1991 (8) TMI 92 - HC - Central Excise

Summary

Issues:
Challenge to legality of order rejecting refund claim under Section 11B of the Central Excises and Salt Act and confirming demand under Section 11A of the Central Excise Act based on the principle of unjust enrichment.

Analysis:
1. The petitioners challenged the order passed by the Assistant Collector, which rejected their refund claim of Rs. 2,36,003.91 and confirmed a demand of Rs. 77,187/- against them. The petitioners claimed that the recovery of duty by the Department was without legal authority, and they sought a refund based on a previous decision by CEGAT. The Assistant Collector rejected the refund claim on the grounds of unjust enrichment, citing the Roplas case. Additionally, a show cause notice was issued to recover the refunded amount of Rs. 77,187/- on the same grounds.

2. The petitioners argued before the Assistant Collector that the recovery of duty was wrong, as established by the CEGAT decision, which led to the Department refunding the amount in question. The Assistant Collector, however, denied the refund claim based on the principle of unjust enrichment, despite the petitioners' arguments and citations of previous court judgments. The High Court found the Assistant Collector's decision erroneous, emphasizing that a refund sought after an appellate order should not be denied based on unjust enrichment. The reliance on the Roplas case was deemed incorrect, as it was no longer valid. The High Court directed the Assistant Collector to grant the refund within two weeks and struck down the show cause notice for the demand of Rs. 77,187/-.

3. In conclusion, the High Court set aside the Assistant Collector's order, directing the refund to be processed promptly. Failure to refund within the specified time would result in the petitioners being entitled to interest on the amount. The High Court also held that the petitioners were entitled to costs, emphasizing the incorrect application of the principle of unjust enrichment by the Assistant Collector and the reliance on an outdated legal precedent.