2012 (11) TMI 149 - HC - Central Excise

Refund claim - same duty paid twice - Held that - When the petitioners paid the duty of ₹ 91,128/- at the time of clearance of goods, they discharged their excise duty liability on such clearances. Thereafter, the petitioners had no further excise duty liability on such goods. If by mistake or a pure clerical error or an oversight, the petitioners also thereafter debited the same amount in the Personal Ledger Account and deposited a sum of ₹ 91,128/- all over again, such deposit cannot take the character of duty paid. Such deposit was purely an error and the amount deposited cannot be co-related with the petitioners responsibility to discharge excise liability. Such payment of ₹ 91,128/- made second time, therefore cannot be seen as a duty deposited or paid. Under the circumstances, the claim of the petitioners seeking repayment of such amount cannot be seen as a refund claim made under section 11B of the Act. Merely because there is no specific statutory provision pertaining to return of amount deposited under a mistake, per se, should not deter from directing the respondents to return such amount. Admittedly, there is no prohibition under the Act from returning such an amount - directed to the respondents to pay petitioners a sum of ₹ 91,128/- with simple interest at the rate of 9% per annum after a period of three months from the date of the application dated 1-11-2003 till actual payment - in favour of assessee.

Issues Involved:
1. Validity of the refund claim for excise duty paid twice.
2. Applicability of the limitation period under Section 11B of the Central Excise Act.
3. Principle of unjust enrichment and equitable considerations for refund.

Detailed Analysis:

1. Validity of the Refund Claim for Excise Duty Paid Twice:
The petitioners, a company engaged in manufacturing sanitary wares, paid excise duty twice on the same goods due to a clerical error. They initially paid Rs. 91,129/- at the time of clearance and mistakenly paid the same amount again by debiting their Personal Ledger Account. The petitioners filed a refund claim on 1-11-2003, which was rejected by the adjudicating authority on 23-3-2004, despite acknowledging that the duty was paid twice. The authority's rejection was based on the ground that the claim was time-barred under Section 11B of the Central Excise Act.

2. Applicability of the Limitation Period Under Section 11B of the Central Excise Act:
The petitioners argued that the amount paid the second time did not take the character of duty and should be refunded without reference to the limitation period under Section 11B. They cited several tribunal decisions and a recent Division Bench decision in C.C. Patel & Associates Pvt. Ltd. vs. Union of India, where similar claims were entertained beyond the limitation period. The adjudicating authority, however, maintained that the limitation period prescribed under Section 11B was absolute and unextendable, as supported by the Supreme Court's decision in Commissioner of Customs and Central Excise vs. Hongo India Private Limited and Another.

3. Principle of Unjust Enrichment and Equitable Considerations for Refund:
The petitioners contended that retaining the erroneously paid amount would result in unjust enrichment for the government. They relied on the principle of restitution and equitable considerations, referencing the Indo-Nippon Chemicals Co. Ltd. case, where the court granted a refund beyond the limitation period. The respondents argued that the refund claim was rightly rejected due to the limitation period and the availability of statutory appeals.

Court's Observations and Judgment:
The court noted that the facts were undisputed: the excise duty was paid twice, and the burden was not passed on to the consumer. The court held that the second payment did not amount to a deposit of excise duty but was a mistaken deposit. Therefore, the refund claim did not fall under Section 11B of the Act, and the limitation period did not apply. The court emphasized that retaining the amount would be inequitable and directed the respondents to refund Rs. 91,128/- with 9% simple interest from three months after the application date (1-11-2003) until actual payment.

The court concluded that while statutory provisions for refund claims must be respected, in cases of clear clerical errors leading to mistaken deposits, equity demands that such amounts be returned without being constrained by statutory limitations. The petition was disposed of accordingly, making the rule absolute.

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