1997 JTR(SC) 974
1997 94 ELT 3 ; 1997 11 SCC 696 ; 1997 KHC 3938 ; 1997 2 KLT(Online) 1141
SUPREME COURT OF INDIA
J.S.Verma, CJI., B.N. Kirpa, J.
H. M. BAGS MANUFACTURER, APPELLANT
VERSUS
COLLECTOR OF CENTRAL EXCISE, RESPONDENT.
Civil Appeals No. 8021 of 1995 with No. 5010 of 1997 (Arising out of SLP (C) No. 19363 of 1995), decided on July 22, 1997.
A demand for duty based on re-classification under Section 37-B of the Central Excises and Salt Act is effective from the date of notification; prospective language like "henceforth" precludes retrospective demands. Refund claims require proof that the duty was not passed on to consumers.
Act
Referred
:CENTRAL EXCISE ACT
: S.11(a)
(A) Central Excises and Salt Act - Section 37-B - Re-classification of goods - Effective date of demand - Trade notice issued by the Board - Demand cannot be raised from any date prior to the date of notification or publication of the classification - Use of the word "henceforth" indicates the intention that the order be effective from the date of issuance and not retrospectively. (Para 2)
(B) Central Excises and Salt Act - Section 11-B - Refund of duty - Discipline of amended section to be followed - Burden of proof on the claimant to show that the duty has not been passed on to the consumers to sustain the claim for refund. (Para 3)
Facts of the case:
A trade notice regarding the re-classification of goods was issued on 5-11-1992, following an order dated 24-9-1992. The revenue sought to raise a demand for duty from a date prior to the issuance of the trade notice. It was contended that since the power was exercised under Section 37-B, the demand should only be effective from the date of notification or publication.
Findings of Court:
The court held that the effective date for raising the demand cannot be prior to the date of the trade notice, as the use of the word "henceforth" excluded the intention of making the classification effective from any earlier date. For the refund of duty already paid, the requirements of Section 11-B must be satisfied.
Issues: Whether the demand for duty based on re-classification under Section 37-B can be raised retrospectively prior to the date of the trade notice, and the conditions for claiming a refund of duty paid.
Ratio Decidendi: A demand for duty based on re-classification under Section 37-B is effective from the date of notification or publication; the use of prospective language like "henceforth" precludes retrospective demands. Refund claims are subject to the condition that the duty was not passed on to consumers.
Result: Appeals allowed.
(B) Central Excises and Salt Act - Section 11-B - Refund of duty - Discipline of amended section to be followed - Burden of proof on the claimant to show that the duty has not been passed on to the consumers to sustain the claim for refund. (Para 3)
Facts of the case:
A trade notice regarding the re-classification of goods was issued on 5-11-1992, following an order dated 24-9-1992. The revenue sought to raise a demand for duty from a date prior to the issuance of the trade notice. It was contended that since the power was exercised under Section 37-B, the demand should only be effective from the date of notification or publication.
Findings of Court:
The court held that the effective date for raising the demand cannot be prior to the date of the trade notice, as the use of the word "henceforth" excluded the intention of making the classification effective from any earlier date. For the refund of duty already paid, the requirements of Section 11-B must be satisfied.
Issues: Whether the demand for duty based on re-classification under Section 37-B can be raised retrospectively prior to the date of the trade notice, and the conditions for claiming a refund of duty paid.
Ratio Decidendi: A demand for duty based on re-classification under Section 37-B is effective from the date of notification or publication; the use of prospective language like "henceforth" precludes retrospective demands. Refund claims are subject to the condition that the duty was not passed on to consumers.
Result: Appeals allowed.
ORDER
1. Leave granted in SLP (C) No. 19363 of 1995.
2. The only contention of learned counsel for the appellant is that a trade notice No. 29 was issued by the Board on 5-11-1992 notifying the re classification and it is this date, i.e., 5-11-1992 which is material and the demand in the present case could not be from any prior date. It is urged that it is the power under Section 37-B of the Central Excises and Salt Act which was exercised in the present case and, therefore, any argument based on Section 11-A is not available to the Revenue. It is submitted that according to the existing practice, any action taken under Section 37-B is duly notified or published and it takes effect from the date of notification or publication. In view of the fact that the notification or publication of the classification made pursuant to the Boards order dated 24-9-1992 was only on 5-11- 1992, the date of issuance of the trade notice, it must be held that the effective date for raising the demand by the Revenue cannot be any date prior to 5-11-1992. This conclusion is reinforced by use of the word "henceforth" by the Board. The Boards order excluded the intention of making the same effective from any earlier date. This submission of learned counsel for the appellant has, therefore, to be accepted.
3. We are informed that the duty has already been paid by the appellant. That being so, the discipline of amended Section 11-B has to be followed for darning the refund and it is for the appellant to show that the duty has not been passed on to the consumers to sustain its claim for refund.
4. Consequently, these appeals are allowed in the above terms and the Tribunals orders are set aside.