1988 (7) TMI 64 - HC - Central Excise

Summary

Issues Involved:
1. Classification of F.R.P. bodies for excise duty purposes.
2. Applicability of exemption notification.
3. Refund claims for excise duty paid.
4. Limitation period for refund claims.
5. Recovery of excise duty from customers and unjust enrichment.

Summary:

1. Classification of F.R.P. bodies for excise duty purposes:
The 1st Petitioners, a company manufacturing Fibre glass Reinforced Plastic (F.R.P.) bodies for motor vehicles, argued that these bodies fell under the residuary entry, Item No. 68, of the First Schedule to the Central Excises and Salt Act, 1944.

2. Applicability of exemption notification:
Notification No. 118/75, dated April 30, 1975, exempted goods falling under Item No. 68 if used within the factory. The Petitioners did not avail of this exemption due to a bona fide belief that it applied only to goods used up in the factory. However, a judgment in Writ Petition No. 382 of 1981 clarified that the exemption applied to all goods intended for use in the factory.

3. Refund claims for excise duty paid:
The Petitioners filed three refund claims for excise duty paid during different periods, totaling Rs. 32,21,519.89. These claims were rejected by the 2nd Respondent on the grounds that the payments were not made under protest or provisionally and were beyond the six-month limitation period.

4. Limitation period for refund claims:
The Court did not delve into the limitation issue, assuming the claims were within time due to the payment being made under a mistake of law.

5. Recovery of excise duty from customers and unjust enrichment:
The Petitioners conceded that they had recovered the excise duty from their customers. The Court held that refunding the duty to the Petitioners would amount to unjust enrichment and a fraud on consumers and society. The Court cited several Supreme Court decisions, including Nawabganj Sugar Mills Co. Ltd. v. Union of India and M/s. Shiv Shankar Dal Mills v. State of Haryana, which emphasized that those who have recovered the duty from others are not entitled to claim its refund.

Conclusion:
The petition was rejected, affirming that the Petitioners, having recovered the duty from their customers, were not entitled to a refund. The Court reiterated the principle against unjust enrichment and the discretionary nature of relief under Article 226 of the Constitution.