1985 (4) TMI 310 - HC - Central Excise

Summary

Issues Involved:
1. Refund of Excess Excise Duty Paid Under Mistake of Law
2. Applicability of Rule 11 of the Central Excise Rules
3. Limitation for Filing Writ Petition Under Article 226
4. Unjust Enrichment as a Defense Against Restitution

Summary:

1. Refund of Excess Excise Duty Paid Under Mistake of Law
The appellants, I.T.C. Limited, sought a refund of excess excise duty paid between 1st September 1970 and 6th October 1972, under a mistake of law, following the Supreme Court's decision in the Voltas case. The Division Bench, comprising Lentin and Sawant, JJ., had differing opinions, leading to the matter being placed before another judge.

2. Applicability of Rule 11 of the Central Excise Rules
Lentin J. held that Rule 11 does not apply where the collection of duty is without authority of law. The department is bound to refund the excess duty collected without authority of law. The refund applications made by I.T.C. were within time, and the writ is a more efficacious remedy than a suit.

3. Limitation for Filing Writ Petition Under Article 226
The learned Single Judge initially dismissed the petition on the ground that I.T.C.'s proper remedy was by way of a suit. However, Lentin J. held that the writ petition was filed within three years from the discovery of the mistake, computed from the date of the Supreme Court's judgment in the Voltas case on 1st December 1972. The writ jurisdiction is available if the writ is filed within three years from the discovery of the mistake.

4. Unjust Enrichment as a Defense Against Restitution
Lentin J. rejected the contention of unjust enrichment, stating that I.T.C. had an integrated price which included excise duty payable in law and not any specific amount of excise duty. The department cannot resist restitution on the grounds of unjust enrichment. The Supreme Court's decision in D. Cawasji & Co. v. State of Mysore was cited, which held that refund of tax cannot be denied even if the person who paid it has collected it from his customers.

Final Judgment:
Lentin J. allowed the appeal, set aside the judgment and order of the learned Single Judge, and directed the respondents to refund the excess excise duty to I.T.C. Sawant J. disagreed, dismissing the appeal on grounds of limitation and the non-maintainability of the writ petition. The majority opinion favored Lentin J.'s view, and the matter was placed before the Division Bench for disposal in accordance with the majority opinion.