Holding

The limitation period for filing refund applications under the Central Excise Act and Customs Act is mandatory and cannot be extended; refund claims must be supported by an affidavit as mandated in Mafatlal Industries, and the surcharge was upheld.

Summary

The Assistant Collector of Customs appealed against Anam Electrical Manufacturing Co. challenging the levy of a ten‑percent surcharge and the handling of a refund claim under the Central Excise Act, 1944 and the Customs Act, 1962. The Supreme Court examined whether the surcharge could be upheld and, more importantly, whether a refund application filed beyond the statutory limitation period could be entertained. Relying on the precedent set in Mafatlal Industries Ltd. v. Union of India (1996) 9 SCALE 457, the Court held that the limitation period prescribed in the statutes is mandatory and cannot be extended by any court or authority. It further directed that any refund claim, whether filed within or beyond the period, must be accompanied by an affidavit by the managing director or principal officer affirming that the duty has not been passed on to another person. The Court affirmed the Madras High Court’s order on the surcharge and disposed of the appeals, ordering no costs.

Issues considered

The legality of levying a ten‑percent surcharge under the Customs Act.
Whether a refund application filed after the limitation period prescribed by the Central Excise Act/Customs Act is maintainable.
The applicability of the Mafatlal Industries decision regarding affidavits and limitation periods in refund claims.
The effect of a constitutional challenge to a provision of the Central Excise/Customs Acts on the limitation period for refunds.

Legislation cited

Subjects

surchargerefund claimlimitation periodCentral Excise ActCustoms Actaffidavit requirementMafatlal decisiontax recovery

Judgment

A ASSISTANT COLLECTOR OF CUSTOMS AND ORS.
v.
ANAM ELECTRICAL MANUFACTURING CO. ETC.

JANUARY 28, 1997

B [S.C. AGRAWAL, B.P. JEEVAN REDDY AND
G.T. NANAVATI, JJ.]

Central Excises and Salt Act, I944/Customs Act, I962-Surcharge of
JOo/u-Levy of-Refund-To be made in accordance with the decision in
C Mafatlal Industries.

Mafatlal Industries v. Union of India, (1996) 9 SCALE 457, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1805-10
of 1979.
D WITH

Civil Appeal Nos. 18126 of 1979.

From the Judgment and Order dated 29.11.73 of the Madras High
E Court in W.P. No. 25-42170,137, 3631-34 of 1971.

AND

Civil Appeal Nos. 1503-1519 of 1978.

From the Judgment and Order dated 13.3.74 of the Madras High
F Court in W.P. Nos. 117-32 of 1974.

K.N. Bhat, Additional Solicitor General, G. Prakash and C.V. Subba
Rao for the Appellants.

D. Ramakrishna Reddy, A.V.V. Nair and S.K. Mehta for the
G Respondents.

The following Order of the Court was delivered :

Heard the counsel for the parties.

H So far as the question of levy of surcharge of ten percent which is in
648
)-
ASS1T. COLLECTOR OF CUSTOMS v. ANAM ELECTRICAL MFG.CO. 649
issue herein is concerned, we affirm the judgmen~ and order of the Madras A
..._......_ __ High Court. So far as the question of refund is concerned, it is obvious that
it shall be governed by the law declared in Mafatlal Industries v. Union of
India, (1996) 9 SCALE 457, read with clause (6) of the format order, a
... copy of which is enclosed herewith which is as follows :

"Where a refund application or an appeal is preferred under and B
in accordance with the directions (1), (2), (3) and (4) above, the
same shall be entertained only if the application for refund/appel-
!ant files affidavit stating that he has not passed on the burden of
the duty, which is claimed by way of refund, to another person. In
case the applicant for refund is a company or a society, the affidavit
shall be sworn by the Managing Director or the Principal Officer
c
of the Company or the Society, as the case may be. Such an affidavit
shall be treated as an averment/assertion which an applicant for
refund has to make in terms of the judgment in Mafatlal.

The appeals are disposed of in the above terms. No costs. D
-t. G.N. Appeals disposed of.

Pursuant to the directions given in Mafatlal Industries v. Union of
India, (1996) 9 SCALE 457, the appeals/Special Leave Petitions coming up
for disposal shall be disposed of in terms of one or the other of the clauses E
below:

(1) Where a refund application was filed by the manufacturer/pm-
chaser beyond the period prescribed by the Central Excise Act/Customs
Act in that behalf, such petition must be held to be untenable in law. Even
..
.>, if in any appeal, suit or writ petition, direction has been given that the
refund application shall be considered without reference to the period of
F

limitation prescribed in the Central Excise Act/Customs Act - or that the
period of limitation shall be taken as three years - such a direction of the
Appellate Court/Civil Court/High Court shall be deemed to be unsus-
J~
tainable in law and such direction shall be set aside. The period prescribed G
by the Central Excise Act/Customs Act for filing a refund application in
the case of "illegal levy" cannot be extended by any authority or court.

_, (2) Where, however, a refund application was filed within the period
prescribed by the Central Excise Act/Customs Act but has been dismissed
wholly or partly on any ground and the said order is questioned by way of H
-{
650 SUPREME COURT REPORTS [1997] 1 S.C.R.

A a writ petition or a suit or any appeal arising therefrom the manufac-
turer/purchaser shall be entitled to withdraw the writ petition, suit or an ;J

appeal arising therefrom, as the case may be, and file an appeal before the
appropriate appellate authority within sixty days from today. It is clarified
herewith that even in a case where such writ petition has been allowed and ..
_

an appeal filed by the revenue is pending, the writ petitioner shall be
B entitled to withdraw the writ petition, in which event, the revenue appeal
shall be disposed of 'permitting the writ petitioner to withdraw the writ
petition to pursue the remedy proposed hereby. If such an appeal is filed,
it shall be entertained without raising an objection on the ground of
limitation and shall be dealt with in accordance with law. This direction
8hall apply even in cases where the High Court or Civil Court is ap-
c proached after exhausting the remedy of appeal to Collector (Appeals).
He can file an appeal to C.E.G.A.T. within sixty days from today, after
withdrawing the writ petition or the suit, as the case may be.

(3) Where, however, a writ petition or suit claiming refund was filed
D directly in the High Court/Civil Court (i.e., without filing a refund applica-
tion), the petitioner/plaintiff shall be entitled to \vithdraw such writ peti-
.'-
tion/suit or any appeal arising the•efrom and prefer a refund claim under
section ll(B) within sixty days from today provided the writ petition or suit
was filed within the period prescribed by the Central Excise Act/Customs
Act for filing the refund application. It is clarified herewith that even in a
E case where such writ petition has been allowed and an appeal filed by the
Revenue is pending, the writ petitioner shall be entitled to withdraw the
writ petition, in which event, the Revenue appeal shall be disposed of
permitting the writ petitioner to withdraw the writ petition to pursue the
remedy proposed hereby.
F
(4) The above rules, however, do n::::t apply in the case of a claim for
.
,.,
refund of duty levied and recovered under an unconstitutional provision.
In such a case, the period of limitatior. shall be prescribed in Mafatlal
Industries. The duty to allege and prove that the duty has not been passed

G
on to another person, of course, remains even in such a case.

(5) Where a person challenges the constitutionality of a provision in
--
...

the Central Excise Act/Customs Act in a High Court or the Supreme Court
but fails in his challenge to constitutionality, he cannot, take advantage of ,_""
the decision in the case of another person striking down 'the said provision,
H as explained in the judgment. This rule is evolved in t~e particular context
r
ASSIT. COLLECTOR OF CUSTOMS v. ANAM ELECTRICAL MFG.CO. 651

of refund claims under these two enactments and has to be observed. A
(6) Where a refund application or an appeal is preferred under and

-- in acco!dance with the directions (1), (2), (3) and (4) above, the same shall
be entertained only if the applicant for refund/appellant files affidavit
stating that he has not passed on the burden of the duty, which is claimed
by way of refund, to another person. In case the applicant for refund is a B
company or a society, the affidavit shall be sworn by the Managing Director
or the Principal Officer of the Company or the Society, as the case may
be. Such a11 affidavit shall be treated as an averment/assertion which an
applicant for refund has to make in terms of the judgment in Mafatlal.

(7)(a) Where the refund claim is rejected by this Court, the assessee
c
who has already obtained any amount by way of refund shall be liable to
pay back the same to the department and the department shall be entitled
to recover the same in accordance with law.

(b) If the refund claim is rejected by an authority under the Act and D
where the assessee has already obtained the refund he shall be liable to~
pay back the said amount to the department according to law and the
department shall be entitled to recover back the said amount, subject to
orders, if any, by an Appellate Authority.

G.N. Appeal disposed of. E