1988 Supreme(Cal) 84

High Court Of Calcutta
Sudhir Ranjan Roy
DAYAPARA TEA CO.LTD - Appellant
Versus
ASSISTANT COLLECTOR OF CENTRAL EXCISE - Respondent
C. R.  4168-68 (W)  Of  1979
Decided On : 03/04/1988

The High Court has the power to intervene in cases where a claim for refund of excise duty paid through inadvertence, error or mis-construction is filed after the period of limitation prescribed under Rule 11 of the Central Excise Rules, and the doctrine of unjust enrichment cannot be invoked in case of claim for refund of excise duty recovered from the manufacturer without authority of law.

Headnote:

EXCISE DUTY - REFUND - LIMITATION - REFUND OF EXCISE DUTY PAID THROUGH INADVERTENCE, ERROR OR MIS-CONSTRUCTION - CLAIM FOR REFUND FILED AFTER THE PERIOD OF LIMITATION - WHETHER THE HIGH COURT CAN INTERVENE IN SUCH CASES UNDER ARTICLE 226 OF THE CONSTITUTION - WHETHER THE DOCTRINE OF UNJUST ENRICHMENT CAN BE INVOKED IN CASE OF CLAIM FOR REFUND OF EXCISE DUTY RECOVERED FROM THE MANUFACTURER WITHOUT AUTHORITY OF LAW.

Fact of the Case:

The petitioner, a manufacturer of Vanaspati and Soap, paid excise duty on the total production of soap during the financial year 1971-73, even though it was exempted from duty under a notification issued by the Central Government. The petitioner came to know about the exemption notification only after receiving a letter from the Accountant General (Central) in August 1974. The petitioner filed an application for refund of the excess duty paid under Rule 11 of the Central Excise Rules, but the claim was rejected by the Assistant Collector, Central Excise, on the ground of limitation. The petitioner's appeal and revision petition were also dismissed.

Finding of the Court:

The High Court held that the writ petitions filed by the petitioner were maintainable and that the petitioner was entitled to a refund of the excess excise duty paid. The Court held that the petitioner had paid the excess duty through inadvertence, error or mis-construction, and that the claim for refund was not barred by limitation under Rule 11 of the Central Excise Rules. The Court also held that the doctrine of unjust enrichment could not be invoked in case of claim for refund of excise duty recovered from the manufacturer without authority of law.

Issues: 1. Whether the High Court can intervene in cases where a claim for refund of excise duty paid through inadvertence, error or mis-construction is filed after the period of limitation prescribed under Rule 11 of the Central Excise Rules? 2. Whether the doctrine of unjust enrichment can be invoked in case of claim for refund of excise duty recovered from the manufacturer without authority of law?

Ratio Decidendi: 1. The High Court held that it has the power to intervene in cases where a claim for refund of excise duty paid through inadvertence, error or mis-construction is filed after the period of limitation prescribed under Rule 11 of the Central Excise Rules. The Court held that 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, but 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. The Court held that the High Court should have full respect for the statutory mandate but not in a way so as to be a silent spectator of its tyranny. 2. The High Court held that the doctrine of unjust enrichment cannot be invoked in case of claim for refund of excise duty recovered from the manufacturer without authority of law. The Court held that the observation of the Supreme Court in D. Cawasji v. State of Mysore, that "there was no provision under which the Court could deny the refund of tax even if the person who paid it had collected it from his customers and had no subsisting liability or intention to refund it: to them, or, for any reason, it was impracticable to do so" as referred to in the decision of the Bombay High Court in Associated Bearing Co. v. Union of India, enunciated the true legal principle which followed from their earlier decisions.

Final Decision: The writ petitions filed by the petitioner were allowed and the Rules issued were made absolute. The respondents were directed to refund to the petitioner the excess excise duties as prayed for within a period of sixty days from the date of the order.