IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY THE TWENTY FOURTH DAY OF SEPTEMBER TWO THOUSAND AND SEVEN PRESENT THE HON'BLE MR JUSTICE BILAL NAZKI & THE HON'BLE MR JUSTICE S.ANANDA REDDY WRIT PETITION NO : 26106 of 2003 Between: VST Industries Limited, Azamabad, Hyderabad and another ..... PETITIONERS AND The Deputy Commissioner of Central Excise Hyderabad Division ‘E’ CLS Building, III Floor, Station Road, Abids, Hyderabad and 2 others .....RESPONDENTS & WRIT PETITION NO : 20941 of 2004 Between: The Commissioner of Central Excise, Hyderabad-II, Commissionerate, Hyderabad ..... PETITIONER AND The Customs, Excise and Gold (Control) Appellate Tribunal, South Zonal Branch, 1st Floor, WTC Building, FKCCI Complex, K.G.Road, Bangalore and another .....RESPONDENTS THE HON'BLE MR JUSTICE BILAL NAZKI & THE HON'BLE MR JUSTICE S.ANANDA REDDY WRIT PETITION Nos.26106 of 2003 & 20941 of 2004 COMMON ORDER: (per Hon’ble Sri Justice S.Ananda Reddy) WP.26106 of 2003 is filed by the petitioners, seeking to call the records from the 1st respondent, relating to Order-in-Denovo 1/2003 dated 28.11.2003 viz., the Deputy Commissioner of Central Excise, Hyderabad Division E, Hyderabad; and to quash the same by issuing a writ, particularly one in the nature of Writ of Certiorari, to the extent that it orders the refund of Rs.7,15,28,042/- to the Consumer Welfare Fund instead of refunding the same to the petitioner; and consequently, direct the respondents to refund the said amount, along with interest at 18% p.a. to the petitioners from the dates of payment by the petitioners till the date of refund by the respondents. 2. It is stated that the 1st petitioner is a company, incorporated under the Hyderabad Companies Act, IV of 1320 Fasli, having its registered office and factory at Azamabad, Hyderabad-500 020. The 2nd petitioner is one of its shareholder. The 1st petitioner carries on business of manufacture and sale of cigarettes in India and abroad and also export of unmanufactured leaf tobacco. For selling arrangements of cigarettes manufactured at its factory at Azamabad, Hyderabad, the petitioner broadly follows the pattern prevalent in the cigarette industry and sells its cigarettes to wholesale buyers in the course of wholesale trade for delivery at the time and place of removal, price being the sole consideration of sale. The prices charged by the petitioner to its main dealers are uniform and all such sales are on a ‘principal to principal’ basis. The main dealers in turn sell the cigarettes to retailers from where they are purchased by the ultimate consumers. 3. For the purpose of such clearances, during the relevant period 01.03.1975 to 28.02.1983, the petitioner declared the assessable value under Sec.4 of the Central Excises and Salt Act, 1944 as per the price lists filed with the Central Excise authorities showing the prices charged by the petitioner to its main dealers. All such price lists filed by the petitioner during the period in question for clearances of cigarettes were provisionally approved by the authorities and the cigarettes were cleared during the said period, on provisional assessment basis. It is stated that with reference to the said period, there were certain disputes as to the claims of the assessee, as to the deduction of certain post manufacturing costs, such as advertisement expenses incurred by the dealers, interest on credit sales receivables and trade discounts. There were lot of proceedings up to the Apex Court and finally, the issues were settled by the decisions of the Supreme Court, decided in Government of India vs. MRF (1995 (77) ELT 433 (SC)) and also the decision of the Supreme Court in Bombay Tyres International vs. Union of India (1983) ELT 1896 (SC)). Finally, pursuant to the decisions of the Supreme Court, the provisional assessments originally made were finalized and even in the final assessments, certain demands were raised as duty payable by the petitioners. But, however, the 1st petitioner was successful before the appellate Tribunal i.e.Customs, Excise and Gold (Control) Appellate Tribunal (for short ‘CEGAT’). Pursuant to the orders of the Tribunal, accepting the claim of the petitioner company that it is entitled for deduction of the post manufacturing expenses by its order dated 03.06.1999, the petitioner filed an application for refund of the excess duty paid. 4. It was the case of the petitioner that various amounts were paid either under the protest or as per the orders of the authorities/Courts. As those payments were not made voluntarily, but in pursuance of the orders of the Department, and as per the directions of the authorities/Courts, the same payments are under protest, and therefore, the amount of excess duty collected by the Department is liable to be refunded. 5. When such an application filed before the 1st respondent, a show cause notice was even issued, proposing to reject the application and finally an order of rejection was passed. The said order was the subject matter of appeal before the Commissioner of Central Excise (Appeals), Hyderabad. The Commissioner of Central Excise (Appeals), though did not agree with the 1st respondent in respect of the grounds, on which the rejection was ordered, but, however, remanded to the 1st respondent for further adjudication which was the subject matter of appeal in Appeal No.E/Misc/302/02 in E/538/02, which was heard and disposed of on 22.11.2002. The said appeal was allowed by the appellate Tribunal, setting aside the orders of the appellate authority. But, however, the remand was confirmed with certain directions. The Tribunal also specifically recorded that since the payments in question were made subsequent to the period in question i.e. 01.03.1975 to 28.02.1983, then on such payments made much after clearance of goods on sale basis, the clause of unjust enrichment cannot be raised, as held in series of decisions. The Tribunal, therefore, remanded the matter with the observations: “Therefore, we would order that this matter be remanded to the original authority, to re-determine the refund claims made, based on the facts of payments; if payments are consequent to the orders of the Honourable Courts; CEGAT and as voluntary adhoc payments on account of requests made or are in the nature of deposits or made after the date of clearances, then the clause of unjust enrichment cannot be invoked.” However, it was made clear that while considering the matter afresh, the 1st respondent was also directed to consider the submissions made with reference to effect of the amended provisions to Rule-9(b)(5) w.e.f.25.06.1999 to be retrospective or not. 6. It is stated that after the remand, the 1st respondent determined the amount of excess duty that was paid by the petitioner, but, however, on the premise that the petitioner did not satisfy the 1st respondent that the above amount of duty paid was not passed on to any other person, the amount was ordered to be refunded to the welfare fund. Against which, the present writ petition is filed, on the premise that the order passed by the 1st respondent is beyond the scope of remand order passed by the Tribunal, therefore, the same is in violation of the directions as well as in contravention of the orders of the CEGAT, therefore, liable to be set aside with a consequential direction for refund of the amount to the petitioner. 7. A counter is filed on behalf of the respondents, disputing and denying the claims of the petitioner. At the outset, a preliminary objection was raised in the counter, stating that against the order of the 1st respondent, an appeal lies under Sec.35 of the Central Excise Act, to the Commissioner (Appeals). There are no circumstances, which would justify the bypassing of the said effective alternative remedy provided under law and to approach this Court. Even on merits also, it was stated that in the impugned order, a clear finding has been recorded that the original authority was finalizing the assessment of the duty, since earlier orders of finalization had been set aside, and as such, in law, the order impugned in the present writ petition, is an order in which the assessment of duty has been finalized. It is stated that the assessment has been finalized only now and not on 25.06.1997. Though an order was passed earlier and the provisions of Rule-9(b) inserting the proviso to sub-rule-(5) was made after the said date but before passing of the present final assessment order, therefore, the said rule would apply to the present proceedings. 8. That apart, it is stated that as per the decision of the Supreme Court in Mafatial’s case if the final orders passed under sub-rule 5 or appealed against or questioned in a writ petition or suit, then any refund claim arising as a consequence of the decision, Sec.11(B) would apply. Therefore, it is stated that the claim of the petitioner for refund is to be considered in the light of the provisions of the Act and the rules made thereunder, and not dehors the rules. The 1st respondent has decided the claim on merits, in accordance with the rules, and therefore, there is no violation of any of the orders or the provisions, and therefore, the writ is liable to be dismissed, and if there is any omission or inappropriate application of any of the provision, it is for the petitioner to assail the same in an appeal, seeking appropriate remedy. 9. A reply is filed on behalf of the petitioner, reiterating the stand of the petitioner and also referring to the circumstances, as held by the Calcutta High Court in Trident Televisions vs. Collector of Customs (1990 (45) ELT 24 (Cal)). The Calcutta High Court in the said decision enumerated the circumstances under which a writ could be filed bypassing the regular appellate jurisdiction. It is stated that the petitioner has been agitating the issue of deduction of post manufacturing expenses over 30 years and even though the petitioner was successful before the Tribunal where deductions were accepted, still the petitioner is not in a position to get the refund of the amount paid by it, therefore, it is imminent case for filing a writ petition, since the claim of the petitioner which was accepted by the Tribunal was not followed. Therefore, the contention of the respondents that a writ is not maintainable is clearly devoid of merit. 10. At the time of hearing, the learned senior counsel for the petitioners, while reiterating the averments that have been made in the petition as well as in the reply, contended that categorical findings were recorded by the Tribunal in favour of the petitioner and the remand is a specific remand and not a general remand, therefore, the 1st respondent ought to have confined to enquiry only to the specific directions. But, however, the 1st respondent failed to give effect to the directions and thereby committed error by acting beyond the jurisdiction, therefore, the order is liable to be set aside. It is contended by the learned senior counsel that the disputed period relates to 1975 to 1983, and even after passing of 24 years after from the end of the disputed period, the petitioner is not in a position to get back the excess amount paid either by virtue of the orders of the Court or request of the department or paid by way of pre-deposits or collected by the department by way of encashing the bank guarantees. All these payments are made subsequent to the disputed period during which the sales were effected. As these amounts were paid subsequent to the disputed period, the question of passing on the burden to any third party would not arise. 11. It is claimed that the petitioner effected the sales of cigarettes manufactured by it as per the price list, approved by the department and it is not the case of the department that the petitioner has collected any amount over and above the approved price list. Under those circumstances, the question of passing of the amounts, which the petitioner has paid long after the disputed period to any third party or the purchasers would not arise, and therefore, the petitioner is entitled for refund. The learned senior counsel contended that the Tribunal remanded the matter for a limited purpose of verification whether the amounts in question were paid either as per the orders of the Court or Tribunal or as a pre-deposit or at the request of the department or not. If once a finding is recorded with reference to the above issue, there is nothing further to decide and the question of the principle of unjust enrichment would not apply to the facts of the present case, as was found by the Tribunal. When once a finding is recorded by the Tribunal that the said principle would not be applicable, the application of the said principle by the 1st respondent, after remand, is clearly beyond the jurisdiction. Therefore, the learned senior counsel sought for setting aside the impugned order. 12. The learned Additional Solicitor General, appearing for the department, on the other hand, sought to sustain the impugned order. It was contended by the learned counsel that though the matter was remanded, it is open to the assessing officer, the 1st respondent to adjudicate upon the matter, in accordance with law, and not contrary to the provisions of the Act as well as the decisions of the Larger Bench of the Apex Court in Mafatial’s case. The learned counsel contended that the findings or the directions, if any, recorded by the appellate Tribunal are not in accordance with law, therefore, the 1st respondent was perfectly justified in deciding the issue, in accordance with law. Since the impugned order was passed in accordance with the provisions of the Act and the Rules as well as the judgment of the Apex Court, the impugned order does not call for any interference. The learned counsel, at length, referred to various observations of the Larger Bench of the Apex Court in Mafatial’s case. Therefore, sought for dismissal of the writ petition. 13. From the above rival contentions, the issue that arise for consideration in this writ petition is whether the 1st respondent’s order is in conformity with the directions of the appellate Tribunal, and is it sustainable under law? or whether the petitioner is entitled for refund of the excess amount of duty, which was admittedly paid after the disputed period. 14. As already mentioned earlier, the dispute relates to the period from 01.03.1975 to 28.02.1983. The petitioner filed the price list of the cigarettes manufactured by it for the purpose of approval by the department for computing of the duties payable from time to time during the said period. As the department while ascertaining the assessable value for the purpose of computing excise duty, declined to exclude post manufacturing expenses, such as selling expenses, advertising expenses, freight charges collected from the wholesale dealers, therefore, the petitioner filed W.P.7143/1974 which was allowed by this Court on 19.12.1975. The same was confirmed in Writ Appeal No.252/1976, dated 18.08.1977. However, subsequently on the premise that there is amendment to Section-4 of the Central Excise Act,1944 w.e.f.01.10.1975 the department took the stand that the judgment of this Court in W.P.7143/1974 does not apply. Therefore, the petitioner filed W.P.1115/1976, claiming deduction of the same items, which were allowed in the earlier writ petition. This writ petition was also allowed on 24.04.1979, holding that even after the amendment also, the above amounts are to be excluded from the assessable value. 15. During the pendency of the above writ petitions, bank guarantees were furnished by the petitioner for the differential duties. Against the above both the writ petitions, the department filed appeals before the Apex Court, as leave was granted by this Court, as Civil Appeal Nos.55/1979 and 2644/1979. The petitioner by virtue of the interim orders of the Apex Court, furnished bonds for the differential duty. The Apex Court permitted the department to make interim demands with reference to the advertising expenses, while allowing the claim of the petitioner in respect of the freight and transport charges, both on cigarettes as well as on smoking tobacco. As per the interim orders, the Assistant Commissioner, Hyderabad passed orders on 23.08.1985, raising an interim demand for the period from 01.03.1975 to 24.05.1981 for an amount of Rs.21,73,518.97ps. Subsequently, as the Apex Court itself has decided the issue in Civil Appeals 2643 and 2650 of 1979 in the case of Union of India vs. MRF Ltd. (1995 (77) ELT 133 (SC)) decided on 08.05.1995, therefore, the assessments were directed to be finalized in the light of the said judgment. The said judgment was rendered in the petitioner's case on 19.07.1995. 16. Pursuant to the above judgment of the Apex Court, the 1st respondent has finalized the provisional assessments for the period in dispute, as per his adjudication order No.86/97, dated 11.06.1997 disallowing of abatement of trade discount and interest on credit sales and also included the advertisement expenses incurred by the dealers for arriving at the assessable value and decided that the assessee was liable to pay an amount of Rs.12,72,56,903/- plus Rs.3,57,378/-. The 1st respondent after giving credit to the amounts paid by way of interim orders of the Court and also crediting amount paid by the petitioner at the request of the Department, further raised a demand for Rs.2,83,56,727/-. The said matter was subject matter of appeal before the Commissioner (Appeals) and further appeal before the CEGAT. 17. When the request of the petitioner for waiver of pre-deposit was negatived by the Commissioner (Appeals), the petitioner filed a writ petition and paid an amount of Rs.1,00,00,000/- as per the interim order and also furnished bank guarantee for Rs.1.84 crores. After the dismissal of the appeal, the Department encashed the said bank guarantee and collected the entire demanded duty. The CEGAT by order dated 03.06.1999, allowed the appeal on all the three issues viz., trade discount, interest on credit sales and advertisement expenses incurred by the main dealers. 18. After the said order of the CEGAT dated 03.06.1999, the assessee filed a statement before the Deputy Commissioner, claiming for refund of Rs.7,40,28,020/- claiming that the said amount has been paid on account of the above three elements. The 1st respondent, however, rejected the said claim by his order dated 27.06.2000 on the following grounds: (1) The refund claim is premature one, as the assessee can prefer the refund claim after the refinalisation of assessments by the jurisdictional authority; (2) The amounts which were paid without following the procedure laid down under Rule 233-B of Central Excise Rules, 1944 can not be refunded; (3) The assessee has not submitted any documentary evidence to show that the amount of duty claimed as refund has not been passed on to the customers and the incidence of duty passes on the innumerable consumers in the society and hence the assessee is not eligible for refund; 19. This was the subject matter of an appeal before the Commissioner (Appeals), who, in his order in Appeal No.224/2001, dated 20.11.2001, modified the order to some extent and the findings are: (1) Though the refund claim was made before the finalization, the Deputy Commissioner should have refinalised the assessments and examined the eligibility of refund; (2) The refund claim is not time barred as the assessments are not finalized and also the payments have not been made voluntarily but made as per the directions of the department or the Courts. As such, the payments are deemed to be made under protest; (3) The assessee’s contention that the unjust enrichment in terms of Section 11-B is not applicable to the refunds arising out of the finalization of provisional assessments is not correct. The judgments of Supreme Court and CEGAT quoted by the assessee in this regard relate to the period prior to 25.06.1999, the date on which proviso has been added to Sub Rule (5) of Rule 9(B) of Central Excise Rules, 1944. As per Rule 9B(5) if an assessee is entitled to a refund, such refund shall be made as per Section 11 (B) (2). As the assessments are still provisional, this rule is applicable to the instant case; (4) The assessee’s contention that the unjust enrichment is not applicable in this case, the payments were made much after the clearance of cigarettes is also not correct. It is to be ascertained whether the said amounts were already recovered by the assessee in any manner at the time of clearance of cigarettes and then retained by them and thereafter paid to the department in piece meal from time to time. If so, the clause of unjust enrichment is applicable to the present case; 20. The said order of the Commissioner (Appeals) was subject matter of an appeal, and CEGAT by order dated 22.11.2002 set aside the order, holding: (1) As the amounts were paid much after the clearance of the goods on the sale basis (i.e.subsequent to the period 01.03.1975 to 28.02.1983), the clause of unjust enrichment cannot be raised; (2) The orders of the lower authorities are not as per Section 11 (B)(2). First, it is to be determined whether any amount is required to be refunded. If so, to whom it has to be paid, i.e. to the welfare fund or to the assessee. Merely rejecting the application for the refund on the basis of unjust enrichment is not correct and the same is not provided under Section 11 (B) (2); (3) The matter has been remanded to the original adjudicating authority to redetermine the refund claim basing on the facts of payments. If the payments are consequent to the orders of Court/CEGAT/Department, then the clause of unjust enrichment cannot be invoked; (4) Payment of interest cannot be covered under the clause of unjust enrichment, if the original duties are required to be refunded to the applicant or to the welfare fund; (5) Deputy Commissioner will take into consideration the submissions made by the assessee with regard to the payment of duties under protest. Further, the effect of amendment to Rule 9(B)(5) to be retrospective or not is left open. The assessee can make submissions before Deputy Commissioner; 21. Holding so, the Tribunal observed that the original order of the Deputy Commissioner cannot be sustained as it has not been in compliance with the provisions of Sec.11-B(2), the order of the Commissioner(Appeals) also cannot be upheld. Holding so, the matter was remanded to the Deputy Commissioner to pass an order in the light of the directions, after hearing the appellant, as per law. Thereafter, the 1st respondent took up the matter. The 1st respondent, instead of confining the enquiry for ascertaining the differential duty that was collected from the assessee in respect of the three items, in respect of which relief was granted by the CEGAT and as to the nature of the payments, as directed by the CEGAT, however, treated the matter as if he was finalizing the price list as well as finalizing the assessment. The order of the CEGAT was very much clear, but after repeatedly extracting and referring to the orders of the Commissioner (Appeals), which was set aside passed orders, as if it was the final assessment. 22. The 1st respondent was conscious of the order passed by the CEGAT on 03.06.1999, granting the relief with reference to three items of the dispute in respect of which the assessee was canvassing for exclusion of the amounts involved from the assessable value. The said order of the CEGAT has become final. But, however, while considering the application of the assessee/petitioner for refund of duty paid, the department took a different stand which had resulted in carrying the matter again to the CEGAT. Even after the second round also, the 1st respondent referred to various payments made by the petitioner and gave categorical finding that these payments were made, as per the orders of the Court as well as the request of the department and also as and by way of pre-deposit, as a result of which, these amounts are to be refunded, as the 1st respondent admittedly found that the excess duty