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NON-REPORTABLE                   

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7895  OF 2004

INTERNATIONAL CONVEYORS LTD. APPELLANT

VERSUS

COMMNR. OF CENTRAL EXCISE & CUSTOMS      RESPONDENT

J U D G M E N T

    ANIL R. DAVE, J.

1. Being aggrieved by the Order No. A/1426/WZB/2004/CI  

dated  6th September,  2004  of  the  Customs,  Excise  and  

Service  Tax  Appellate  Tribunal,  West  Zone  Bench  at  

Bombay  in  Appeal  No.C/560/04,  the  appellant  has  

approached this Court by way of this appeal.

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2. In our opinion,  this case hardly involves any legal issue  

but  we feel more concerned about  the  hard  luck  of the  

appellant, a manufacturer of PVC Coal Conveyor Belting  

made from imported Nylon Yarn.  We do not propose to  

go  into  the  circumstances  in  which  the  litigation  had  

started but we start from the point which gave rise to some  

confusion  and  as  a  result  thereof  the  appellant  was  

dragged to the present litigation.

3. Upon hearing the learned counsel appearing for the parties  

and on perusal of the impugned order and other relevant  

orders, we find that there was some issue with regard to  

imposition of duty on import of Nylon Yarn.  It was held  

by  the  Central  Excise  &  Gold  (Control)  Appellate  

Tribunal, New Delhi by its order dated 5th April, 1991 that  

the case put forward by the appellant with regard to the  

classification of the goods imported by it was correct and  

the amount  which had been demanded by the Revenue,  

which had been paid by the appellant under protest should  

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be returned to the appellant upon production of evidence  

of  end use of the imported yarn in the manufacturing of  

belting  to  the  satisfaction  of  the  concerned  Assistant  

Collector.

4. In  pursuance  of  the  above  order,  the  appellant  filed  a  

refund  claim  along  with  relevant  documents,  for  

Rs.17,35,119/-,  the  amount  which  was  paid  by way of  

duty under protest in respect of the nylon yarn which was  

imported by the appellant during the period commencing  

from February, 1987 to February, 1988.

5. As the amount of refund had not been paid in pursuance  

of the refund claim made by the appellant, the appellant  

was  constrained  to  file  Writ  Petition  No.5185  of  1993  

before the High Court of Bombay praying for a direction  

that  the  aforestated  amount  be  refunded  along  with  

interest  thereon to the appellant.   The said  petition  was  

allowed and by virtue of an order dated 19 th April, 1994,  

the  High  Court  had  directed  the  Revenue  to  take  

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appropriate action for making payment of the refund of  

Rs.17.35  lacs  within  three months  from the  date  of the  

order to the appellant.

6. After the aforestated order was passed by the High Court,  

the Assistant  Collector of Central  Excise issued a show  

cause notice dated 27.04.1994 calling upon the appellant  

to show cause as to why the application claiming refund  

should not be rejected on the ground of unjust enrichment  

as the amount of tax was alleged to have been recovered  

by  the  appellant  from  M/s.  Coal  India  Ltd.  and  M/s.  

Singarani Collieries Co. Ltd., to whom the goods had been  

supplied by the appellant.

7. In  pursuance  of  the  aforestated  show cause  notice,  the  

appellant  had  given  its  reply  on  9th May,  1994  giving  

details to the effect that the amount of duty paid had never  

been recovered from the aforestated two units which were  

substantially  controlled  by  the  Government.   Necessary  

evidence was also adduced and even the aforestated two  

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units also confirmed the fact that the aforestated amount  

of duty paid by the appellant had not been collected from  

them.  The said reply was duly considered by the Deputy  

Collector, Central Excise and Customs, Aurangabad and  

thereupon he passed a  final  order dated  5th April,  1995  

whereby  he  had  come  to  the  following  conclusion,  as  

recorded in his order:

“I have gone through the records of the case carefully.  As  regards  end  use  of  nylon  yarn,  the  jurisdictional  range  Supdt.  has  certified  that  the  raw  material  i.e.  nylon yarn imported under the said B/E has been used  in the manufacture of the conveyor belting.

As  regards  unjust  enrichment,  party  submitted  that their contracts were fixed price contract and were  without  any  escalation  clause  and  were  signed  even  before the dispute arose about the custom duty.  M/s.  Singarani Collieries Co. Ltd. and M/s. Coal India Ltd.  have also certified  that  they have not  paid  any extra  price due to increase in custom duty. Thus, it emerges  that  since  duty  is  paid  under  protest,  therefore,  the  limitation  u/s  27 of C.A. is  not applicable to subject  refund claim.

i) The refund claim is admissible on merit; ii) The refund claim is also admissible on the  

limitation period; iii) Also the excess duty incidence has not been  

passed on by the assessee on their buyers.”

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The aforestated facts, as recorded by the Deputy Collector,  

Central  Excise  and  Customs,  Aurangabad  clearly reveal  

that the amount of duty claimed by way of refund had not  

been collected by the appellant from the above named two  

buyers  who  had  purchased  conveyor  belting  from  the  

appellant.

8. It is, however, strange that the Deputy Collector, Central  

Excise  and  Customs,  Aurangabad  passed  the  following  

final order:

“I hereby sanction  the  refund  u/s  27  of  C.A.  –  1962  claim for  Rs.17,35,119/-  with  a  condition  that  the  party  should  give  an  undertaking  that  they will pay back money to the Government in  case Supreme Court decides the SLP No.2332/92  U.O.I.  Vs.  M/s.  Solar  Pesticides  Pvt.  Ltd.  in  favour of the Department.”

9. Apparently, there was no issue of captive consumption in  

the instant case and yet the appellant was directed to file  

an undertaking as stated hereinabove in the order.  Being  

in need of money, the appellant filed an undertaking under  

protest,  though, in our opinion,  it  was not necessary for  

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the  Deputy  Collector,  Central  Excise  and  Customs,  

Aurangabad to ask for such an undertaking.  Be that as it  

may, the said order was not challenged by anybody and  

therefore, it attained finality.  

10. Ultimately, this Court decided SLP No.2332/92, Union of  

India vs. M/s. Solar Pesticides Pvt. Ltd. and the judgment  

delivered in the said case has been reported at page no.705  

of  2000 (2) SCC.  

11. In  our  opinion,  the  aforestated  judgment  is  not  at  all  

relevant  so  far  as  the  appellant’s  case  is  concerned.  

However,  the  learned  counsel  appearing  for  the  

respondent  had  made  a  feeble  effort  to  correlate  the  

aforestated  judgment  and  the  facts  of  the  case  of  the  

appellant.  We do not agree with the submissions made by  

the learned counsel for the respondent for the reason that  

Union of India Vs. M/s. Solar Pesticides Pvt. Ltd. (supra)  

is a case where incidence of duty had been passed over to  

the buyer,  whereas in  the instant  case it  is  an admitted  

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fact,  even as  recorded by the  Deputy Collector,  Central  

Excise  and  Customs,  Aurangabad  that  the  incidence  of  

duty  had  not  been  passed  over  to  the  purchaser  of  the  

furnished  goods.   In spite  of  the  aforestated  fact,  by a  

show cause  notice  dated  3rd March,  2003  the  appellant  

was  called  upon  to  pay  the  amount  which  had  been  

refunded to the appellant in pursuance of the undertaking  

filed by the appellant  as per order dated 5th April,  1995  

passed  by  the  Deputy  Collector,  Central  Excise  and  

Customs, Aurangabad.  The aforestated show cause notice  

dated 3rd March, 2003 was replied to by the appellant on  

3rd April, 2003 and thereupon by an order dated 14 th July,  

2003 the said show cause notice had been dropped.  

12. The order dated 14th July, 2003, whereby the show cause  

notice dated 3rd March, 2003 had been dropped, was taken  

into review and by an order dated 31st March,  2004 the  

said  review  was  allowed  and  thereby  once  again  the  

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appellant was asked to pay the amount which had already  

been refunded to it.

13. The said order dated 31st March, 2004 was challenged by  

the  appellant  before  the  Tribunal  and  the  Tribunal  was  

pleased to dismiss the said appeal and the impugned order  

of  dismissal  dated  6th September,  2004  has  been  

challenged by the appellant in this appeal.

14. Upon hearing the concerned counsel and looking at  the  

facts of the case, it is very clear that it is an admitted fact  

that  the amount of duty paid by the appellant had never  

been passed over to the purchasers and the said fact has  

been  duly  recorded  by  the  Deputy  Collector,  Central  

Excise and  Customs,  Aurangabad  in  his  order dated  5th  

April,  1995.   The  said  order  has  attained  finality  as  

nobody challenged the said order. An undertaking, though  

strictly  not  required  to  be  given,  was  given  by  the  

appellant as demanded under the aforestated order dated  

5th April,  1995  and  ultimately  the  amount  had  been  

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refunded  to  the  appellant.   In  our  opinion,  there  is  no  

question of demanding the said amount again, especially  

when the facts which had been disputed by the Revenue  

before  the  Tribunal  had  already  been  admitted  in  the  

proceedings  which  had  been  initiated  by  the  Deputy  

Collector, Central Excise and Customs, Aurangabad in his  

order dated 5th April, 1995.  We are not in agreement with  

the findings arrived at by the Tribunal which are contrary  

to  the  facts  recorded  by  the  Deputy  Collector,  Central  

Excise and Customs, Aurangabad.  Unfortunately, the said  

order  has  not  been  referred  to  at  all  by  the  Tribunal.  

Without disturbing the findings arrived at by the Deputy  

Collector, Central Excise and Customs, Aurangabad in his  

order dated 5th April, 1995,  the Revenue could not have  

come to an altogether different conclusion on facts.  In our  

opinion,  due efforts  were made to  find  out  whether the  

amount of duty had been passed over to the purchasers,  

who  are  either  government  Companies  or  Corporations  

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controlled by the Government.  It has been clearly stated  

in the aforestated order dated 5th April, 1995 that even the  

purchasers had admitted the fact that the amount of duty  

paid by the appellant had not been passed over to the said  

purchasers or in other words, the said amount of duty had  

not been recovered from the said purchasers.

15. We fail to understand as to how the judgment delivered in  

U.O.I.  Vs.  M/s.  Solar  Pesticides  Pvt.  Ltd.  (supra)  is  

applicable to the case of the appellant.  Neither this is a  

case  of  captive  consumption  nor  is  a  case  of  unjust  

enrichment.

16. For  the  aforesaid  reasons,  we  quash  and  set  aside  the  

impugned  order  passed  by  the  Tribunal  dated  6 th  

September,  2004.   The  appeal  is  allowed  with  costs.  

Looking at the hardship suffered by the appellant, in our  

opinion, it would be just and proper to award an amount  

of Rs.25,000/- as costs and the said amount shall be paid  

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to the appellant within three months from the date of this  

order by the respondent authority.   

……….......................................J .

                                                      (ANIL R. DAVE)

……...........................................J.  (SHIVA KIRTI SINGH)

New Delhi February 25 ,  2014

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