Case Note & Summary
The matter arose from appeals before the Supreme Court against a judgment and order of the Madras High Court concerning the levy of ten percent surcharge under customs/excise laws and the consequential refund claims. The appellant was the revenue (Assistant Collector of Customs) and the respondent was an assessee/electrical manufacturing company. The Supreme Court heard counsel for the parties and disposed of the appeals by affirming the High Court judgment on the surcharge issue and directing that refund claims be governed by the law declared in Mafatlal Industries v. Union of India, (1996) 9 SCALE 457, read with clause (6) of the format order appended to the judgment. The format order lays down detailed rules for refund applications: refund applications filed beyond the prescribed limitation under the Central Excise Act or Customs Act are untenable and no court can extend the limitation; where refund applications were filed within time but dismissed, the assessee may withdraw the writ petition or suit and file an appeal before the appellate authority within sixty days; where a writ petition or suit was filed directly without a refund application, the assessee may withdraw it and prefer a refund claim under Section 11B within sixty days provided the original writ or suit was filed within the limitation period; for refund of duty levied under an unconstitutional provision, the period of limitation as per Mafatlal applies and the duty to prove non-passing on of burden remains; a person who unsuccessfully challenges constitutionality of a provision cannot take advantage of a later decision striking down the provision in another case; every refund application or appeal must be accompanied by an affidavit stating that the burden of duty has not been passed on to another person, and for companies or societies the affidavit must be sworn by the Managing Director or Principal Officer. The order also provides for recovery of refunds already obtained if the refund claim is ultimately rejected. The appeals were disposed of in these terms with no order as to costs.
Headnote
A) Customs and Central Excise - Surcharge - Levy of ten percent surcharge - Central Excise Act/Customs Act - The Supreme Court affirmed the judgment and order of the Madras High Court on the question of levy of ten percent surcharge. Held that the High Court's decision on surcharge stands. (Paras 1-3) B) Customs and Central Excise - Refund - Limitation period for filing refund applications - Central Excise Act Section 11B and Customs Act - Refund applications filed beyond the period prescribed by the Central Excise Act/Customs Act are untenable; no court or authority can extend the limitation period. Held that the period prescribed cannot be extended even for illegal levy. (Paras 1-3) C) Customs and Central Excise - Refund - Unjust enrichment and burden of proof - Central Excise Act/Customs Act - Refund applicant must file an affidavit stating that he has not passed on the burden of duty to another person; for companies or societies, affidavit must be sworn by Managing Director or Principal Officer. Held that such affidavit is mandatory and treated as assertion under Mafatlal. (Paras 1-3) D) Constitutional Law - Validity of tax provisions - Benefit of declaration of unconstitutionality - Central Excise Act/Customs Act - A person who unsuccessfully challenges the constitutionality of a provision cannot take advantage of a later decision striking down the provision in another person's case. Held that this rule applies to refund claims under these enactments. (Paras 1-3) E) Customs and Central Excise - Refund - Recovery of refunds already obtained - Central Excise Act/Customs Act - If a refund claim is rejected, amounts already obtained by refund must be repaid to the department. Held that the department is entitled to recover such amounts in accordance with law. (Paras 1-3)
Issue of Consideration
Whether the levy of ten percent surcharge was valid, and whether refund claims were governed by the law declared in Mafatlal Industries v. Union of India and the format order including limitation, affidavit, and unjust enrichment requirements
Final Decision
The appeals were disposed of. The judgment and order of the Madras High Court was affirmed insofar as the levy of ten percent surcharge. Refunds were governed by the law declared in Mafatlal Industries v. Union of India read with clause (6) of the format order, requiring an affidavit of non-passing on of duty burden. No costs.
Law Points
- Refund claims under Central Excise Act and Customs Act must comply with prescribed limitation periods
- courts cannot extend limitation
- refund applicant must file affidavit stating burden of duty has not been passed on
- persons who unsuccessfully challenged constitutionality cannot benefit from later decision striking down provision
- ten percent surcharge affirmed
