1992 (8) TMI 85 - HC - Central Excise

Summary

Issues Involved:
1. Classification of the product "Patta" under the Central Excises and Salt Act, 1944.
2. Entitlement to refund of excise duty paid under protest.
3. Applicability of amendments to Section 11B and Sections 12A, 12B, 12C, and 12D of the Act of 1944.
4. Principle of unjust enrichment.

Summary:

1. Classification of the product "Patta" under the Central Excises and Salt Act, 1944:
The petitioner, a partnership firm manufacturing stainless steel product known as "Patta," initially classified the product as "sheet" or "strips" under sub-item (ii) of Tariff Item No. 26AA. The petitioner claimed it should be classified under sub-item No. (ia) based on decisions in cases of M/s. C.D. Industries and M/s. Ae Vee Iron & Steel Works Private Limited. The Assistant Collector, Central Excise, Jodhpur, rejected this claim. The petitioner's appeal was accepted by the Collector (Appeals), making the petitioner entitled to a refund of duty paid 'under protest'.

2. Entitlement to refund of excise duty paid under protest:
The petitioner applied for the refund, which was initially rejected by the Assistant Collector, Central Excise. The petitioner's subsequent appeal was allowed by the Collector (Appeals), directing the Assistant Collector to grant the refund. Despite the Excise Department's appeal to CEGAT, which was dismissed, no refund was made. The petitioner filed a writ petition seeking a mandamus directing the respondents to refund the excise duty.

3. Applicability of amendments to Section 11B and Sections 12A, 12B, 12C, and 12D of the Act of 1944:
The respondents contended that amendments effective from 20th September 1991, particularly Section 11B, barred the petitioner from any refund. The Court held that the amendments were not retrospective and did not apply to refunds due as a result of appellate orders. The Court emphasized that the entitlement to refund arises from the appellate order and does not require further adjudication by the Assistant Collector. The duty to refund is a statutory obligation under the provisions existing before the amendments.

4. Principle of unjust enrichment:
The respondents argued that the petitioner is not entitled to a refund based on the principle of unjust enrichment. The Court rejected this contention, stating that the principle of unjust enrichment does not apply to refunds of tax illegally collected. The Court cited several precedents, including Supreme Court decisions, affirming that taxes collected without authority must be refunded, and the principle of unjust enrichment cannot be invoked to deny such refunds.

Conclusion:
The petition was accepted, and the respondents were directed to refund the excise duty with 12% per annum interest from the date of actual payment to the date of refund. The refund was to be made within two months from the date of the order.