1994 (3) TMI 93 - HC - Central Excise

Summary

Issues Involved:
1. Quashing of departmental orders refusing refund.
2. Refund of money paid by the petitioner.
3. Jurisdiction and limitation for refund claims.
4. Unjust enrichment and retrospective effect of amendments.
5. Delay and laches in filing the writ petition.
6. Grant of interest on refunded sums.

Issue-wise Detailed Analysis:

1. Quashing of Departmental Orders Refusing Refund:
The petitioner sought to quash three orders from the Assistant Collector, the Collector, and the Tribunal, all of which refused the refund of money. The court noted that these authorities had no jurisdiction beyond the statutorily prescribed time to make a refund order for any duty paid. Since the payments made by the petitioner were not recognized as duty, the departmental authorities were compelled to treat the payments as duty and assess if they were refundable according to the law. The court found no error in the authorities' decisions and thus did not accede to the first set of prayers.

2. Refund of Money Paid by the Petitioner:
The sums of Rs. 1,13,005.36 and Rs. 7,285.65 were paid by the petitioner for periods prior to April 1981. The petitioner, a small-scale manufacturer, was exempt from excise duty under certain notifications. The payments were made based on a letter from the Superintendent of Central Excise, which implied a suggestion for starting deposits. The court concluded that the petitioner was not under any legal obligation to make these payments. The court granted the relief of refund with interest, recognizing that the payments were made without any legal cause.

3. Jurisdiction and Limitation for Refund Claims:
The court discussed the limitation period for refund claims, noting that the limitation is six months from the date of payment of duty, as per Section 11B of the amended 1944 Act. The petitioner protested from 13th April 1981, and payments made thereafter were refunded. For the period prior to this date, the authorities held that the duty was not paid under protest or provisional assessment, thus the limitation period could not be bypassed. The court agreed with these findings but noted that the limitation provisions did not apply to the refund of money not recognized as duty.

4. Unjust Enrichment and Retrospective Effect of Amendments:
The court addressed the argument of unjust enrichment, noting that the Tribunal did not consider this issue in its decision. The 1991 amendment to Section 11B, which bars refunds if the incidence of excise duty has been passed on to purchasers, was discussed. The court referred to the Supreme Court's decision in Union of India v. ITC Limited, which held that the amendment has retrospective effect. However, the court found that the payments made by the petitioner were not duty and thus not subject to the limitation and unjust enrichment provisions of Section 11B.

5. Delay and Laches in Filing the Writ Petition:
The court considered the delay in filing the writ petition, noting that normally a writ is barred after three years. The petitioner had approached the departmental authorities first and only approached the writ court after failing in the Tribunal in 1990. The court found no laches or negligence on the part of the petitioner, attributing the delay to wrong legal advice and bona fide pursuit of an infructuous remedy. The court exercised its discretion to condone the delay, emphasizing that justice should not be denied due to technical reasons.

6. Grant of Interest on Refunded Sums:
The court addressed the issue of interest on the refunded sums, noting that the respondents had the benefit of the money for several years. The court decided to grant interest at the rate of six percent per annum from 13th April 1981 until payment. The court emphasized that the respondents could have refunded the money earlier based on the communications from the Assistant Collector in 1983. The court ordered the refund of the principal sums with interest to be made within sixteen weeks.

Conclusion:
The court granted the writ petitions, ordering the respondents to refund the sums with interest at six percent per annum from 13th April 1981 until payment. The court emphasized the principles of reasonable, fair, and equal action in its decision and refused a stay of the order's operation.