1993 (7) TMI 363 - SC - Central Excise

Summary

Issues Involved:
1. Refund of excess excise duty due to mistake of law.
2. Applicability of limitation period for refund claims.
3. Impact of Section 11B of the Central Excise Act, as amended by Act 40 of 1991, on refund claims.
4. Doctrine of unjust enrichment.

Issue-wise Detailed Analysis:

1. Refund of Excess Excise Duty Due to Mistake of Law:
The respondent, a manufacturer of cigarettes, paid excess excise duty under a mistaken interpretation of Section 4(a) of the Central Excise & Salt Act, 1944. The High Court of Delhi held that the excess duty was paid due to a mistake of law and directed the refund of the sum of Rs. 49,90,043.01. The Supreme Court acknowledged that the respondent had paid excess excise duty due to a mutual mistake of law, as clarified in the Voltas case. The Court reiterated that there is a legal obligation on the part of the Government to refund excess duty collected without the authority of law.

2. Applicability of Limitation Period for Refund Claims:
The Collector of Central Excise (Appeals) rejected two refund applications on the ground of limitation. However, the High Court set aside this order, stating that the respondent could not be non-suited on the plea of limitation since the excess duty was paid due to a mistake of law. The Supreme Court upheld the High Court's view, emphasizing that the respondent was not guilty of any laches and had promptly approached the Assistant Collector after the Voltas judgment.

3. Impact of Section 11B of the Central Excise Act, as Amended by Act 40 of 1991, on Refund Claims:
The appellants raised the plea based on the amended Section 11B to deny the refund. The Supreme Court noted that Section 11B, as amended, requires that any refund claim must be supported by evidence that the incidence of duty has not been passed on to any other person. The Court found that the respondent failed to provide such evidence. The amended provisions apply to all pending claims as of 20.9.1991, including the present case. The Supreme Court concluded that the respondent is not entitled to the refund as it failed to establish that it bore the burden of the excess duty.

4. Doctrine of Unjust Enrichment:
The appellants argued that the respondent, being an indirect tax payer, passed on the duty to consumers and thus should not be entitled to the refund. The Supreme Court agreed, stating that the respondent did not provide sufficient evidence to rebut the presumption under Section 12B of the Act, which assumes that the incidence of duty has been passed on to the buyer. The Court highlighted that the plea of unjust enrichment can be raised during the hearing of the appeal, as it relates to the interpretation of statutory provisions that came into effect during the pendency of the appeal.

Final Judgment:
The Supreme Court allowed the appeal, setting aside the High Court's order directing the refund. The respondent was directed to refund the sum of Rs. 49,90,043.01 with 12% interest per annum from the date of receipt, within eight weeks. The Court emphasized that the respondent failed to rebut the presumption of passing on the duty burden and thus was not entitled to the refund under the amended Section 11B. The parties were directed to bear their own costs.