2005 Supreme(SC) 428

2005(3) Supreme 660
Supreme Court of India
(From Central Excise, Customs and Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai)
Mrs. Ruma Pal, Arijit Pasayat and C.K. Thakker, JJ.
M/s. Sahakari Khand Udyog Mandal Ltd. —Appellant
versus
Commissioner of Central Excise and ­Customs —Respondent
Civil Appeal Nos. 6832 and 6833 of 1999
Decided on 9-3-2005
Counsel for the Parties :
For the Appellant : Ramesh Singh, Pratap Venugopal, P.S. Sudher, Amit Singh, Advocate for K.J. John, Advocate/Advocates.
For the Respondent : A. Saran, Additional Solicitor General, Anuvrat Sharma, Advocate for B. Krishna Prasad, Advocate.

Important point
Before claiming a relief of refund of ­excise duty, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss.

Headnote:Central Excise and Salt Act, 1944 —Section 11B, Item 1(1), First Schedule—Central Excise Rules, 1944—Rule 8(1)—Claim of benefit of exemption from octroi duty for excess production—Appellant Mandal engaged in manufacturing sugar claimed rebate of Rs. 6,92,779/- on basis of Notification No. 257/76 dated 30-9-1976—Notification provided for exemption from payment of excise duty leviable thereon in excess of average production of sugar of corresponding period of preceding three years—According to the Assistant Collector, claimant could not have claimed Rs. 6,92,779/- but only Rs. 5,42,342.90 ps—Invoking the doctrine of unjust enrichment, he transferred the amount to Consumer Welfare Fund, set up by the Government of India—CEGAT confirmed the order passed by the Assistant Collector—According to CEGAT, calim was ‘clearly barred by limitation—Claim was in respect of production for the year 1976-77—Claim submitted on 14-8-1976 rightly held to be barred by limitation—Whether appellant Mandal is entitled to claim any amount—(No)—Whether refusal to grant benefit can be held ­arbitrary, unreasonable or inequitable —(No).

       Held : In our opinion, both the notifications are abundantly clear. The benefit under the said notifications can be claimed only if sugar is sold in the proportion of 65 : 35 levy sugar and free sale sugar respectively. Since the appellant was claiming the benefit of exemption from excise duty, it was obligatory on the appellant-Mandal to sell sugar in the ratio of 65 : 35 as specified in the notifications and unless that condition is fulfilled, the benefit of exemption from duty could not be claimed by it. On the basis of actual sale by the appellant, the respondent had calculated the amount of exemption from excise duty which was in consonance with the notifications and no grievance can be made by the appellant against that decision. (Para 24)

       Stated simply, ‘Unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. ‘Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else. The doctrine of ‘unjust enrichment’, therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of ‘unjust enrichment’ arises where retention of a benefit is considered contrary to justice or against equity. The juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or the doctrine of restitution. (Paras 31 to 33)

       The doctrine of ‘unjust enrichment’ is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss. In the present case, not only no such case has been made out by the appellant-Mandal, the position is to the contrary. All the authorities below have expressly recorded a finding that the appellant-Mandal has recovered the amount from consumers and as such excise duty is passed on to consumers/customers. In view of specific finding, in our opinion, the conclusion is inescapable that the appellant-Mandal is not entitled to claim any amount. Allowing exemption or refund of amount would result in ‘unjust enrichment’ by the appellant which cannot be permitted. In our opinion, therefore, even on that count, orders passed by the authorities and refusal to grant benefit cannot be held arbitrary, unreasonable or inequitable. (Paras 47 and 48)