Holding

Section 11B, as amended, applies only to pending refund proceedings and does not affect cases that had become final before the amendment; therefore the appellant is entitled to the refund without having to prove non‑passing‑on of duty.

Summary

Triveni Chemicals Ltd., a manufacturer of adhesive, deposited excise duty under protest and later obtained a classification that made the product exempt, prompting it to seek a refund of the duty paid. The initial refund application was rejected, but the appellate authority allowed the refund; however, no refund was subsequently made despite representations, leading the company to file a writ petition which the Gujarat High Court dismissed on the ground that the company must prove the duty was not passed on to customers. The Supreme Court was asked to decide whether Section 11B of the Central Excise Act, as amended by the 1991 Amendment Act, applied to the case and whether the appellant had to prove the burden of duty was not passed on. The Court held that the amendment’s retrospective operation was limited to proceedings that were pending at the time of its commencement and did not apply to cases that had become final before the amendment. Consequently, the authorities were bound by the doctrine of judicial discipline to honour the earlier refund order, and the appellant was not required to prove the non‑passing‑on of duty. The High Court judgment was set aside and the appeal was allowed, directing refund and awarding costs.

Issues considered

Whether Section 11B of the Central Excise Act, as inserted by the Central Excise and Customs Laws (Amendment) Act, 1991, is applicable to a refund claim where the original proceedings had become final before the amendment came into force.
Whether the appellant must prove that the incidence of excise duty was not passed on to its customers (unjust enrichment) in order to obtain a refund.
Whether the doctrine of judicial discipline obliges the administrative authorities to implement a refund order passed by the appellate authority.

Legislation cited

Central Excise Act, 1944s. 11B
Central Excise and Customs Laws (Amendment) Act, 1991s. 3 (inserting Section 118)

Subjects

Central ExciseRefund of dutySection 11BRetrospective legislationUnjust enrichmentDoctrine of judicial disciplineAdministrative vs judicial sideAmendment Act 1991

Judgment

TRIVENI CHEMICALS LTD. A
v.
UNION OF INDIA AND ANR.

DECEMBER I5, 2006

[S.B. SINHA AND MARKANDEY KATJU, JJ.] B

Central Excise Act, 1944-Section 1I B (As amended by Central Excise
and Customs Laws (Amendment) Act, 1991)-Refund of excise duty-Plea of
unjust enrichment raised by the claimant before the original as well as
appellate authorities-After order for refund from judicial side, demand of C
refund from administrative side-Denial of refund on the ground that it was
for the claimant to prove that the burden of duty had been passed on to the
customers relying on Amendment Act-Held: Claimant was entitled to refund-
Provisions of Section 1 I B as inserted by Amending Act would not be
applicable to application to be dealt with on administrative side- D
Administrative authorities were bound to refund the amount in view of
doctrine of judicial discipline-The provision is not applicable to cases
where proceedings came to an end before coming into force of the amending
provision-Doctrine of Judicial discipline-Doctrine of Unjust Enrichment-
Retrospective operation of statute.
E
Appellant, a manufacturer had deposited excise duty under protest After
the manufactured article was classified under exempted item, appellant became
entitled for refund of the duty and he applied for the same. He was denied
..- • refund. Appeal thereagainst was allowed. Appellant thereafter filed several
representations. Despite that refund was not made. Plea of unjust enrichment F
was taken before the original as well as the appellate authority. Such plea
was not taken in the representations. Appellant filed a Writ Petition which
was dismissed by High Court holding that the appellant was bound to prove
that the incidence of duty was not p&ssed on to its customers. Hence the present
appeal
G
The question for consideration before this Court was whether in the
facts of this case, Section I I B as amended by Section 3 of Central Excise
and Customs Laws (Amendment) Act, I99I is applicable.

1197 H
'....t •
1198 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A Allowing the appeal, the Court

HELD: 1. The respondents herein could raise all contentions before the
Appellate Authority. In fact, before the original authority, a plea of unjust
enrichment was raised. Such a plea, however, appears to have not been raised
before the Appellate Authority. If no such plea was raised, only because the
B appellant herein filed an application to be dealt with on the administrative side
for refund subsequently, the same would not attract the provisions of Section
11 B of Central Excise Act, t 944 as inserted by Central Excise and Customs
Laws (Amendment) Act, 1991. (1202-F-H)

2. The application filed subsequently by the appellant was required to
C be filed to proceed with the.matter on administrative side. Appellant had all
along been contending that despite such order, the amount in questi~n had
not been refu11ded. It was, therefore, obligatory on the part of the concerned
authorities to comply with the order passed by the Collector. The authorities
were bound to do so in view of the doctrine of judicial discipline. The same
D having not been done the plea sought to be raised now that it was for the
appellant to prove that the burden of the duty had not been passed to the
customers cannot be accepted. (1202-G-H; 1203-A-B]

3. Section 11 B was inserted with retrospective effect. However, the
retrospective effect and retroactive operation given to the said provision
E confined only to cases where the applications for refund were pending. The
said provision did not apply to a case where the proceeding had come to an
end before coming into force of the said amending provision. (1203-B-C]

Mafatlal Industries Ltd and Ors. v. Union of India and Ors., (1997] 5
SCC 536; Commissioner of Central Excise, Mumbai-II v. Allied
F Photographies India Ltd, (2004] 4 sec 34, distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5836 of2006.

From the final Judgment and Order dated 29.9.2004 of the High Court
of Gujarat at Ahmedabad in S.C.A. No. 7949/1991.
G
Jay Savla and Reena Bagga for the Appellant.

Mohan Pararsaran, A.S.G., B. Krishna Prasad for the Respondents.

The Judgment of the Court was delivered by
H
TRI VEN I CHEMICALS LTD. v. U.0.1. [S.B. SINHA, J.] 1199
S.B. SINHA, J. Leave granted. A
Appellant is a manufacturer of 'Adhesive' falling under Tariff Item No.
68 of the erstwhile schedule to the Central Excise and Salts Act, 1944. It was
classified as such. It deposited the excise duty under protest. A dispute
arose as it was held to be classifiable under Tariff Entry No. 68 by an order
dated l l.l l.l 985. Indisputably, the said order attained finality. The question B
which arises for consideration is as to whether the appellant was entitled to
refund of the excess amount of the excise duty paid by it. An application
therefor was filed on 19.03.1985. The said application was rejected. An
appeal was preferred thereagainst before the Collector of Central Excise
(Appeals). By an order dated 07 .09.1989, the said appeal was allowed stating C

" ... The refund arising due to this order cannot be rejected on the plea
that the department has preferred an appeal against the order of
CEGAT in the case of Nevichem Synthetic Industries on the basis of
·~ which the above order was passed. The facts and circumstances of D
the appellant's case and that of Nevichem Industries and
distinguishable. It is seen that the Asstt. Collector has not based his
conclusion upon the ratio of the said CEGA T judgment. A casual
reference has been made to the said CEGAT order by the Asstt.
Collector after reaching a findings on the classification of the impugned
product. In view of the matter the appeal filed by the department E
against the CEGTAT order will have no effect on the appellants even
if it is decided in favour of the department."

... Appel!~nt thereafter filed several_representations dated 2l.Q9.1989 and
l I .07.1991 for refund of the said amount. As despite the said representations,
the amount in question was not refunded, a notice of hearing was given to F
it on 06.08.1991.

It filed a writ petition. By reason of the impugned judgment, the writ
petition of the appellant was dismissed, opining :

"In view of the above, learned Standing Counsel Shri Malkan for G
the respondents was very much right in submitting that the
respondents were not required to file any reply to such type of
petition. He has rightly submitted that at first instance there was
gross delay of about 2 years in approaching this Court by way of
petition for the claim of their refund and no one had remained present H
,-
1200 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A on 26.8.1991, therefore, the respondent no. 2 has not passed any order
on the refund application of the petitioner. He submitted that in
absence of any written order passed by the respondent no. 2, this
Court should not entertain this petition. There is a lot of substance
in this submission. If the respondent no.2 had at all conveyed orally
to the representative of the petitioner on 26.8.1991 that the petitioner
B was not entitled for any refund on the ground of unjust enrichment ~ .
then the petitioner could have requested the respondent No.2 in
writing to pass such order in writing. But, nothing is done and it
seems that because of the delay of 2 years after sending reminder to
the respondent No. 2 for refund, the petitioner approached this Court
c in October, 1991 by way of this petition taking advantage of the letter
dtd. 6.8. I 991 issued by the respondent No.2.

In view of the above discussion, this petition fails and is dismissed.
Rule is discharged. However, there shall be no order as to costs."

Section 11 B of the Central Excise Act, 1944, (for short, 'the Act') as was
D
applicable at the relevant point of time, read as under :

"Section 11 B: Claim for refund of duty.- (I) Any person claiming 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
E months from the relevant date.

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

(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
..
,

F of excise paid by the applicant should be refunded to him, he may
make an order accordingly.

(3) Wbere as a result of any order passed in appeal or revision
under this Act refund of any duty of excise becomes due to any
persons the Assistant Collector of Central Excise may refund the
G amount to such person without his having to make· any claim in that
behalf."

It underwent an amendment on or about 20 .09 .1991 by reason of Section
3 of the Central Excise and Customs Laws (Amendment) Act, 1991, which
H reads as under :
TRIVENI CHEMICALS LTD. v. U.0.1. [S.B. SINHA, J.] 1201

"Section 118: Claim for refund of duty.-(l) Any person claiming A
refund of any duty of excise may make an application for refund of
such duty to the Assistant Commissioner 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 B
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 C
before the commencement of the Central Excise 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 sub-
section (2) substituted by the Act.
•.
D
Provided further that the limitation of six months shall not apply
where any duty has been paid under protest.

(2) If, on receipt of any such application, the Assistant
Commissioner 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 E
an order accordingly and the amount so determined shall be credited
to the Fund.

Provided that the amount of duty of excise as determined by the
Assistant Commissioner of Central Excise under the foregoing
·> provisions of this Sub-section shall, instead of being credited to the p
Fund, be paid to the applicant, if such amount is relatable to :

(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 G
account current maintained 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; H
' . '' '
1202 SUPREME COURT REPORTS (2006) SUPP. 10 S.C.R.

A (d) 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;
(t) the duty of excise borne by any other such class of applicants
B 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
c concerned 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
or any other law for the time being in force, no refund shall be made
D except as provided in Sub-section (2)"

The short question which arises for consideration before is as to whether
in the peculiar facts and circumstances of this case, Section 11 B, as amended
by Section 3 of the Central Excise and Customs Laws (Amendment) Act, 1991,
E would be applicable.

We have noticed hereinbefore that the application for refund was rejected
by the Assessing Authority. It was, however, allowed by the Appellate
Authority. It is not in dispute that no further appeal was taken therefrom. The
said order, therefore, attained finality. It matters little as to whether the
F application for refund was in the prescribed form or not. The respondents
herein could raise all contentions before the Appellate Authority. In fact,
before the original authority, a plea of unjust enrichment was raised. Such
a plea, however, appears- to have not been raised before the Appellate
Authority. If no such plea was raised, only because the appellant herein filed
an application to be dealt with ori the administrative side for refund
G subsequently, the same would not, in our considered view, attract the
provisions of Section 118 as inserted by the Amending Act of 1991.

The application filed subsequently by the appellant was required to be
filed to proceed with the matter on administrative side. Appellant had all
H along been contending that despite such order, the amount in question had

, ) ..'
_... ....,

TRIVENLCHEMICALS LTD. v. U.0.l. [S.B. SINHA, J.] 1203

not been refunded. It was, therefore, obligatory on the part of the concerned A
authorities to comply with the order passed by the Collector. The authorities
were bound to do so in view of the doctrine of judicial discipline. The same
having not been done, in our opinion, the plea' sought to be raised now that
it was for the appellant to prove that the burden of the duty had not been
passed to the customers cannot be accepted.
B
Section I I 8 was inserted with retrospective effect. However, the
retrospective effect and retroactive operation given to the said provision
confined only to cases where the applications for refund were pending. The
said provision did not apply to a case where the proceeding had come to an
end before coming into force of the said amending provision. C
Reliance placed by the learned Additional Solicitor General upon a
decision in Ma/at/al Industries Ltd and Ors. v. Union of India and Ors. [I997]
5 SCC 536, in our opinion, is misplaced. Therein this Court categorically held
that the provision of Section I I 8 as· amended in the year 1991 would not
apply to a case where proceeding for refund had come to an end. B.P. Jeevan D
Reddy, J. speaking for the majority, observed :

"(xi) Section 11-B applies to all pending proceedings notwithstanding
the fact that the duty may have been refunded to the petitioner/
plaintiff pending the proceedings or under the orders of the Court/
Tribunal/Authority or otherwise. It must be held that Union of India E
v. Jain Spinners and Union of India v. /. T.C. [I 993] Suppl. 4 S.C.C.
326, have been correctly decided. It is, of course, obvious that where
the refund proceedings have finally terminated - in the sense that the
appeal _period has also expired - b.efore the commencement Qf the 199 I
(Amendment) Act (September 19, 199I), they cannot be re-opened F
and/or governed by Section 11-8(3) (as amended by the 1991
(Amendment) Act). This, however, does not mean that the power of
the appellate authorities to·. condone delay in appropriate cases is
affected in any manner by this clarification made by us."

K.S. Paripooman, J. in his separate judgment observed :
G
" ... Sections 118(2) and (3) cannot be made applicable to refunds
already ordered by the court or the refund ordered by the statutory
authorities, which have become final. It follows from a plain reading
of Section 118, Clauses (1) (2) and (3) of the Act. The provisions
contemplate the pendency of the application on the date of the coming H

._
1204 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A into force of the Amendment Act or the filing of an application which
is contemplated under law, to obtain a refund, after the Amendment
Act comes into force. I am of the opinion, that if the said provisions
are held applicable, even to matters concluded by the judgments or
final orders of courts, it amounts to stating that the decision of the
court shall not be binding and will result in reversing or nullifying the
B decision made in exercise of the judicial power. The legislature does
not possess such power. The court's decision must always bind
parties unless the condition on which it is passed are so fundamentally
altered that the decision could not have been given in the altered
circumstances. It is not so herein. Shri Prithvi Cotton Mills Ltd and
c Anr. v. Broach Borough Municipality and Ors. and Madan Mohan
Pathak v. Union of India and Ors. etc.

S.C. Sen, J. who delivered the minority opinion, observed

"I shall now examine the other provisions of the newly added
D sections. Sub-section (I) of Section 118 requires an application for
refund to be made. Sub-section (2) requires the Assistant Commissioner
to pass an order of refund provided the conditions set out therein are
fulfilled. Sub-section (3) merely lays down that no refund shall be
made except as provided in Sub-section (2); There is a non obstante
clause that this will operate notwithstanding anything to the contrary
E contained in any judgment, decree, order etc. It is obvious that new
provisions will apply in cases where applications for refund were
made before the new provisions came into force and also subsequently.
Sub-section (3) has no retrospective effect. When a case has been
finally heard and disposed of and no application for refund need be
made, Sub-section (3) cannot apply. If there is a judgment, decree or
F
order which has to be carried out, the Legislature cannot take away
the force and effect o~ that judgment, decree or order, except by
amending the law retrospectively on the basis of which the judgment
was pronounced."

G We are not oblivious of the fact that this Court therein also dealt with
the applicability of the provisions of Section 72 of the Indian Contract Act,
1872, but then such a contention was specifically required to be raised. If
the same had not been raised, the Revenue at a later point of time could not
be permitted to raise the said plea.

H Strong reliance has been placed on Commissioner of Central Excise,
·• /
TRIVENICHEMICALS LTD. v. U.0.1. [S.B. SINHA,J.] 1205
Mumbai-II v. Allied Photographies India ltd. (2004] 4 SCC 34. Therein, the A
question which arose for consideration was as to whether despite a concession
made by the assessee that it had passed on the burden to its sole distributor,
the provision of Section 11 B of the Act was attracted or not. The distributor
moved an application on I 1.02. I 997 for refund under Section 11 B of the Act.
It was in the aforementioned fact situation, this Court held that the burden
to prove that the incidence of duty was not passed on the applicant seeking B
refund. The said decision cannot be said to have any application in the
instant case.

For the reasons aforementioned, we are of the opinion that the High
Court was not correct in opining that the appellant was bound to prove that C
the incidence of duty was not passed on to its customers. The impugned
judgment is set aside. The appeal is allowed with costs. Counsel' fee
assessed at. Rs.10,000/-.

K.K.T. Appeal allowed.

\ .,.