COMMISSIONER OF CENTRAL EXCISE CALCUTTA Vs. PANIHATI RUBBER LTD
LAWS(SC)-2006-9-43
SUPREME COURT OF INDIA
Decided on September 08,2006

COMMNR. OF CENTRAL EXCISE, CALCUTTA Appellant
VERSUS
PANIHATI RUBBER LTD. Respondents


Referred Judgements :-

CIMMCO LTD. V. COLLECTOR OF CENTRAL EXCISE,JAIPUR [REFERRED TO]
COMMISSIONER OF CENTRAL EXCISE MUMBAI II VS. ALLIED PHOTOGRAPHICS INDIA LTD [REFERRED TO]
RUBBER PRODUCTS LTD VS. UNION OF INDIA [REFERRED TO]



Cited Judgements :-

RAJESH KUMAR TIWARI VS. STATE OF U P [LAWS(ALL)-2007-7-30] [REFERRED TO]
M/S. SUMMIT ONLINE TRADE VS. UNION OF INDIA [LAWS(SIK)-2013-5-1] [REFERRED TO]
COMMISSIONER OF CUSTOMS VS. FOREVER LIVING HEALTH NUTRITION AND BEAUTY CARE PRODUCTS P. LTD. [LAWS(CE)-2014-1-9] [REFERRED TO]
JYOTI PROCESSORS P. LTD. VS. COMMISSIONER OF C. EX., AHMEDABAD [LAWS(CE)-2008-7-82] [REFERRED TO]
VXL INSTRUMENTS LTD. VS. COMMISSIONER OF CUSTOMS, BANGALORE [LAWS(CE)-2011-11-80] [REFERRED TO]
MEGHDOOT GRAM UDYOG VS. COMMISSIONER OF C. EX., LUCKNOW [LAWS(CE)-2009-12-162] [REFERRED TO]
AGW REALTORS P LTD VS. KOLKATA MUNICIPAL CORPORATION [LAWS(CAL)-2010-9-12] [REFERRED TO]
KAPARDI STRAW BOARDS VS. COMMISSIONER OF CUS. & C. EX., GUNTUR [LAWS(CE)-2007-5-87] [REFERRED TO]
MEGHDOOT GRAM UDYOG VS. COMMISSIONER CENTRAL EXCISE, LUCKNOW [LAWS(ALL)-2019-12-172] [REFERRED TO]


JUDGEMENT

S.B.Sinha, J. - (1.)LEAVE granted.
(2.)THE respondent, which is a Company incorporated and registered under the Indian Companies Act, manufactures 'Hose Pipe'. It supplies goods manufactured by it to the Indian Railways. THE goods are manufactured in terms of the specifications of the railway administration. Supplies are, however, made against specific contracts. THE respondents used to pay 30% basic excise duty and 15% special duty. THE goods came to be classified under Sub-Heading 4009.92. THE said classification was in dispute. THE contention of the manufacturers was that it is classifiable under Sub-Heading 4009.99. THE lis ended in favour of the respondent. It, however, obtained clearance of the goods on payment of duties under protest as the products had been classified under classification 4009.92. THE respondent filed two applications for refund of Rs.6.30 lakhs, which had already been paid by way of excise duty. THE said applications were rejected by the authorities under the Act (Central Excise and Salt Act, 1944) opining that the same would amount to unjust enrichment. THE respondent preferred an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal, which was registered as Appeal No.E/R-79/98. THE question, which arose before the Tribunal, was: "As to whether the goods supplied to the railway administration included the element of excise duty?" THE Tribunal for determining the issue went through the correspondences exchanged by and between the contracting parties, as also the certificate issued by the railway administration and held:
"I have perused the records and considered the rival submissions. According to the contract, the prices were inclusive of excise duty. THE subsequent letter from the railways indicated that no amount was provided towards excise duty while pricing was worked out. One letter specifically stated "E.D.-Nil". This would suggest that the price fixed under the contract did not provide for an element towards the Central Excise duty."

While arriving at the said finding, the Tribunal relied upon its own judgment in Cimmco Ltd. Vs. Collector of Central Excise, Jaipur [1999 (107) ELT 246 (Tribunal)], wherein it was held:

"We have given careful consideration to the rival submissions. The clue to the problem in this case lies in a proper understanding of the provisions in the work order particularly with reference to the rates. There is an apparent conflict in what is stated in different parts of the schedule of rates. Thus, as against a note that the rates are inclusive of all duties, taxes and to and fro handling charges in one place there is another remark regarding the rates under the caption condition of contract which is more elaborate than the earlier referred to sentence. This reads as follows: (1) Rates The rates are inclusive of all materials, labour, equipment, lifts, leads, Sales tax, octroi required in connection with completion of work to the entire satisfaction of the Corporation. All the materials are to be supplied by the Contractor unless otherwise stated. (2) Rates shall be valid till the entire work is 100% complete, and no escalation will be considered at any stage."

An application for reference was filed by the appellant herein before the Calcutta High Court. The Tribunal was directed to refer to the High Court the following questions:

"(i) Whether or not the bar of unjust enrichment will be attracted in a case where duty has been passed on to the buyer of goods not separately as duty but by inclusion in the price as one component of the same?

(ii) Whether the Learned Tribunal was justified in holding that the bar of unjust enrichment would not be attracted when the price is inclusive of duties and taxes following the case of CIMMCO Ltd. Reported in 1999 (107) ELT 246 (Tribunal)?

(iii) Whether the Hon'ble Tribunal was justified in passing the order ignoring the principles of law laid down in the case of Mafatlal Industries reported in 1997 (89) ELT 247 (SC) and the findings of the department indicated in the order in original?"

(3.)THE High Court, by its impugned judgment, affirmed the findings of the Tribunal, holding:
"Having regard to the definite view expressed by the learned Tribunal that the bar of unjust enrichment was not attracted in the instant case the questions as framed in our view do not require any answer since we agree that having paid the excise duty under protest and there being a subsequent finding that no excise duty was payable in respect of the goods, the respondent company was entitled to refund and there was no question of unjust enrichment in the instant case."

Mr. Harish Chander, learned Senior Counsel appearing on behalf of the appellant submitted that- (i) The Tribunal and consequently, the High Court committed an error in passing the impugned judgment in so far as they failed to take into consideration that the question, 'As to whether the price included excise duty or not?', was a comprehensible one, having regard to the terms of the contract. (ii) Subsequent correspondence by and between the respondent and the railway administration were wholly irrelevant.



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