Refund of excise duty paid by mistake may survive limitation and unjust enrichment where the levy lacked legal authority.

Excise duty paid under mistake was treated as refundable notwithstanding Rule 11 limitation where the writ court found no laches attributable to the assessee and intervention under Article 226 was warranted to prevent defeat of a lawful claim. The Court also rejected unjust enrichment as a bar to refund where the levy had been collected without authority of law, preferring the view that money wrongly recovered by public authorities should be returned. On that basis, writ relief was available and refund of the excess duty was directed.

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Issues: (i) Whether a claim for refund of excise duty paid under mistake could be rejected as time-barred under Rule 11 of the Central Excise Rules despite the assessee's subsequent resort to Article 226 of the Constitution of India. (ii) Whether refund could be declined on the ground of unjust enrichment where the duty had been collected without authority of law.

Issue (i): Whether a claim for refund of excise duty paid under mistake could be rejected as time-barred under Rule 11 of the Central Excise Rules despite the assessee's subsequent resort to Article 226 of the Constitution of India.

Analysis: Rule 11, as it then stood, specifically governed refund of duty paid through inadvertence, error or misconstruction and prescribed a short period of limitation. The payment in question was not pursuant to an erroneous demand by the excise authorities but was made in ignorance of the exemption notification, and therefore fell within the ambit of mistake and error. The Court held that although the statutory remedy was time-bound, the writ court, as a court of equity, could intervene in an appropriate case where the delay was not attributable to the assessee's laches and the lawful claim would otherwise be defeated.

Conclusion: The refund claim was not to be defeated merely on the ground of limitation under Rule 11, and the writ court could grant relief in the assessee's favour.

Issue (ii): Whether refund could be declined on the ground of unjust enrichment where the duty had been collected without authority of law.

Analysis: The Court noted the conflicting High Court views on unjust enrichment, but preferred the line of authority holding that repayment cannot be refused merely because the duty burden may have been passed on, particularly where the levy itself lacked authority of law. The Court treated the principle of returning money wrongly recovered by public authorities as controlling, and held that equitable relief under Article 226 was available notwithstanding the plea of unjust enrichment.

Conclusion: The plea of unjust enrichment was rejected and did not bar refund to the assessee.

Final Conclusion: The writ petitions succeeded and the authorities were directed to refund the excess excise duty to the assessee.

Ratio Decidendi: Where excise duty has been recovered without authority of law and the assessee's delay in seeking refund is not due to its own laches, the High Court may, in exercise of writ jurisdiction, grant refund notwithstanding the statutory limitation period and the plea of unjust enrichment.

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