10th December, 2003
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Judicial Cell, North Block, New Delhi
Subject : Application of the doctrine of unjust enrichment to provisional assessment cases.
Please refer to Board’s Circular No.744/60/2003-CX Dated 11.09.2003, whereby it was informed that Department’s appeal on the above issue, in the case of T.V.S. Suzuki Ltd., has been dismissed by the Hon’ble Supreme Court vide their judgment dated 06.08.2003 [reported in 2003 (156) ELT 161 (SC)] and that the said judgment has been accepted by the Board.
Subsequent to the above, in Civil Appeal No. 2687/2001 in the case of CCE, Mumbai vs. M/s Allied Photographics India Ltd., vide order dated 13.11.2003, a two judge bench of the Hon’ble Supreme Court has expressed the view that the three judges bench decisions in the case of CCE, Chennai vs. T.V.S. Suzuki Ltd. [2003 (156) ELT 161] and Sinkhai Synthetics & Chemicals Pvt. Ltd vs. CCE, Aurangabad [2002 (143) ELT 17] are against the law as laid down by the 9 judges bench in the case of Mafatlal Industries Ltd. vs. Union of India [1997 (89) ELT 247] and has referred the matter to a larger Bench. A copy of the said order dated 13.11.2003 of the Hon’ble Supreme Court (as retrieved from the ‘Courtnic’) is enclosed.
You are requested to bring this development to the notice of all the field formations under your charge for necessary action at their end and advise them to keep the pending matters on the issue pending in the Call book, till the decision of the Hon’ble Supreme Court.
Joint Secretary (Review)
C. A. No. 2687 of 2001
ITEM NO. 104 COURT NO. -7 SECTION II
S U P R E M E C O U R T
O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No. 2687 of 2001
COMMNT. OF CENTRAL EXCISE, MUMBAI APPELLANT (s)
M/S. ALLIED PHOTOGRAPHICS INDIA LTD. RESPONDENT (s)
(with appln. (s) for intervention and with office report)
Date : 13/11/2003 This petition was called on for hearing today.
HON’BLE MR. JUSTICE
HON’BLE MR. JUSTICE H.K. SEMA
For Appellant (s) Mr. A.K.
Ganguly, Sr. Adv.
Mr. Dileep Tandon, Adv.
Mr. B.K. Prasad, Adv.
For Responden (s) Mr. S.
Ganesh, Sr. Adv.
Mr. J.F. Pochkhanawalla, Sr. Adv.
Mr. Shri Narain, Adv.
Mr. Sandeep Narain, Adv.
Ms. Anjali Jha, Adv. for
M/s. S. Narain & Co. Advs.
Mr. Ashok H. Desai, Sr. Adv.
Mrs. Bimla Sharma, Adv.
Mrs. Kum Kum Sen., Adv.
UPON hearing counsel the court made the following
O R D E R
In this appeal, a question has arisen whether a claim for refund can be allowed without taking into consideration the doctrine of unjust enrichment after final assessment.
Reliance has been placed upon a 3 – Judge Bench decision of this Court in the case of Sinkhai Synthetics and Chemicals Pvt. Ltd. Vs CCE, Aurangabad reported in 2002 (143) E.L.T. 17 wherein from the facts it would appear that a final assessment had taken place. This Court held as follows :
“4. Subsequent to this decision of the Tribunal a Bench of nine learned Judges of this Court has resolved the issue in favour of the assessees. The judgment is in Mafatlal Industries Ltd Vs Union of India (89) E.L.T. 247. The relevant paragraph is Para (95), and it, so far as is relevant, read thus:
“Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as 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 in excess of the duty finally assessed, the assessee shall 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 9B will not be governed by Section 11A or Section 11B, as the case may be.”
5. “It is fairly not disputed by learned counsel for the Revenue that the decision in Mafatlal Industries Ltd governs the appeals.”
It is to be noted that this decision proceeds on a concession made by counsel for the Revenue. The question whether on a final assessment the doctrine of unjust enrichment would apply was not dealt with as it was not argued. Further, this judgment basis itself on the above quoted paragraph in Mafatlal Industries Ltd. case [(1997) 5 SCC 536]. However, the entire paragraph in Mafatlal Industries case reads as under: -
“Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as 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 in excess of the duty finally assessed, the assessee shall 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 9B 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 petition or suit, as the case may be, assuming that such a writ 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 a s a consequence of the decision in such appeals 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 the issues already 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.”
From the portion highlighted above, it appears that the nine Judge Bench in Mafatlal Industries case is laying down that if a final order is passed, then a refund claim would be governed by Section 11-B.
Reliance was also placed upon another 3-Judge Bench decision of this Court in the case of Commissioner of Central Excise, Chennai vs T.V.S. Suzuki Ltd., reported in 2003 (156) E.L.T. 161 wherein also there was a final assessment. Here again the latter portion of the paragraph from Mafatlal Industries case has not been noticed.
To us it appears that the aforementioned two decisions of 3-Judge Benches are against the law as laid down by 9-Judge Bench in Mafatlal Industries Ltd. As the judgments are of 3-Judge Benches and the question of law is an important question, we consider it necessary that the question whether a claim for refund made after a final assessment is government by Section 11-B, be referred to a larger Bench. The papers may be placed before the learned Chief Justice for constituting a larger bench.
It must be mentioned that it was submitted on behalf of the respondents that even in this case there were only provisional assements. This submission has been disputed by learned counsel for the appellants. However, at present we are not going into this disputed question as we feel that his question required to be determined by a larger bench.
Court Master Court Master