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1990 Supreme(Ori) 282
IN THE HIGH COURT OF ORISSA
B.L. Hansaria, R.C. Patnaik, JJ.
MAMTA DRINKS AND INDUSTRIES LTD. AND ANOTHER - APPELLANT
Versus
UNION OF INDIA (UOI) AND ANOTHER - RESPONDENT
O.J.C. No. 1107 of 1983
Decided On : 11-03-1990
B. Mohanty, P. Mohanty and Ananga Patnaik, for the Appellant; A.B. Misra, Senior Standing Counsel, for the Respondent
The doctrine of unjust enrichment prevents the granting of a refund in this case, as it would result in the Petitioners' unjust enrichment.
Headnote:
EXCISE - REFUND - LIMITATION - SECTION 11-B OF THE CENTRAL EXCISE AND SALT ACT, 1944 - WHETHER REFUND CAN BE CLAIMED UNDER SECTION 72 OF THE INDIAN CONTRACT ACT - WHETHER DOCTRINE OF UNJUST ENRICHMENT WOULD PREVENT GRANTING OF REFUND - HELD, YES.
Fact of the Case:
Petitioner, a company manufacturing aerated soft drinks, paid excise duty at 20% ad valorem under the mistaken belief that their products contained blended flavouring concentrates. Upon discovering the error, they filed a petition for refund under Article 226 of the Constitution, claiming a refund of Rs. 1,98,084.32. The Assistant Collector rejected the claim as time-barred under Section 11-B(1) of the Central Excise and Salt Act, 1944.
Finding of the Court:
The Court held that refund could be claimed under Section 72 of the Indian Contract Act, which provides for the repayment of money paid under mistake, and that the general law of limitation would apply. The Court also held that the doctrine of unjust enrichment would prevent the granting of a refund in this case, as it would result in the Petitioners' unjust enrichment.
Issues: 1. Whether refund can be claimed under Section 72 of the Indian Contract Act despite the provisions of Section 11-B of the Central Excise and Salt Act, 1944? 2. Whether a refund can be granted in a proceeding under Article 226 of the Constitution? 3. Whether the doctrine of unjust enrichment would prevent the granting of a refund in this case?
Ratio Decidendi: 1. Section 11-B of the Central Excise and Salt Act, 1944 does not bar a claim for refund under Section 72 of the Indian Contract Act, which provides for the repayment of money paid under mistake. 2. A refund can be granted in a proceeding under Article 226 of the Constitution. 3. The doctrine of unjust enrichment prevents the granting of a refund in this case, as it would result in the Petitioners' unjust enrichment.
Final Decision: The petition for refund was dismissed.
JUDGMENT :
B.L. Hansaria, C.J. - Petitioner No. 1 is a company carrying on the business of manufacture of aerated soft drinks, namely, Gold Spot, Limca and Kismat. These products were liable to excise duty ' 20% ad valorem as aerated water under Tariff Item No. ID of the First Schedule to the Central Excise and Salt Act, 1944 (shortly stated 'the Act').
2. On 17 3-1972. a notification was issued by the Central Government under Rule in) of the Central Excise Rules, 1944 (shortly stated 'the Rules') exempting aerated water other than those in which blended flavouring concentrates have been used from so much of excise duty as is in excess of 10% ad valorem. The result of the notification is that aerated water in which blended flavouring concentrates are not used are liable to exercise duty ' 10% ad valorem and not 20% ad valorem. It is the case of the Petitioners that being under the erroneous impression that Gold Spot, Limca and Kismat contained blended flavouring concentrates, excise duty ' 20% ad valorem was paid during the period from 23-4-1973 to 19-9-1975. A decision was, however, rendered by the Government of India in the Ministry of Finance, Department of Revenue, that the aforesaid products did not contain blended flavouring concentrate. This order was passed on a review petition filed by M/s. Chennai Bottling Company, Madras on 26-9-1980. This led the Petitioners to approach the Assistant Collector of Central Excise and Customs, Rourkela Division, by filing a petition on 2-1-1981 claiming refund of Rs. 1,98,084.32. This claim has been rejected, by the Assistant Collector in the ground of limitation. Hence this petition under Article 226 of the Constitution of India praying for quashing the order of the Assistant Collector and to issue-a writ of mandamus to direct refund.
3. A perusal of the impugned order shows that the Assistant Collector rejected the prayer of the Petitioners first by stating that the claim having been preferred after six months from the date of payment was time barred inasmuch as Section 11-B(1) of the Act Permits a person to claim refund before expiry of six months from the relevant date. As regards the contention of the Petitioners that Section 11-B of the Act did not apply as the present was a case of mistake of law attracting Section 72 of the Contract Act because of which the claim for refund could be preferred within three years under the general law of limitation, the View taken by the Assistant Collector was that the mistake must have come to the knowledge of the Petitioners from the date of the Bombay High Court's judgment in M/s. Duke and Sons (P) Ltd. v. Superintendent of Central Excise (Misc. Petition No. 944 -of 1973 disposed of on 8-10-1976) inasmuch as in that case it was held that aerated waters manufactured by M/s. Duke and Sons did not contain blended flavouring concentrates because of which excise duty was payable at the rate of 10% ad valorem.
4. Let it be first seen whether the provisions contained in Section 11-B of the Act could have stood in the way of the Petitioners in claiming refund with the aid of Section 72 of the Contract Act and whether order of refund can be passed in a petition under Article 226 of the Constitution. As there is no direct decision of this Court of these aspects, it would be in fitness of things to examine the point in some detail. To substantiate his contention, learned Senior Standing Counsel has referred to Sub-sections (4) and (5) of Section 11-B of the Act, which are in the following language:
(4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained.
(5) Notwithstanding anything contained in any other law, the provisions of this Section, shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from, duty and no Court shall have any jurisdiction
