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TMI Blog1988 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year by any manufacturer whose total production of soap in the preceding financial year did not exceed 500 tonnes. 4. The petitioner Company is covered by the self removal procedure under Rules 173A to 173Q of the Central Excise Rules under which it is required to assess the duty payable and on payment of duty so assessed can remove the goods under Rule 9 of the said Rules. 5. Since, during the financial year 1971-72, the petitioner produced only 391.764 metric tonnes of soap, it was not liable to pay any excise duty on the first 50 tonnes of soap produced and/or manufactured during the succeeding financial years beginning from 1st April, 1972, in view of the exemption notification. But without being aware of such notification the petitioner during the Financial year: 1971-73 paid excise duty on the total production of soap. 6. That it was only on receipt of a letter from the office of the Accountant General (Central) dated 7th August, 1974 (Annexure 'C') directing the petitioner to let them know whether any claim for refund of duty had been preferred by it, that the petitioner came to know an enquiry about the exemption notification. 8. Thereafter, on 7-12-1974 the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents was that in view of the facts and circumstances of the case, the Excise authorities were quite justified in applying the period of limitation as provided by Rule 11 and consequently, this Court exercising Writ jurisdiction, should not exercise its discretionary powers in favour of the petitioner. It was further contended by him that the petitioner having already passed on the excess duty paid to the customers and ultimately to the members of the public, the Writ Court as a Court of equity would be reluctant to direct refund of the duty to the petitioner, on the ground of unjust enrichment. 15. Now, before examining the rival contentions of the parties, it may be useful to refer to Rule 11 of the Central Excise Rules, as it stood at the material time. It is as hereunder : "No duties or charges which have been paid or have been adjusted in account current maintained with the Collector under Rule 9, and of which repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded unless the claimant makes an application for such refund under his signature and lodges it with the proper officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny express or implied bar for such suit, it undoubtedly provided a specific remedy for refund of part or whole of the excise duty paid through error, inadvertence or mis-construction and also provided a specific period of limitation for preferring such claims for refund. 25. The question which, therefore, stares large is that whether in such a situation it could be said that the ordinary remedy for recovery of such amount was by way of suit for which the period of limitation under the Limitation Act is three years. 26. In Patel India Ltd. v. Union of India, 1983 E.L.T. 1495 (S.C.) = A.I.R. 1973 SC 1300, the excise duty in respect of which refund was claimed, was demanded by the Customs Authority on the ground that the invoice price did not represent the real value of the imported goods and payment was made under protest. Refund of such duty was thereafter claimed under Section 40 of the Sea Customs Act, 1878 which, as in Rule 11 of the Central Excise Act provided for refund of Customs duty paid through inadvertence, error or mis-construction. The Supreme Court held that since the claim of the assessee was not based on any such ground, Section 40 of the Act did not have any manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the analogy of the statute of limitation in a proceeding under Article 226 though the statute may not apply to the proceeding. 32. An identical question came up for consideration before a Division Bench of this Court in Khardah Company Ltd. v. Union of India, 1983 E.L.T. 2159 (Cal.). 33. There also the petitioner's claim for refund of excess excise duty was rejected by the Excise Authority solely on the ground of limitation as provided by Rule 11 of the Central Excise Rules. The Court after having duly considered the scope and amplitude of Rule 11 held that it could not be said in view of the facts and circumstances of the case that the petitioner had paid the excise duty through inadvertence, error or mis-construction. 34. The Court in this connection viewed the matter from another angle, that is, from the view point of propriety. In support thereof reference was made to the following observations of the Supreme Court in Aluminium Corporation of India Ltd. v. Union of India, A.I.R. 1975 S.C. 2279. : "To return what has been taken wrongly is as much a duty and grace of the Government as to levy relentlessly and fully what is due. Default in either, not altogether, unfamiliar br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not visualise a situation where the remedy had become time-barred not due to any laches of the party but due to circumstances beyond his control or due to any other genuine reasons. The question is whether in such circumstances, a Writ Court, which is basically a Court of equity, would come to the rescue of the party on the ground that at any event recovery of the duty had been made without any authority of law in violation of Article 265 of the Constitution. 39. Thus, in my view, the Bench decision of this Court in Inchek Tyre's case (supra) cannot be cited as an authority for the proposition that a Writ Court cannot or should not under any circumstances allow a claim for refund which has become time-barred under a special statute. 40. Considering the trend of the decisions referred to earlier, I am more in favour of the view that though the High Court while exercising powers under Article 226 of the Constitution should not overlook the express statutory provisions so as to render such provisions totally nugatory, it should step in as a Court of equity in appropriate cases to grant relief to a party to prevent his rightful claim being defeated for no fault of his. 41. So fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to become time-barred due to its own laches. And as such, it is a fit case where the writ Court should step in so that the petitioner's rightful claim is not defeated. 46. In this connection it was contended by Mr. Roy Chowdhury, the learned Counsel representing the respondents that as a court of equity the writ Court should decline to come to the assistance of the petitioner on the ground of unjust enrichment, since the petitioner has already passed on the burden of the excess duty paid to its customers. 47. Now, so far this doctrine of unjust enrichment is concerned, a catena of decisions of different High Courts will bear testimony to the fact that the point is now being raised before this Court possibly for the umpteenth time. 48. It may, however, be mentioned at the outset, that the High Courts in India are not consistent in their views on the point. While the Bombay High Court has more or less consistently held that a claim for refund cannot be defeated on the ground of unjust enrichment, different views have been taken by the Madras, Delhi and Gujarat High Courts. 49. In Union of India v. Ahmedabad Calico Printing, 1984 (17) E.L.T. 246, a Division Bench of the Gujara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. Cawasji v. State of Mysore (supra), which though obiter, appeared to enunciate the true legal principle which followed from their earlier decisions in A.I.R. 1958 S.C. 152 and A.I.R. 1962 S.C. 1006. 56. On such finding the Court rejected and overruled the plea of unjust enrichment. It was also held that though the High Court in exercise of its writ jurisdiction has power for the purpose of enforcement of fundamental as well as statutory rights to give consequential relief by ordering repayment of money realised without any authority of law; the special remedy under Article 226 is not intended to supersede completely the other normal remedies or to deny defences legitimately open in such an action. 57. In my judgment, much controversy could have been avoided had the legislature while prescribing a period of limitation for preferring such claims under a special statute, made provision authorising the statutory functionaries to condone the delay in preferring the claim, on such delay being explained satisfactorily. 58. But so long it is not done the writ Court as a Court of equity has to step in sometimes in case of collection of tax without authority of law in contravention of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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