- (1.) Finding inconsistencies between two decisions of three-Judge Benches of this Court in the case of Sinkhai Synthetics and Chemicals Pvt. Ltd. v. Collector of Central Excise, (2002 (143) ELT 17) and Collector of Central Excise, Chennai v. T. V. S. Suzuki Ltd., (2003 (156) ELT 161) on one hand and the decision of nine-Judge Constitution Bench in Mafatlal Industries Ltd. v. Union of India, ((1997) 5 SCC 536) on the other, a two-Judge Bench of this Court vide order dated 13-11-2003 has referred the following question of law involved in this civil appeal to a larger Bench and accordingly the matter has come before this Court. "Whether a claim for refund after final assessment is governed by Section 11-B of the Central Excise Act, 1944 FACTS :
(2.) New India Industries Ltd. (NIIL) is incorporated under the Companies Act, 1956 and carries on business of manufacturing photographic printing paper which became chargeable to excise duty vide tariff item No. 37-C(2) of the Central Excise Act, 1944 (hereinafter referred to as "the Act") with effect from March 1, 1974. NIIL had entered into distribution agreement with a firm, Agfa Gevaert (India) Ltd. (M/s. AGIL) for supply of goods. On 8-5-1974 the Department served show cause notice on NIIL (Manufacturer) to explain why prices declared by the company vide letter dated 7-3-1974 should not be rejected as wholesale cash price and why prices charged by M/s. AGIL to its dealers should not be approved in terms of Section 4(a) of the said Act. On 13-12-1974 the Department confirmed the show cause notice and directed NIIL to pay excise duty on the prices charged by M/s. AGIL to its dealers. In pursuance of the said order, a notice of demand dated 3-1-1975 was served on NIIL demanding excise duty of Rs. 99,631/- for the period 1-3-1974 to 20-5-1974 which NIIL paid, Under Protest, and carried on appeal to the Appellate Collector. On 8-1-1976 the said appeal was dismissed. NIIL moved the High Court under Article 226 of the Constitution of India vide Misc. Petition No. 841 of 1976 challenging the order holding that the liability of NIIL to pay excess duty should be ascertained by the price charged by M/s. AGIL to its dealers. The petition was subsequently withdrawn. On 15-9-1975, NIIL addressed a latter to the Department submitting a declaration stating that M/s. AGIL is not related to NIIL in terms of Section 4(a) of the said Act. On 1-10-1975, the said Section 4 of the Act was amended and the concept of "related person" was introduced. On 11-11-1975, NIIL was asked by the Department to pay excise duty on the price charged by M/s. AGIL to its dealers. NIIL went in appeal which was dismissed on 21-9-1979. On 31-10-1984 the Department approved the ex-factory price of NIIL instead of the price list of M/s. AGIL to its dealers. Therefore, from 1-11-1984, NIIL started paying excise duty on the ex-factory price charged by NIIL to M/s. AGIL and not on price charged by M/s. AGIL to its dealers. On 11-8-1986, NIIL filed refund claims for Rs. 60,19,238.65 for recovery of excise duty between the period 1-11-1981 to 31-10-1984. On 29-9-1986 another refund claim of Rs. 42,77,358.59 was lodged for recovery of excise duty during the period 1-11-1978 to 31-10-1981. Similarly on 7-4-1987 another refund claim was lodged for excise duty paid in excess during the period 1-3-1974 to 31-10-1978 by NIIL amounting to Rs. 22,38,391.72. These refund claims were made in view of judgment of this Court in the case of Union of India and others v. Bombay Tyre International Ltd. reported in (AIR 1984 SC 420). On 7-4-1987, NIIL made a consolidated refund claim of Rs. 1,25,34,988.97 for the entire period from 1-3-1974 to 31-10-1984. In respect of these refund claims the Department served a show cause notice and ultimately the Assistant Collector granted refund to NIIL only for two months preceding the lodgment of the claim. On 13-4-1987, NIIL filed Writ Petition No. 1336 of 1987 in the High Court challenging the order of Assistant Collector denying refund except for two months. That writ petition came for hearing before learned single Judge on 29-8-1988. The learned Judge held that the action of the Department in collecting duty not on the sale price of NIIL to M/s. AGIL was illegal and, therefore, NIIL was entitled to refund. However, since the question of unjust enrichment was debatable, the learned Judge referred the question to the Full Bench. After the decision of the Full Bench in the case of New India Industries Ltd. v. Union of India reported in (1990 (46) ELT 23), the said Writ Petition No. 1336/87 was reported before the learned Judge on 17-1-1990 when he directed Union of India to prove that the tax burden has in fact been shifted to consumers. Pending further examination, the Department was directed to deposit Rs. 1,25,34,988.97 in Court. When the Writ Petition came for hearing on 22-3-1990, NIIL conceded that it had passed on the burden to M/s. AGIL, the sole-selling distributors of NIIL. The learned Judge, however, directed M/s. AGIL to file affidavit stating whether it has passed on the burden to its dealers or not. Therefore on 22-3-1990 the refund claims of NIIL were rejected but the learned Judge went into further enquiry as to whether the burden had been passed on by M/s. AGIL to its dealers and by judgment dated 14-6-1990 held that Union of India had failed to prove that M/s. AGIL had passed on the burden to its dealers and accordingly granted refund of Rs. 1,25,34,988.97 to M/s. AGIL. Being aggrieved, the Department carried the matter in appeal to the Division Bench which took the view that since NIIL had conceded of having passed on the tax burden to M/s. AGIL there was no question of the trial Court further examining the question as to whether M/s. AGIL had passed on the burden to its dealers. Accordingly, the Division Bench allowed the appeal filed by the Department vide judgment dated 2-3-1993. Being aggrieved, NIIL came to this Court vide SLP No. 7484 of 1993. By order dated 30-1-1997, this Court disposed of the SLP observing that since NIIL had passed on the burden of excise duty to M/s. AGIL the refund claims filed by NIIL are liable to be rejected. Accordingly, the said SLP was dismissed. However it was clarified that the said Order will not prevent M/s. AGIL from adopting appropriate remedy as open to it in law. In view of the order dated 30-1-1997 passed by this Court, M/s. AGIL filed Writ Petition No. 1776 of 1993 in the High Court contending that the petitioners (AGIL) were entitled to refund of Rs. 1,25,34,988.97 as sole selling distributors of NIIL. That as distributors they (AGIL) were not related to NIIL. That their transaction was at arms length and therefore, the Department had erred in collecting excess excise duty from NIIL on the basis of the prices charged by M/s. AGIL to its dealers. In the Writ Petition, M/s. AGIL relied on the judgment of this Court in the case of Bombay Tyre (supra). By order dated 28-9-1993 passed by the High Court, the Department was allowed to withdraw Rs. 1,25,34,988.97 with undertaking to bring back the amount with interest as and when the Court so directs. In the meantime on 19-12-1996 this Court delivered its judgment in Mafatlal's case (supra) inter alia giving 60 days' time to those claimants, who had earlier adopted legal proceedings claiming refund to move under Section 118 as amended w.e.f. 20-9-1991. Consequently, M/s. AGIL moved their refund claim before the Department on 11-2-1997 for Rs. 1,25,34,988.9[7] On 9-5-1997, a show cause notice was issued by the Department to M/s. Allied Photographics India Ltd. (formerly known as M/s. AGIL) calling upon them to show cause why Rs. 1,25,34,988.97 should not be transferred to Consumer Welfare Fund. By judgment and order dated 31-10-1997 passed by the Assistant Commissioner refund was granted to M/s. Allied Photographics India (P.) Ltd. (M/s. APIL). This order of Assistant Commissioner was confirmed in appeal by the Commissioner (Appeals) and the Tribunal vide impugned order dated 13-6-2000 and the Department was directed to refund Rs. 1,25,34,988.97 with interest. Being aggrieved, the Department has come to this Court by way of present civil appeal under Section 35-L(b) of the Act.
(3.) Mr. A. K. Ganguli, learned senior counsel for the Department submitted that there was a difference between provisional assessment under Rule 9-B and payment of duty under protest in terms of Rule 233-B. In this connection reliance was placed on the judgment of this Court in Mafatlal's case (supra). He submitted that under the second proviso to Section 11-B if duty is paid by the manufacturer under protest the limitation of six months was not applicable, however, the purchaser of duty paid goods, after finalization of assessment of excise duty payable by the manufacturer, was not entitled to rely upon the said proviso. That in any event in the present case, M/s. APIL (the respondent-herein) had claimed refund by filing an independent application on 11-2-1997 and therefore it was governed by Section 11-B(3). In support reliance was placed on para 104 of the Mafatlal's case. It was submitted that the abovementioned two decisions of this Court in the case of Sinkhal Synthetics and Chemicals Pvt. Ltd. v. Collector of Central Excise reported in (2002 (143) ELT 17) and Collector of Central Excise v. T. V. S. Suzuki Ltd. reported in (2003 (156) ELT 161) run counter to the law laid down by this Court in Mafatlal's case and a clarification to that effect was required in the interest of justice. Learned counsel next contended that M/s. APIL as the sole distributor of NIIL had bought the products in the course of trading between 1974 and 1984 and had sold them to its dealers earning profits between 12.6535% to 21.1333%. That during the said period, the purchaser had no right to claim refund and that M/s. APIL became entitled to claim refund only after 20-9-1991 when Section 11-B was amended by the Central Excise and Customs Amendment Act of 1991 when such right was recognized for the first time and, therefore, there was no reason for M/s. APIL not to pass on the burden to its dealers. That M/s. APIL not only passed on the burden to its dealers but even admittedly made profits on its sales. That the consideration paid by M/s. APIL to NIIL included excise duty and the very fact that M/s. APIL recovered all its expenses and made profits in all its sales to its dealers itself establishes that incidence of duty was passed on to the dealers by M/s. APIL in the course of its trading business. It was further urged that M/s. APIL had never moved any refund claim prior to 8-6-1990 and that it filed its affidavit on that day in response to suo-motu notice issued by the High Court in the Writ petition filed by NIIL inter alia for refund whereby for the first time M/s. APIL contended that it had not passed on the burden to its dealers. In this connection, M/s. APIL asserted that the excess duty component was negligible amount of 1.62% of its sale price; that it had earned profits varying from 12.6535% to 21.1333% and therefore it absorbed the burden of excess duty within its profit and that it gave a trade discount varying from 2% to 4% to its customers which itself was more than the burden of additional duty. However, on behalf of the Department it was contended that excess duty component was a part of cost incurred by M/s. APIL during the above period 1974/1984 and there is no reason why M/s. APIL did not recover it from its dealers particularly when M/s. APIL had no right as a purchaser to claim refund which was recognized only on 20-9-1991 when Section 11-B was amended and therefore, M/s. APIL was seeking to unjustly enrich itself by seeking such refund. Lastly, it was urged that M/s. APIL had worked out its sale prices before the Department in such a way that it has not passed the burden to its dealers and yet it has earned profits varying from 12.6535% to 21.1333% which was contrary to normal conduct of a trader. In this connection it was further submitted that M/s. APIL did not produce any material before the Department disclosing how its sale price were arrived at.;