Refund of excess excise duty survives limitation and unjust enrichment objections where exemption notification was breached

Duty collected at the normal rate despite an operative exemption notification was treated as excess collection without authority of law, so Rule 11 of the Central Excise Rules, 1944 did not bar refund in the circumstances. The delay in seeking refund also did not defeat relief, because the assessee learned of the exemption only later and the department's own breach of the notification was material. The note further records that refund was not denied on unjust enrichment, as the exemption functioned as a fiscal incentive and the facts did not show an improper windfall. The excess duty was therefore regarded as refundable in writ jurisdiction.

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Issues: (i) Whether the claim for refund of excise duty collected in excess of the exemption notification was barred by limitation under Rule 11 of the Central Excise Rules, 1944. (ii) Whether refund could be refused on the ground of unjust enrichment.

Issue (i): Whether the claim for refund of excise duty collected in excess of the exemption notification was barred by limitation under Rule 11 of the Central Excise Rules, 1944.

Analysis: The duty had been collected at the normal rate despite the operative exemption notification, so the excess collection was contrary to the legal exemption and without authority of law. Rule 11 was held inapplicable to a case where the department itself had breached the exemption notification. The Court also accepted that the petitioner came to know of the exemption only later, and the delay in making the claim did not defeat relief in the circumstances.

Conclusion: The refund claim was not barred by limitation and the objection based on delay failed.

Issue (ii): Whether refund could be refused on the ground of unjust enrichment.

Analysis: The exemption was intended as a fiscal incentive for newly established factories, and the facts did not show that granting refund would unjustly enrich the petitioner. The Court distinguished the authorities relied upon by the revenue and held that the nature of the exemption and the surrounding circumstances did not justify denial of relief on this ground.

Conclusion: The plea of unjust enrichment was rejected.

Final Conclusion: The excess excise duty was held refundable, and writ relief was granted in favour of the petitioner despite the delay in seeking refund.

Ratio Decidendi: Duty collected contrary to an operative exemption notification is illegally retained and may be refunded in writ jurisdiction notwithstanding the refund-rule limitation, where the department's action itself was without authority of law.

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