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Commissioner of Central Excise, Tiruchirapalli v. M/S. Dalmia Cement (Bharat) Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3600 of 2006)Decided 2 Sept 2015
Civil Appeal No. 3600 of 2006
Justice A.K. Sikri · Justice Rohinton Fali Nariman

Background

Dalmia Cement had a dispute with the excise department over duty paid on cement between 1970-1978, which the tribunal decided in the company's favour in 1989, directing a refund. However, the refund was never actually paid out. In 1991, Parliament amended the refund law (Section 11B of the Central Excise Act) to add a new requirement: a claimant must prove it did not pass on the cost of the duty to customers before it can get a refund ("unjust enrichment"). Because the refund order existed but had not been implemented, the excise department later tried to apply this new 1991 rule to deny the refund, and the matter wound its way up through the tribunal and the Delhi High Court before reaching the Supreme Court.

Decision Breakdown

The Supreme Court held that the 1991 amendment's unjust-enrichment requirement only applies to applications for refund that were still pending (undecided) when the amendment came into force. Here, the refund had already been finally ordered back in 1989, only its actual payment was outstanding, so there was no "pending application" left to which the new rule could attach. Relying on the nine-judge bench ruling in Mafatlal Industries Ltd. v. Union of India, the Court held that once a refund order has attained finality, a government officer tasked only with implementing that order cannot reopen it to investigate unjust enrichment. The Court agreed with the High Court's view and dismissed the department's appeal.

Lesson Learnt

A law that changes the rules for pending claims cannot be used to reopen matters that have already been finally decided, once an order has become final, only its implementation remains, not a fresh inquiry under a later amendment.

Official source (sci.gov.in)View Judgment (PDF)

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