U. Foam Private Ltd. vs Assistant Collector, Central Excise

Ramanujulu Naidu, J.—This writ petition was filed by the petitioner on 23.2.1988 seeking a declaration that the duty collected during the period 21.8.1971 and 28.2.1978 is exempt under Notification Nos. 69/71, 107/73 and 108/73. The petitioner consequently seeks a direction for the refund of the duty collected with interest at 12% on the said duty. The subject-matter of this writ petition is also the subject-matter of R.C. 36/84 pursuant to a reference made by Excise, Custom and Gold Control Tribunal under S. 35G of the Central Excises and Salt Act, 1944. The writ petition was filed by the petitioner in order to meet an objection raised during the course of appeal before the Tribunal and also in the arguments before this Court in R.C. No. 36/84 that without invoking the jurisdiction under Art. 226 of the Constitution of India, it is not open to the petitioner to claim refund for any period except under rule 11 of the Central Excise Rules. The Tribunal held that the application of the period of limitation under general law can arise only in a writ proceeding in the High Court and it cannot be considered in the course of statutory remedies availed by the petitioner under the Act. It was felt that in the proceeding before the Tribunal the petitioner should necessarily relate its claim for round under rule 11. In that view, the Tribunal dismissed the appeal filed by the petitioner claiming refund holding that the application for refund was filed beyond the period of limitation under rule 11. This contention was re-iterated by the learned Standing Counsel for the Central Government when R.C. 36/84 was being argued. Obviously, the petitioner filed the present writ petition in order to meet the above criticism and sought refund of the duty said to have been collected illegally by the authorities while the notifications referred to above exempted the duty payable in respect of goods manufactured from out of the scrap or waste of polyurethane foam.

A preliminary objection was taken by the learned Standing Counsel that this writ petition ought not to be admitted at this belated stage. On the other hand the petitioner explained that the Excise officials collected illegally without the sanction of law a substantially large sum of money and declined to refund the money on the technical ground that the period of limitation under Rule 11 of the Excise Rules had run out. Learned counsel for the petitioner invited our attention to the untiring efforts made by the petitioner right from the year 1971 which were unsuccessful. In view of the stand taken by the Tribunal and also the learned Standing Counsel that the general law of limitation, cannot be applied by this court except in a writ proceeding, the present writ petition was filed. The petitioner submitted that the delay in the filling of the writ petition may be condoned having regard to the facts and circumstances of the case.

We are satisfied that this a case warranting sympathetic consideration. The petitioner had been pursuing its efforts to secure the refund from 1971 onwards. It cannot, therefore, be said that there are laches on the part of the petitioner. If the petitioner mistakenly thought that without invoking the jurisdiction under Article 226 of the Constitution, it could still canvass for the refund of the amount in the course of appeals filed under statutes, it cannot be held that the petitioner is guilty of laches. If anything, it was a clear misunderstanding. In the circumstances, we condone the delay and admit the writ petition.

In our order of even date disposing of R.C. 36/84 we held that the petitioner is entitled to claim refund pursuant to the application filed on 26.10.1978 inasmuch as rule 11, in our opinion, was inapplicable. That view would prevail, in any event, for the purpose of disposing of the writ petition in exercise of the power under Art. 226 of the Constitution. Even if it should be held that rule 11 would govern the period of limitation in connection with the remedies pursued by the petitioner under the Act, such a situation undoubtedly does not prevail when we decide the matters under Art. 226. We have referred to a large number of decisions of various High Courts supporting the view that in a writ proceeding the Court is entitled to determine the period of limitation by applying the general principles of law. We do so, and hold that in the facts and circumstances the petitioner is entitled to claim refund of duty collected from it for the period 21.8.1971 to 2.5.1978.

Learned Standing Counsel pressed an argument that the doctrine of unjust enrichment applies in this case, as the petitioner must have passed on the burden to the consumer and the petitioner should not, therefore, be allowed to enrich itself by seeking refund of the money in respect of which the burden was passed on to the consumer. Although elaborate arguments were advanced, we are unable to entertain this plea for one reason. The plea of unjust enrichment was not taken by the authorities below, namely, the Asst. Collector, the Appellate Collector or the Appellate Tribunal, as the case may be. The only ground upon which the claim for refund was rejected was that it was outside the period of limitation. We cannot overlook the fact that the Department itself granted refund for the period 1.3.1978 to 31.8.1978 and the grant of refund for this period would constitution self-contradiction of the claim that it was a case of unjust enrichment. If that is so, the claim for refunds for the period 1.3.1978 to 31.8.1978 also should have been rejected but that was not the case. In any event, no foundation is laid for the proposition that a presumption can legitimately be drawn that the petitioner had passed on the burden to the consumer. In the absence of any foundation for that plea, we are unable to consider it during the course of writ proceedings, more especially because it involves investigation of facts and the Petitioner disputes that it had passed on the burden to the consumer. The only question that then remains for consideration is whether the petitioner is also entitled to claim interest in respect of the sum refundable to it. We feel that in the facts and circumstances of the case, there was no justification for withholding the refund after the Asst. Collector accepted the classification of goods - vide his order dated 16.3.1979. Whatever may be the uncertainty existing till that date, the order of the Asst. Collector dated 16.3.1979 set at rest that in respect of goods classified under Tariff Item 15A(4) the petitioner was entitled to claim refund and the refund was unjustifiably denied. We would, therefore, direct that interest at 12% p.a. be paid to the petitioner on the sum refundable from 16.3.1979 till the date of payment. We also direct that the respondents shall grant the necessary refund, consisting of the duty illegally collected during the period 28-1-1971 to 2-5-1978 together with interest thereon as ordered above, within three months from the date of receipt of this order.

The writ petition is accordingly allowed, but in the circumstances, without costs.

(Writ Petition No. 2684 of 1988)

An oral application for leave to appeal to the Supreme Court, against the judgment just now rendered by us, is made by Shri Jagannadha Rao, Senior Standing Counsel to the Union Government. Inasmuch as the order pronounced by us is supported by a number of decisions of the Supreme Court referred to therein, we do not find that any substantial question of law of general importance which requires consideration by the Supreme Court is involved in the matter.

Leave asked for is accordingly refused.