1992 (2) TMI 96 - HC - Central Excise

Refund - Writ jurisdiction - Indirect tax collected without authority of law -Unjust enrichment

Issues:
1. Whether the petitioner company's manufactured goods are liable to excise duty.
2. Whether the petitioner is entitled to a refund of excise duty paid for a specific period.
3. Whether Section 11B of the Act is unconstitutional.
4. Whether the petitioner has established a case for entitlement to a refund under Article 226 of the Constitution.
5. Whether the petitioner has suffered loss or injury due to a mistake of law, justifying a refund.
6. Whether the court should exercise discretion under Article 226 for a refund.
7. Whether the petitioner has fulfilled the conditions under Section 72 of the Contract Act for a refund.
8. Whether the petitioner's claim for refund should be granted based on legal precedents.
9. Whether relief should be granted under Article 226 for refund of taxes collected over an indefinite period.
10. Whether any other contentions have been raised in the petition.

Analysis:
1. The petitioner company claimed that its goods are not liable to excise duty as the cutting and straightening process does not constitute manufacture under Section 2(f) of the Central Excises & Salt Act, 1944. The petitioner relied on a previous decision by CEGAT to support its claim for a refund of excise duty paid. The court noted the partial allowance of the refund claims and subsequent re-classification of articles by the department.

2. The petitioner sought a refund for excise duty paid from April 1984 to December 1986, arguing that approaching the departmental authority would be futile due to the limitation period under Section 11B of the Act. The court referenced Supreme Court decisions to emphasize the authority's limitation under the statute and the petitioner's need to establish entitlement to the refund.

3. The petitioner challenged the constitutionality of Section 11B of the Act, citing a previous judgment. The court rejected this challenge, stating that no new grounds warranted reconsideration or referral to a Larger Bench.

4. The court found that the petitioner failed to establish a case for entitlement to a refund under Article 226 of the Constitution. It highlighted the petitioner's lack of averments regarding loss or injury, essential for invoking the court's discretion.

5. The court emphasized the need for the petitioner to prove payment under a mistake of law, coercion, or pressure, as per Section 72 of the Contract Act. Referring to previous judgments, the court concluded that the petitioner did not demonstrate legal injury or prejudice due to the duty payment.

6. Legal precedents were cited to support the court's position that granting a refund in cases of little or no possibility of refunding consumers would result in unjust enrichment. The court referenced Supreme Court decisions to illustrate the principle that only those bearing the ultimate burden of payment are entitled to a refund.

7. Since the petitioner failed to show loss or injury resulting from the alleged mistake of law, the court concluded that the claim for a refund was not established. Therefore, the question of exercising discretion under Article 226 did not arise.

8. The court referred to a Supreme Court decision to highlight the limitation on relief granted in cases of illegal exaction. It emphasized that relief would be limited to the period not barred by limitation, even in cases of applications for refund or suits for tax recovery.

9. Based on the analysis of each ground raised, the court deemed it improper to grant relief under Article 226 and direct the department to refund the tax amount collected from the petitioner.

10. The court found no merit in the petition and rejected it, discharging the rule.

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