UNION OF INDIA AND ORS. versus JAIN SPINNERS LTD. AND ANR.

Citation: [1992] SUPP. 1 S.C.R. 484 · Decided: 10-09-1992 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
UNION OF INDIA AND ORS. 
v. 
JAIN SPINNERS LTD. AND ANR. 
SEPTEMBER 10, 1992 
[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. 
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. 
B 
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 
provisions of Section 11-B applicable with retrospective effect to all pend-
G 
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 

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