"".
Sub-section (1) now requires the applicant for refund to establish that the amount of excise duty in relation to which refund is claimed ""was
collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person."" By reason of the amendment
to sub-section (2), the Assistant Collector of Central Excise is required to be satisfied upon such application that ""the whole or any part of the duty
of excise paid by the applicant is refundable,"" and thereupon ""he may make an order accordingly and the amount so determined shall be credited
to the Fund"". The Fund is defined by Section 2(cc) to mean the Consumer Welfare Fund established u/s 12C and the money credited to the fund is
required by reason of Section 12D, to be utilised by the Central Government for the welfare of consumers in accordance with Rules in that behalf
that it might make.
It is submitted, and rightly, that the order under appeal can operate only subject to the aforesaid provisions. Thus, the writ petitioner shall now have
to establish before the first appellant that the incidence of the excise duty in question had not been passed on by it to any other person and if any
amount is found to be refundable, the first appellant shall credit the same to the said Consumer Welfare Fund. The Division Bench of the
Karnataka High Court in the above decision taking such a view modified the order of the learned single Judge directing the Central Government to
refund to the respondent in that appeal the excise duty paid by the later under the Act and allowed the writ appeal.
In M/s. Brooke Bond India Ltd. v. U.O.I. & Anr. (W.P. No. 1047 of 1987 dated 10-10-1991), the Division Bench of the Andhra Pradesh
High Court dealing with the effect of the amendment introduced to Section 11B of the Act by Act 40 of 91 and the procedure to be adopted in
matters pending in writ petitions observed as follows :
We are of the opinion that it is for the petitioner to seek refund of the concerned amount from the Assistant Collector of Customs as provided in
Section 11B(1) and (2) of the Central Excise Act as amended by Amending Act, 1991, and in compliance with the rules and regulations framed
thereunder. It is for the petitioner to comply with the provisions contained in the Act, Rules and the Regulations as amended primarily, so as to
seek enforcement of his claim for refund.
In view of the above it is not necessary for this court now to consider the relief which the petitioner seeks in this writ petition. The writ petition is
disposed of without prejudice to the right of the petitioner to file an application in the prescribed form before the competent authority. No costs.
In view of the above position of law, the order of the learned single Judge directing the appellants to refund a sum of Rs. 16,59,721.30 to the
respondent is liable to be set aside and accordingly it is set aside. However, the judgment in this writ appeal is without prejudice to the right of the
respondent to file an application for refund afresh in the manner known to law and it is open to the respondent to seek refund of the amount
concerned, afresh, from the Assistant Collector of Central Excise as provided u/s 11B(1)(2) of the Act as amended by Act 40/91. The respondent
is directed to submit his application for refund before the competent authority within 8 weeks from today and the Department is directed to pass
orders on the refund application according to law within three months from the date of receipt of the application for refund. It is needless to say
that the question of limitation prescribed u/s 11B does not arise in this case, because admittedly the duty was paid by the respondent during the
relevant period under protest. Further, the order of the Collector (Appeals) (the 3rd appellant herein) dated 8-5-1989 in appeal No. 48/89(CBE)
rejecting the appeal filed against the order of the first appellant dated 18-8-1988, will not stand in the way of the competent authority considering
the respondent''s application claiming refund afresh, because the order of the third appellant dated 8-5-1989 was not passed on merits and the
said appeal was dismissed by the third appellant on the ground that the same matter was pending before this court in W.P. No. 6260 of 1987.
In the result, the writ appeal is allowed and the order of the learned single Judge is set aside subject to the above directions. No costs.