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COMMISSIONER OF CENTRAL EXCISE, MUMBAI-II A v

MIS ALLIED PHOTOGRAHICS INDIA LTD.

MARCH 18, 2004

[V.N. KHARE, CJ., S.B. SINHA AND 3.h KAPADIA, JJ.] B

Central Excise Act, 1944-Section 11 B-Unjust enrichment- Applicability of-Making of refimd and claiming of refund-Difference between-Payment of duty under protest-Nature of-Held, is different than C duty paid under provisional assessment-Duty paid by the manufacturer under protest-Burden of duty passed on to buyer/distributor-Subsequently, duty revised by Department-Distributor claiming refund-Held, Section 11 B would be applicable-Central Excise Rules, 1944-Rule 9 B.

Constitution of India-Article 136-Concurrent findings of fact- D lnte(ference with-lower authorities not examining relevant facts while arriving at findings of fact-Held. can be interfered with-Central Excise Act. 1944- Section 11 B.

Respondent was the sole distributor of NHL. The Excise Department sought to recover excise duty from NHL on the basis of the price charged E by the respondent to its dealers and not the price declared by NHL as wholesale cash price. NHL paid the amount demanded by the Department under protest and appealed against the said demand. The appeal filed by NHL was dismissed.

In view"of subsequent judgment in Union of India and Ors. v. Bombay F Tyre International, AIR (1984) SC 420, which held that distributor could not be treated as "related person" under Section 4 (1) (a) of the Central Excise Act, 1944 the Department, on 31.10.1984, approved ex-factory price of NHL as value under Section 4 of the Central Excise Act. NllL filed claim for refund. The Assistant Commissioner granted only two months' refund. G

NHL filed writ petition where it concede that it had passed on the burden of the duty to the respondent. The High Court however granted refund to the respondent holding that the appellant had failed to prove that the respondent had passed on the burden of the duty to its consumers.

261 H

A The matter ultimately came in appeal to the Court. The Court held that

..I.. .. as NllL had passed on the burden of duty to the respondent, its refund - claims were liable to be rejected. However, the Court observed that the order would not prevent the respondent from adopting appropriate remedies open to it in law.

B After the judgment of the Court in Mafat/a/ Industries Ltd. v. Union of India, [1997J 5 SCC 536, on ll.2.1997, the respondent filed refund claim before the Department. The claim of the respondent was allowed by the Assistant Commissioner. The Department filed an appeal to the (.

Commissioner (Appeals) but the appeal was dismissed. The Tribunal, on c appeal, also affirmed the order passed by the Commissioner.

The appellant filed appeal before the Court. The respondent, defending the impugned judgment contended that deposit of duty under protest stood on the same footing as a provisional assessment under Rule 98 of the Central Excise Rules, 1944 both being in the nature of "on D account" payment and therefore, in view of observations of the Court in para 104 of Mafalfa/ Industries ltd. v. Union of India, [19971 5 SCC 536, resort to Section 11 B of the Central Excise Act was not necessary. The 'r • respondent further contended that it had stopped into the shoes of the NHL and therefore, the amount payable to NHL should be paid to it. It was

E also contended that the concurrent finding of facts should not be interfered with.

Allowing the appeal, the Court

 HELD: l. l. There is a basic difference between duty paid under

F protest and duty paid under Rule 9 B of the Central Excise Rules, 1944.

The duty paid under protest falls under Section 11 B of the Central Excise .4 Act, 1944 whereas duty paid under provisional assessment falls under 9 B of the Central Excise Rules. Section 11 B of the Central Excise Act deals with claim for refund whereas Rules 9 B of the Central Excise Rules deals with making of refund, in which case the assesssee has not to comply with G Section 11 B of the Central Excise Act. Therefore, Section 11 B of the Central Excise Act and Rule 9 B of the Central Excise Rules operate in different spheres. 1279-G-H; 280-AI

r: 1.2. Rule 9 B of the Central Excise Rules is a complete code by itself.

On Compliance with the conditions therein, the proper officer is duty H bound to refund the duty without requiring the assessee to make a separate

C.C.E. v. ALLIED PHOTOGRAHICS INDIA LTD. 263

refund application. Rule 9 B, therefore, provides for making of refund. A On the other hand, Section I I B (1) of the Central Excise Act deals with claiming of refund by the person who has paid duty on. his own accord.

Hence, under Section ll B (1 ), such a person had to claim refund by making an application. A bare reading of Section 11 B (1) of the Central Excise Act, therefore, shows that it refers to claim for refund as against B making of refund by the proper officer under Ruie 9 B of the Central Excise Rules. There is a difference between making of refund and claiming of refund.

1.3. In cases where duty is paid under Rule 9 B of the Central Excise Rules and refund arises on adjustment under Rule 9 B (5) thereof, then C such refund will not be governed by Section I I B of the Central Excise Act. If an independent refund claim is made after adjustment on final assessment under Rule 9 B (5) of the Central Excise Rules, then such claim would attract Section I I B of the Central Excise Act. This is because when the assessee makes an independent refund claim after final orders under Rules 9 B (5) of the Central Excise Rules, such application represents a D claim for refund and, it would not come in the category of making of refund and therefore, the bar of unjust enrichment would apply. The respondent was bound to comply with Section I I B of the Central Excise Act. (280-A-B; DJ

1.4. Para 104 of the judgement in Mafatld's case dealt with refund E consequent upon finalisation of provisional assessment under Rule 9 B of the Central Excise Rules. Paragraph l 04 does not deal with refund of duty paid under protest. In para 104 there is nothing to suggest that payment of duty under protest does not attract bar of unjust enrichment.

(282-A-B; 279-E-FI F

Mafatlal Industries Ltd v. Union of India, (I 997( 5 SCC 536, explained.

Sinkhai Synthetics and Chemicals Pvt. Ltd. v. Collector of Central Excise, Chennai, (2002), 143 ELT 17 and National Winder v. Commissioner of Central Excise, Allahabad, (2003), I 54 ELT 350, held per incuriam.

Collector of Central Excise, Chennai v. TVS. Suzuki Ltd., (2003) 156, EL T 161; Union of India and Ors. v. Bombay Tyre International, AIR (1984)

>.: SC 420 and New India Industries Ltd. v. Union olfndia, (1990) 46 ELT 23, referred to.

A CCE v. National Tobacco Co. of India ltd, AIR (1972) SC 2563, cited.

1.5. In any event, the application filed by the respondent for refund fell in the category of refund claim being made after finalisation of assessment of NHL and, therefore, Section 11 B of the Central Excise Act had to be complied with in terms of para 104 of the judgment in Mafatla/'s B case. 1280-D-EI

2.1. There is no merit in the argument advanced on behalf of the respondent that the distributor was entitled to claim refund of "on account" payment made under protest by the anufacturer without C complying with Section 11 B of the Central Excise Act. The basis on which a manufacturer claims refund is different from the basis on which a buyer claims refund. The cost of purchase to the buyer consists of purchase price including taxes and duties payable on the date of purchase (other than the refund which is subsequently recoverable by the buyer from the Department). Consequently, it is not open to the buyer to include the D refund amount in the cost of purchase on the date when he buys the goods as the right to refund accrues to him at a date after completion of purchase depending upon his success in the assessment. j281-E-F; B-DJ

Atic Industries Ltd v. H.H. Dave, Asstt. Collector of Central Excise, AIR

(1975) SC 960, referred to.

2.2. Rule 9 B of the Central Excise Rules refer to the payment of duty on provisional basis by the assessee on his own account and, therefore, in cases where the manufacturer has been allowed to invoke this Ruic.: and the refund accrues on adjustment under Rule 9 B (5) of the Central Excise Rule, that refund is on the account of the manufacturer and not F on the account of the buyer. Section 11 B of the Central Excise Act on one hand and Rule 9 B of the Central Excise Rules on the other hand, both indicate payment by the assessee on his own account and refund becomes due on that account alone. [278-F-Gj

G 2.3. The scheme of Section 11 B of the Central Excise Act shows the difference between the rights of a manufacturer to claim refund and the right of the buyer to claim refund as separate and distinct. The accounts of the manufacturer are different from the accounts of a buyer (distributor). [281-E-FJ

3. Since relevant factors have not been examined by the authorities

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C.C.E. v. ALLIED PHOTOGRAHICS INDIA LTD. fKAPADIA . .I.] 265

below, there is no merit in the contentions of the respondent that the Court A should not interfere under Article 136 of the Constitution of India in view of the concurrent finding of fact. The refund claim is made by the buyer and not by the manufacturer. The respondent has admitted that it bought the goods from the manufacturer paying the purchase price which included cost of purchase plus taxes and duties on the date of purchase. In such B cases, cost of purchase to the buyer is the relevant factor. None of the authorities below have looked into this aspect. [285-E-F; 284-G-H[

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2687 of2001 .

From the Judgment and Order dated 13.6.2000 of the Central Excise, Customs and Gold (Control) Appellate Tribunal, West Regional Bench, C Mumbai in F.O. No. CJ 1/1748-50/WZ.B/2000 in A.No. E/3318 of 1999- Mum.

A.K. Ganguli. S. Ganesh, Dushyant A. Dave, Dileep Tandon, G.

Venkatesh Rao, B. Krishna Prasad, Sandeep Narain, Shri Narain, Ms. Anjali, D Ms. Rohina Nath, Umesh Kumar Khaitan and Ms. Kumkum Sen for the appearing parties.

The Judgment of the Court was delivered by

KAPADIA, J. Finding inconsistencies between two decisions of three- E Judge Benches of this Court in the case of Sinkhai Synthetics and Chemicals

Pvl. ltd. v. Collector of Central Excise, (2002) I43 EL T 17 and Collector of Central Excise. Chennai v. T V.S. Surnki ltd., (2003) (156) EL T 161 on one hand and the decision of nine-Judge Constitution Bench in Mafatlal Industries ltd. V. Union of India, [ 1997) 5 sec 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:

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) H

A of"the Central Excise Act 1944 (hereinafter referred to as "the Act") with effect from March I, 1974. NllL 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 B should not be rejected as wholesale cash price and why prices charges 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 charges 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 C 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 ofNIIL to pay excess duty should be ascertained by the price charged by M/s AG IL to its dealers. The petition was subsequently withdrawn. On D 15.9.1975, NIIL addressed a latter to the Department submitting a declaration stating that Mis AGIL is not related to NllL in terms of section 4(a) of the said Act. On I. I 0.1975, the said section 4 of the Act was amended and the y 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 AG IL to E its dealers. NIIL went in appeal which was dismissed on 21.9.1979. On

31. I 0.1984 the Department approved the ex-factory price of NllL instead of the price list of Mis AGIL to its dealers. Therefore, from l .11.1984, NllL started paying excise duty on the ex-factory price charged by NIIL to Mis AGIL and not on price charged by Mis AGIL to its dealers. On 11.8.1986, NIIL filed refund claims for Rs. 60.19,238.65 for recovery of excise duty F between the period 1.11.1981 to 31.10.1984. On 29.9.1986 another refund claim for Rs. 42,77,358.59 was lodged for recovery of excise duty during the period 1.11. l 978 to 3 I. I 0.1981. Similarly on 7.4.1987 another refund claim was lodged for excise duty paid in excess during the period 1.3.1974 to

31. I 0.1978 by NllL amounting to Rs.22,38,391.72. These refund claims were G made in view of judgment of this Court in the case of Union of India and

Ors. v. Bombay Tyre International ltd., repo1ted 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 H of the claim. On 13.4.1987, NIIL filed Writ Petition No. 1336of1987 in the

C.C.E. r. ALLIED PHOTOGRAlllCS INDIA LTD. JKAPADIA . .I.] 267

High Cou11 challenging the order of Assistant Collector denying refund except A 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 ofNIIL to Mis 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 B Bench. After the decision of the Full Bench in the case of New India Industries . Ltd v. Union of India, reported in (1990) 46 EL T 23, the said Writ Petition No. I 336/87 was reposted before the learned Judge on I 7. l.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. I ,25,34,988.97 in Court. When the Writ Peiition came for hearing C on 22.3.1990, NIIL conceded that it had passed on the burden to Mis AGIL, the sole-selling distributors of NIIL. The learned Judge, however, directed Mis AGIL to file affidavit stating whether it had 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 Mis AGIL to its dealers and by judgment D dated 14.6.1990 held that Union of India had failed to prove that Mis AGIL had passed on the burden to its dealers and accordingly granted refund of Rs. l ,25,34,988.97 to Mis AG!L. 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 Mis AGIL there E was no question of the trial court further examining the question as to whether Mis 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 Mis AGIL the F 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 Mis AGIL from adopting appropriate remedy as open to it in law. In view of the order dated 30.1.1997 passed by this Court, Mis AGIL filed Writ Petition No. 1776 of 1993 in the High Court contending that the petitioners G (AG IL) 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 NII L on the basis of the prices charged by Mis AGIL to its dealers. In the Writ Petition, Mis AGIL relied on the judgment of this Court in the case of Bombay Tyre (supra). By order dated H

A 28.9.1993 passed by the High Coun, the Depa11ment was allowed to withdraw Rs.1,25,34,988.97 with undenaking 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 B refund to move under section I 18 as amended w.e.f. 20.9.1991. Consequently,

Mis AGIL mov(:d their refund claim before the Depanment on 11.2.1997 for Rs. 1,25,34,988.97. On 9.5.I997, a show cause notice was issued by the Department to Mis Allied Photographies India Ltd. (formerly known as Mis 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 C 31.10.1997 passed by the Assistant Commissioner refund was granted to Mis Allied Photographies India (P) Ltd. (Mis 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 Depal'tm€!lt has come to this Court by way of present civil appeal under D section 35L\b) ohlle Act.

ARGUMENTS:

Mr. A.K. Ganguli, learned senior counsel for the Department submitted E that there was a difference between provisional assessment under rule 9B and payment of duty under protest in tern1s of rule 233B. In this connection reliance was placed on the judgment of this Cou11 in Mafat!al '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 F 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 respondentherein) had claimed refund by filing an independent application on 11.2.1997 and therefore it was governed by section 11 B(3). In suppol1 reliance was placed on para 104 of the Ma/at/al 's case. It was submitted that the above mentioned two decisions of this Court in the cases of Sinkhal Synthetics and G Chemicals Pvt. ltd. v. Collector of Central Excise, reported in (200~) 143

EL T 17 and Collector of CC'n!ral Excise v. T. VS. S1cuki 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 H of NllL had bought the products in the course of trading between 1974 and

I )--

.( '

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C.C.E. v. ALLIED PHOTOGRAHICS INDIA LTD. fKAPADIA . .I.] 269

1984 and.had sold them to its dealers earning profits between 12.6535% io A 21.1333%. That during the said period, the purchaser had no right to claim refund and that Mis 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 Mis APIL not to pass on the burden to its dealers. That Mis APIL not only passed on the burden to its dealers B but even admittedly made profits on its sales. That the consideration paid by

Mis APIL to NllL included excise duty and the very fact that Mis 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 Mis APIL

in the course of its trading business. It was further urged that Mis APIL had C never moved any refund claim prior to 8.6.1990 and that it filed its affidavit on that day in response to suo-moto notice issued by the High Court in the Writ Petition filed by NIIL inter alia for refund whereby for the first time Mi s APIL contended that it had not passed on the burden tG its dealers. In this connection, Mis APIL asserted that the excess duty component was negligible amount of 1.62% of its sale price; that it had earned profits varying from D 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 Mis API L during the above period E 1974/1984 and there is no reason why Mis APIL did not recover it from its dealers particularly when Mis APIL had no right as a purchaser to claim refund which was recognized only on 20.9.1991 when section 118 was amended and therefore, Mis APIL was seeking to unjustly enrich itself by seeking such refund. Lastly, it was urged that Mis APIL had worked out its sale prices before the Department in such a way that it has not passed the F 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 Mis APIL did not produce any material before the Department disclosing how its sale price were arrived at.

Per contra, Shri S. Ganesh, learned senior counsel for the respondent

- Mis APIL submitted that Mis APIL as the purchaser was entitled to claim refund of the excess duty as that amount had been passed on by NllL to Ml

.I( s APIL. In this connection reliance was placed on judgments of this Cou1t in the case of Mqfatlal (supra) and in the case of National Winders v. Collector

of Central Excise, reported in (2003) 154 EL T 350. Learned counsel for the H

A respondent contended that in the present case section 118 was not at all attracted. In support he pointed out that during the period 1974 to 1984, the Department insisted on NIIL paying excise duty on the footing that M/s APIL was related to NIIL. That the Department insisted on NIIL paying the additional excise duty of 1.62% on the footing that Mis APIL was related B person to NIIL. However in 1984 assessments of NIIL were finalized in tenns of judgment of this Court in the case of Bombay Tyre (supra) wherein it was held that the distributor could not be treated as a "related person" and accordingly the amounts paid by NllL towards excise duty during 1974-84 were adjusted and appropriated against the amounts found payable on the -l . said assessments and consequently the disputed amount of excess duty of C 1.62% paid by NllL under protest during the above period became refundable on the finalization of NII L's assessments in 1984. That neither NIIL nor M/

s APIL ever disputed the said assessments made in 1984 and M/s APIL had based their refund claim on the said assessment. It was submitted that when a provisional assessment is made under the Act or when excise duty is paid Under Protest by the appellant, all payments of excise duty are On Account payments which are to be adjusted and appropriated only on vacating of the protest or finalization of assessment. In this connection, reliance was placed on rule 98 (5) as it stood prior to its amendment in 1989 and rule 2338 (v) r • and (vi). In either situations, when the assessment is finalized or the protest is vacated and the account is settled between the appellant and the Department E and the said On Account payments made by the appellant are adjusted and appropriated against the assessed amount and if it is found that any amount is payable by the appellant then it can be recovered by the Department without issuance of show cause-cum-demand notice under section 11 A.

Correspondingly, if any amount is found to be repayable by the Department to the appellant on such taking of accounts, then that amount has to be F refunded without going through section 118. In this connection reliance was

placed on the judgment of this Court in the case ofCCE v. National Tobacco

Co. of India Ltd., reported in AIR (1972) SC 2563. According to the learned counsel the same principle was applicable in cases where the Department has to refund moneys to the appellant on finalization of the assessment; which G principle has been reiterated vide para 104 of the Mafatlal judgment.

Accordingly it was submitted that the doctrine of unjust enrichment in section

118 would not apply to the present case. Lastly it was urged that the argument of the Department was based entirely on section 118 (3) which had no bearing on the basic issue as to whether section 118(2) was at all applicable particularly when the appellant was seeking refund of an "On account" H payment made Under Protest or under the Provisional assessment". Therefore,

' ..

the reliance on section 118(3) was misplaced. That in the circumstances, A neither Sinkhal Synthetics nor T.V.S. Suzuki can be said to be in any way incorrect, much less per incuriam. On merits, learned counsel for the respondent submitted that the question as to whether the burden of duty has been passed on to the consumer is to be answered by relying on one singular test viz. whether the manufacturer has increased his sale price in order to pass B on the disputed amount and not whether the manufacturer has made profits or losses. In this connection, reliance was placed on judgments of the Appellate Tribunal having been accepted by the Department that composition of costs incurred by Mis APIL was not relevant and the only relevant factor was whether M/s APlL had increased its sale price to its dealers after it was required to pay the differential amount of excise duty in the form of the C increased price charged to it by NIIL. In this connection it was submitted that M/s APIL did not increase its sale price after it was required to bear the differential amount of excise duty of 1.62% in the form of the enhanced purchase price paid by it to NIIL and on the contrary, far from enhancing its sale prices, Mis APIL granted discounts between 2% to 4% on the sale price D charged by it to its dealers and this discount was more than the disputed differential amount of excise duty which came to l .62% of the price. It was submitted that the case of Mis APIL has been accepted by all the authorities below and that this Court should not interfere with the concurrent findings of fact recorded by the authorities below. In this connection it was submitted E that the said findings were based on the audited accounts of APIL; certificate of Chartered Accountant, Sale Invoices of APIL and two affidavits filed on behalf of APIL. It was further urged that in the case of Maji11/al (supra) it has been held that where the claim for refund relates to the period from .... to 20.9.1991, any evidence which reasonably shows that the disputed duty has not been passed on to the dealers/customers in the form of increased price F would suffice and the claimant is not required to produce documents specified in section 12A which has prospective operation.

Hence, Mis APlL (respondents herein) had not increased the sale price for rec"vering the additional disputed duty burden of l .62% which was passed on to it (M/s APIL} by NllL.

Learned counsel for the respondent next contended that G profits made by it during the period 1974 to 1984 does not indicate passing on of the duty burden to its dealers. It was contended that profit or loss is not the determinative factor in order to ascertain whether the disputed additional duty is passed on by the respondent to its dealers. In the circumstances, it was submitted that on the said material and evidence and having regard to the specific findings the only possible conclusion was that H the respondent, Mis APIL had not passed on the disputed duty burden to its

A dealers/customers.

POINT FOR DETERMINATION:

Whether the doctrine of unjust enrichment in section l IB of the Act is applicable to the facts of this case, having regard to the fact that NIIL B (manufacturer) had paid the differential disputed excise duty Under Protest

from 1.3.1974 to 31.10.1984 when the assessment was finalized in favour of NllL in view of the judgment of this Court in the case of Union of India and Ors. v. Bombay Tyre International Ltd., reported in AIR (1984) SC 420?

C FINDINGS.·

The points at issue in this civil appeal are - whether refund of duty paid under provisional assessment is similar to duty paid under protest as both are "On Account" payments adjustable on finalization of assessment or vacating of protest? Secondly, in the course of such adjustment or vacation of protest, D if any amount is found payable by the Department to the manufacturer, is it open to the purchaser to contend that he (the purchaser) has stepped into the shoes of the manufacturer seeking refund of "on account payment" and, therefore, he was not bound to comply with section 11 B of the said Act. In

"I this civil appeal, we have to deal with the law governing refund during the E disputed period from 1974 to 1984. To resolve the dispute herein, we quote herein below section 11 B of the said Act as also rule 9B of the Centrnl Excise Rules, 1944 as it stood prior to Central Excise & Customs (Amendment) Act, 40 of 1991: -

"Section 11 B: Claim for refund of duty.

(I) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Centi ul

Excise before the expiry of six months from the relevant date:

Provided that the limitation of six months shall not apply where G any duty has been paid under protest.

Explanation. - For the purposes of this section, -

(A)"refund" includes rebate of duty of excise on excisable goods expoi1ed out of India or on excisable materials used in the manufacture of goods which are expo11ed out of India;

(B) "relevant date" means, -

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,}

(a) in the case of goods exported out of India where a refund of A excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, -

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves B India, or

(ii) if the goods are exported by land, the date on which such goods pass the frontier, or

(iii) if the goods are exported by post, the date of despatch of C goods by the Post Office concerned to a place outside India;

(b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid;

( c) in the case of goods to which banderols are required to be affixed D if removed for home consumption but not so required which expo1ted outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory;

(d) in a case where a manufacturer is required to pay a sum for a E ce1tain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; F

(e) in a case where duty of excise is paid provisionally under this Act or the ru Jes made thereunder, the date of adjustment of duty after the final assessment thereof;

(f) in any other case, the date of payment of duty.

(2) If on receipt of any such application, the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant should be refunded to him, he may make an order accordingly.

(3) Where as a result of any order passed in appe; il or revision under this Act refund of any duty of excise becomes due to any person, the Assistant Collector of Central Excise may refund the amount to such person without his having to make any claim in that behalf.

(4) Save as otherwise provided by or under this Act, no claim for

refund of any duty of excise shall be entertained.

(5) Notwithstanding anything contained in any other law, the provision of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim.

Ruic 98: Provisional assessment of duty.-{ I) Notwithstanding anything contained in these rules: -

(a) where the proper officer is satisfied that an assessee is unable to produce any document or furnish any information necessary for the assessment of duty on any excisable goods; or l'! I

(b) where the proper officer deems it necessary to subject the E excisable goods to any chemical or any other test for the purpose of assessment of duty thereon: or

( c) where an assessee has produced all the necessary documents and furnished full information for the assessment of duty, but the proper officer deems it necessary to make further enquiry (including the inquiry to satisfy himself about the due observance of the conditions imposed in respect of the goods after their removal) for assessing the duty,

the proper officer may, either on a written request made by the assessee or on his own accord, direct that the duty leviable on such goods shall, pending the production of such documents or furnishing of such information or completion of such test or enquiry. be assessed provisionally at such rate or such value (which may not necessarily be the rate or price declared by the assessee) as may be indicated by him, if such assessee executes a bond in the proper form with such surety or sufficient security in such amount, or under such conditions as the proper officer

.J.

deems fit, binding himself for payment of the difference between A the amount of duty as provisionally assessed and as finally assessed.

(2) ..........

(3) The Collector may permit the assessee to enter into a general B bond in the proper Form with such surety or sufficient security in such amount or under such conditions as the Collector approves for assessment of any goods provisionally from time to time:

Provided that, in the event of death, insolvency or insufficiency of the surety or where the amount of the bond is inadequate, the C Collector may, in his discretion, demand a fresh bond and may, ifthe security furnished for a bond is not adequate, demand additional security.

( 4) The goods provision ally assessed under sub-rule (I) may be cleared for home consumption or export in the same manner as the goods D which are not so assessed.

(5) When the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty E finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be."

Before analysing section 11 B, it is important to note that there is a difference between making of refund and claiming of refund. Section 118 was inserted in the said Act w.e.f. 17.11.1980. Under sub-clause (e) to F ... explanation B to section 11 B( I), where assessment was made provisionally the relevant date for commencement of limitation of six months was the date of adjustment of duty as final assessment. Entitlement to refund would thus be known only when duty was finally adjusted. Sub-clause (e) referred to limitation in cases covered by rule 98 which dealt with duty paid under G provisional assessment. The said rule started with a 11011-obstante clause.

Rule 98(1 )(a) to (c) indicated the circumstances in which the proper officer would allow provisional assessment.

Rule 98(4) dealt with clearance of goods provisionally assessed whereas rule 98(5) dealt with adjustment of provisionally assessed duty against finally assessed duty. The said rule 98 H

A was a complete code by itself. On compliance with the conditions therein.

J.. the proper officer was duty bound to refund the dut~ without requiring the assessee to make a separate refund application. The said rule, therefore, provided for making of refund. On the other hand. section l B( I) dealt with claiming of refund by the person who has paid duty on his own accord. In this connection, section 4 of the said Act is relevant. In the case of Bombay B Tyre (supra) it has been held that section 3 of the Act refers to levy of duty whereas section 4 dealt with assessment. Assessment means determination of the tax liability. Under the Act, duty was payable by the manufacturer on his own account.

Hence, under section I I B( I), such a person had to claim refund by making an application within six months from the relevant date C except in cases where duty was paid under protest in terms of the proviso.

However, even in such cases, the person claiming refund had to pay the duty under protest in terms of prescribed rules. A bare reading of section 11 B(l ), therefore, shows that it refers to claim for refund as against making of refund by the proper officer under rule 9B.

D On 20.9.1991, the above section I IB underwent a drastic change vide Central Excises and Customs Laws (Amendment) Act. 40of1991 (hereinafter referred to as "the Amendment Act"). By the Amendment Act, the concept of unjust enrichment as undeserved profit was introduced. We reproduce herein below amended section 11 B: -

E "Section 11 B: Claim for refund of duty.-( I) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by

such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from," or paid by, him and the incidence of such duty had not been passed on by him to any other person:

Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act. 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of subsection (2) substituted by that Act:

. _)

Provided further that the limitation of six months shall not apply A where any duty has been paid under protest.

(2) If, on receipt of any such application, the Assistant Commissi01; ier of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amonnt 0o determined shall be B credited to the Fund:

Provided that the amount of duty of excise as detennined by the Assistant Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - C

(a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India;

(b) unspent advance deposits lying in balance in the applicant's D account current mair.taiJ1ed with the Commissioner of Central Excise;

(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;

(d) the duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person;

( e) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person;

(f) the duty of excise borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette specify:

Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty has not been passed on by the persons concerned G to any other person.

(3) Notwithstanding anything to the contrary contained in any judgment, decree. order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder H

278 SUPREME COllRT REPORTS 12004 I :l S.C.R.

A or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).

Explanation. - For the purposes of this section -

(8) "relevant date" means -

(f) in any other case, the date of payment of duty."

According to statement of objects and reasons for enacting the Amendment Act, the Public Accounts Committee recommended introduction of suitable legislation to amend the said Act to deny refunds in cases of unjust enrichment.

Under the amended section 118(3) of the. said Act, notwithstanding anything to the contrary in any judgment, decree, order or direction of the appellate Tribunal or any Court, no refund was to be made except in accordance with section 118(2) of the said Act. Further, there was substitution of sub-clause ( e) to explanation 8 to section I I 8(1) by which the original sub-clause (e) was deleted and substituted by new sub-clause (e) D under which in cases where duty has been passed on by the manufacturer to the buyer, the relevant date for cmnputing the period of limitation would commence from the date of purchase of goods by the buyer. At this stage, it is important to note that although sub-clause (e} as it stood prior to 20.9.1991 dealt with the period of limitation in cases of refund of duty paid under provisional 3ssessment, the substantive provision for provisional assessment E of duty was rule 98. Therefore, even with the deletion of old sub-clause (e}, rule 9B continued during the relevant period. The deletion of sub-clause (e) and continuation of rule 98 shows that the section 11 B (as amended) applied to claiming of refunds where the burden was on the applicant to apply within time and prove that the incidence of duty has not been passed on whereas F rule 9B covered cases of ordering of refund/making of refund, where on satisfaction of the conditions, the concerned officer was duty bound to make the order of refund and in which case question of limitation did not arise and. therefore. there was no requirement on the part of the assessee to apply under section 11 B. Lastly, rule 9B referred to payment of duty on provisional basis by the assessee on his own account and; therefore, in cases where the G manufacturer has been allowed to invoke this rule and refund accrues on adjustment under rule 9B(5} that refund is on the account of the manufacturer and not on the account of the buyer. If one reads section 11 B on one hand and rule 98 on the other hand, both indicate payment by the assessee on his own account and refund becomes due on that account alone.

H In the light of what is stated above, we now quote hereinbelow para

. )

:....

104 of the judgment of this Court in the case of Mafatlal Industries Ltd. A (supra): -

"I 04. Rule 9-B provides for provisional assessment in situations specified in clauses (a), (b) and (c) of sub-rule (1).

The goods provisionally assessed under sub-rule (I) may be cleared for home consumption or export in the same manrir ?5 the goods which are finally assessed. Sub-rule (5) provides that "when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against

the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall C pay the deficiency or be entitled to a refund, as the case may be".

Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9-B will not be governed by Section 11-A or Section 11-B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ D petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be .governed by Section 11- B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9-B(5) reagitating th.e issues already E decided under Rule 9-B assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11-B.

It follows logically that position would be the same in the converse situation."

At the outset it may be pointed out that in para I 04 there is nothing to F suggest that payment of duty under protest 'ioes not attract bar of unjust enrichment. Para I 04 only states that if refund arises upon finalization of provisional assessment, section 11 B will not apply.

In the present case, reliance was placed by the respondent Mis APIL on the above para in support of its contention that payment of duty under protest G and payment of duty under provisional assessment are both "on account" payments under the Act. We do not find any merit in this argument. As discussed, there is a basic difference between duty paid under protest and duty paid under rule 9B. The duty paid under protest falls under section 11 B whereas duty paid under provisional assessment falls under rule 9B. That H

280 SUPREME COlJRT REPORTS

[2004] 3 S.C.R.

A section 118 deals with claim for refund whereas rule 98 deals with.maki1ig of refund, in which case the assessee has not to comply with section 118.

Therefore, section 118 and rule 98 operate in different spheres and, consequently, in para I 04 of the said judgment, it has been held that in cases where duty is paid under rule 98 and refund arises 0.1 adjustment under rule B 98(5), then such refund will not be governed by section 118. In the said para, it has been clarified that if an independent refund claim is made after adjustment on final assessment under rule 98(5), agitating the same issues, then such claim would attract section I I 8. This is because when the assessee makes an independent refund claim after final orders under rule 98(5), such application represents a claim for refund and, it would not come in the C category of making of refund and therefore, the bar of unjust enrichment would apply. Hence, there is no merit in the contentionofthe respondent Ml s APIL that although in this case duty was paid under protest, there was no difference between such payment and duty paid under provisional assessment under the said Act. This argument was obviously advanced because unless D the two payments are equated as contended, the respondent Mis APIL was required to comply with section I I 8. In this matter, duty has been paid under protest. It is the case of the respondent Mis APIL that since such payment was similar to payment under rule 98, the respondent Mis APIL was not required to com pry with section 118. In the light of the discussion hereinabove, we hold that the respondent was bound to comply with section E 118. Lastly, in any event, the application dated 11.2.1997 fell in the category of refund claim being made after finalization of assessment of NIIL and, therefore, section 118 had to be complied with in terms of para I 04 of the above judgment in the case of Ma/at/al Industries ltd. (supra). For above stated reasons, since there was failure to comply with section I 18, the p respondent was not entitled to refund.

The point which still remains to be decided is - whether the respondent herein was entitled to refund without complying with section 118 of the Act on the ground that it had stepped into the shoes of NllL (manufacturer) which had paid the duty under protest.

It was argued on behalf of the G respondent that NIIL had paid the excise duty under protest pending final assessment. which was ultimately decided in favour of NIIL and since NllL had sold the product to the respondent herein. the respondent was entitled to the benefit of the second proviso to section 11 B( I) which inter alia stated that limitation of six months shall not apply where duty had been paid under H protest. We do not find any merit in this argument. In the case of Bombay

" .

)..

Tyre fnternationa/ ltd. (supra), ii has been held by this Court that section 3 A of the said Act is a charging section whereas section 4 is a computation section which covers assessment and collection of excise duty. That the basis of assessment under section 4 was the real value of excisable goods which included manufacturing cost and manufacturing profit but excluded selling cost and selling profit. That the price charged by the manufacturer for sale B of the goods represented the real value of the goods for assessment of excise duty. In the case of Atic Industries ltd. v. H.H. Dave, Asstt. Collector of Central Excise, reported in AIR (1975) SC 960, this Court has held that the resale price charged by a wholesale dealer who buys goods from the manufacturer cannot be included in the real value of excisable goods in terms of section 4 of the said Act. Therefore, it is clear that the basis on which a C manufacturer claims refund is different from the basis on which a buyer claims refund. The cost of purchase to the buyer consists of purchase price including taxes and duties payable on the date of purchase (other than the refund which is subsequently recoverable by the buyer from the Department).

Consequently, it is not open to the buyer to include the refund amount in the D cost of purchase on the date when he buys the goods as the right to refund accrues to him at a date after completion of the purchase depending upon his success in the assessment. Lastly, as stated above, section 11 B dealt with claim for refund of duty. It did not deal with making of refund. Therefore, section 11 B(3) stated that no refund shall be made except in terms of section

11 B(2). Section 11 B(2)(e) conferred a right on the buyer to claim refund in E cases where he proved that he had not passed on the duty to any other person.

The entire scheme of section 11 B showed the difference between the rights of a manufacturer to claim refund and the right of the buyer to claim refu1id as separate and distinct. Moreover, under section 4 of the said Act, every payment by the manufacturer whether under protest or under provisional assessment was on his own account. The accounts of the manufacturer are different from the accounts of a buyer (distributor). Consequently, there is no merit in the argument advanced on behalf of tl1e respondent that the distributor was entitled to claim refund of "on account" payment made under protest by the manufacturer without complying with section 11 B of the Act.

As stated above, para 104 of the judgment in the case Ma.fat/al Industries ltd. (supra) states that if refund arises upon finalization of provisional assessment, section 1 lB will not apply. Para 104 of the said judgment does not deal with payment under protest. ln the light of what is stated herein, we may now consider the judgment of this Court in the case Sinkhai Synthetics

& Chemicals Pvt. ltd. (supra). ln that matter, the assessee was a manufacturer. H

A The assessee claimed exemption which was denied by the Department. The assessee went in appeal to CEGA T. Pending appeal, assessee paid excise duty under protest. The assessee succeeded before the CEGA T and claimed refund on 17.1.1991. Refund was denied by the Department. Therefore, it was a case of payment of duty under protest. However, in the said decision, this Court applied para I 04 of the judgment of the Constitution Bench in the B case of Mafatlal Industries ltd. (supra), which with respect, had no application.

As stated above, para I 04 of the judgment in the case of Mafatlal Industries ltd. (supra) dealt with refund consequent upon finalization of provisional assessment. Para I 04 does not deal with refund of duty paid under protest.

As stated above, there is a difference under the Act between payment of duty C under protest on one hand and refund consequent upon finalization of provisional assessment on the other hand. Th is distinction is missed out, with respect, by the judgment of this Court in the case of Mafatlal Industries ltd. (supra). We may also point out that the judgment in the case of Sinkhai Synthetics & Chemicals Pvt. ltd. (supra) is based on the conce~3ion made by the counsel appearing on behalf of the Department.

That judgment is, D therefore, per incuriam. Learned counsel for the respondent herein placed reliance on the judgment of this Cou1t in the case of TVS Suzuki ltd (supra).

In that case, application for refund was filed. This was on completion of final assessment. On 9.7.1996, the Department issued a show-cause notice as to why the refund claim shon Id not be rejected for non-compliance of E section I IB. By order dated 17.7.1996, the refund claim was rejected on the ground that it was beyond limitation. On appeal, the Commissioner (Appeals) observed that the bar of unjust enrichment was not applicable as the assessee claimed refund consequent upon final assessment. He allowed the refund claim. CEGAT agreed with the view of Commissioner (Appeals). Before this Court, the Department conceded rightly that in view of para I 04 of the F judgment of this Court in Mafa1la/ Industries ltd. (supra), bar of unjust enrichment was not applicable in cases of refund consequent upon adjustment u11der rule 9B(5). The judgment of this Court in the case of TVS Suzuki ltd. (supra), therefore, supports the view which we have taken herein above that refund consequent upon finalization of provisional assessment did not attract G the bar of unjust enrichment.

Mr. Ganesh, learned senior counsel appearing on behalf of the respondent vehemently urged that the issue arising in the present matter is squarely covered by the decision of Division Bench of this Court in the case of National Winder v. Commissioner o.f Central Excise, Allahabad, (2003) 154 H EL T 350 in which it has been held that if duty is paid by a manufacturer

.,,...

C.C.E. v. ALLIED PllOTOGRAHICS INDIA LTD. [KAPADIA. J.] 283

under protest then limitation of six months will not apply to a claim of refund A by a purchaser. For the reasons given hereinabove, we hold that the said judgment is per incuriam. At this stage, it is important to note that the Division Bench judgment [Hon. S.N Variava & B.P. Singh, JJ.] in the case of National Winder (supra) was delivered on 11.3.2003.

However, on 13.I 1.2003, the Division Bench [Hon. S.N. Variava & H.K. Serna, JJ.], has B referred the matter as stated above to the larger bench in the light of conflict which the Division Bench noticed between the earlier judgments of this Court on one hand and paragraph 104 of the judgment of the Constitution Bench , ). of nine-Judges in the case of Mafatlal Industries Ltd. (supra). Hence, by this judgment, we have clarified the position in law.

"'

Having come to the conclusion that the respondent was bound to comply with section 11 B of the Act and having come to the conclusion that the refund application dated 11.2.1997 was time barred in terms of section 11 B of the Act, we are not required to go into the merits of the claim for refund

by the respondent who has alleged that it has not passed on the burden of duty to its dealers. Mr. Ganesh, learned senior counsel however submitted D that this Court should not interfere, under Article 136 of the Constitution, in view of the concurrent finding of fact given by the authorities below that the respondent has not passed on the incidence of duty to its dealers. We do not find any merit in this argument. In May, 1974, the Department took the view that price declared by NHL in its price list cannot be accepted as assessable E value of excisable goods and price at which their sole distributor M/s AGIL sold the goods represented the correct price. Accordingly, on 8.5.1974 showcause notice was issued to NIIL as to why the prices submitted by NHL should not be rejected and why excise duty should not be collected from NIIL on the prices at which their distributor M/s AGIL sold the goods in the market. By order dated 31.12.1974, the Department held that the transactions F between NIIL and M/s AGIL (predecessor of the respondent herein) were not at anns length and accordingly it was ordered that the prices charged by the distributor M/s AGIL should be taken as a wholesale cash price under section 4 of the said Act, as it stood at the relevant time. However, later on, in view of the judgment of this Court in the case of Bombay Tyre International Ltd. G

(supra) the Department approved the price list of NHL vide order dated

31. I 0. I 984 and accepted the ex-factory price of NIIL. On the basis of the said order, NIIL claimed refund of Rs.1,25,34,988.97 on which the Department issued show-cause notice on 23.2.1987 calling upon NllL to show-cause why the said amount should not be credited to the Consumer Welfare Account.

NIJL objected. However, their objection was rejected. Thereafter, the litigation H

A took place as stated above. Ultimately, vide order dated 31.10.1997, the Assistant Commissioner Central Excise granted refund, which order was confirmed in appeal by the Commissioner (Appeals) and by CEGAT. Hence, the Department has come by way of the present Civil Appeal.

On the above facts, the short point which arises for determination is B whether incidence of duty was passed on by NllL to its distributor Mis AGIL and whether Mis AGIL in tum passed on the burden to its dealers. On the first point, NIIL conceded in the earlier proceedings before the High Court that it had passed on the duty burden to its distributor Mis AGIL. Therefore, the only question which we are required to decide is - whether Mis AGIL in C turn had passed on the duty burden to its dealers as alleged. In the present case, it was argued on behalf of the Department before the authorities below that 20% of the total price paid by Mis AGIL represented the duty recovered by NHL as a part of the sale price. It is important to note that Mis AGIL was the sole distributor of NHL. Therefore, it is highly improbable for a distributor to incur cost of purchase which included 20% element of duty in D addition to the purchase price without passing on the burden to its dealers.

From the record, it appears that during the disputed period 1974 to 1984, Ml s AGIL were in trading which further supports the above improbability.

In the present case, there is no material placed on record by Mis AGIL as to how it had accounted for the cost of purchase in its books and the accounting E treatment it gave to the said item at the time of payment of the purchase price. No record as to costing of that item has been produced. This material was relevant as in the present case NIIL conceded that it had passed on the burden of duty to its distributor Mis AGIL (buyer) and it was the buyer who claimed refund. It has been urged on behalf of the respondent and which argument has been accepted by the Authorities below that 20% of the total F price paid by Mis "AGIL to NIIL represented total excess excise duty levied and not the excess duty collected by NHL in the form of sale price from its distributor Mis NIIL.

It was argued that excess duty collected by NIIL represented only 1.62% of the total price. It was argued that resale price charged by Mis AGIL to its dealers had no relevance to excess excise duty G paid by Mis AGIL to NHL at the time of purchase as the sale price charged by Mis AGIL to its dealers was based on the prevailing market price. We do not find any merit in this argument. In the present case, the refund claim is made by a buyer and not by the manufacturer. The buyer says that he has not passed on the burden to its dealers. The buyer has bought the goods from the mnufacturer paying the purchase price which included cost of purchase H plus taxes and duties on the date of purchase. In such cases, cost of purchase

f )

1 x

to the buyer is a relevant factor. None of the authorities below have looked A into this aspect. Even the appellate Tribunal has not gone into this relevant factor. It has merely quoted the passages from the order of the lower authority, whose order was impugned before it. Costing of the goods in the hands of the distributor, the cost element and the treatment given to purchases by the buyer in his own account were relevant circumstances which the Authorities B below failed to examine. It was submitted that cost of purchase was not a relevant factor. It was submitted on behalf of the respondent that the resale price charged by the buyer was not a relevant factor. It was submitted that since the sale price of the goods before and after the assessment remained the same the burden of excess duty was absorbed by the respondent. It was submitted that in any event the sale price of the goods increased much less C than the amount of duty (differential) involved in this case and, therefore, incidence of duty was not passed on to the consumers. In this connection, reliance was placed on several judgments of the Tribunal. We have gone through these judgments. They are not applicable to the facts of this case.

In the present case, we are concerned with the distributor buying the products D from the manufacturer and reselling them to its dealers. Hence, the cost of purchase is a relevant factor. The facts of the cases before the Tribunal deal with sale by manufacturer to the consumer. They deal with assessees' invoice bearing a composite price. They are the cases which dealt with the claim of refund by the manufacturer. They did not deal with claim of refund by the buyer. Hence, they have no bearing on the facts of the present case.

Before concluding, we may state that uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors. Hence, even on merits, the respondent has failed to make F out a case for. refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the

Constitution in view of the concurrent finding of fact.

Accordingly, this Civil Appeal stands allowed. The judgment and order G No.C-11/1748-50/WZB/2000 dated 13.6.2000 in Appeal No.E/3318/99-Mum passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai-II is hereby set aside. There shall be no order as to costs.

B.K.M.

Appeal allowed.