COMMNR. OF CENTRAL EXCISE, CALCUTTA versus M/S. PANIHATL RUBBER LTD

Citation: [2006] SUPP. 5 S.C.R. 847 · Decided: 08-09-2006 · Supreme Court of India · Bench: S.B. SINHA

Judgment (excerpt)

... 
COMMNR. OF CENTRAL EXCISE, CALCUTTA 
A 
v. 
M/S. PANIHA Tl RUBBER LTD. 
SEPTEMBER 8, 2006 
[S.B. SINHA AND DAL VEER BHANDARI, JJ.] 
B 
Central Excise Act, 1944 
Dispute regarding classification of goods for payment of excise duty-
Manufacturer depositing excise duty under protest-Contention of C 
manufacturer upheld-Manufacturer seeking refund of excise duty paid--
Authorities rejecting claim for refand applying principle of unjust enrichment-
Whether claimant entitled to refund of excise duty paid-Held, principle of 
unjust enrichment not attracted as price fixed under contract was inclusive 
of excise duty and burden of excise duty not passed on to customers-Jn the D 
facts, held, manufacturer entitled to refimd of excise duty. 
Constitution of India, 1950-Article 136-/nterference with findings of 
fact arrived at by Tribunal-Held, findings of fact by Tribunal should 
ordinarily be accepted-Practice and procedure. 
Respondent_ manufactures 'Hose Pipe' in terms of specifications of 
· railway administration and supplies goods against specific contracts to Indian 
Railways. Respondent used to pay 30% basic excise duty and 15% special 
duty on the said goods under the Central Excise Act, 1944. The goods came 
E 
to be classified under Sub-Heading 4009.92. The said.classification was in 
dispute as the respondent-manufacturers contended that goods were F 
classifiable under Sub-Heading 4009.90. Respondent, however, obtained 
clearance of goods on payment of duties under protest under classifiaction 
4009.92. The lis ended in favour of the respondent. Applications filed by 
respondent for refund of amount paid by way of excise duty was rejected by 
the authorities opining that the same would amount to unjust enrichment. G 
Respondent preferred appeal before the Customs, Excise and Gold (Control) 
Appellate Tribunal which was allowed and Tribunal directed refund holding 
that the. bar of unjust enrichment was not attracted as price fixed under the 
contract was inclusive of excise duty and burden of excise duty has not been 
passed on to customers. High Court in reference upheld the findings of the 
847 
II 
848 
SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R. 
A Tribunal. Hence this appeal by the authorities. 
B 
c 
D 
E 
F 
G 
H 
Appellant contended that finding of fact arrived at by Tribunal is based 
on no material; and that subsequent correspondence between respondent and 
railway administration regarding contracts were issued in collusion and were 
wholly irrelevant. 
Respondent contended that this Court under Article 136 of the 
Constitution of India should not interfere with findings of fact recorded by 
Tribunal. 
Dismissing the appeals the Court 
HELD: 1. It is now well settled that despite levy of excise duty in a given 
situation being held to be illegal, in the event it is found that the assessee in 
fact passed on the burden of excise duty to its customers, applying the principle 
of unjust enrichment, the Court would not ordinarily direct refund thereof. 
(852-BJ 
2.1. It is only during the pendency of the application filed by the 
respondent for revising classification list, it received four orders from the 
Railway Administration. The excise duty was specified as 'Nil' in the order 
dated 10th May, 1993. So far as the order dated 6th April, 1993 is concerned, 
no excise duty was specified. However, in the order dated 16th February, 1993 
a stipulation was made by the Railway Administration that the price was 
inclusive of duty, with a view to avoid the claim made by the respondent at a 
later stage on the ground that a duty had to be paid. It is also not in dispute 
that clarifications were obtained by the respondent from the Railway 
Administration specifically in this behalf. (852-F; 853-A-B) 
Mis. Rubber Products Ltd. v. Union of India, (1992) 43 ECR 520, 
referred to. 
2.2. If the price for supply of Hose Pipes in respect of the contract dated 
10th May, 1993 being@ Rs. 48.65p. did not include the element of excise 
duty, the same being 'Nil', the Tribunai may be correct in its opinion that the 
question of excise duty having been p11ssed by the respondent to the Railway 
Administration would not arise. In respect of the other three orders, wherein 
the rate quoted was Rs. 46.90p., Rs. 47.90p. and Rs. 48.65p. also the said 
question would not arise as the rate included the element of excise duty. 
(854-E-FJ 
Commissioner of Central Excise, Mumabi-11 v. Allied Photographies 
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• 
COMMNR.

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