1986 (5) TMI 126 - AT - Central Excise

Summary

Issues:
Challenge to the correctness of the Tribunal's order
Applicability of the doctrine of unjust enrichment in refund claims under Section 11B of the Central Excises and Salt Act, 1944

Analysis:
The reference application challenged the Tribunal's order in Appeal No. E/178 of 1985, raising questions regarding the correctness of the order and the application of the doctrine of unjust enrichment in refund claims under Section 11B of the Central Excises and Salt Act, 1944. The learned S.D.R. argued that the first question was a matter of fact, not law, as the Tribunal's order could not be reviewed in a reference application. Regarding the doctrine of unjust enrichment, it was established through judicial precedents, including the Supreme Court, that the Department cannot withhold a refund due to a party based on unjust enrichment principles.

The Supreme Court's ruling in R. Abdul Quader and Company v. Sales Tax Officer emphasized that if a dealer collects an amount not authorized by law, it is a matter between the dealer and the purchaser, and the State cannot recover it unless it is due as tax. This principle, applicable to sales tax, extends to excise duty collection by an assessee from a purchaser. The Supreme Court in M/s. D. Cawasji and Company v. State of Mysore further clarified that a writ petition for refund of tax, within the limitation period, can be filed based on a mistake of law, even if the person who paid it has no intention to refund it to customers.

The Division Bench of the Bombay High Court and the Allahabad High Court have also held that the State is obligated to refund amounts collected without legal authority, rejecting the defense of unjust enrichment. The Tribunal in Collector of Central Excise, Rajkot v. Decora Ceramics Private Ltd. affirmed that Central Excise law does not permit denial of relief on the basis of unjust enrichment or make refund conditional on passing relief to the ultimate consumer. Given the settled legal position on the doctrine of unjust enrichment in refund claims under Section 11B, the Tribunal rejected the reference application, emphasizing that further reference on this matter was unnecessary.

In conclusion, the Tribunal dismissed the reference application and the memorandum of cross-object, highlighting the well-established legal principles regarding the doctrine of unjust enrichment in refund claims under the Central Excises and Salt Act, 1944.