1981 (9) TMI 121 - HC - Central Excise

Summary

Issues Involved:
1. Refund of excise duty paid under a mistake of law.
2. Estoppel from claiming refund.
3. Unjust enrichment by the petitioner.

Detailed Analysis:

1. Refund of Excise Duty Paid Under a Mistake of Law:
The petitioner sought a Writ of Mandamus for the refund of Rs. 13,01,628.15, paid as excise duty under a mistaken classification of their products Coca Cola and Fanta. The petitioner paid duty under Central Excise Tariff Item 1-D(1)(a) instead of the correct Item 1-D(2), resulting in an overpayment. The mistake was discovered post the Bombay High Court's judgment in W.P. 944 of 1973. The court acknowledged that the period of limitation for recovery of money paid under a mistake of law is three years from the date the mistake becomes known. Thus, the petitioner's claim was not barred by delay.

2. Estoppel from Claiming Refund:
The respondents argued that the petitioner, having voluntarily filed a classification list under the 'self removal procedure' and paid the maximum duty, was estopped from claiming a refund. However, the court rejected this contention, citing judicial precedents. The Supreme Court in Sales Tax Officer v. Kanhaiyalal and State of Madhya Pradesh v. Bhailal Bhai established that money paid under a mistake of law or fact must be repaid. The court emphasized that there is no estoppel when the mistake of law is common to both parties, as both the petitioner and the Department suffered from the same misconception.

3. Unjust Enrichment by the Petitioner:
The respondents contended that refunding the excise duty would unjustly enrich the petitioner, as the duty had already been reimbursed by consumers. The court reviewed various judicial precedents, including D. Cawasji and Co. v. State of Mysore and Maharashtra Vegetable Products Pvt. Ltd. v. Union of India, which held that refund cannot be denied on the ground of unjust enrichment. The Supreme Court's observations in D. Cawasji and Co. v. State of Mysore clarified that there is no provision under which the court could deny refund even if the person who paid it has collected it from customers. The court concluded that the petitioner could hold the refunded amount in trust for the consumers and refund it pro rata as claims are made.

Conclusion:
The court allowed the writ petition, directing the refund of the amount within three months. The petitioner was instructed to keep the refunded amount in trust for the actual consumers and refund it pro rata with interest as claims are made. There was no order as to costs in the writ petition.