Unauthorised excise duty refund cannot be blocked by limitation or unjust enrichment without proof of passing on

Refund of excise duty collected without authority of law was held not to be defeated by limitation under the Excise Rules when relief was sought in writ jurisdiction. The Court applied the principle that money recovered under a mistaken or unauthorised levy should ordinarily be refunded, and rejected the limitation objection. The plea of unjust enrichment also failed because the revenue did not produce satisfactory proof that the duty burden had been passed on to consumers; vague assertions were insufficient. Refund was therefore allowed, subject to verification of the claim, and the restriction confining refund to six months was set aside.

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Issues: (i) Whether refund of excise duty collected without authority could be denied on the ground of limitation under the Excise Rules in proceedings under Article 226 of the Constitution of India; (ii) Whether the refund could be refused on the ground of unjust enrichment without satisfactory proof that the duty burden had been passed on to consumers.

Issue (i): Whether refund of excise duty collected without authority could be denied on the ground of limitation under the Excise Rules in proceedings under Article 226 of the Constitution of India.

Analysis: The claim arose from duty paid under a mistaken belief, and the Court followed the principle that money recovered without authority of law must ordinarily be refunded. It was held that, in the exercise of writ jurisdiction, the bar of limitation under the excise law would not prevent relief where the levy had been collected under a mistake.

Conclusion: The limitation objection was rejected and the refund claim could not be denied on that ground.

Issue (ii): Whether the refund could be refused on the ground of unjust enrichment without satisfactory proof that the duty burden had been passed on to consumers.

Analysis: The Court held that the burden lay on the revenue to establish actual passing on of the duty burden. Vague or general averments were found insufficient, and the material relied upon did not satisfactorily prove that the petitioners had recovered the duty from consumers.

Conclusion: The plea of unjust enrichment failed for want of adequate proof.

Final Conclusion: The petitioners were held entitled to refund of the excess duty, subject to verification of the claim by the respondents, and the order restricting refund to six months was set aside.

Ratio Decidendi: Where duty has been collected without authority of law and the burden of unjust enrichment is not proved by the revenue, refund cannot be defeated by the statutory limitation applicable to excise claims when relief is sought under writ jurisdiction.

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