Wyeth Laboratories Ltd. vs Union of India

A.V. Savant, J.—The first petitioner is a company incorporated under the provisions of the Companies Act, 1956, and the second petitioner is a share-holder of the first petitioner-company. The first petitioner-company manufactures Wysolone Tablets falling under Tariff Item 14-E as patent and proprietary medicine. During the period 13th November, 1975 to 20th November, 1979, the Excise Authorities loaded the price-list filed by the petitioners by 5% in terms of the Tariff Advice No. 8 of 1968. At the relevant time the first respondent itself had fixed the retail price of the said medicine at Rs. 91.89 under Drugs (Price Control) Order, 1970. The Superintendent of Central Excise approved the retail price as above as the assessable value. Under the terms of the excise Notification 147 of 1970 dated 25th July, 1970 the petitioners opted to have their assessable value determined at 25% below the retail price. Since the Government approved retail price of Rs. 91.89 was loaded by 5%, the department, while approving the fresh price-list in November, 1975, declared the assessable value to be Rs. 96.48. However, again the rate of duty was increased from 24th March, 1976 from 7 1/2% to 12 1/2% ad valorem. Hence the price list was again freshly approved with a loading of 5% of the retail price which became Rs. 99.91 as against the Government approved retail price of Rs. 95.15.

In the meanwhile, however, another manufacturer namely, Geoffery Manners Limited filed Writ Petition No. 1067 of 1974 raising identical issue. The said writ petition was decided in favour of the company on 14th August, 1979 by one of us - Pendse J. There is no controversy at the bar that the appeal filed by the revenue against the decision of Pendse J. in the case of Geoffery Manners Limited has been dismissed. The decision in Geoffery Manners Limited was rendered on 14th August, 1979. On 27th November, 1979, the present petitioner-company applied for refund of Rs. 1,30,819.88 referable for the period 29th July, 1975 to 30th November, 1979. The Assistant Collector by his order dated 8th January, 1980 rejected the claim of the petitioner-company on the ground that the Revenue has not accepted the judgment of the High Court in Geoffery Manners Ltd. and that the revenue was contemplating filing of an appeal on the merits of the case of Geoffery Manners Limited. The Assistant Collector, therefore observed that the judgment of the Bombay High Court in the case of M/s. Geoffery Manners Limited cannot be made a basis for grant of the claim of refund in the petitioners'' case. On this ground alone the Asst. Collector rejected the application for refund.

In appeal, the Collector of Central Excise took the view that the appeal filed by the Revenue against the High Court judgment in Geoffery Manners Limited was summarily dismissed and hence the petitioner-company was entitled to refund of the excess duty paid if the claim was otherwise in order. However, relying upon the provisions of rule 11 of the Central Excise Rules 1944, the Collector took the view that the refund could be granted only for a period of six months and hence partly allowed the appeal to the extent of the refund claimed for the period of six months namely 1st June, 1979 to 20th November, 1979 amounting to Rs. 17,875.40. The rest of the claim to the tune of Rs. 1,12,944.48 was, however, rejected on the ground of limitation alone. It is this order of the Collector passed on 4th August, 1983 which has been challenged in the present writ petition.

We have heard the learned Counsel for the parties. Shri Pochkanawala appearing for the petitioners has invited our attention to the decision of this Bench in writ petition No. 1028 of 1981 decided on 11th July, 1991. He has also relied upon the judgment delivered by us on 30th July, 1991 in Writ Petition No. 284 of 1984 of Hindustan Hosiery Industries and Another v. Union of India and Others. Now, it is well settled that normally in a case where the money has been recovered without authority of law, the same should be refunded and in a series of decisions this Court has taken the view that while exercising the powers under Article 226 of the Constitution of India, the bar of limitation would not come in the way of the High Court granting relief to the petitioner who had paid the tax or duty under a mistaken belief and the respondents had collected such tax or duty under a mistaken belief. Both in Writ Petition No. 1028 of 1981 decided by us on 11th July, 1991 and in Writ Petition No. 284 of 1984 decided on 30th July, 1991 by us, we have placed reliance on the judgment of the Supreme Court in Salonah Tea Company Ltd. v. Superintendent of Taxes, Nowgong and Others reported in : 1988(33)ELT249(SC) . Relying upon the observations of the Supreme Court in the said case of Salonah Tea Company Ltd., etc. we have held that if the citizen had paid the tax or duty under a mistaken belief, it would not be permissible to refuse to grant the refund on the ground that the claim was barred by limitation under the provisions of the Excise Law. In this view of the matter, the petitioners would be entitled to the refund claimed subject to verification as usual.

Shri Rege, however, has contended that even assuming that the petitioner-company was entitled to claim the refund, granting of refund would amount to unjust enrichment of the petitioner-company. No doubt, an affidavit has been filed by the Asst. Collector making the usual averment that the duty recovered has been ultimately passed by the petitioner-company to the ultimate consumers. The further averment is that if the duty collected from the petitioner-company has been passed on by the petitioner-company to the ultimate consumers, the grant of refund would result in the petitioner-company unjustly enriching itself and, hence, refund should not be granted. Suffice it to say that the Full Bench of this Court in the case of New India Industries Ltd. v. Union of India and Others reported in 1990 (46) ELT 23 has taken the view that it was necessary for the revenue to file an affidavit satisfying the writ Court that the burden was in fact shifted to others and that the order for refund would in fact result in unjust enrichment of the petitioner. The observations of the Full Bench show that the burden is upon the revenue to satisfy the writ Court that the petitioner-company had in fact passed on the burden to the consumers. In our opinion, the vague and general allegations made in the affidavit filed on behalf of the respondents in this case are not sufficient to discharge the heavy burden thrown upon the revenue in the light of the judgment of the Full Bench referred to above. Shri Rege did make an attempt to substantiate the averment by relying upon certain documents annexed to the affidavit. However, on closure scrutiny, it is not possible for us to hold that the petitioner-company had actually passed on the burden to the consumers. In this view of the matter, it is not possible for us to hold that the revenue has discharged the burden cast upon it.

In conclusion, therefore, we hold that the petitioners will be entitled to grant of refund subject to the petitioners'' claim being verified by the respondents. Accordingly, the order dated 4th August 1983, in so far as it rejects the claim of the petitioners beyond the period of six months, is set aside. The respondents are directed to verify the petitioners'' claim for refund within a period of 12 weeks from today. On the respondents so verifying the amount, the refund should be granted to the petitioners within the period of 12 weeks from today. In the event of the respondents'' failure to comply with the order as aforesaid, the respondents will be liable to pay interest to the petitioners at the rate of 15% p.a. from today till the date of payment on the amount of refund to be granted.

Accordingly, the rule is made absolute. No order as to costs.