Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of Central Excise vs Sahu Cylinders And Udyog Private ... on 15 May, 1986
Equivalent citations: 1988(15)ECR382(TRI.-CHENNAI), 1986(26)ELT133(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. This reference application is directed against the order of the Tribunal in Appeal No. E/178 of 1985 dated 4. 12.85. The Collector of Central Excise, Madras, who is the applicant has set out the following questions in the reference application as questions of law:
"(i) Whether the aforesaid Tribunal order is correct in law?
(ii) Whether the Tribunal is correct in allowing the refund claim filed by the company by holding that principle of unjust enrichment cannot be imported in dealing with a regular claim for refund of duty under Section 11B of the Central Excises and Salt Act, 1944 when such duty has already been collected by the company from its customers and not been paid back to the customer?"
2. Shri Chandramouli, the learned S.D.R. made submissions on the questions set out in the reference application. The first question is purely a question of fact and not a question of law since the correctness of order of the Tribunal cannot be assailed much less reviewed in a reference application. So far as the applicability of the doctrine of unjust enrichment with reference to the refund claim ^arising under Section 11B of the Central Excises and Salt Act, 1944 is concerned, the position is fairly well settled by the judicial pronouncement of the various High Courts including the Supreme Court that the Department cannot withhold the refund otherwise lawfully due to the party on the principles of 'unjust enrichment'.
3. The Constitution Bench of the Supreme Court in the case of R. Abdul Quader and Company v. Sales Tax Officer, 2nd Circle, Hyderabad, reported in AIR 1964 SC 922 has held that "if a dealer has collected anything from a purchaser which is not authorised by the taxing law, that is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly collected by the dealer". The case before the Supreme Court was in respect of sales tax which was so collected and the case pertains to the period when Entry 54 of List II was not amended. The same principle continues to apply in the case of Excise because there is no provision under the Central Excises and Salt Act, 1944 under which the Excise Department can recover from the assessee any excise duty collected by the assessee from his purchaser which is in excess of the excise duty payable by the assessee under the Act.
4. The Supreme Court in the case of D. Cawasji and Company, etc., etc. v. State of Mysore and Anr., reported in AIR 1975 SC 813 while discussing the question relating to limitation for recovery of moneys paid under a mistake of law envisaged by Section 72 of the Contract Act held that when a suit will lie to the recovery of moneys paid under a mistake of law, a writ petition for refund of tax within the period of limitation prescribed viz. within three years of knowledge of the mistake would also lie. Though the Hon'ble Supreme Court was conscious of the fact that such a right recognised in a person to recover the amount paid as tax even after several years of the date of payment on the basis of mistake 'of law might both be inexpedient and unjust so far as the State is concerned, nevertheless has held:
"Nor is there any provision under which the Court could deny refund of-tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them or for any reason it is impracticable to do so."
The Division Bench of the Bombay High Court in the case of Chemicals and Fibres India Ltd. v. Union of India and Ors., reported in 1982 ELT 917 (Bom.) has adverted to various Division Bench rulings of the Bombay High Court such as Maharashtra Vegetable Products Private Ltd. v. Union of India- and Ors., reported in 1981 ELT 468 (Bom.), Wipro Products Ltd. and Anr. v. Union of India and Ors., reported in 1981 ELT 531 (Bom) and held that the State is under obligation to refund moneys which have been recovered without authority of law and the defence that the grant of relief would amount to unjust enrichment is totally without any merit. The Allahabad High Court also has taken the similar view in the case of Govind Sugar Mills Ltd. v. Union of India - 1978 ELT (J 151) - holding that the excise department cannot demand payment of any further additional sum that is not lawfully due to it. Similarly in the case of Mohan Meakin Breweries Ltd. v. Excise Inspector-in-charge, reported in 1979 ELT (J 7), the Allahabad High Court observed that if some one has collected anything from the customer which is not authorised by the taxing law, that is a matter between him and the purchaser and the Government cannot recover it unless the money so collected is due as tax.
5. The Special Bench of the Tribunal in the case of Collector of Central Excise, Rajkot v. Decora Ceramics Private Ltd., Rajkot, reported in 1986 (24) ELT 73 (Tribunal), to which one of us was a party; has held that "Central Excise law does not authorise denial of relief on the score of unjust enrichment nor does it make refund of duty conditional on the relief being passed on to the ultimate consumer."
6. Since the law as discussed above is well settled with reference to the applicability of doctrine or unjust enrichment in respect of a claim for refund under Section 11B of the Central Excises and Salt Act, the question of making any further reference in this regard would not arise.
7. In the result the reference application is rejected. The memorandum of cross object is dismissed as not pressed.