- (1.)The petitioners have filed this petition seeking a writ, order or direction setting aside Order-in-Original dated 16-5-2007 and Order-in-Appeal dated 5-9-2007. The petitioners have further prayed for a direction for payment of interest of Rs. 23,59/504/- and the delayed payment of interest amount by the Central Excise authorities. The petition arises in following factual background. The petitioner No. 1 is a company registered under the Companies Act and is engaged in the business of manufacture of plastic products like HDPE and PP tapes etc. The petitioner No. 2 is a Director of the petitioner No. 1 company.
(2.)The petitioners manufacture various excisable goods such as HDPE and PP woven fabrics and bags which according to the petitioners were classifiable under Chapter 39 of the Central Excise Tariff Act, 1985 as articles of plastic. Revenue, however, held an opinion that such goods were classifiable under Chapters 54 and 63 as textile articles. As per the petitioners' understanding of the classification, rate of duty applicable to such goods, exemption from payment of certain duties as well as facility of modvat credit on the inputs used in the manufacturing of such goods was more favourable to the petitioners. Under the insistence of the Department, however, the petitioners paid higher duty under protest for the period between February, 1987 to February, 1992. The Madhya Pradesh High Court in the case of Raj Pack Well Ltd. and Others, 1990 50 ELT 201 decided the issue in favour of the trade and held that such goods were classifiable under Chapter 39 of the Tariff. The Central Board of Excise and Customs ('C.B.E. & C.', for short) issued a Circular No. 8/92 dated 24-9-1992 in exercise of powers under Section 37B of Central Excise Act, 1944 ('the Act', for short) clarifying that the goods in question would be classifiable under Chapter 39.
(3.)In the meantime, since the adjudicating authority had already taken a view against the petitioners on the question of such classification, the petitioners pointed out these developments to the Commissioner (Appeals) before whom the appeals against the adjudicating authority's orders were pending. Such appeals were allowed by order dated 13-4-1991. Based on such order, the petitioners filed a refund claim for a sum of Rs. 1,20,63,349/- which was a principal sum of differential duty recovered from the petitioners by the Department. The Assistant Commissioner upon such refund claim passed his order-in-original dated 4-9-1996 and sanctioned refund only to the tune of Rs. 11,05,000/- which represented the amount secured by bank guarantee. With respect to rest of the claims, he ordered crediting the amount in the Consumer Welfare Fund on the ground that the petitioners had not established that the burden of differential duty was not passed on to the ultimate consumer. In short, on the ground of unjust enrichment, rest of the refund claim was rejected.