Legal principle

A claimant who has passed on the burden of an indirect tax to buyers is not entitled to a refund of excess duty; refund lies only with proof that the claimant bore the burden, under the unjust-enrichment scheme embodied in the amended Section 11B/11D regime upheld in this case.

Court decision

The Andhra Pradesh High Court upheld the constitutional validity of the Amendment Act of 1991 and dismissed all the writ petitions (without costs), holding that petitioners whose refund claims were barred by the six-month limitation in Section 11B could not claim the duty; it rejected the contention that CEGAT lacked jurisdiction over transferred revisions, refused leave to appeal to the Supreme Court (no substantial question of law of general importance), and declined to suspend operation of the judgment.

Facts

Laxmi Starch Ltd., a company manufacturing 'Liquid Glucose' under the Central Excises and Salt Act, revised its classification list in June 1991 and, under provisional assessment (Rule 9B), claimed it had paid excess excise duty (BED Rs. 14,53,174 and SED approx. Rs. 1,08,468) for 9-6-1991 to 14-10-1991. On 6-12-1991 it filed a refund claim under Section 11B of the Central Excise Act. The Assistant Collector issued a show cause notice dated 25-5-1992 proposing rejection of the Rs. 15,61,742 refund claim as inadmissible under Section 11D read with Section 11B (as amended by the Central Excise and Customs Laws Amendment Act, 1991), because the company had already collected the duty from its buyers. The company then challenged the constitutional validity of Sections 11B and 11D as amended, as violative of Articles 265, 14 and 19(1)(g), in writ petitions heard together with other refund cases.

Key provisions

• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 28B, Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government
• Section 28A(2), Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice
• Section 131B(2), Customs Act, 1962 — Transfer of certain pending proceedings and transitional provisions
• Section 28D, Customs Act, 1962 — Presumption that incidence of duty has been passed on to the buyer
• Section 9, Customs Act, 1962 — [Omitted] ****
• Section 13, Customs Act, 1962 — Duty on pilfered goods
• Section 157, Customs Act, 1962 — General power to make regulations
• Section 131C(a), Customs Act, 1962 — Definitions
• Section 159, Customs Act, 1962 — Rules, certain notifications and orders to be laid before Parliament
• Section 2, Customs Act, 1962 — Definitions
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods