INTERNATIONAL CONVEYORS LTD. Vs COMMNR. OF CENTRAL EXCISE & CUSTOMS
Bench: ANIL R. DAVE,SHIVA KIRTI SINGH
Case number: C.A. No.-007895-007895 / 2004
Diary number: 25069 / 2004
Advocates: GAGRAT AND CO Vs
ANIL KATIYAR
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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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