1983 (12) TMI 317 - HC - Central Excise

Issues Involved:
1. Whether the Department is bound to refund excess excise duty collected without authority of law, even if it results in unjust enrichment.
2. Applicability of Rule 11 of the Central Excise Rules.
3. Whether the writ petition filed by the appellant was within the period of limitation.
4. Whether the writ jurisdiction should be exercised in favor of the appellant considering unjust enrichment.

Summary:

1. Refund of Excess Excise Duty:
The primary issue was whether the Department is obligated to refund the excess excise duty collected from the appellant without authority of law, even if it results in unjust enrichment. The court held that the Department is bound to refund the excess duty as it was collected without authority of law, citing various precedents such as Patel India v. Union of India, Maharashtra Vegetable Products Pvt. Ltd. v. Union of India, and others. The court emphasized that recovery of every rupee must be an authorized recovery.

2. Applicability of Rule 11:
The appellant argued that Rule 11 of the Central Excise Rules, which prescribes a time limit for refund applications, did not apply to their case. The court agreed, noting that Rule 11 is not attracted where the collection of duty is without authority of law. This was supported by decisions from other High Courts and previous judgments from the Bombay High Court, which held that persons cannot be denied the remedy under Article 226 where revenue has been collected without authority of law.

3. Limitation Period for Writ Petition:
The appellant contended that they were entitled to take appropriate action within three years from the delivery of the Supreme Court judgment in the Voltas case on 1st December 1972. The court held that the starting point of limitation was the date when the Voltas case was finally decided by the Supreme Court, and not the earlier date when the Bombay High Court delivered its judgment. The court found that the writ petition filed on 30th September 1975 was within the limitation period, as it was filed within three years from the Supreme Court's decision.

4. Unjust Enrichment:
The respondents argued that the appellant had already collected the excess duty from their distributors, resulting in unjust enrichment. The court, however, held that even if there was unjust enrichment, the Department could not resist restitution. The court cited the Supreme Court's decision in D. Cawasji & Co. v. State of Mysore, which observed that there is no provision under which the court could deny the refund of tax even if the person who paid it collected it from his customers and has no intention to refund it to them. The court also referred to various decisions from the Bombay High Court that reiterated this principle.

Separate Judgment by Sawant, J.:
Sawant, J. delivered a separate judgment dismissing the appeal on both grounds: that the petitioners were not entitled to invoke the extraordinary equitable and discretionary jurisdiction under Article 226 of the Constitution, and that the petitioners' claim was barred by limitation. He emphasized that granting relief would result in unjust enrichment, as the petitioners had already recovered the excess excise duty from their distributors. He also held that the applications for refund were time-barred under Rule 11 of the Central Excise Rules, and that the petitioners were aware of their mistake in law at least by 22nd September 1972, if not earlier.

Conclusion:
The appeal was allowed, and the judgment and order of the learned Single Judge were set aside. The respondents were directed to refund the excess duty to the appellant within six months. However, Sawant, J. dissented, dismissing the appeal on the grounds of unjust enrichment and limitation.

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