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of <h1>Manufacturing company wins refund claim despite time-barred rejection under Central Excise Act</h1> <h3>SWASTIK SANITARYWARES LTD Versus UNION OF INDIA</h3> SWASTIK SANITARYWARES LTD Versus UNION OF INDIA - [2012] 37 STT 508 (GUJ.) , 2013 (296) E.L.T. 321 (Guj.) , 2017 (49) S.T.R. 484 (Guj.) Issues Involved:1. Validity of the refund claim for excise duty paid twice.2. Applicability of the limitation period under Section 11B of the Central Excise Act.3. Principle of unjust enrichment and equitable considerations for refund.Detailed Analysis:1. Validity of the Refund Claim for Excise Duty Paid Twice:The petitioners, a company engaged in manufacturing sanitary wares, paid excise duty twice on the same goods due to a clerical error. They initially paid Rs. 91,129/- at the time of clearance and mistakenly paid the same amount again by debiting their Personal Ledger Account. The petitioners filed a refund claim on 1-11-2003, which was rejected by the adjudicating authority on 23-3-2004, despite acknowledging that the duty was paid twice. The authority's rejection was based on the ground that the claim was time-barred under Section 11B of the Central Excise Act.2. Applicability of the Limitation Period Under Section 11B of the Central Excise Act:The petitioners argued that the amount paid the second time did not take the character of duty and should be refunded without reference to the limitation period under Section 11B. They cited several tribunal decisions and a recent Division Bench decision in C.C. Patel & Associates Pvt. Ltd. vs. Union of India, where similar claims were entertained beyond the limitation period. The adjudicating authority, however, maintained that the limitation period prescribed under Section 11B was absolute and unextendable, as supported by the Supreme Court's decision in Commissioner of Customs and Central Excise vs. Hongo India Private Limited and Another.3. Principle of Unjust Enrichment and Equitable Considerations for Refund:The petitioners contended that retaining the erroneously paid amount would result in unjust enrichment for the government. They relied on the principle of restitution and equitable considerations, referencing the Indo-Nippon Chemicals Co. Ltd. case, where the court granted a refund beyond the limitation period. The respondents argued that the refund claim was rightly rejected due to the limitation period and the availability of statutory appeals.Court's Observations and Judgment:The court noted that the facts were undisputed: the excise duty was paid twice, and the burden was not passed on to the consumer. The court held that the second payment did not amount to a deposit of excise duty but was a mistaken deposit. Therefore, the refund claim did not fall under Section 11B of the Act, and the limitation period did not apply. The court emphasized that retaining the amount would be inequitable and directed the respondents to refund Rs. 91,128/- with 9% simple interest from three months after the application date (1-11-2003) until actual payment.The court concluded that while statutory provisions for refund claims must be respected, in cases of clear clerical errors leading to mistaken deposits, equity demands that such amounts be returned without being constrained by statutory limitations. The petition was disposed of accordingly, making the rule absolute.
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