1991 (8) TMI 111 - HC - Central Excise

Issues Involved:
1. Whether a statutory authority can refuse relief to an applicant by invoking the principle of "unjust enrichment."
2. Whether the Assistant Collector is authorized to issue a notice under Section 11B of the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Whether a statutory authority can refuse relief to an applicant by invoking the principle of "unjust enrichment":

The primary issue in this case is whether the Assistant Collector, while exercising his power under Section 11B of the Central Excises and Salt Act, 1944, can refuse to refund the duty illegally collected by invoking the principle of "unjust enrichment." The petitioner, a manufacturer of cement, sought a refund of duty paid on the cost of packing, which was later determined to be non-includible in the assessable value of cement.

The court found sufficient force in the petitioner's contention that the theory of unjust enrichment has no place in dealing with a claim for refund of duty under Section 11B of the Act. The Assistant Collector is not authorized to exercise the power of refusing a refund on the ground of unjust enrichment, which is a power that can only be exercised by the High Court or the Supreme Court under Articles 226 and 32 of the Constitution.

The court referenced multiple cases to support this conclusion:
- Bombay Burmah Trading Corpn. Ltd. v. Union of India: The Bombay High Court held that the Department could not refuse to make a refund because the duty was paid under protest.
- Amar Dye Chem Ltd. v. Union of India: The Bombay High Court reiterated that the Department was duty-bound to refund the amount and could not refuse by applying the principle of unjust enrichment.
- Kesoram Cements, Basantnagar v. Union of India and Others: The Andhra Pradesh High Court held that excise authorities had no jurisdiction to levy excise duty except as empowered by the Act, and any duty collected otherwise was liable to be refunded.
- Birla Jute Manufacturing Company Ltd. v. Union of India and Others: The Madhya Pradesh High Court held that the cost of packing was not includible in the assessable value and directed a refund.
- Orient Paper & Industries Ltd. v. Union of India and Others: The Calcutta High Court held that the Assistant Collector had no jurisdiction to refuse a refund on the ground of unjust enrichment.
- Salonah Tea Company Ltd. etc. v. Superintendent of Taxes, Nowgong & Others etc.: The Supreme Court held that taxes collected without authority should be refunded.

The court concluded that an authority like the Assistant Collector under the Act has no jurisdiction to refuse a refund by invoking the theory of unjust enrichment.

2. Whether the Assistant Collector is authorized to issue a notice under Section 11B of the Central Excises and Salt Act, 1944:

The court examined the issuance of the notice by the Assistant Collector under Section 11B of the Act. The court noted that there is no provision in Section 11B requiring the Assistant Collector to issue a show cause notice to an assessee. The procedure for refund is provided in Section 11B, and a statutory authority cannot transgress the powers conferred on him under the statute.

The court reviewed the authorities cited in the notice and found them inapplicable:
- The Nawabganj Sugar Mills Co. Ltd. and Others v. The Union of India and Others: The Supreme Court formulated a scheme for refund in a different context, which did not apply to the Assistant Collector's powers under Section 11B.
- M/s. Shiv Shankar Dal Mills etc. v. State of Haryana and Others etc.: The Supreme Court's observations on discretionary power under Article 226 did not apply to the Assistant Collector's statutory powers.
- U.P. State Electricity Board, Lucknow v. City Board, Mussoorie and Others: The Supreme Court's decision on discretionary power under Article 226 was not relevant to the Assistant Collector's statutory duties.
- M/s. Amar Nath Om Parkash and Others v. State of Punjab and Others: The Supreme Court's decision on unjust enrichment under a different statute did not apply to the Central Excises and Salt Act.
- The Orient Paper Mills Ltd. v. The State of Orissa and Others: The Supreme Court's decision on a different statutory provision was not relevant.

The court also referenced a decision of the Orissa High Court in Mamta Drinks & Industries Ltd. and Another v. Union of India and Another, which distinguished between the powers of statutory authorities and higher courts. The court held that while higher courts can refuse refunds based on unjust enrichment, a statutory authority like the Assistant Collector cannot.

The court concluded that the Assistant Collector had no authority to issue the notice and that the issuance of the notice was wholly misconceived and without jurisdiction.

Conclusion:

The court quashed the notice issued by the Assistant Collector and directed him to dispose of the petitioner's application for a refund in accordance with law. The writ application was allowed, and there was no order as to costs.

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