1986 (4) TMI 56 - HC - Central Excise

Summary

Issues Involved:
1. Whether the processing of teleprinter paper rolls and tapes constitutes "manufacture" under the Central Excises and Salt Act, 1944.
2. Whether the refund claims filed by the petitioner are time-barred under Rule 11 or Rule 11 read with Rule 173(J) of the Central Excise Rules.
3. Whether the petitioner is entitled to a refund of the duty paid under a mistaken belief.
4. Whether the doctrine of unjust enrichment applies to the refund claims.
5. Whether the petitioner is entitled to interest on the refunded amount.

Summary:

1. Processing as Manufacture:
The petitioner argued that the processing of teleprinter paper rolls and tapes by cutting, slitting, and inter-leaving with carbon paper does not constitute "manufacture" u/s 2(f) of the Central Excises and Salt Act, 1944. The Department initially collected duty on these goods, but a trade notice clarified that no further excise duty was applicable if the goods were made from duty-paid printing and writing papers.

2. Time-Barred Refund Claims:
The Assistant Collector rejected the refund claims as time-barred u/r 11 or Rule 11 read with Rule 173(J) of the Central Excise Rules. The petitioner contended that the duty was paid under a mistaken belief and that the limitation period should start from the date of discovery of the mistake. The High Court held that the limitation period begins from the date of discovery of the mistake, and the claims were filed within six months of this discovery.

3. Entitlement to Refund:
The High Court held that the duty collected was without authority of law as the goods were not liable to duty. The petitioner paid the duty under a mistaken belief, and upon discovering the mistake, promptly filed for a refund. The Court cited precedents where taxes collected without authority must be refunded.

4. Doctrine of Unjust Enrichment:
The respondents argued that refunding the duty would result in unjust enrichment of the petitioner, who had already passed on the duty to customers. The High Court rejected this argument, stating that the doctrine of unjust enrichment does not apply when the duty was collected without authority of law. The Court emphasized that the manufacturer is entitled to a refund irrespective of whether the burden was passed on to consumers.

5. Interest on Refund:
The High Court ruled that the petitioner is entitled to interest on the refunded amount at the rate of 12% per annum from the date of collection till the date of payment. The Court referenced decisions from the Gujarat High Court supporting the award of interest on amounts collected without authority of law.

Conclusion:
The High Court directed the respondents to refund the sums of Rs. 30,288.57 and Rs. 1,56,774.24 with interest at 12% per annum from the date of collection till the date of payment, to be made within three weeks after service of the judgment.