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Issues Involved
1. Entitlement to the refund of excise duty paid under a mistake of law. 2. Consideration of the writ petition filed after the expiry of three years. 3. Justification of refund in light of potential unjust enrichment. Detailed Analysis 1. Entitlement to Refund of Excise Duty Paid Under a Mistake of Law The petitioner, a public charitable trust, sought a refund of excise duty paid under a mistaken classification of goods. Initially, the petitioner classified condensers under Tariff Item No. 68 based on the Department's opinion, which was later acknowledged as incorrect. The correct classification under Tariff Item No. 30, which provided an exemption, was accepted by the Assistant Collector in 1981. The petitioner realized the mistake in 1980 and filed for a refund in 1982. The court held that the mistaken classification constituted a mistake of law, entitling the petitioner to a refund under Section 72 of the Contract Act, independent of the provisions of the Excise Act. 2. Consideration of the Writ Petition Filed After the Expiry of Three Years The writ petition was filed in 1986, four years after the realization of the mistake. The Department argued that the suit would be barred by limitation under Article 113 of the Limitation Act. However, the court noted that the delay was justified due to the intervening proceedings and the petitioner's reliance on a 1973 circular issued by the Central Board of Excise and Customs, which directed officers to grant refunds for claims made within three years of realizing the mistake. The court emphasized that the delay was caused by the Department's own actions, including the prolonged appeal process, and not by the petitioner. 3. Justification of Refund in Light of Potential Unjust Enrichment The court addressed the issue of unjust enrichment, noting that the petitioner's activities were charitable and educational, with no personal benefit to the trustees. The Full Bench judgment referenced by the court stated that the government cannot retain amounts unjustly recovered in violation of Article 265 of the Constitution. The court concluded that refunding the amount to the trust would be appropriate, as the funds would be used for public benefit. Conclusion The court ruled in favor of the petitioner, granting the refund of the excise duty paid under a mistaken classification. The court also ordered the Department to pay interest at 12% per annum from 1982 until the date of payment and awarded costs of Rs. 5,000 to the petitioner. The application for a stay of the order was rejected.
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