1990 (8) TMI 149 - HC - Central Excise

Summary

Issues:
1. Incorrect payment of excise duty under the wrong tariff item.
2. Claim for refund of excise duty paid erroneously.
3. Application of Rule 11 of Central Excise Rules regarding the limitation period for claiming refund.
4. Consideration of unjust enrichment by the Department.
5. Allegation of laches by the Department against the petitioners in approaching the Court.

Analysis:
1. The petitioners, engaged in manufacturing plastic moulded luggage articles, paid excise duty under Tariff Item 68 instead of the correct Tariff Item 15A(2) due to the advice of excise officers. Upon realizing the error, they sought exemption and refund based on the correct classification.

2. The petitioners filed a refund claim for duty paid erroneously between March 1, 1975, and April 20, 1979. The Assistant Collector allowed the refund only for a specific period, citing Rule 11 of the Central Excise Rules which imposes a limitation on refund claims. The petitioners challenged this decision through a writ petition under Article 226 of the Constitution of India.

3. The Court acknowledged the limitation under Rule 11 but held that in cases of wrongly paid duty, the limitation does not apply in proceedings under Article 226. The petitioners were granted a refund for the entire period from March 1, 1975, to November 28, 1978, despite the limitation period.

4. The Department raised the issue of unjust enrichment, arguing that refund should not be granted automatically. However, as the Department failed to provide evidence or file an affidavit to support this claim, the Court did not consider unjust enrichment as a valid reason to deny the refund.

5. The Department accused the petitioners of laches for delaying their approach to the Court. The Court rejected this argument, stating that the petitioners were not aware of the rejection based on limitation and had valid reasons for the delay. The Court emphasized that the revenue cannot retain erroneously collected duty by citing laches.

In conclusion, the Court set aside the Assistant Collector's order and directed the refund of duty paid erroneously between March 1, 1975, and November 28, 1978. The Assistant Collector was instructed to process the refund by a specified date, with interest payable if delayed. The Court clarified that the refund for the subsequent period was upheld, and the Assistant Collector was directed not to object to refunding amounts beyond the six-month limitation period.