Case: Garware Polyester Limited &amp; Another Vs. Union of India &amp; Others

refund. The proceedings regarding the refund cannot be said to have been concluded or terminated unless the amount repayable as refund is actually paid without any reservation by the department. It would not attain finality to the act of refund unless the actual payment is made unconditionally. Indeed, otherwise the purpose is made unconditionally. Indeed, otherwise the purpose behind the amended Section 11B would be defeated. It is also apparent that the concept of finality or termination of the refund proceedings has been clarified by the judicial pronouncements bearing in mind that it is necessary to put an end to those cases wherein refund has already been paid prior to coming into force of Section 11B and in those cases they should not be allowed to be re-opened. Otherwise, it would have led to a chaotic situation resulting in harassment and great prejudice to the manufacturers.14. In ITC Limiteds case, the contention of the company was that under a mistake of law regarding the true interpretation of Section 4(a) of the said Act, it had cleared its product and had paid excess excise duty under the impression that the price charged by the wholesale dealers to the secondary wholesalers would from the correct basis of assessment and not the price at which the goods were sold to the wholesale dealers. Two application pertaining to the period from 1-9-1976 to 28-5-1971 and 1-6-1971 to 19-2-1972 involving refund of Rs.23,68,686.85 and Rs.26,21,356.16 respectively came to be filed along with three other applications relating to the period from 20-2-1972 to 28-2-1973. All the five applications were rejected by the Assistant Collector by his order dated 9-10-1973. In the appeals preferred by the company, the Collector (Appeals) allowed the appeals by order dated 30-2-1975 in relation to three revision applications pertaining to the period 20-2-1972 to 28-2-1973 granting consequent relief in favour of the company directing refund of the excess excise duty. While rejecting the other two applications on the ground of bar of limitation. The company filed Writ Petition No.971 of 1976 against the order of rejection of the appeals and the Division Bench of the Delhi High Court considering that on account of mistake of law excess excise duty was paid by the company and received by the department, held that the Government was under legal obligation to return the same to the company and, therefore, while allowing the petition ordered that the company could not be non-suited on the ground of limitation and therefore set aside the orders of the Collector (Appeals) as well as of the Assistant Collector, and directed refund of sum of Rs.49,90,043,01 to the company which was to be made within a period of six months from the date of the judgment i.e., from 12-4-1982. The department preferred S.L.P. which was granted and upon hearing the appeal, the Apex Court while dealing with the points raised on the basis of applicability of Section 11B, as amended, held that:-"The thrust of the amendment vide Section 11B(2) of the Act is that the refund of duty paid by the manufacturer can be allowed, if due, only in cases where the assessee has not passed on the incidence of such duty to any other person."It was further held that:-"Under Section 11B(3) (supra) no refund shall be made except as provided for in sub-section (2), as amended, notwithstanding anything to the contrary contained in any judgment, order or direction of the Appellate Tribunal or any court or in any other provisions of the Act or the Rules made thereunder or under any other law for the time being in force."The Apex Court relying upon the decision in Jain Spinners case rejected the plea raised on behalf of the company that the prohibition contained in Section 11B(3) of the Act would not apply to the facts and circumstances of that case, more so because the judgment and order of the High Court directing refund was pending final adjudication by the Apex Court when the amended provision of Section 11B(3) of the Act had come into force with effect from 20-9-1991 and ruled that All pending claims for refund on or before 20-9-1991, are required to be dealt with and disposed of only in accordance with the amended provisions of law, by reason of the amended Section 11B(3) and the present case is no exception."15. Reverting to the facts of the case, as already observed above, in the case in hand, undoubtedly the High Court on the basis that the process of metallising or lacquering of the already manufactured polyester films does not amount to manufacture under the said Act had allowed the Writ Petition No.3040 of 1982 by its judgment dated 7-12-1990 and therefore it directed refund of the excess duty paid by the petitioners during the relevant period. There was no conclusive termination of the proceedings relating to the refund consequent to the said order, on the day when the provisions of the amended Section 11B had come into force. Undisputedly, the refund was not granted till the said day. Neither the issue regarding unjust enrichment was finally and conclusively adjudicated. Applying the law laid down by the Apex Court in the matters of Jain Spinners, ITC Limited and Mafatlal Industries to the facts of the case in hand, it would therefore be apparent that the claim for refund at the instance of the petitioners were still pending on the day when the provisions of the amended Section 11B came into force and therefore the authorities were perfectly justified in issuing the show cause notice in terms of Section 11B(3) of the said Act.16. Bearing in mind the law laid down by the Apex Court in Jain Spinners, ITC Limited and Mafatlal Industries, all the objections sought to be raised on behalf of the petitioners are without substance and no fault can be found with order rejecting the refund claim in question as the same is in consonance with the law laid down by the Apex Court in the said decisions.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]12. The analysis of the facts of the decision in Jain Spinners case and the ruling by the Apex Court therein clearly disclose that it was in relation to the excise duty payable by the assessee which was assessed by the Assistant Collector onand the amount payable thereunder was paid by thein the year 1986 which was held to be refundable to the company by order datedand this order ofhad attained finality the prior to coming into force of the amended provision of Section 11B of the said Act. Even the application for refund in accordance with the said order of the Collector (Appeal) was filed by the company onTaking note of all these facts, as already observed above. The Apex Court in no uncertain terms held that The High Courts order ofunder which alone the refund was claimed could not be an exception to the said provisions nor could the High Court have made such order afterdirecting the payment contrary to the said provisions. and further held the order ofto be wholly unwarranted and band inApex Court relying upon the decision in Jain Spinners case rejected the plea raised on behalf of the company that the prohibition contained in Section 11B(3) of the Act would not apply to the facts and circumstances of that case, more so because the judgment and order of the High Court directing refund was pending final adjudication by the Apex Court when the amended provision of Section 11B(3) of the Act had come into force with effect fromand ruled that All pending claims for refund on or beforeare required to be dealt with and disposed of only in accordance with the amended provisions of law, by reason of the amended Section 11B(3) and the present case is no exception."15. Reverting to the facts of the case, as already observed above, in the case in hand, undoubtedly the High Court on the basis that the process of metallising or lacquering of the already manufactured polyester films does not amount to manufacture under the said Act had allowed the Writ Petition No.3040 of 1982 by its judgment datedand therefore it directed refund of the excess duty paid by the petitioners during the relevant period. There was no conclusive termination of the proceedings relating to the refund consequent to the said order, on the day when the provisions of the amended Section 11B had come into force. Undisputedly, the refund was not granted till the said day. Neither the issue regarding unjust enrichment was finally and conclusively adjudicated. Applying the law laid down by the Apex Court in the matters of Jain Spinners, ITC Limited and Mafatlal Industries to the facts of the case in hand, it would therefore be apparent that the claim for refund at the instance of the petitioners were still pending on the day when the provisions of the amended Section 11B came into force and therefore the authorities were perfectly justified in issuing the show cause notice in terms of Section 11B(3) of the said Act.16. Bearing in mind the law laid down by the Apex Court in Jain Spinners, ITC Limited and Mafatlal Industries, all the objections sought to be raised on behalf of the petitioners are without substance and no fault can be found with order rejecting the refund claim in question as the same is in consonance with the law laid down by the Apex Court in the said decisions.