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

2. The petitioners have their factory at Aurangabad for manufacturing polyester films in their factory at Aurangabad and such films are metallised or lacquered at their factory at Nasik. A question arose whether the process of metallising or lacquering of the manufactured polyester films amounted to manufacture under the provisions of Section 2(f) of the Central Excise and Salt Act, 1944, hereinafter called as the said Act and in the Writ Petition No.3040 of 1982 the Division Bench of this Court held that the activity of metallising and/or lacquering of the already manufactured polyester films did not amount to manufacture within the meaning of the said expression under the said Act. Consequently, the said petition was allowed by its judgment datedin terms of prayer clauses (a) and (b) of the said writ petition. The prayer clause (a) related to quashing of the orders passed by the assessing authorities and the prayer clause (b) included direction for refund of the excess duty paid fromunder protest on the lacquerated and/or metallised and/or laminated films at the petitioners factory at Nasik. It was also directed that the refund should be made within a period of ten weeks from the date of the said judgment failing which the refund was to carry interest at the rate of 12% p.a. from the expiry of the said period. Along with a letter datedthe petitioners forwarded a certified copy of the said judgment to the second respondent for the purpose of refund of the amount paid under protest during the period from82 amounting to Rs.20,90,354.10 ps. And for further period from82 amounting to Rs.13,07,038.71 ps., thus totaling to Rs.33,97,392.81 ps. Under a letter datedthe third respondent called upon the petitioners to submit the refund claim in an appropriate proforma along with the relevant documents supporting the refund claim. In reply thereto, the petitioners by their letter datedfiled a refund claim for the said amount of Rs.33,97,392.81 ps. Under letter datedthe third respondent called upon the petitioners to report whether the refund amount claimed by them was already recovered from the customers or not. In reply, under letter datedthe petitioners informed the third respondent that the petitioners did not charge excess duty from the customers as their price was the total price to the customers. By further letter datedthe third respondent called upon the petitioners to submit copies of the respective invoices for the period under reference in relation to the refund claimed, along with the balance sheet. Same was furnished by the petitioners along with a letter datedFurther by letter datedaddressed to the respondent No.2. the petitioners sought to point out that in terms of the judgment datedof the High Court, the respondents were required to refund the excise duty within ten weeks and as the said period had already expired, the respondents were required to expedite the refund of the amount. Reminders were sent thereafter onas well as onFurther the petitioners sought to draw the attention of the respondents to the judgment of the Calcutta High Court in the case of M/s. Titaghar Paper Mills Co. Ltd., reported in 1992 (57) E.L.T. 527 under a letter datedHowever, by his letter datedthe respondent No.2 informed the petitioners that consequent to the decision of the Apex Court in the matter of Union of India v. Jain Spinners Limited, reported in 1992 (61) E.L.T. 321, the amendment brought about to the said Act in terms of the provisions of law contained in Section 11B has retrospective effect and therefore the petitioners were required to produce documentary evidence showing that the duty for which the refund was claimed was not recovered by them from their customers. The petitioners were thereafter personally heard in the matter and by order datedrelying upon the decision of the Apex Court in Jain Spinners case (supra), the second respondent rejects the refund claim of the petitioners and ordered that the amount be credited to the Consumer Welfare Fund under Section 11B of the said Act. The petitioners preferred appeal before the third respondent being Appeal No.278 of 1993 which came to be rejected onThe petitioners have therefore preferred the present writ petition.

Reasoning:
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.