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Issues: (i) Whether aluminium alloy strips manufactured in the petitioners' plant were liable to excise duty under Tariff Item 27(b) despite the contention that they were not marketable goods. (ii) Whether the petitioners were entitled to refund of duty recovered under the impugned levy and whether the plea of unjust enrichment could defeat such refund.
Issue (i): Whether aluminium alloy strips manufactured in the petitioners' plant were liable to excise duty under Tariff Item 27(b) despite the contention that they were not marketable goods.
Analysis: Liability to excise duty depends not only on manufacture and inclusion in the tariff but also on marketability. The strips in question were shown to be intermediate products used in the manufacture of bimetal bearings, and the Department failed to establish that they were marketable goods known to the market. The impugned order treated absence of marketability as irrelevant, which was inconsistent with the settled legal position that marketability is an essential ingredient of excisability.
Conclusion: The aluminium alloy strips were not liable to excise duty under Tariff Item 27(b), and the levy could not be sustained.
Issue (ii): Whether the petitioners were entitled to refund of duty recovered under the impugned levy and whether the plea of unjust enrichment could defeat such refund.
Analysis: Once the levy and the appellate confirmation were set aside, the duty collected without authority became refundable. The plea of unjust enrichment was not supported by the Department on affidavit or by any material showing that the burden had been passed on to consumers, and therefore it could not be accepted to defeat refund.
Conclusion: The petitioners were entitled to refund of the duty recovered, and the plea of unjust enrichment failed.
Final Conclusion: The writ petition succeeded, the excise levy on the aluminium alloy strips was quashed, and consequential refund relief was granted with ancillary directions.
Ratio Decidendi: For excise purposes, marketability is an essential ingredient of dutiability, and where a levy is struck down the assessee is entitled to refund unless the Department establishes unjust enrichment with supporting material.
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