SC and State of Malnrashtra Others v. Swanstone Multiplex Cinema

Counsel for ttre Respondent: Mr. Siddam Maneendra The Court delivered the following: COMMON JUIIGMENT P AND 4of COMMON JUDGMENT: @erthe Hon'bteSriJustice P'Sam Koshv) Heard Mr. Dominic Fernandes, leamed Senior Standing Counsel for CBIC appearing on behalf of the appellant / Revenue in both C.E.As., Mr. N.ViswanatharU learned counsel appearing on behalf of Mr. S.Shriram, learned counsel for the respondent / assessee in c.E.A. No.l 14 of 201[, and for Mr. Siddam Maneendra, learned counsel for the respondent / assessee in C.E.A. No.l55 of 2017. Z. These are two appeals under Section 35G of the Central Excise Act, lg44 (for short 'the Act') preferred by the appellant i.e. the Customs Department.

3. C.E.A.No.l14 of 2011 is one where the challenge is to the Final Order No.882 of 2@9, dated 26.03.2009 in Appeal No.CEl938/2008, passed by the Customs, Excise and Service Thx Appellate Tribunal, South Zone Bench at i i ; i ! I t t I I l Page 2 of l5 Bangalon:' The issue in this Appeal relates to the period between February, l9g5 to 26'04'1995- Furrher, c.E.A. No.155 0f 2017 is one where the cha'enge is to the Finar. order No. A/307g 2/2016 dated 03.0g.20 r 6 in Appeat No' E/g6zr/20rt, passed by the customs, Excise and service Thx Apperate Tribunal, l(egional Bench, Hyderabad. 4' vide the impugned order in c.E.A. Ntro.rss 0f 2017, thecESTAT herd rhat pursu.nr ro the Finar order No.gg2 0f 2*,g,dated 26.03.200g, refund arising our of the finarization of provisionar assessment during the period February Igg5 to Aprir, rgg5 need not pass the test of unjust enrichment and accordingry herd that the assessee is entitled for refund of Rs.2,g6 ,3g,r7/- for the period retween March, Igg5 to Apr,, rggr and March, tgg4 toAprir, I 995. 5' In C'r:'A' No'r55 0f 20r7,the claim of the assessee was finarized in rerms of the order dated 26-03.200g passed by the cEsTAT which is under challenge in C].E.A. No.il4 of 2011. 6' The p'imary contention of the leamed senior standing counser for .BIC in cr'E'A- No.r55 0f 2017 was that since the order dated 26.03.200g of \ \ \ \ }:-=--- --"-=,=o.. the CESTAI has already been challenged in C.E.A. No. 1 14 of 20 I I , it cannot be presumed that the provisional assessment has attained finality and therefore the CESTA[ ought not to have decided the appeal of the assessee which is under challenge in C.E.A. No.155 of 2017 and should have waited till the finalization of C.E.A. No.114 of 2011. Thus, the fate of C.E.A. No.l55 of 2Ol7 sotely revolves around the fate of C.E.A. No.l 14 of 2011. If the appeal of the Revenue viz.,C.E.A. No.l14 of 20ll fails or is dismissed, as a natural corollary C.E.A. No.1l4 of 2011 also would automatically get dismissed as the very ground of challenge in C.E.A. No.l55 of 2017 would no longer survive and the result would be in converse if C.E.A. No.1l4 of 2011 is allowed in favour of the Revenue.

7. [n view of the aforesaid factual backdrop, we proceed to decide C.E.A- No.l 14 of 2011. The substantial question of law raised in this appeal for ready reference is reproduced heretrnder: "whether 1ESTAT is iustified in holding that Principles oJ' [)nju.st Enrichment has not application in tlrc prcsent cose without considering lhe low laid down by Apex Court rcgarding Principles of Uniust Enrichment in decisions rcported in lvlls Sahakari kand {l$tog Mandal Limited Vs C'CE 2005(t8l)-ELT328 SC and State of Malnrashtra & Others Vs. Swanstone Multiplex Cinema (P) Limited 2009'TIOL-90-SC ET." I j Page 4 of I5

8. It would be relevant at this juncture to take note of the Circular of the Central Boerrd of Excise and Customs i.e. Circular No. 79412712N4-CX., dated 23.06.2004, whereby the Central Board of Excise and Customs clarified in respect cf the doctrine of unjust enrichment. to cases of provisional assessment and payment of duty paid under protest. The relevant portion of the said Cir<:ular is reproduced below: "The issue has since been decided by the Hon'ble Suprcme Court vide rheir .judgment in the case of Allied Photographics Ltd. [2004 (166) E.L.T'. 3 6.C.)J. wherein while holding the judgments in the cases of Sinkhai S),nthetics & Chemicals Pvt. Ltd. [2004 (143) E.L.T 17 (S.C.)J and National Wnders [2N)3 (154) E.L.T 350J fuhich were on the isiue of appli:abiliW of the provisions of unjust enrichmenl in casg of payment of duty under protest) to be per incuriam, Hon'ble &tprcme Court hos affirnted their judS4ment in the case of TV.S. Suzuki Ltd. [2003 (155) 8.1.7:-t6t (S.C tl II is requcsted that the fieldformotions in your charge be infurmed of this j udgment and clisposol oJ'pending cases. "

9. The Hon'ble Supreme Court in Commissioner of Central Excise, Chennai vr;. T.VS. Suziki Ltd.r referring to an earlier landmark decision on t I ' 2oo3 (156) E.L.T. 161 (s.c.) \ \ the subject in Mafatlal Industries Ltd. & Ors. vs. Unbn of tndia & Ors.2 in paragraph Nos.4 to 7 has held as under: "4. Thete is no dispute that tlrc rcfund claim in this case wos ma& much prior to the addition of the ptoviso in sub-rule (5) of Rule 98. On the date on which the refund claim was mode, tte lav' applicable was the law as declared by this Court in Mafatlal Industries ttd. (supra) which we have rcprcduced above. Howeve4 it is contended by the learned counsel Shri Vermo for the &partment, that the claim of refund would be governed by rhe pruviso intrcduced in sub'rule (5) of Rule 98, and that as a consequence, the restrictions in Section 11A and Section llB with regard to the prucedure for refund would apply to the case of the tespondent. The same question came upfor considerotion of this Court in Sinkhai Synthetics & Chemicals Pvt. Isd. v- C.C.E.,'Aurangabad, (2N2) 143 E.L.T 17 SC. This Court took the view tlut the case would be governed by the rule laid down in Mafatlot Industries Ltd. (supra). This view has been reiterated in a subsequent judgment of this Court in C-A- No. 2533 of 2001- (Commi.ssioner of Central Excise, Meerut v. IlOs. Star Paper Mills Linited, [2003J 7 SCC 27) upholding the view of the tribunal that the refund claim of the asseessee before the court was justtlied. 5. Shri Verma fairly concedes that the prcviso introduced in sub-rule (5) o.f Rule 98 connot be said to be rctruspective in operation. He, however crrntends f hat on the date on which the pruviso was brcught into.force, i.e. 25.6. tggg, the refund claim was still pending with the departmental outhorities and, thercfote, it lad to be adiudicated in accordance with the law as il became enforceablefum 25.6.1999, In our view, this contention connot be accepted. Merely because the depgrtmental authorities took a \ \ '(rggz) 5 scc 536 Page6ofl5 long time to process the application for rcfund, the right of the asseessee does nc't get defeated by the subsequent amendment made in sub-rule (5) of Rule 98. The Commissioner of Central Excise and the CEGAT werc, thercfo,v, justified in holding rhat the clain for rcfund made by the rcspontlent.had to be decided according to the law laid down by this Cout in Malbtlal Industries Ltd. (supra) and would not be gwerned by the ptovisc, to sub-rule (5) of Rule 98. 6. In the result, u,e find no merit in appeal. The appeal is dismissed. CivitAppeal Nos. 289t/2001,8380/2001 and 610-61120(D 7. In all these appeals the question which arises for our consideration is identical. The refund claims were made pursuant to tlp finalisation of provisional assessment orders and prior to 25.6.1999, i,e, the date whiah the prcviso to sub-rule (5) d' Rule. 98 came into force. In our view, thercfc,rc, all these coses would be governed by the rule in' Malatlal l Indust,,ies Limited (supra) namely thar the restrictions in Sectibn'IlA and Sectiott I I B would not apply to re.fund claims consequent upon fiialization of prot,isional assessmenl orders. "{ l | Hence, these uppeal.s orc dismissed. No costs

10. The said view was also reiterated in Commissioner of C. Er, Mumbai-Il vs. Allied Photographics India Ltd.3, wherein in paragraph Nos.12 and [4, it has been held as under: I 0 3 2oo+ (166) E. -.T. 3 (s.c.) \ \ "12. In the present case, rcliarrce was placed by the rcspondent i,I/s APIL on the above para in supporr of its contention that paymeni of duty under prctest and payment of duty under provisionol assessment are both "on account" payments under tlp Act. We do not lind any merit in this argument. As discussed, tlprc is a basic dffircrce between duty paid under protest and duty paid under rule 98. The duty paid under prutest falls under section llB whereas duty paid under prcvisicinal assessment falls under rule 98. That section ttB deals with claimfor rcfund w,hercas rule 98 deals with making of refund, in which case the assessee has not to comply with section llB. Thercfore, section I,IB and rule 98 operate in differcnt spheres and, consequently, in para 104 of ttw saidjudgment, it has been held that in cases wherc duty is paid under ntle 98 and tetfund arises on adjustment under rule 9B(5), then such rcfwd will not be governed by section I I B: tn the said para, it lus been clarified that if an independent refund cluim is made ofter adjustment on firu| assessment under rule 9B(5), agilating the same issues, then such claim would attract section IlB. This is because when the assessee mokes an independent rcfund ctaim after finol orulers under rute 9B(5), such application reprcsents a claim for rcfund and. it would not come in the cotegoty of making of rcfund and there.fore. tha bar of unjust enrichment would qpply. Hence, therc is no merit in the c'rtntention of the rcspon&nt l[/s A.PIL that although in this ca.se rluty, was paid under pnotest, there was no differcnce between such payment arul duty paid under provisional assessment under the said Act. This urgumenl vtus obviously adwnced becouse unless the two payments are equuted o.r contended, the rcspondent Ins APILwas rcquircd to comply with secrion I t B. In this matter duty has been paid under prutest. It is the case of the respondent Ws APIL that sirce such pryment was similar to payment undcr rule 98. the rcspondeht Ms APIL was not requircd to / .J, V i I l I I I I I I I \ \ \ uo ruawssassD lDuotsaoill.fit uttttntpurfuodn ruanbasuoe punlat pu? puDrl auo uo faptd Dpun ,tlnp .1it Ntaruind uadisaq py aq, .tapun acuao$1p D s! aDW 'a^oqD pawts sb, -ts'axud rapun pmd iQnp lo pur{at fllu pap rou saop ,0J Drod 'tuawssassn lnuu:rttqtd./b uor\nnpur!udn ruanbasuoc .pt.l s)trtsnpq ptnlDn lo asoc at{, ul Tuew*pnt PuUu ,,lrln ,pap @tdns) )W & 2gJ o,tod 'a^oqD papts^ \.y u(ilrDtlddn ou pot. .tcadsat qr!^ ,lcltltl '(otdns) ?r7 sautsnpul lopn/n1,y /it asnt aqt u! tpuag uounil$uoJ aq, lo ,uau8pn[aqtto tOt ond paryldn t.tro.) r-ltlt .uolslrap plDS aq, u! za.eitoH '1sa|and opun /Qnplb Tuawiod 1it asn) n co,n t! .arc{aor11 .yaw1tofltg aql {q paluap sottt pury{ay .t 66 t.t.L I uo gtun/at parulDp puD JvggJ atp ato{aq papaeccns aassassD aq1 'lsarud r)putl [1np asrcxa p10d aassasso ,ioaddo tupaad JVDXJ o1 Toaddo u! tu;r,^ aar^sassn at11 .ruauuodag aqt tq,celuap sattl' tlclrlil uotrduaxa pauDp adssassD aq1 tanlco{nuDu D sDA AASSaSSO aq, ZalrDut ,Dtlt ul .@tdns) -pt7 .tdrl s^lDrtruaq) T sc11aq1u,(g lDWtulS asDc aq, u! uno) s1r1t{o garuBpnl aW taplsuor nou,{out a$,ulanq papr sl ,Drttt{o tqty aqt uJ lsa1and tapurt ruarurbd qrltt; pap pu saop gau1pnt plos ag {o tOt oto4 Qddn pu llt.t4, g l I uol.,eas ,ualzrssassD louolsyod to uouozlyougf uodn sasuo pun{at .l! tor1t safi$ (otdns) .pr7 saursrtpul lDtroIDN asDc aqt ur paut*pn[ at4 lo pg1 o.tod ,a^oqo pap$ sy .rI lX l,fr ffi .pun{u o, paplrua tou sDttl Tuapuodsat att, ,g I I uolpas qtu ,{\dwoc o7 anpo! so& aDqi aculs 'suosoan papts aloqD ng -(otdnsl .pt7 sat.ttsnpuJ tDtro{Dru {o antp at71 u1 Tuaw8pn[ a^oqD ary to 29 1 0tod lo swrat u! tltr* paqdutoc aq ot pfr,tl g I I uolrcas 'atotanqt ,paD TIIN to gautssasso lo uotlozlloug[ n{o apota tulaq uto1c put{atto tho&a1oc aqt q ilal U6l.Z.ll parDp uol1ocryddo aqt ,ruava rftio u1 ,Qtsu7 'gII uol:aas qtu t1dwoc ot punoq som Tuapaodsat aqt, ptl, noq a$ 'aioqDulanq uo$sncslp aqttott1&y ary q .gll uolpas glm/t,rdwoc glgoge8u6 tlp other hand. This distinction is missed out, with respect, by theiudgment of this court in the case of Mafatlal Industries Ltd. (supra). we moy also point out thot the iudgment in the case of stntthoi synthetics & chemicals Pvt.Ltd.(supra)isbasedontheconcessionmadebytlpcounselqpearing on behalf of the Department. That judgment is' thercfote' per incuriam' korned counsel for the respondent hercin placed-teliance on the iudgJnent of this Court in the'case of TVS Suzuki Ltd' (supra)' In that case' applicotion for refund was filed' This was on completion of final assessment. on 9.7.1996, the Department issued a show-cause notice as to why the rcfund claim should not be rcjected for non-comPliance of seafion t 18. By order dated t 7.7. I 996, the refund claim was teiected on tlu gruund that it was beyond limitation. on oppeol, the commissioner (,lppeals) obsented that the bar of unjust.enrichment was not applicablc os the assessee claimed refund consequent upon final assessment. He allowed the rcfund claim. 1EGAT agreed with the view of commissioner (Appeals)' B"fo,ethisCourr,theDepartmentconcededrightlythatinviewofpara t04 of the judgment of this (lourt in Mafatlat Industries Ltd.: (supror), bar of unjust enrit.hment ttas nol applicable in cases of tefund consequent upon adjustment untler rule 9B(5). The judgment of this Courtin the case of WS Suzuki Ltd. (supra), rhere.fore, supports the vidw which we have talcen herein above rhar re.fund consequent upon finalization of patisional assessment ,!;'t *et attruLtl the bar of unjust enrichment'" Page l0ofl5 l1- Recentl.y, again the Hon'ble Suprerne Court in Commissioner of Customs vs. Hindustan Zinc Ltd.4 in paragraph Nos.2, 4 and 5 has held as under: "2. In all these cases the common question which arises is whether claimfor refund ctf amounts deposited towards provisional duty. as a condition for cleorance of imported goods can be the subject matter of refund after conclusion of assessment prcceedings and hoving regarul to its outcome, under Section 18 of the Customs Act. It is not disputed that this issue has been co.nsidercd both in the context of provisional assessment under Rule 9- B of the' Central Excise Rules by judgments oJ'this Court as well as in the cofiert of Section 18 of the Customs Act, in "Commissioner of Customs, New De'lhivs. lu{/s Orientol Exports, New Delhi" [2003 156 ELT l6lJ. The Court l,eld that even though Rule 9-B of rhe Customs Rules (applicable in that cav), was not rctrospective, nevertheless pending applications werc euitled to the rclief prcscribed by it. This Court had occasion again to consider the issue in the.light of the conflict of decision by o three Judge Bench, in a thrce Judge Bench tlecision in "('ommissi<tner of Central Excise, Mumbai-Ilvs. Allied Photographic.s India Ltd." l(2001) 4 SCC 341. TIu Court held that the doctrine of uniust enrichment w'as not applicable to provisional dssessment even afterfinalization oJ the proceedings.

4.It is btought to the notice of this Courl that u.iudgmant subsequent to the ruling in "Allied" i.e. "sahakari Khund Udyry Mandal Ltd. vs. Commissiondr of Central Excise & Custctms." [(2005) J S((l 738J appears to hqve exprcssed a dffircnt view in thut the Court held that to maintain a claim lbr rcfund, the ossessee hos to estobli.rh thot he or it had paid the amount for which rclief is sought and had not passed on the burden to the / o 2023 (384) E.t-.T.62G (s.c.) \ \ Page ll of15 consumets. This judgment though rendercd by a thrce Judge Bench, overlooked the ruling in Allied (supra). Furtlermorc, even ttnugh tle jtdgment has generally referrcd to the nine Judge Bench ruling in "Mafittlal Industries Ltd. & Ors. vs. Union of India & Ors." [(1997) 5 SCC 537J, nevertheless.the specrfic observations in para 104 appeors to haw escapd the attention of the Court. Para 104 in Mafatlal l4dustries Ltd., is eatracted below:

104. Rule 9-B provides for provision assessment in situatbns srycified in clauses (o). (b) and (c) of sub-rule (l). ru ggods provisionally assessed under suh-rule (t) may be clearedfor toine consumption or export in the same manner as the goods which arc finally assessed. Sub-rule (5) provides that "when the duty leviablc on the goods is assessed finolly in with the provisions of these Rules, the duty provisionally asses.sed shall be the duty fi"dly ossessed, and if the duty provisional assessed falls short of or is in deficiency or be entitled n o re.filnd, as the case m6y be". Arty tecoveries or refunds consequent upon the adjustment under. gtb rule (5) of Rule 9-B witt not t{overnett b4t Sec.tion Il-A or &ction ll-B as the case may be. However if the final orders passed under sub-rule (5) are appeuled aguinst - questioned in a writ petition or . suit, as the case muy he. assuming that such a writ or suit is entertained ond is allowed/dec,reecl - then any refund claim arising as a consequence of the clec'ision in such appeal or such otlrcr pruceedings, os the cose muv, he. v'ttuld he governed by Section lI- B. It is also made clear that if un independent refund cloim is Jiled after the final decision under Rule 9-B(5) rcagitating the issues alrcady decided under Rule 9-B - ussuming that such a rcfund chim l! I Page 12 ofl5 lies - and is allowed, tt would obviously be governed by Section lt- B. It follows logically that position would be the same in the converse situation. Naturc and character of refund claims under lhe Central Excises and Salt Act and the Customs Act." 5 The judgment in "saholcari Khand Udyo7 Mandal Ltd.", in this Courtb consid,zrcd view, has to be confined to the facts of that case for the reasons mentioned above. In this view of the matten there is no infirmity with the findiny,s and conclusions rccorded in the impugned judgments, which are in accora' with the ratio in Atlied (supm). The rcvenue'.s appeals are, accora' i ngly, dismi s se d - "

12. With the observations made by the Hon'ble Supreme Court in Sahakari Khand Udyog lt{andal Ltd. vs. Commissioner of Central Excise & Customss so also in Sinkhai Synthetics & Chemicals Pvt. Ltd.6 were all per incuriam and that it was the judgment in Mafatlal lndustries Ltd. & Ors. (supra) and followed by the judgment in T.v.S. Suziki Ltd. (supra) holds good and is corre:ct law to be applied for refund of claim fbr the period between February, l!)85 to April, 1995. Further, in view of the aforesaid authoritative decision of the Hon'ble Supreme Court and also in the light of the Circular of the Central Board of Excise and Customs, we have no hesitation in holding that the question of law framed has to be answered in favour of the assessee I (zoosl 3 scc 738 " 2oo4 (143) E.L.T. 17 (s.c.) \ \ Page 13 ofl5 and 4gainst the Revenue and it is ordered accordingly. In the result, c.E.A; No.114 of 20ll stands dismissed

13. Now we proceed to decide the second c.E.A. i.e. c.E.A. No.l55 of 2017- The substantial questions of raw framed in this appeal for ready reference are reproduced hereunder: "whether the Hon'ble GESTAT| decision is correcr in holding that rcfund arising out of the finalization of provisionol a.Tsessment during the priod Febnnry'1985 to April'1995 need nol pass the test of unjust enrichment as the amendment to sub-rure (5) of Rure 98 came into force onry w.e.f, 25.06.1ggg? and whetler the Hon'bte GESTAT| Final order wus correct in setting aside the impugned order-In-Appeal dt.30.0g.20r r passed b-v the Appelrate Authority and fucided the case without di.scussing ctn rhe grutunds put forth and the case lmys rcferrcd thercin ?', 14' What needs to be appreciated is the lact that the impugned order of CESTAI itself in this case was based upon the order of the CESTAI earlier passed on26.03-2o09 which was chalrenged in c.E.A. No.l14 of 20il. The challenge in the present appear c.E.A. No. r 55 of 20 r 7 is on the ground that since C'E'A. No.l14 of 20ll was pending considerarion, the CEsTAt could not have decided the same based upon the CESTAT's order which is already sub-judice before the High Courr. r Page 14ofl5

15. Now r.oday since we have already dismissed the C.E.A. No.l14 of 201I afiirming th,: order of the CESTAI dated 26.03.2009, as has been held earlier, there is no hesitation on our part in reaching to the conclusion that the orden passed by ttre CESTAT deciding the claim of the assessee for refund in terms of the order dated 26.03.2009 cannot be found fault with either on facts or on law, as the .iudgment of the Hon'ble Supreme Court and the Circular of the Department itself, all of which have ateady been reproduced in the earlier pan of this judp;ment stands decided against the Revenue and in favour of the assessee. As a consequence, C.E.A. No.155 of 2017 also stands dismissed and the substantial questions of framed inthis appeal stands answered in favour of the assessee and against the Revenue. The order dated 03.08.2016, passed by the CEST/{T stands affrrmed entitling the assessee for refund of Rs.2,86,39,1171- for the period between March, 1985 to April, l99l and March, 1994 to April, 1995. Since the claim of refund of the assessee is pending consideration with the Department for atmost 2 decades and the instant Appeals also getting dismissed, it is directed that the Customs Department should ensure the entire refund payable to the assessee along with Page 15 of15 interest in accordance with the statutory provisions be computed and paid within an outer limit of 3 months from today.

16. In the result both the C.E.As. stands dismissed.

17. As a sequel, miscellaneous petitions pending if any, shall stand closed. SD'- N SRIHARI DEPUTY REGISTRAR ,/TRUE COPY// ,a(a \-/ SECTION OFFICER To,

1. '2.

4. 5. 6. Kam/PSL T[g customs, Excise and service Tax Appellate Tribunat, south zonal Bench, Bangalore The customs, Excise and service Tax Appellate Tribunal, Regionat Bench, Hyderabad. one cc to Mr. Dominic Fernandes, senior standing counsel for cBlc loPUcl One CC to Mr. Siddam Maneendra, Advocate tOpUCl One CC to Mr. S. Shriram, Advocate IOPUC] Two CD Copies i { I j I I . i i I i I HIGH COURT DATED i1811112025 COMMON JUDGMENT CEA.Nos.l1 4 ot 2011 and 155 of 201 'll;: J I 3 ?.1 lrlt 2oll .\ t D]SMISSING THE CEA'S