UNION OF INDIA AND ORS.versusJAIN SPINNERS LTD. AND ANR.

A                       UNION OF INDIA AND ORS.
                                        v.
                      JAIN SPINNERS LTD. AND ANR.

                              SEPTEMBER 10, 1992

B    [M.N. VENKATACHALIAH, P.B. SAWANT AND N.P. SINGH, JJ.)

        Central Excises and Salt Act, 1944/Central Excises and Customs Laws
    (Amendment) Ac~ 1991:

C          Section 11-B-Refund of duty-Amount of duty deposited by assessee
    in Court- Revenue permitted to withdraw the amount by High Court, subject
    to condition that it will be re-paid if assessee succeeded in appeal-Sub-
    sequently assessee's appeal al/owe~Assessee making application for refund
    based on High Coun's ordel'-But meanwhile provision amended with
    retrospective effect-Applicability of provision to pending application - High
D   Court subsequently directing authorities to give effect to its earlier
    orde,-wiiether prope~ejection of the claim for refund-Whether vali~
    Courts should keep in mind the amended provisions before passing inter-
    locutory orders injuncting authorities from recovering duty.

E          The respondents-manufacturers of Cellulosic Spun Yarn containing
    man-made fibre of non-cellulosic origin, I.e., by blending celluloslc fibre
    and the waste of non-cellulosic origin in different proportions, filed two
    classification lists being List No.4/83 dated 5.7.1983 and List No. 9/84
    dated 1.3.1984 under Tariff Item No. 18 III (i) showing in each of the two
    lists (I) 85% of cellulosic fibre and 15% waste ofnon-celluloslc origin, (ii)
F   52% of celluloslc fibre and 48% waste of non-cellulosic origin and (Iii) 60%
    of celluloslc fibre and 40% waste of non-celluloslc origin.

          The Company started manufacturing yarn out of blending of
    NCSW/Vlscose and claimed classification under Tariff Item No. 18 III (i)
    as per classification List No. 4/83 dated 5.7.1983. Though the Assistant
G   Collector, Central Excise, initially accepted the Company's classification
    and granted concessional rate of duty under Notification No.275/82 dated
    13.11.1983, but subsequently, on the basis of test report of the Chemical
    Examiner, which revealed that the Company had mis~lassified and mis·
    stated the product, issued a show cause notice as to why the product
H   should not be classified under Tariff Item No.18 III (ii). The Company
                                        484
                       U.0.1. v. JAIN SPINNERS                         485

challenged the show cause notice, but the High Court rejected the Writ A
Petition.

     Thereupon, the adjudication process commenced and the demand
made in respect of six show cause notices was confirmed and a penalty was
imposed.
                                                                              B
      Aggrieved, the respondent-Company tiled a Writ Petition before the
High Court and also filed an appeal under Section 35 of the Central
Excises and Salt Act, 1944 before the appellate.authority.

       The High Court by its interim order of 20.11.85 directed the respon-   C
dent-Company to deposit the amounts in Court, and by its order of 19.2.86
permitted the appellants to withdraw the amounts so deposited, subject to
the condition that the appellants would refund the amounts with interest,
if the repondent-Company succeeded ultimately.

       Thereafter, the appeal filed by the Company was allowed by the         D
appellant authority and accoridingly the Company applied to the authori·
ties for refund of the amounts deposited by it with interest.

      During the pendency of the application, the respondent-Company
approached the High Court for permission to withdraw the Writ Petition E
and for a direction to the appellants to refund .the deposit with interest
thereon. This was resisted by the appellants on the ground that the
respondents had already recovered the duty in question from others and
hence they were not entitled to any refund. However, on 19.9.1991, the High
Court allowed the respondents' application thereby allowing them to
withdraw the petition and also observed that the ground of unjust enrich- F
men! could not be considered at that stage because of its interim order of
19.2.1986 permitting the conditional withdrawal of the deposit by the
appellants.

      Meanwhile on 20.9.1991 the Central Excise and Customs Law
(Amendment) Act, 1991 came into opeartion making the amended G
provisions of Section 11-B applicable with retrospective effect to all pend-
ing applications for refund of duty. The appellant-Union of India, there-
fore, took the stand that whether it was the High Court's order of
19.2.1986 or of 19.9.1991, in terms of the amended provisions, it was the
duty of the Assistant Collector to satisfy himself that no part of the duty H
    486                   SUPREME COURT REPORTS(l992] SUPP. 1 S.C.R.

A in respect of which the refnnd was claimed, was recovered by the respon·
    dents from any other person, before making any order of refnnd. Hence It
    filed an ,application before the High Court on 16th November, 1991,
    praying for time to consider the refund of the amount to the respondents
    in accordance with the amended provisions of Section ll·B of the Act. The
    respondent-Company also filed a contempt application In November 1991.
B
          On 19.2.1992, the High Court rejected the appellants' application.
    Thereafter, on 18.3.1992 the High Court passed an interim order directing
    the appellants to refund the amount to the respondents, if no decision was
    taken by the Government withlo four weeks on the application or the
C   Ameodemeot Act of1991.

          Thereafter, the Assistant Collector, Central Excise, passed an ex·
    haustlve order on 13.4.1992 holding that since the respondents had passed
    on the incidence of duty to others, they were not entitled to the refund of
    the amount and the interest thereon and rejected the respondents' chum
D   for the same.

          Thereafter, when the contempt petition filed by the respondents
    came up again for hearing on 20.4.1992 before the High Court, the order
    dated 13.4.1992 passed by the Assistant Collector, Central Excise was
E   brought to the notice of the High Court. The High Court rejected the
    Assistant Collector's order on the ground that the decision of the Assis·
    tant Collector was not that of the Government and directed the Union of
    India to deposit the entire amount together with bank Interest on or beCore
    the specified date and adjourned the Contempt Application filed by the
    respondents, for further orlfers in regard to interim relief.
F
          Allowing the appeals filed by the Union of India, this Court,

          HELD: 1.1. The High Court was not correct in holding that it was
   the Government whlcll ought to have considered the application of the
(j amended provisions of the Act to the instant case. Under the Act, the duty
   is cast upon the specified statutory authority, viz., the Assistant Collector,
   Excise to consider the said question. [496-E)

          1.2. When the amended provisions of Section 11-B of the Central
    Excises and Salt Act, 1944, came Into force on 20.9.1991, the respondents'
H   application for refund was pending before the Assistant Collector and,
                      U.0.1. v. JAIN SPINNERS                       487

therefore, as provided in the Act, the amended provisions were applicable A
to the said application. Even if this fact is disregarded on the ground that
independ-ontly of the said application, the respondents were entitled to the
refund by virtue of the order dated 19.2.1986 of the High Court, the
amended provisions of the Act would still be operative and prevent the
refund, since the provisions are retrospectively applicable, as stated in B
sub-section (3) of Section ll·B of the Act, to orders passed by the Court
as well. (496 F·G]

      1.3. Under the amended Section ll·B of the Act.when application for
refund of any duty of excise was made, the Assistant Collector of Central
Excise should satisfy himself that the claimant had not passed on the C
incidence of the duty to any other person. This obligation was cast on the
Assistant Collector even in respect of applications made before the com·
mencement of the said amended provisions. The amended provisions
further applied, notwithstanding anything to the contrary contained in
any judgment, decree, order or direction of the appellate Tribunal or any D
court or in any other provisions of the said Act or the rules made
thereunder or any other law for the time being in force. [492 G·H; 493-A]

       1.4. The High Court's order of 19.2.i986 under which alone the
refund was claimed could not be an exception to the said provisions nor E
could the High Court have made such order after 20.9.1991 directing the
payment contrary to the said provisions. The Assistant Collector in bis
order of 13.4.1992 bas discussed exhaustively the claim made by the
respondents and has pointed out that the respondents bad failed to prove
that they bad not passed on the duty in question to others. Whether the
reasons given by the Assistant Collector are valid or not is not for this F
Court to comment upon in the present proce.edings. The respondents have
their remedies to challenge the said orders on merits and they may pursue
the same. The only question is whether the order dated 20.4.1992 of the
High Court which is passed to give effect to its earlier order of 19.2.1986
Is valid or not. Since the order of 19.2.1986 attracts the provisions of G
sub-section (3) of Section ll·B of the Act which has come into force on
20.9.1991, the respondents are not entitled to take advantage of the said
order unless they succeed in showing to the statutory authorities that they
had not passed on the whole or any part of the duty in question to otb.ers.

                                                              (497 B·El   H
    488                  SUPREME COURT REPORTS[1992] SUPP. 1 S.C.R.

A          1.5. Ir it is accepted that the respondents were entitled to refund by
    virtue of order of the High Court dated 19.2.1986, it would defeat the
    amended provisions of the Act. It would then be open to the assessees to
    obtain orders from courts as in the present case, and instead of paying the
    assessed amount of duty to the authorities, deposit it in court and raise a
B   plea that what is deposited In court is not duty and the assessees are
    entitled to get the refund either directly from the court or If it is
    withdrawn by the authorities, from the authorities, notwithstanding that
    they have passed on the duty to others. It would create two artificial
    classes of assessees, viz., those who have paid the duty to the authorities
    and those who have obtained orders from the courts for depositing the
C   duties in courts. The former will, and the latter will not, be governed by·
    the amended provisions of the Act. This would result in a discriminatory
    and invidious situation. It would also open a new door for unjust enrich-
    ment by enabling the assessees to bypass the statutory provisions which
    have been speciflcally enacted to prevent the malpractice.
D                                                          [497 G-H; 498 A-CJ

         2.1. When In rare cases It becomes necessary to pass interlocutory
  orders injuncting the statutory authoriti"" from recovering the duty, the
  Courts should keep in mind the amended provisions of the Act and
E provide adequate safeguards in the order itself for adjudication of the
  question whether the assessee has passed on the burden of duty to others,
  and prevent withdrawal or refund of the amount in case the assessee fails
  to prov~ before the proper authority that he has not passed on the burden
  to oth~~s. If the authority after proper adjudication in that behalf comes
  to the connclusion that th~ assessee has faile4 to discharge the burden,
F the courts, where they have earlier injuncted the authorities from recover-
  ing the duty, instead of directing the amount to be paid to the assessee,
  should direct it to be credited to the fund created for the purpose, under
  the Act. Such direction will avoid further unnecessary controversy and
  litigation, although in stricto jure, It may not be necessary to do so. Even
G without such safeguards, the courts will be bound to follow the amended
  provisions of the law, and would be unable to order withdrawal of refund
  or the duty to the assessee unless the assessee discharges the burden cast
  on him by the statute. [499 E-HJ

          2.2. In the instant case, the High Court has competely ignored the
H provisions of the Act. [499-H]
                  U.0.1. v. JAIN SPINNERS [SAWANT, J.]                         489

    CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3576-77                            A
(NM) of 1992.

      From the Judgment and Order dated 20.4.1992 of the Bombay High
Court in Civil Application No. 3608 of 1991 and Contempt Petition No. 57
of 1992 in Writ Petition No. 810 of 1985.
                                                                                       B
     K.T.S. Tulsi, Addi. Solicitor General, T.C. Sharma and B. Krishna
Prasad for the Appellants.

     Kamal Parsurampuria, .Ms. Sunita Mukherjee and Ms. Hemantika
Wahl for the Respondents.
                                                                                       c
      The Judgment of the Court was delivered by

      SAW.(N'f, J.

      Leave granted.
                                                                                       D
       2. The respondents herein are the manufacturers of Cellulosic Spun
Yarn containing man-made fibre of non-cellulosic origin, i.e., by blending
cellulosic fibre and the waste of non-cellulosic origin in different proportions.
They filed two classification lists being List No. 4/83 dated 5.7.1983 and List
No. 9/84dated1.3.1984 under Tariff Item No.18 III (i) showing in each of the           E
two lists (i) 85% of cellulosic fibre and 15% waste of non-cellulosic origin, (ii)
52% of cellulosic fibre and 48% waste of non-cellulosic origin and (iii) 60%
of cellulosic fibre and 40% waste of non-cellulosic origin.

        3. It appears that from June 1983, the respondent-Company started
manufacturing yarn out of blending of NCSW/Viscose and claimed cl as-                  F
sification under Tariff Item No. 18 III (i) as per the classification list effective
from 5.7.1983. The main varieties were 40' and 605 and the rate of duty in July
1983 was Rs. 1.30 plus 15% (Additional Duty) plus 10% (Special Duty), i.e.,
total of Rs. 1.63 approximately, per k.g. for 405 yarn. For the same count of
yarn for Polyster/Viscose manufactured out of virgin fibre, the rate of duty
was Rs. 9.00 plus 15% (Additional Duty) plus 10% (Special Excise Duty),                G
i.e., total of Rs. 11.25 per k.g. The difference in Central Excise Duty on these
two varieties was, therefore, Rs. 9.60 per k.g. for 40' yarn. In the same
manner, the difference in duty for. 605 yarn was Rs. 6.75 per k.g. The clearar ·
ces of yam manufactured out of NCSW/Viscose blend started from July 1983
onwards as the classification list was filed w.e.f. 5.7.1983.                          H
    490                   SUPREME COURT REPORTS[l992) SUPP. 1 S.C.R.

A         4. At the initial stage, the Assistant Collector, Central Excise, Auran-
    gabad Division granted provisional approval and forwarded samples in
    both the cases to the Chemical Examiner for his report. The classification
    claimed by the Company was subsequently finalised granting concessional
    rate of duty under Notification No. 275/82 dated 13.11.1983.

B         5. Since the Deputy Chief Chemist in his test report observed that
    the yarn as classified by the respondent-Company contained fibres of
    non-cellulosic origin and the cellulosic fibres predominated in weight, the
    issue was taken for fresh proceedings. A show cause notice was issued on
    12.7.1984 asking the Company to show cause as to why their product should
C   not be classified under Tariff Item No. 18 III (ii) as they had misclassiffied
    and mis-stated the products.

          6. Against the said show cause notice, the respondent-Company
    approached the High Court by a writ petition under Article 226/227 of the
    Constitution. The High Court rejected the writ petition. Thereafter, the
D   issue was taken up for adjudication by the Assistant Collector, Central
    Excise and Customs, Aurangabad Division. During the relevant period, six
    show cause notices for different amounts, together totalling Rs.
    1,10,81,405.94 were issued to the respondent-Company.

          7. By his order dated 28.8.1985, the Assistant Collector, Central
E Excise confirmed the demand made on the respondent of Rs.l,10,81,405.94
    and imposed a penalty of Rs.500.

         8. Against the said order of the Assistant Collector, the respondent-
    Company preferred a writ petition in September, 1985 being Writ Petition
    No.810 of 1985 under Article 226 of the Constitution, in the High Court.
F
          9. On 28.10.1985 the respondent-Company also preferred an appeal
    being Appeal No.1424 of 1985 under Section 35 of the Central Excise and
    Salt Act, 1944 [the Act) before the Collector of Central Excise (Appeals],
    Bombay and applied for stay of the order of the Asstt. Collector,
G
          10. The Union of India contested the writ petition and filed its
    counter-affidavit. While the application for stay in the appeal was still
    pending, writ petition came up for hearing on 20.11.1985 for admission,
    and the High Court on that day passed the following order:

H            "Rule. Interim stay on condition that petitioners [Respon-
                 U.0.1. v. JAIN SPINNERS [SAWANT, J.]                     491

         dents herein] deposit in this Court an amount of Rupees                 A
         Twenty Eight Lacs by 31st January, 1986 and a further
         amount of Rupees Twenty eight lacs by 30.4.198~. For
         further clearance Petitioner [Respondents herein] to give
         bank guarantee of the disputed duty on future clearance
         and pay admitted duty as per 18 III [i] of Central Excise
         Tariff. Liberty to respondents [Petitioners herein] to
                                                                                 B
         apply."

       The High Court passed the following further order in the writ
petition when it came up for hearing again on 19.2.1986:

         "Permitted to withdraw subject to the condition that the
                                                                                 c
         Respondent in this Writ Petition should pay interest at
         Bank rate and refund the amount along with interest within
         two months of the decision of the Writ Petition provided
         that the Petitioners succeed ultimately."
                                                                                 D
       11. The respondents deposited the said amount of Rs. 56 lakhs in six
instalments between 29.1.1986 and 7.8.1986 after obtaining extensions in
time for the relevant deposits. The appellant-Union of India received the
said amount from the High Court between 24.2.1986 and 14.8.1986 in three
different instalments.
                                                                                 E
      12. The appeal filed by the respondents was allowed by the learned
Collector on 19.4.1991. The operative part of the appellate order read as
follows:

        "The appeal is allowed and the appellants are eligible for
        the consequential reliefs, if otherwise admissible."
                                                                                 F

                                                        (Emphasis supplied)

      13. On 31.5.1991, the respondents filed an application for refund of
Rs. 56 lakhs plus interest of Rs. 51,44,202.73 at the bank rate, upto            G
31.5.1991. The application was filed before the Assistant Collector, Central
Excise, Aurangabad Division.

       14. While the said ap;ilication for refund was still pending before the
Assistant Collector, the respondents approached the High Court on
25.6.1991 with an application in the pending writ petition, being Civil          H
    492                  SUPREME COURT REPORTSfl992J SUPP. 1 S.C.R.

A   Application No.2061, of 1991, for the following reliefs:

          "[A] That the writ petition be disposed of by an order that
               impugned order having been set aside by the Collector
               [Appeals] the Writ Petition does. not survive.

B         [BJ   That the Respondents be directed to pay the sum of
                Rs.56 lakhs with interest thereon at 17.5% per annum
                within two months of the date hereof.

          [CJ   That the respondents also be directed to pay the sum
c               of Rs. ___with interest thereon at 18% per annum
                wiihin two months of the date hereof.

          [DJ   Such further and other reliefs be granted as the nature
                and circumstances of the case may require."

D         15. The application was resisted by the appellant-Union of India
    contending that the respondents had already recovered the duty in question
    from others and, therefore, they were not entitled to aoy refund. However,
    the High Court on 19.9.1991 allowed the application of the respondents
    thereby allowing them to withdraw the petition and also observed that the
E   ground of 'unjust enrichment' could not be considered at that stage be-
    cause of the interim order of 19.2.1986 whereunder the appellant-Union of
    India was permitted to withdraw the amount deposited by the respondents
    in the High Court subject to the condition that the appellaot-Union of
    India would pay interest at bank rate aod refund the amount along with
    interest within two months of the decision in the writ petition, provided the
F
    respondents succeeded ultimately.

          16. On the next day, i.e., on 20.9.1991 the Central Excises and Custom
    Laws [Amendment] Act, 1991 came into operation making the amended
    provisions of Section 11-B applicable with retrospective effect to all pend-
G   ing applications for refund of duty. The amended Section 11-B inter a/ia
    provides that when application for refund of any duty of excise is made the
    Assistant Collector of Central Excise would satisfy himself that the
    claimant had not passed on the incidence of the duty to any other person.
    This obligation is cast on the Assistant Collector even in respect of applica-
H   tions made before the commencement of the said amended provisions. The
                  U.0.1. v. JAIN SPINNERS [SAWANT, J.]                 493

amended provisions further apply notwithstanding anything to the contrary A
contrained in any judgment, decree, order or direction of the appellate
Tribunal or any court or in any other provisions of the said Act or the rules
made thereunder or any other law for the time being in force. The appel-
lant-Union of India, therefore, took the stand that whether it was the High
Court's order of 19.2.1986 or of 19.9.1991 [which was passed prior to the B
coming into operation of the amended provisions on 20.9.1991 and obvious-
ly without taking congnizance of them], it was the duty of the Assistant
Collector to satisfy himself that no part of the duty in respect of which the
refund was claimed, was recovered by the respondents from any other
person, before making any order of refund.
                                                                              c
      17. Hence on November 16, 1991 the appellant-Union of India filed
an application being Civil Application No. 3553 of 1991 before the High
Court praying inter alia that two months' time be granted to them to
consider the refund of the amount to the respondents in accordance with
the amended provisions of Section li-B of the Act.                            D
      18. In November 1991, the respondent-Company also filed a con-
tempt petition being Civil Application No. 3608 of 1991 in the High Court
making a grievance that in spite of the orders of the High Court the
appellants had failed to comply with the same and asking for committing
the officers of the appellant for contempt. On 21.1.1992, yet another         E
contempt petition being Contempt Petition No.57 "of 1992 was filed for the
same purpose ostensibly on the ground that in the meanwhile there was a
change of the incumbent in the post of the Assistant Collector, Central
Excise.

      19. It appears that only appellants' application being Civil Applica-   F
tion No. 3553of1991 came up for hearing on 19.2.1992,.and the High Court
passed the following order:

        "Heard learned Advocate. Rejected in view of order dated
        19.9.1991 passed by Division Bench while disposing of main
        Writ Petition No. 810/85."                                            G
       20. Thereafter, on 18.3.1992 the contempt petition being Civil Ap-
plication No. 3608 of 1991 came up for hearing, and the High Court passed
the following order:

        nHeard.                                                               H
    494                  SUPREME COURT REPORTS[1992] SUPP. 1 S.C.R.

A           2. Mr. D. Y. Lovekar, learned Counsel for the Respondents,
            submits that the question regarding the application of the
            C~ntral Excise and Custom Laws [Amendment] Act, 1991,
            is under consideration of the Government and, therefore,
            he wants four weeks time. In the event if no decision is
            taken within four weeks, the learned Counsel submits that
B           the department will deposit Rs.56,00,000 together with
            interest thereon at bank rate, which comes to about
            Rs.56,00,000. Shri Parshurampuria the learned Counsel for
            the Petitoner, indeed, contends that no further time could
            be granted as the amount has not been deposited in the
c           Court as previously directed. In the nature and circumstan-
            ces of the case, we are inclined to gr.ant the request of Shri
            Lovekar, learned Counsel for the Respondents. We, there-
            fore, adjourn this matter for four weeks. In the event the
            Respondents do not take decision on the questio11 of ap-
            plication of the aforesaid Act within four weeks from today,
D
            we direct the Respondents to deposit in this Court the
            amount of Rs.56,00,000 together with bank interest as
            stated above on or before 13th April, 1992. No further time
            will be granted on any count.

E           S.0. for 4 weeks."

          21. On 13.4.1992, the Assistant Collector, Central Excise, passed an
    exhaustive order holding that since the respondents had passed on the
    incidence of the duty to other, they were not entitled to the refund of the
    said amount of Rs.56 lakhs and the interest of Rs.51,44,202,73 and rejected
F
    the respondents' claim for the same.

           22. Thereafter, the contempt petition filed by the respondent being
    Civil Application No. 3608 of 1991 along with Contempt Petition No. 57 of
    1992 came up again for hearing on 20.4.1992 before the High Court. The
G   order passed by the Assistant Collector, Central Excise was brought to the
    notice of the High Court. The learned counsel for the respondents ad-
    mitted having received the said order and also made a statement that his
    client was filing writ petition challenging the said order of the Assistant
    Collector. However, the court held that the decision of the Assistant
H   Collector was not the decision of the Government and that the repre-
                U.0.1. v. JAIN SPINNERS [SAWANT, J.]                  495

sentation made earlier by the counsel for the appellant-Union of India was A
that it was the Government which was going to consider the question
regarding the application of the amended provisions of the Act and since
the Government had not conveyed its decision regarding the application of
the Act, the order passed by the Assistant Collector was irrelevant. The
High Court, therefore, directed the Union of India to deposit the entire B
amount of Rs.56 lakhs together with bank interest on or before 24.4.1992
and adjourned the Civil Application No.3608 of 1991 and Contempt Peti-
tion No. 57 of 1992 to 8.6.1992 for further orders in regard to interim relief.

       23. From the above· narration of events, the following things emerge
distinctly: Were it not for the order of stay obtained from the High Court, C
the amount of the duty would have been recoverd by the Department. The
orders of the High Court directing the respondents to deposit. the amount
in court and thereafter permitting the appellant-Union of India to withdraw
it were both during the pendency of the writ petition jn the High Court.
The order permitting the withdrawal was on the condition that the amount D
would be refunded provided the respondents succeeded ultimately. While
the Writ petition was still pending in the High Court, the appeal filed by
the respondents before the Collector, Central Excise was allowed in favour
of the respondents. As a consequence of the appeal being allowed, the
appellate order of the Collector clearly stated that the respondents would E
be eligible for the consequential reliefs "if otherwise admissible". As a
consequence of the appellate order, the respondents filed an application
on 31.5.1991 before the Assistant Collector for refund of the amount. While
the application for refund was still pending, the respondents also filed an
application before the High Court for withdrawal of the writ petition as
well as for a direction to the appellants to refund the amount with interest. F
This application was resisted by the appellants on the ground that the
respondents had recovered the duty in question from others and, therefore,
the refund of the said amount would unjustly enrich the respondents. The
application for withdrawal of the writ petition and for a direction to the
appellants to refund the amount was allowed by the High Court on G
19.9.1991 holding that the ground of unjust enrichment could not be
considered at that stage since the interim order dated 19.2.1986 was made
subject to the condition that the appellant-Union of India would refund
the amount provided the respondents succeeded ultimately. On the very
                                                                             H
    496                   SUPREME COURT REPORTS[l992] SUPP. 1 S.C.R.

A next day, i.e. on 20.9.1991 the amended provisions of Section 11-B of the
    Act came into force with retrospective effect and applied not only to all
    pending applications for refund of duty but also to all earlier orders and
    directions given by any court for such refunds. When the appellant-0 nion
    of India made an application to the High Court to consider the applicability
B   of the said amended provisions to the present case, time was granted by
    the High Court for the purpose, and within that time the Assistant Collec-
    tor considered the said question and passed his order of 13.4.1992 holding
    that the amended provisions of the Act applied to the present case and in
    view of the fact that on the material produced before him the respondents
C   had failed to prove that they had not passed on the burden of the duty to
    others, they were not entitled to the refund of the said amount. The
    respondent-Company has stated before the High Court that they were
    filing writ petition to challenge the said order of the Assistant Collector.
    The High Court, however, did not consider either the order dated 13.4.1992
    passed by the Assistant Collector or the question regarding the ap-
D   plicability of the amended provisions of the Act to the present case.

           24. It is difficult to appreciate the reasoning of the High Court that
    it was the Government which ought to have considered the application of
    the amended provisions of the Act to the present case. Under the Act, the
E   duty is cast upon the specified statutory authority, viz., the Assistant
    Collector, Excise to consider the said question. It cannot be disputed that
    the amount which was deposited by the respondents in the court and was
    withdrawn by the appellant-Union of India was towards the duty which was
    assessed by the Assistant Collector, Excise. As pointed out earlier, when
    the amended provisions of the Act came into force on 20.9.1991, the
F   respondents' application for refund filed on 31.5.1991 was pending before
    the Assistant Collector and, therefore, as provided in the Act, the amended
    provisions were applicable to the said applicatiOn. Even if we disregard the
    said fact, on the ground, as urged vehemently on behalf of the respondents,
    that independently of the said application they were entitled to the refund
G   by virtue of the order dated 19.2.1986 of the High Court, the amended
    provisions of the Act would still be operative and prevent the refund, since
    the provisions are retrospectively applicable, as stated in sub-section (3) of
    Section 11-B of the Act, to orders passed by the court as well. The said
    sub-section reads as follows:
H
                U.0.1. v. JAIN SPINNERS [SAWANT, J.]                    497

        "(3). Notwithstanding anything to the contrary contained                A
        in any judgment, decree, order or direction of the Appel-
        late Tribunal or any Court or in any other provisions of this
        Act or the rules made thereunder or any other law for the
        time being in force, no refund shall be made except as
        provided in sub-section (2)."
                                                                                B
       The High Court's order of 19.2.1986 under which alone the refund
was claimed could not be an exception to the said provisions nor could the
High Court have made such order after 20.9.1991 directing the payment
contrary to the said provisions. The Assistant Collector in his order of
13.4.1992 has discussed exhaustively the claim made by the respondents C
and has pointed out, for reasons recorded therein, that the respondents
had failed to prove that they had not passed on the duty in question to
others. Whether the reasons given by the Assistant Collector are valid or
not is not for us to comment upon in these proceedings and we express no
opinion on the same. The respondents have their remedies to challenge the D
said orders on merits and they may pursue the same. The only question
before us is whether the impugned order dated 20.4.1992 of the High Court
which is passed to give effect to its earlier order of 19.2.1986 is valid or
not. Since we are of the view that the order of 19.2.1986 attracts the
provisions of sub-section (3) of Section 11-B of the Act which has come E
into force on 20.9 .1991, the respondents are not entitled to take advantage
of the said order unless they succeed in 'bowing to the statutory authorities
that they had not passed on the whole or any part of the duty in question
to others.

       25. All the submissions made by Shri Parshurampuria, learned coun-
                                                                                F
sel for the respondents revolved round the said order of 19.2.1986 and are
merely different ways of expressing the same thing. The authorities cited
by Shri Parshurampuria do not really bear on the point. It is not, therefore,
necessary to discuss the said authorities here.
                                                                                G
      Further, if the contention advanced by the learned counself is ac-
cepted, it would defeat the amended provisions of the Act. It would then
be open to the assessees to obtain orders from Courts as in the present
case, and instead of paying the assessed amount of duty to the authorities,
deposit it in court and arise a plea that what is deposited in court is not H
    498                   SUPREME COURT REPORTS[1992] SUPP. 1 S.C.R.

A   <luty and the assessees are entitled to get the refund either directly from
    <he court or if it is withdrawn by the authorities, from the authorities,
    notwithstanding that they have passed on the duty to others. It would create
    two artificial classes of assessees, viz., those who have paid the duty to the
    authorities· and those who have obtained orders from the courts for
B   depositing the duties in courts. The former will, and the latter will not, be
    governed by the amended provisions of the Act. This would result in a
    discriminatory and invidious situation. The view canvassed by the learned
    counsel will also open a new door for unjust enrichment by enabling the
    assessees to bypass the statutory provisions which have been specifically
C   enacted to prevent the malpractice.

            26. One other contention raised by Shri Parshurampuria was that the
    Government had issued a circular on 4.1.1991 whereby attention was
    invited of all the authorities to the instructions of the Central Board of
    Revenue that if a duty is paid in case of goods which are fully exempted
D   "it will be in the nature of deposit with the Government and it will not be
    in the nature of duty". We are afraid that there is a misconception of the
    purport of the said circular. As is clear from the circular, it appears that
    certain manufacturers were trying to claim a grant of credit in respect of
    the duty paid on goods or in respect of finished goods which had used the
E   goods in respect of which the duty had been paid. In order to avail of the
    said credit, they were paying duty on exempted goods. It, therefore, became
    necessary to issue the circular in question and to point out, among other
    things, in paragraphs 2 and 3 of the same, as follows:


F           "2. The Ministry of Law has advised inter alia that an
            exemption notification having been made in accordance
            with the power conferred by the statute has statutory force
            and validity and therefore, the exemption is as if it is
            considered in Parent Act itself. It view of this, the law and
            Notification have to be followed. It is not the sweet will of
G           the manufacturers to pay the duty on exempted goods. The
            executive instructions contrary to the statutory position
            have no legal sanctity. Further, if a person deposits any
            amount in the name of excise duty which is not leviable by
            law the amount so deposited will not be in the nature of
H           duty; it will be in the nature of a deposit with the Gm·ern-
                U.0.1. v. JAIN SPINNERS [SAWANT, l.]                   499

        ment. As it will not be in the nature of duty, question of            A
        granting any credit in respect of the duty paid inputs or in
        respect of finished goods which have nsed the goods in
        respe~\ of which the duty has been paid, does not arise.
        Copy of the advice of the Ministry of law is enclosed
        herewith.
                                                                              B
        3. The Board agrees with the aforesaid advice of the
        Ministry of Law and according it is clarified that an asses-
        see has got no option to pay duty on his own volition in
        case the goods are fully exempted from payment of duty.
        Board's earlier instructions as contained in letter
        F.No.267/16/88.CX.8 dated 15.2.88 may therefore be
                                                                              c
        treated as withdrawn. 11

      The contention of the learned Counsel based on the said circular has,
therefore, to be rejected and the deposit made by the respondents in the
Court has to be held as one towards the duty.                                 D
      27. The present case has made it necessary to send a word of caution
to the courts that when in rare cases it becomes necessary to pass inter-
locutory orders injucting the statutory authorities from recovering the duty,
they should keep in mind the amended provisions of the Act and provide E
adequate safeguards in the order itself for adjudicaticn of the question
whether the assessee has passed on the burden of duty to others, and
prevent withdrawal or refund of the amount in case the assessee fails to
prove before the proper authority that he has not passed on the burden to
others. If the authority after proper adjudication in that behalf comes to
the conlusion that the assessee has failed to discharge the burden, the F
courts, where they have earlier injuncted the authorities from recovering
the duty, instead of directing the amount to be paid to the assessee, should
direct it to be credited to the fund created for the purpose, under the Act.
Such direction will avoid further unnecessary controversy and litigation,
although in stricto jure, it may not be necessary to do so. Even without such G
safeguards, the courts will be bound to follow the amended provisions of
the law, and would be unable to order withdrawal or refund of the duty to
the assessee unless the assessee discharges the burden cast on him by the
statute. In the present case the High Court completely ignored the
provisions of the statute and hence the note of caution.                      H
    500                SUPREME COURT REPORTS(l992) SUPP. 1 S.C.R.

A        28. In the view we have taken, we allow the appeals. There will,
    however, be no order as to costs.

    N.P.V.                                               Appeals allowed.