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Chemicals and Fibres India Limited Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtMumbai High Court
Decided On
Case NumberMiscellaneous petition No. 326 of 1972
Judge
Reported in1982(1)BomCR677; 1982(10)ELT917(Bom)
ActsCentral Excise Act, 1944 - Sections 3
AppellantChemicals and Fibres India Limited
RespondentUnion of India and Others
Excerpt:
excise - duty - section 3 of central excise act, 1944 - whether polyester chips of textile grade manufactured by petitioners are assessable to excise duty under item 15 a of schedule i of central excise act - nature of products was technical and scientific - polyester resins are recognised as commodities which are marketable and recognised by trade - held, polyester chips of textile grade manufactured by petitioners are not assessable to excise duty under item 15 a of schedule i of central excise act. - - but in view of the tendency of inappropriate terminology to 'gel' irreversibly, it seems like a losing battle to attempt to replace 'synthetic resin' with the more precise 'synthetic polymer'.see also note under gum. ' this note will indicate that the current terminology of.....chandurkar, j.1. the only question which arises in this petition if whether polyester chips of textile grade manufactured by the petitioners are assessable to excise duty under item 15a of schedule i of the central excises and salt act, 1944 (hereinafter referred to as 'the excise act').2. the petitioners are a company incorporated under the companies act, 1956 and are manufacturers of synthetic fibres. in their factory at thane-belapur road, they manufacture polyester staple fibre which is marketed under the trade name 'terene'. the process of manufacturing the synthetic fibre, as set out in the petition, is not in dispute. the raw materials for the manufacture of the synthetic fibre are dimethyl terephthalate and ethylene glycol shortly called dmt and ethylene glycol. these raw.....
Judgment:

Chandurkar, J.

1. The only question which arises in this petition if whether polyester chips of textile grade manufactured by the petitioners are assessable to excise duty under Item 15A of Schedule I of the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Excise Act').

2. The Petitioners are a company incorporated under the Companies Act, 1956 and are manufacturers of synthetic fibres. In their factory at Thane-Belapur Road, they manufacture polyester staple fibre which is marketed under the trade name 'Terene'. The process of manufacturing the synthetic fibre, as set out in the petition, is not in dispute. The raw materials for the manufacture of the synthetic fibre are dimethyl terephthalate and ethylene glycol shortly called DMT and ethylene glycol. These raw materials are initially reached in an pester interchange vessel in the presence of a catalyst and heat in order to form a monomer. After the monomer is formed, a delustrant titanium dioxide is added to import to the said monomer opaqueness. The delustered monomer is then polymerised in a vessel known as an autoclave under the effect of heat, catalyst and vacuum until the desired viscosity is reached, after which the said molten polymer is solidified into a ribbon with water sprays and then cut into polymer chips. These polymer chips are the product in question, which are polyester chips. These polymer chips are the product in question, which are polyester chips, and the petitioners describe them as polymer chips fibre grade. Admittedly no material known as plasticines are added at any stage in the manufacture of the polymer chips. The polymer chips are then dried, moulded and spun through spinnerets and finally processed into polyester staple fibre or tops which are used exclusively for the manufacture of blended fabrics and garments in the textile industry.

3. We are not concerned in this petition with the process by which the polymer chips are processed into polyester fibre. The polymer chips are chemically termed as polyethylene terephthalate polymer. According to the petitioners, the polymer chips are purely an intermediate product which have no use and are not marketable but which are base material for the manufacture of polyester staple fibre. This, however, has no relevance to the question argued before us. According to the petitioners, the polymer chips manufactured by them are saturated polymer as they contain molecules from terephthalic acid and are ideal for fiber-making and are unsuitable for and cannot be used for moulding. They are not sold by the petitioners as they are merely an intermediate product in the manufacture of polyester fibre.

4. The relevant entry in Item 15A of Schedule I of the Excise Act relevant for the purposes of this petition is the one as it was in 1964, which read as follows :-

'15A. Artificial or synthetic resins and Twenty per centplastic materials, and articles thereof. ad valorem.(1) Artificial or synthetic resins and plastic materials in any form, whether solid, liquid or pasty, or as powder, granules or flakes, or in the form of moulding powders, the following, namely :-

(i) Condensation, Polycondensation and Poly-addition products, whether or not modified or polymerised, including Pheno-plasts, Aminoplasts, Alkyds, Polyurethane, Polyallyl Esters and other Unsaturated Polyesters;

(ii) Polymerisation and Co-polymerisation products including Polyethylene and Polytetrahaloethylene, Polyisobutylene, Polystryrene, Polyvinyl chloride, Polyvinyl acetate, Polyvinyl Chloroacetate and other polyvinyl derivatives, Polyamides, Polyacrylic and Polymethacrylic derivatives and Coumarone Indene resins; and

(iii) Cellulose acetate (including di-or triacetate), Cellulose acetate butyrate and Cellulose propionate, Cellulose acetate-propionate, Ethyl cellulose and Benzyl cellulose, whether plasticised or not, and plasticised Cellulose nitrate.

(2) Articles made of plastics, all sorts, including tubes, rods, sheets, foils sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible, including lay-flat tubing and Polyvinyl chloride sheets.

Explanation. - For the purpose of sub-item (2) 'plastics' means the various artificial or synthetic resins or plastic material included in sub-item (1)'.

In 1962 Item 15A was as follows :-

'15A. Plastics, all sorts(i) Moulding powders, granules and flakes Twenty per cent(thermosetting and thermoplastic). ad valorem.(ii) Polythene films, lay-flat tubing andP.V.C. sheets (that is to say, PolyvinylChloride sheets)(iii) Not otherwise specified.'

5. According to the petitioners, the polymer chips textile grade manufactured by them do not fall within Item 15A and no excise duty could, therefore, be levied in respect of the product manufactured by them. According to them, polymer chips produced by them in the course of manufacture of polyester fibre are not plastics or artificial or synthetic resins within the meaning of Item 15A. The petitioners allege that the polymer chips manufactured by them are not understood nor known as plastics or artificial or synthetic resins or as raw materials for such plastics, in the trade or market or by people who regularly deal in plastics.

6. After the petitioners had commenced manufacture of polyester staple fibre in January 1965 and the Excise Authorities in Bombay informed the petitioners that excise duty was also leviable on polymer chips, the petitioners wrote to the Central Board of Revenue on 22nd March, 1965 pointing out that excise duty was not leviable under Item 15A on the polymer chips, but that they would be paying duty under protest while their representation was under consideration and that the Central Board of Revenue should work out a machinery for determining the assessable value of the chips while the petitioners' claim was being considered. The petitioners also took up the matter with the Ministry of Commerce reiterating their contention that the polymer chips were not leviable to excise duty under Item 15A as they were not plastics. On 1st June, 1965, the Central Government issued a notification exempting polymer chips of duty in excess of Rs. 1.50 per kg. The petitioners continued to pay excise duty under protest till 25th March, 1970 on which day, the Assistant Collector of Excise wrote to the petitioners asking them to stop paying duty under protest. The petitioners complied with the same order and continued to pay duty.

7. According to the petitioners, a judgment was delivered by Mr. Justice V.D. Tulzapurkar (as he then was) on 31st April, 1970 in Miscellaneous Petition No. 491 of 1964, Nirlon Synthetic Fibres and Chemicals Ltd. v. R. K. Audim, Assistant Collector and others, in which it was held that polyamides or polymer chips were not plastics within the meaning of Item 15A and that no excise duty could be levied on the same. It may be stated that it was held in that decision that on a true construction of Item 15A, the polymer chips or nylon 6 chips obtained by the petitioners in the case for further manufacture of nylon do not fall within the expression 'plastics, all sorts', which was the main heading of Item 15A in 1962 nor within the expression 'Artificial or synthetic resins and plastic materials' and, therefore, did not attract excise duty.

8. The petitioners have also referred in their petition to a decision of the Delhi high Court in J.K. Synthetics Ltd., Kota (Rajasthan) v. The Collector of Central Excise, Delhi, Civil Writ No. 115-D/63 decided on 28th August, 1970, in which a learned single Judge of the Delhi High Court held, with reference to Item 15A as it was in force in 1962, that polymer chips of the spinning range were not regarded as plastics by persons in the trade.

9. It is the petitioners' case that having regard to these two decisions, they addressed an Advocate's letter on 12th January, 1972 to the respondents pointing out that no duty was payable by them and that the respondents should desist from collecting such duty in respect of the polyester chips. The respondents were also intimated by the Advocates' letter that if the requisition made by them in the same letter was not complied with within a period of 15 days from the receipt of the letter, the petitioners would approach a competent court for enforcement of their rights.

According to the petitioners, from January 1965 to 24th April, 1972 an aggregate amount of Rs. 586 lacs has been paid by them as and by way of excise duty on polymer chips. This recovery, according to the petitioners, was without authority of law and without jurisdiction and ultra vires and they were, therefore, entitled to a refund of the said amount. The petitioners, therefore, ask for a writ directing the respondents to forbear and refrain from collecting any excise duty from the petitioners in respect of polymer chips produced by them in the course of manufacture of polyester staple fibre and further directing them to refund to the petitioners the sum of Rs. 586 lacs which has been illegally recovered as excise duty.

10. In their affidavit, the respondents challenged the maintainability of the petition and, in any event, according to them, a large claim for refund was barred by limitation and, in any case, the petitioners would not be entitled to refund of any excise duty which has been paid beyond a period of three years prior to the filing of the present petition. In so far as the question as to whether the polymer chips in question fell within Item 15A of Schedule I to the Excise Act is concerned, the case of the respondents is that polymer chips manufactured by the petitioners, although they are a saturated liner polymer, are of high molecular weight and are also thermo plastic materials and fall within the ambit of sub-item (1)(i) of Item 15A. It is the contention of the respondents that the polymer chips, apart from their use in textile industry, are also used for the manufacture of films when they do not contain any delustrant. According to them, the average molecular weight of the polymer chips manufactured by the petitioners ranges from 15,000 to 17,000 and as such, these polymer chips are suitable for the manufacture of films which are recognised to be plastics. It is also denied that the polymer chips are not finished marketable articles. The respondents' case further is that polymer chips are synthetic resins and plastic materials prepared by polycondensation process and as such, they fall under Item 15A(1)(i) of Schedule I to the Excise Act. According to the respondents, plastic materials or artificial resins would include synthetic organic polymers of high molecular weight including cellulose derivatives and polyethylene terephthalate used in yarns and for making films are called thermoplastics having molecular weights in excess of 10,000. According to the respondents, the high molecular weight saturated linear polyester based on polyethylene terephalate (in the high molecular weight range) are also used for production of extruded sheeting known as Mylar and photographic films base known as Coronar. The respondents have denied that polymer chips manufactured by the petitioners are intermediate products and, according to them the polymer chips manufactured by the petitioners come in finished form and in fact were stored in bonded store-rooms. Such polyester polymer chips are according to the respondents, sold and marketed in the international markets as such. The respondents denied that the petitioners were entitled to rely on the two decisions referred to above.

11. Affidavits have been filed in both sides to show the use to which the polymer chips in question can be put and to show how they are recognised in the market. To these affidavits we shall refer later.

12. It is necessary at the outset to ascertain the nature and the scope of Item 15A and the nature of the product polymer chips fibre grade in question. Item 15A is in substance a virtual reproduction of the heading in Chapter 39 in Brussels Tariff Nomenclature. The heading in Chapter 39 is 'Artificial Resins and Plastic Materials, Cellulose Esters and Ethers; Articles thereof'. Under the heading 'Chapter Notes' in that Chapter, item 2 reads as follows :-

'2. Heading Nos. 39.01 and 39.02 are to be taken to apply only to goods of a kind produced by chemical synthesis answering to one of the following descriptions :-

(a) 'Artificial plastics including artificial resins.'

Similarly clause (1) in item 15A is also a virtual reproduction of item 39.01 in the said Nomenclature which reads as follows :-

'Condensation, polycondensation and polyaddition products, whether or not modified or polymerised, and whether or not linear (for example, phenoplasts, aminoplasts, alkyds, polyallyl esters and other unsaturated polyesters, silicones).'

Similarly clause (2) is also reproduction of item 39.02 in the said Nomenclature. A reference to a detailed description of the products which fall under item 39.01 which, as already pointed out, is virtually the same as clause (1) of Item 15A will show the nature of the products which are covered by Item 15A(1). We have been given a xerox copy of the Nomenclature in January, 1972 as a part of a compilation of technical material and after referring to the condensation and polycondensation products under the headings 'Phenoplasts', 'Aminoplasts', 'Alkyd resins' and 'Unsaturated polyesters', in the residuary items under the heading 'Certain other polycondensation and polyaddition products' the item included is :

'Linear polyesters such as the polycondensation products of terephthalic or adipic acids ethanediol.'

The products known as phenoplasts are described as a wise range of resinous materials such as resins which are permanently fusible and soluble in alcohol or other organic solvents, thermosetting phenol-formal dehyde resins and oil soluble resins. The group of aminoplasts is described as containing urea resins and melamine resins. Alkyd resins are classified as a class by themselves. Unsaturated polyesters are also described as resins which appear as liquids mainly used for producing glass fibre, reinforced laminates and transparent thermoset cast products. The category of unsaturated polyesters is said to include ally resins obtained by condensation of polyacids with ally alcohol.

13. Synthetic resins have been defined as follows in the Condensed Chemical Dictionary :-

'Resin, synthetic. A man-made high polymer (q.v.) resulting from a chemical reaction between two (or more) substances, usually with heat or a catalyst. This definition includes synthetic rubbers, siloxanes, and silicones, but excludes modified water-soluble polymers (often called resins). Distinction should be made between a synthetic resin and a plastic (q.v.) the former is the polymer itself, whereas the latter is the polymer plus such additives as fillers, colourant, plasticizers, etc.........

Note : Because the term 'resin' is so broadly used as to be almost meaningless, it would be desirable to restrict its application to natural organosoluble, hydrocarbon-based products derived from trees and shrubs. But in view of the tendency of inappropriate terminology to 'gel' irreversibly, it seems like a losing battle to attempt to replace 'synthetic resin' with the more precise 'synthetic polymer'. See also note under gum. natural.'

This note will indicate that the current terminology of synthetic resin was sought to be replaced by more scientific synthetic polymer, but the efforts met with no success.

The January 1978 Edition of Brussels Tariff Nomenclature contains the following :-

'Artificial resins and plastic materials are products of various kinds and different constitution having the common characteristic of plasticity, that is of being capable, or of having been capable at some stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticines) into shapes which are retained on the removal of the external influences. The shaping processes used include moulding, casting, extruding, rolling. etc.'

14. It is not in dispute that the product in question known, according to the petitioners, as polymer chips fibre grade is a saturated linear polyester, as will be clear from the affidavit of Dr. B. P. Patel filed on behalf of the petitioners. Dr. Patel is the Production Manager of the petitioners and has stated that his responsibilities include polyester polymer and fibre production. Though the affidavit was filed in order to counter the claim made on behalf of the respondents that the polymer chips in question can also be used for film-making, for the present it will suffice to refer to the fact that the polymer chips in question have admittedly been referred to by Dr. Patel as polyester polymer. He has stated that the polyester chips required for making fibre are technically and commercially entirely different from polyester and the chips for film-making and the polyester chips manufactured by the petitioners are entirely unsuitable for the manufacture of films. He has admitted in paragraph 15 that the product in question is a polymer manufactured by polycondensation process. He has then stated that there is a difference in the trade between polyester chips of textile grade and polyester chips of the plastic grade. In paragraph 23 he has admitted that polyester chips manufactured by the petitioners are saturated. In paragraph 29 he has stated that the petitioners have not only manufactured polyester chips for their own subsequent manufacture of polyester staple fibre but have on occasions manufactured polyester chips to be used for the manufacture of fibre or yarn by other mills. There is, therefore, no dispute that the product in question is a saturated polyester. Undisputedly polyesters were a product of polycondensation process.

15. We may usefully refer to an extract from the chapter on polyesters in Volume 11 of Encyclopedia of Polymer Science and Technology at page 35 under the heading 'Commercial Development of Polyethylene Terephthalate)'. It is stated in that chapter that polyethylene terephthalate) is a fiber-making polymer discovered in England in 1941 and it was recognised at an early stage to be a material of unusual interest and developmental investigations on the polymer and its fibres were undertaken first by British Government research laboratories and later by Imperial Chemical Industries Ltd., who acquired rights to the basic Calico Printers Association patent (46) for all countries except the United States, where it was sold to E.I. du Pont de Nemours and Co. It refers to the several trade marks of polyethylene terephthalate fibres in different countries. It is also stated in that chapter that concurrently with its role as a fibrous material, polyethylene terephthalate has come into use as a source of high strength biaxially drawn films (e.g. Melinex in the United Kingdom, Mylar in the United states) which are noted for their high transparency and dimensional stability. These are used extensively as electrical insulators; for photographic and drawing-office use; as bases for magnetic recording tapes and typewriter ribbons; in decorative laminates and panelling; and as a vacuum-formable crating and packaging material. A polyester is a high polymer and includes a variety of materials having properties ranging from hard and brittle to soft and elastic. Addition of such modifying agents as fillers, colorants, etc., yields an almost infinite number of products collectively called plastics High polymers are the primary constituents of synthetic fibres, coating materials (paints and varnishes), adhesives, sealants, etc. (See 'polymer, high in Condensed Chemical Dictionary). A polymer has been described as a compound formed by the reaction of simple molecules having functional groups that permit their combination to proceed to high molecular weights under suitable conditions and polymers may be formed by polymerization (addition polymer) or polycondensation (condensation polymers). Condensation is a chemical reaction in which two or more molecules combine, with the separation of water or some other simple substance. If a polymer is formed, the process is called polycondensation. (See Condensed Chemical Dictionary).

16. Considering the nature of the product in question, which is a saturated polyester, undisputedly it is a polycondensation product and technologically and chemically, it will clearly fall within sub-clause (i) of Item 15A(1). The Legislature has clearly indicated that polycondensation product inter alia will be a synthetic or artificial resin and is intended to be included within the scope of Item 15A of the First Schedule to the Excise Act.

17. The learned Counsel for the petitioners has, at the outset, contended that Item 15A(1), as it stood at the relevant time, only applies to materials which are either (i) artificial or synthetic resins, or (2) plastic materials, because, according to the learned Counsel in Item 15A(1) the words used immediately preceding clause (i) are 'the following namely' and reference was made to a decision of the Madras High Court in State of Tamil Nadu v. Kasiraja Nadar 47 STC 337, in which a Division Bench of the Madras High Court has observed that the meaning of the word 'namely' used in a notification is restrictive in the sense that the general expression which precedes the word 'namely' is confined to the itemised expressions that follow the word 'namely' and its meaning can be neither illustrative nor expansive.

18. Now, there can hardly be any dispute that clauses (i), (ii) and (iii) which follow the words 'the following, namely' in Item 15A restrict the scope of the general descriptive words 'Artificial or synthetic resins and plastic materials in any form, whether solid, liquid or pasty, or as powder, granules or flakes or in the form of moulding powders.' The effect of the words the 'following, namely' is that in order that a particular product should fall within Item 15A, it should not only be an artificial or synthetic resin or plastic material, but that product must be such that it also falls under clauses (i), (ii) and (iii) in Item 15A.

19. The learned Counsel for the petitioners has then contended that the only question which requires to be determined is whether the polyester chips of the petitioners are plastic materials or synthetic resins and this question, according to the learned Counsel, has to be determined on the basis of how the said chips are regarded in the trade and we must disregard the technical meaning of the words

'Artificial or plastic resins and plastic materials'.

Now, it may be stated, at the outset, that outset, that it is not the case of the respondents, who have to justify the levy, that the polyester chips are plastic materials and the arguments before us have proceeded on the footing that polyester chips are artificial or synthetic resins and are a product of a polycondensation process as contemplated by clause (i) of Item 15A(1).

20. Before we consider the question as to whether the polyester chips which are admittedly a product of polycondensation process, fall within the category of artificial or synthetic resins, it is necessary to consider the argument of the learned Counsel for the petitioners that we musty wholly disregard the technical meaning of the words 'artificial or synthetic resins' and we must merely ascertain as to how the polyester chips in question are regarded in the trade. The argument of the learned Counsel in effect is that nowhere in the trade are these polymer or polyester chips known as artificial or synthetic resin, but they are recognised as polymer or polyester chips and, therefore, they are are out of the scope of Item 15A. The argument is that unless the respondents are able to establish that in trade parlance, the polyester chips in question are recognised as artificial or synthetic resins, they cannot be said to be covered by Item 15A of the First Schedule to the Excise Act.

21. Reliance has been placed by the learned Counsel for the petitioners on certain decisions of the Supreme Court as well as the decision of Tulzapurkar, J., as he then was, for the proposition that when an article is referred to in a taxing statute, its popular and not technical or scientific meaning should be accepted and since, according to the learned Counsel, the evidence in the form of affidavits filed by the respondents does not establish that the polyester chips in question are recognised as artificial or synthetic resins by persons in the trade but that, as indicated by the affidavits filed on behalf of the petitioners, the product produced by the petitioners is known in the trade only as polymer or polyester chips, the levy of excise duty on the footing that the product is covered by Item 15A is illegal.

22. As pointed out by the Supreme Court in Dunlop India Ltd. v. Union of India A.I.R. 1977 S.C. 597, it is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should commend itself to the authority. In Ramavatar v. Assistant Sales Tax Officer, : [1962]1SCR279 , the question was whether for the purposes of sales tax under the C.P. and Berar Sales Tax Act, 'betel leaves' which was specified as a separate item was covered by 'vegetables' which was also a separate item by itself and the Supreme Court held that the word 'vegetable' in taxing statutes is to be understood as in common parlance, that is, denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table. Vegetable was one of the items exempt from taxation and the Supreme Court held that the betel leaves are not exempt from taxation.

23. Sales Tax Commissioner, Indore v. Messrs J. Singh, : [1967]2SCR720 , was a case under the M.P. General Sales Tax Act and the question was whether charcoal was covered by the entry :

'Coal, including coke in all its forms - 2 per cent.'

or whether charcoal would fall in the residuary entry :

'All other goods not included in Sch. I or any other part of this Schedule - 4 per cent.'

While holding that charcoal was covered by the entry 'Coal', the Supreme Court observed as follows :-

'Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is now well-settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense.'

We may point out that while taking this view, the Supreme Court has referred to a decision of Cameron J. in His Majesty the king v. Planters Nut and Chocolate Co. Ltd. 1951 C.L.R. 122, where the question was whether salted peanuts and cashew nuts fell within the category of either fruits or vegetables and the Court found that the Parliament in enacting the Excise Tax Act, 1927, Part XIII and Sch. III was not using words which were applied to any particular science or art and, therefore, the words used are to be construed as they are understood in common language. The Canadian Court held that what constitutes a 'fruit' or 'vegetable' within the meaning of the Excise Tax Act is what would ordinarily in matters of commerce in Canada be included therein and not what would be a botanist's conception of the subject-matter and that if a statute uses the ordinary words in every day use, such words should be construed according to their popular sense. It is necessary to emphasise at this stage that when reference was made to resort being had to the popular meaning and not to the scientific or technical meaning of certain terms, the Supreme Court has quoted with approval the view of the Canadian Court that words should be construed according to their popular sense if a statute uses the words in very day use and the following observations of Cameron J. were quoted :-

'The object of the Excise Tax Act is to raise revenue, and for this purpose to class substance according to the general usage and known denominations of trade. In may view, therefore, it is not the botanist's conception as to what constitutes a 'fruit' or 'vegetable' which must govern the interpretation to be placed on the words, but rather what would ordinarily in matters of commerce in Canada be included therein. Botanically, oranges and lemons are berries, but otherwise no once would consider them as such.'

24. The following observations of the Supreme Court quoting from the decision of Pollock, B. and then of Fry J. would be useful :-

'This rule (Reference is to the rule laid down by Cameron, J.) was stated as early as 1831 by Lord Tenterdan in Attorney General v. Winstanley (1831) 2 Dow 302. Similarly, in Grenfell v. Inland Revenue Commrs. (1876) 1 Ex. D 242 , Pollock, J. observed, 'that if a statute contains language which is capable of being construed in a popular sense such statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words 'popular sense', that sense which people conversant with the subject matter with which the statute is dealing would attribute to it'. But 'if a word in its popular sense and read in an ordinary way is capable of two constructions, it is wise to adopt such a construction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers. In other words, the construction of the words is to be adopted to the fitness of the matter of the statute'. On the other hand, as Fry, J. said in Holt and Co. v. Collyer (1881) 16 Ch D 718 , 'If it is a word which is of a technical or scientific character then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning.'

Now, it is clear from the above observations that the rule that the words should be construed in a popular sense is not a rule which will be applicable in all cases and cannot be said to be all pervasive. This rule is, in our view, a qualified rule and could only apply, as Pollock, J. pointed out, if the statute contains language which is capable of being construed in a popular sense. It is also important to note that the observations of Fry, J. have been quoted with approval and according to Fry, J., if a word in a statute is of a technical and scientific character, then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning. Therefore, the decision of the Supreme Court in Sales Tax Commissioner, Indore v. Messrs J. Singh cannot be construed as laying down that the rule of construction which requires a word to be construed in its popular sense can never be departed from and, in our view, it will be permissible and indeed necessary while construing a word which is of a technical or scientific character to give it only is technical or scientific meaning.

25. Even a cursory reading of Item 15A of Schedule I to the Excise Act will show that it is not restricted to any one particular item, but it refers to a class of products such as artificial or synthetic resin and plastic materials. This is further clear from the fact that the chemical processes are also referred to in Item 15A with reference to which the identity of the product has to be ascertained. We are mainly concerned in this petition with Item 15A(1)(i) and reading the main part of Item 15A(1) with clause (i), it is clear that the nature of the products specified therein are highly technical and scientific in character and, therefore, the words used therein will have to be given only their technical or scientific meaning. The different chemical processes like condensation, polycondensation, polyaddition, polymerization, co-polymerization is not language which is capable of being construed in a popular sense. Indeed it can be construed only in a scientific and a technical sense. Adopting any other method of construction of the words used in Item 15A, which are words which fall within the field of chemistry exclusively will amount to wholly defeating the very purpose of making Item 15A a comprehensive one.

26. Reference was made before us by the learned Counsel for the petitioners to another decision of the Supreme Court in Indo-International Industries v. S.T. Commissioner, U.P., : 1981(8)ELT325(SC) , in which the principle of construing words according to their popular meaning was reiterated. But it has also been laid down in that case that if certain words have been defined, then the terms and expressions must be understood in the sense in which they have been defined. In paragraph 4, the Supreme Court observed as follows :-

'It is well settled that interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.'

On the basis of this decision it was contended that Item 15A does not contain any definition of artificial or synthetic resins or plastic materials and, therefore, the respondents must show that polymer chips are known as synthetic resins in the market.

27. Now, it is no doubt true that if what is contended by the learned Counsel is that Item 15A does not say that artificial or synthetic resins mean certain products, the learned Counsel is right. But having regard to the manner in which the Legislature has described those products, which will be liable to excise duty with reference to the processes out of which they result, in our view, there is no room for argument that there is no specific definition. Artificial or synthetic resins are clearly a product of polycondensation or polymerization process and if it is made clear in Item 15A that products of certain kinds of processes will be liable to duty, there is no occasion to find out whether such products, even if they fall within item 15A, should be taken out of Item 15A on the ground that in the market, the product is known by some different name.

28. At this stage we may refer to the nature of the market which the polyester products have. In Encyclopedia of Polymer Science and Technology, Volume 11, published by Inter science Publishers, it is stated as follows :-

'Characterization -Because of the multiplicity of types, grades, and uses of polyester products there are no uniformly accepted specification and testing standards and the materials are mostly sold on the basis of suitability for particular end uses determined, as required, from such properties as the melting and/or brittle temperature, viscosity, colour, haze, moisture content, storage life, unsaturation, and end-group content.'

It is thus clear that polyesters, which are artificial or synthetic resins, do not have any fixed uniform specification and they are made according to the requirements of the use to which they have to be put. These are, therefore, products which could not have been described individually and have, therefore, been described with reference to the category into which they chemically fall and with reference to the processes from which they result.

29. A reference has been made to note on clauses in the Finance Bill No. 14 of 1964 which was enacted as Finance Act of 1964 by which new Item 15A in the Excise Act was inserted. The note in respect of the relevant clause was as follows :-

'Sub-clause 2(f) seeks to recast the tariff description of the Item relating to Plastics to make its scope more precise.'

This note cannot control the meaning of the specific words used in Item 15A and now it is the scope of the item in the light of the words used which are now called upon to consider. Even otherwise what is stated in the note that the object of resting the tariff description was to make the scope of the item relating to 'Plastics' more precise does not run contrary to the view which we have taken because it is clear that the mode adopted to make precise the scope of the tariff description more precise was by describing the products specifically with reference to the processes which yielded those products.

30. It is not, therefore, possible for us to accept the contention of the learned Counsel for the petitioners that the words in Item 15A must be construed by giving the words their popular meaning and unless the respondents are able to establish that the polyester chips in question are known as synthetic or artificial resins in the market, they will not be entitled to levy excise duty on the polyester chips.

31. It is no doubt true that a large number of documents have been produced before us to show that the product required by the petitioners for manufacturing fibre is polyester chips textile grade and these documents are in the form of orders and invoices. It is also true that nowhere do we find that in any order forms or in any bills or invoices, the polyester chips have been referred to as artificial or synthetic resins, but that, in our view, is not material for the purposes of ascertaining whether polyester chips in question are covered by Item 15A.

32. A cursory reference to the Chapter on Polyesters in 'Fibres, Films, Plastics and Rubbers by Roff and Scott' will show that polyesters are known by several trade names. So far as the fibre-forming polyesters, which are the polyesters in question in the present petition, are concerned, in sub-section 24B under the heading 'Synonyms and Trade Names' the following appears :

'Polyethylene terephthalate (PET.PETP). Fibres : Terylene, Decron, Diolen, Lavsan, Tergal, Terlenka, Teron, Trevira, Films : Melinex, Hostaphan, Mylar, Terphane, Videne.'

It is clear, therefore, that polyesters are known in the market by various trade names and not by any particular trade name. The Legislature is not expected to reproduce for the purposes of excise duty such trade names and it would clearly be permissible to describe the excisable items by their general description as has been in Item 15A.

33. Reference has been made before us to extracts from Import Policy handbooks for the years 1978-79 to 1982-83 in support of the contention that the product of the kind manufactured by the petitioners is known in the market as polyester chips of textile grade and not as synthetic resins and that there is a difference in the trade between polyester chips of textile grade and polyester chips of plastic grade. The items referred to are under two heads, namely, list of 'banned items' and list of 'restricted items' as follows :-

------------------------------------------------------------------------Years Entry List of banned Entry List of restrictedNo. items. No. items.------------------------------------------------------------------------1978-79 415 Polyamide/Polyester 246 Polyester metallised film.resins, and chipsor textile grade.1979-80 405 Polyamide and 258 Polyamide and PolyesterPolyester resins. chips of textile grade ortypes.1980-81 410 Polyester resins 276 Polyamide/Polyester(unsaturated) chips of textile andplastic grades.1981-82 425 Polyester 327 Polyamide and Polyester(Unsaturated) chips of textile andplastic grades.1982-83 316 Polyester resins 322 Polyamide and Polyester(Unsaturated) chips of textile andplastic grades.------------------------------------------------------------------------

34. There is some discrepancy with regard to entry No. 415 in the list of banned items in the Import Policy Books. In the Import Policy Book with the petitioners, the entry is 'Polyamide/Polyester resins, and chips of textile grade.' In the Import Policy Book, as amended up to 31st October, 1978, given by the respondents, the entry is 'Polyamide/Polyester resins, and chips of textile grade'. The difference lies in the fact that while in one there is no comma after chips, in the other there is a comma after chips. That, however, does not make much difference, but it is clear that the entry in both the books will indicate that the qualification 'textile grade' will govern both polyester resins and polyester chips. The fact that in that year there was a complete ban on polyester resins and chips of textile grade is not inconsistent with restricting the import of polyester metallised film or polyester film other than electrical grade. The inclusion of polymer or polyester resins in the list of banned items in 1979-80 will, in our view, clearly indicate that polyester resins are themselves recognised as commodities which are marketable and recognised by trade. If 'polyester chips of textile grade all types' are permitted to be imported on restricted basis, that is not inconsistent with the import of polyester resins being banned as that entry will then include all polyester resins except those which are permitted to be imported on restricted basis. That 'polyester resins unsaturated' are also recognised as marketable commodities by themselves is also clear from entry No. 410 in respect of the Import Trade Control Policy for 1980-81. In the other entries referred to above also, there is nothing which can taken out the polyester chips of textile and plastic grades from the category of synthetic resins. The fact that polyester chips of textile grade are separately shown in the list in the context of Import Policy will not, in our view, affect the question as to whether they fall within the entry in Item 15A because that question will have to be decided on the consideration as to whether these products satisfy the description given in Item 15A as being polycondensation products.

35. It is further contended that in any event, even technically the polymer chips manufactured by the petitioners do not fall under Item 15A for the following reasons : Technically, as also in common parlance, artificial or synthetic resins are synonymous with plastic materials; Plastics are materials, which can be moulded or made into films; the polyester chips in question are brittle by reason of the molecular weight and are, therefore, unsuitable for moulding. It is also argued that the polyester chips admittedly contain the delustrant and are, therefore, unsuitable for making films and further that the polyester chips being admittedly saturated, they are not thermosetting and are not plastic materials.

36. Reference was made to the affidavits of four persons in support of the contention that the polyester chips are not suitable as raw-materials for the manufacture of plastics. The first affidavit relied on was of one Bachraj Parakh, who is the Proprietor of National Plastic Industries at Madras, which firm manufactures and deals in plastic injection moulded items and in the said manufacture uses various raw material such as polyethylene, low and high density, polypropylene, polystyrene, etc. He has stated that the polymer chips produced by the petitioners in the course of manufacture of polyester fibre are not known to persons in the trade as plastics and these chips would not be suitable as raw materials for the manufacture of plastics. To the same effect is the affidavit of one K.R. Viswanathan, who is a Managing Partner of Messrs Venus Moulders carrying on business of plastic moulding and fabrication jobs from various raw materials such as nylon, acetal, polypropylene, ABS, low density polyethylene, high density polyethylene, polystyrene, etc. He has stated that the polymer chips produced by the petitioners are not known in the trade as plastics and the chips would not be suitable as raw materials for the manufacture of plastics. There is also the affidavit of one Chidanand Bhomkar, who is an M.Sc. (Tech.) with Plastic from the Department of Chemical Technology, Bombay University, and is employed with Asian Paints as Technical Manager and he says that the polyester chips in question cannot be used or regarded as raw materials for the manufacture of plastic goods as the polymer chips are totally unfit for the manufacture of plastic articles. The last affidavit is of one Mahaveer Prasad Taparia, who is a Managing Director of Supreme Industries Ltd., which is a firm manufacturing and dealing in plastic injection moulded items, in the manufacture of which various raw materials such as low density polythene moulding powder, high density polythene moulding powder, nylon moulding powder, etc. are used. He has stated that the polymer chips in question are not commercially known as plastic and cannot be used as raw materials for the manufacture of plastic goods. He has further stated that the polymer chips are totally unfit and are not used, nor are the same regarded as raw materials, for the manufacture of plastic articles.

37. According to the respondents, artificial or synthetic resins cannot be treated as synonymous with plastic. It is contended that the amendment of the item made in 1964 would itself indicate that there is a difference between artificial or synthetic resins and plastic materials. It is argued the plastic is the result of certain additives added to the polymers and an artificial resin can be shaped by moulding. The learned Counsel for the respondents contends that moulding is not the only process by which an article can be shaped and an article can be shaped by casting, extruding, rolling, etc. The learned Counsel further contended that the basic requirement for film forming character is the same as for fibres, and resins are raw materials for films also. The learned Counsel has referred to some publications to show that saturated liner polyester resins can be film or fibre-forming material such as polyethylene terephthalate. Reference is made to a passage under the heading 'Polyester Resins' from a publication 'A Concise Guide to Plastic' by Herbert R. Simonds and Church, which reads as follows :-

'Polyester Resins.

In the broad sense of the term, polyester resins include many types of resinous condensation products and collectively represent a broad and expanding field in the plastics industry... As indicated in another section, alkyd resins are basically polyesters. Saturated liner polyester resins can be film or fibre-forming material, for example, polyethylene terephthalate.'

38. Reference is made to Plastic Chemistry And Technology by W.E. Driver, in which under the heading 'Thermoplastic Polyesters' it is stated that Glycols are reached with terephthalic acid or dimethyl terephthalate to form a linear polymer and this type of polymer is sold as fibre and film under several trade names. A quotation from Modern Plastics Encyclopedia at page 544 was produced to indicate that Mylar (trade mark of E.I. du Pont do Nemours & Co. Inc.) is prepared from polymer formed by the condensation reaction between ethylene glycol and terephthalic acid.

39. It was also contended on behalf of the respondents that the use of a delustrant, namely, titanium dioxide does not affect that usability of the polyester for making films and that there is no change in the chemical character of the polyester by the addition of the delustrant and the polyester resulting from the process of polycondensation, during which process the delustrant is added, is still a resin. In support of the contention that by the addition of titanium dioxide, which is admittedly a delustrant, no chemical reaction takes place, reference was made to a passage from The Encyclopedia of Basic materials for Plastics by Simonds and Church at page 473 where in reference to titanium dioxide pigment, the following is stated :-

'Because of its physical stability and lack of chemical reactivity, titanium dioxide pigment is compatible with virtually all of the resins available - natural rubber and natural resins, the synthetics from ABS and acrylics, to cellulosic, phenolics, polyesters, polystyrene, polyolefines, urothanes, vinyls and others.'

With regard to the affidavits filed on behalf of the petitioners it is urged that all those affidavits merely state that the polyester chips are not known to the persons in the trade as plastics, but they do not say as to whether they are known as resins or not or by what general name the product is known. Reliance is placed on behalf of the respondents on the statements made in affidavits filed on their behalf out of which two alone need to be referred, namely those of Rajamani and Salvi. We need not refer to the affidavits of Teckchandani and Tripathi because Teckchandani is merely a Chemical Examiner in the Central Excise Laboratory and has no personal experience about the manufacture of polyester chips and Tripathi is an Assistant Collector of Customs and his statement that Messrs Garware Nylons are one of the manufacturer who manufacture film from polyester polymer has been denied by Shyamsunder Nagar, who is an employee of Messrs Garware Plastics Polyester Ltd. and who has stated that the principal raw material used for the purpose of manufacturing bioaxially oriented polyester film is the film grade polyester chips which is all along being imported and that fibre grade polyester chips manufactured by the petitioners have never been used by the company for making polyester film. According to Mr. Rajamani, the polyester polymer is a synthetic resin and is known in commercial and trade parlance also as a synthetic resin. He does not agree with the statement made by the Technical Manager of the petitioners that the polymer chips in question are not a thermoplastic material. According to him, there is not relevant significant difference between a polymer from which fibre is made and a polymer from which films are manufactured. Salvi is a B.Sc., B.Sc. (Tech.) of Bombay University with specialisation in paints and varnished and resin technology and is a partner of a firm by name Messrs Navkem Industries (RESINS), which is manufacturing synthetic resin. He has been in the business of manufacturing resin for the last 27 years and was a Chief Technologist and Technical Manager at the Asian Paints. Bombay, for about 8 years. According to him, the product manufactured by the petitioners is known in the market as well as in the technical terminology as synthetic resin. He also says that resins which he is manufacturing such as alkyd resins, malefic resins and phenolics resins, which are used in the manufacture of paints and varnishes are not used for manufacturing plastic articles. He also states that polyester polymer is imported in India, and in the countries from which they are imported, they are known to the trade as resins.

40. The entire argument of the learned Counsel for the petitioners is founded on the basis that synthetic resins must be construed as synonymous with plastic materials, It is no doubt true that this contention finds some support from the Chapter on 'Plastics and Resins' in Encyclopaedia Britannica, Vol. 14, where it is observed as follows :-

'Plastics, in the modern meaning of the word, are synthetic materials that are capable of being formed into useable products by heating, milling, moulding, and similar processes. The term is derived from the Greek plastikos, 'to form'. By some interpretations of the word, rubber and other natural products are said to be plastic, but the modern definition, especially in relation to industry, excludes natural rubber and also such other natural products as wood, leather, and metals. Resins are both natural and synthetic. Natural resins range from pitch and asafetida to frankincense, myrrh, and amber. Synthetic resins are the basis of an enormous range of products the growth of which shows no signs of abating.

The distinction between plastics and resins is at best arbitrary, since many of today's synthetic materials can properly be called both resins and plastics. Historically, it appears that the term resin was applied to those products primarily used as substitutes for the natural product in coating compositions, whereas the term plastic was applied to designate those compositions that involved a moulding operation in their fabrication.'

We have, however, earlier reproduced an extract from the Condensed Chemical Dictionary in which a clear distinction has been made between synthetic resin and plastic by stating that whereas synthetic resin is polymer itself, plastic is polymer plus such additives as fillers, colorant, plasticizers, etc.

41. A reference to Fibres, Films, Plastics and Rubbers by Roff and Scott will show that there is an independent Chapter on plasticines (Section 56) and a plasticiser is described as a substance added to a high polymer to reduce brittleness or impart flexibility, or to increase flexibility especially at low temperature. It acts like a solvent, penetrating the polymer and lowering the intermolecular cohesion.

41A. In Encyclopedia of Basic Materials for Plastics also, there is a Chapter on Fillers, and Fillers are defined as comminuted solid materials which occupy a volumetric proportion of a plastics composition as discontinuous phase and it is stated that some fillers are used primarily for reducing the cost of plastic. There are organic and inorganic fillers. But from the nature of the chemical difference between a synthetic resin simpliciter and a plastic resulting from addition of fillers, colorant, plasticines, in our view, it will be wholly impermissible to equate synthetic resins with plastic. It is also necessary to point out that Item 15A does not refer to 'plastic' as was done in the 1961 or the 1962 item in the Schedule to the Excise Act. The entry now is 'Artificial or synthetic resins and plastic materials and articles thereof.' It is also necessary to point out that in sub-item (2) of Item 15A specific reference is made to articles made to plastics and under the explanation it is clarified that for the purpose of sub-item (2) 'plastics' means the various artificial or synthetic resins or plastic material included in sub-item (1). The effect of the Explanation is that articles made of artificial or synthetic resin is now equated with plastics only for the purpose of sub-item (2) of Item 15A. When the Legislature has used the words 'Artificial or synthetic resins' and has separately used the words 'plastic materials' and further the word 'plastics' has been specifically used in sub-item (2), it would be wholly improper to proceed to decide the scope of the product covered by Item 15A by equating artificial synthetic resins with plastics. We must, therefore, reject the argument advanced on behalf of the petitioners that artificial or synthetic resins must be taken to have been used synonymously with plastics. In view of this, the further contention that the plastics are materials which can be moulded or made into films and that the polyester chips in question cannot be moulded or that they are unsuitable for making films because of the addition of delustrant is not required to be considered.

42. It is no doubt true that in the Nirlon Synthetic Fibre & Chemicals Ltd.'s case, a contention was raised that polymer chips in that case could not be known and are not known as plastics or plastic materials to the traders, dealers and consumers in plastic industry and as such would not fall within unamended or amended Item 15A and this contention was upheld. But a reading of that judgment will show that judgment proceeded on the footing that the terms used in Items 15A(1) were not scientific or technical terms and the true criterion would be whether these words and expressions are well-known to and are freely used by manufacturers, traders and dealers in that line as if they have become common place words of every day use with them and that these words will have to be understood in the sense which persons dealing with or commercially conversant with those substances would attribute to them. It appears that judgment proceeded on the footing that the Department itself has treated the two expressions 'synthetic resins' and 'plastics' as interchangeable and the Court was concerned with the question as to how the expression 'plastics or plastic material' was understood by commercial person who deal in it. The view taken in that case was that caprolactum polymer chips of the spinning grade obtained by the company for the manufacture of nylon yarn were not regarded as raw material for the manufacture of plastic goods or plastic articles and were not commercially known as plastics. Having regard to the view which we have taken of the nature of the items covered by Item 15A(1), the decision in Nirlon Synthetic Fibres & Chemicals Ltd.'s case cannot be of any assistance to the petitioners.

43. We need not refer in detail to the decision of the Delhi High Court in J.K. Synthetic Ltd. v. The Collector of Central Excise in which the relevant Item 15A, which fell for consideration, was as it was in 1962 and the question was whether polymer chips were plastics within the meaning of Item 15A.

44. In the view which we have taken that the polyester chips in question are covered by the item 'Artificial or synthetic resins' and that the petitioners were liable to pay excise duty, it is strictly not necessary for us to decide the contention of the respondents that there has been a delay in the filing of the petition and that the petition must, therefore, be dismissed on the ground of delay and secondly that any order for refund made would result in unjust enrichment of the petitioners because, according to the learned Counsel for the respondents, the burden of excise duty must have been passed on by the petitioners to the consumers or the purchasers of the fibre. We will, however, proceed to deal with this contention because a decision on the question as to whether the petitioners would be entitled to any refund would become necessary in case we are wrong in our view that there was no invalidity or illegality in the recovery of excise duty.

45. The petitioners in the instant case have filed the petition in April 1972. They had been paying excise duty under protest from 1965 to 1969 and thereafter according to them, they were compelled to discontinue the protest and the payments were made without any protest, though at the instance of the respondents. Now, it appears that the claim for refund made is founded on the decision in the Nirlon Synthetic Fibers & Chemicals Ltd.'s case which was rendered on 30th April, 1970 though the petition itself was filed in 1964. There is no explanation whatsoever in the petition as to why the petitioners did not think it worthwhile to approach this Court independently and challenge the levy which, according to it, was illegal. No justification has been made out as to why the petitioners were required to wait for a decision in the case of Nirlon Synthetic Fibres & Chemicals Ltd. in order to make a claim for refund of the alleged refund of the excise duty alleged to have been illegally recovered. If at all petitioners were entitled to any refund, in our view, an order for refund could be made only in respect of recovery for a period of three years prior to the filing of the petition.

46. In so far as the plea of unjust enrichment is concerned, reference has been made before us on behalf of the respondents to certain observations made by the Supreme Court in D. Cawasji & Co. v. State of Mysore, : 1978(2)ELT154(SC) in which it has been observed that it will be unjust to require repayment of a tax after it has been in whole or in part expended if the suit or application could be brought at any time within three years of a Court declaring the law under which it was paid to be invalid, it a hundred years after the date of payment. These observations must be read in the light of the fact that they were intended to highlight the necessary for an amendment of the law as indicate in paragraph 11 of the judgment. It needs to be pointed out that in the same decision in paragraph 8, the Supreme Court has observed that where a suit will lie to recover moneys paid under a mistake of law, a writ petition for refund of tax within the period of limitation prescribe, that is within 3 years of the knowledge of the mistake, would also lie and that for filing a writ petition to recover the money paid under mistake of law, the Supreme Court has said that the starting point of limitation is from the date on which the judgment declaring as void the particular law under which the tax was paid was rendered, as that would normally be the date on which the mistake becomes known to the party. The decision in D. Cawasji & Co.'s case is not an authority for the proposition that were recovery of tax is illegal, refund should not be ordered to be made because the burden of the tax may have been passed over to the consumer.

47. A reference has been made before us to a decision of the Andhra Pradesh High Court in Gurram Sreeramulu, Garlapati Anjanevulu & Co. v. The State of Andhra Pradesh and others 30 STC 120, in which a Division Bench of that Court has taken the view that even if the High Court is satisfied in a petition under Article 226 of the Constitution that the petitioner is entitled to refund of the tax, the petitioner may still not be granted this discretionary relief if it results in retention of the sales tax collected by the petitioner from the public and imposes the burden on the State of refunding the tax which it had collected under a valid assessment order. It is not doubt true that the Division Bench in that case has taken the above view. But it will appear from the reading of the judgment that on facts it was found that the sales tax, refund of which was sought, was not found to have been paid under a mistake common to both the parties. The following observations in that context are material :-

'To sum up, in entitling the petitioners to refund of tax, the tax must have been collected by the State and paid by them under a mistake common to both the parties. But the petitioners would not be entitled to refund of tax as a matter of course merely because it has bee paid under a mistake. The right to such refund is subject to questions of estoppel, waiver, limitation and the like.... Among the facts and circumstances which would be relevant for holding whether the petitioner is entitled to refund or not, the fact that the assessment order is not void but is merely erroneous in law or on facts would be a relevant circumstance. If the assessment order cannot be questioned in civil court, the refund of tax also cannot be ordered by a civil court. That being so, even in a petition under article 226 of the Constitution there cannot be an order of refund without the assessment order itself being quashed. And in considering whether the assessment order also should be quashed the fact that the petitioner has not availed himself or the alternative remedy provided under the Act cannot be ignored.'

These observations will show that the High Court was not inclined to interfere with the assessment orders and that was one of the grounds on which the claim for refund was negatived.

48. Reliance was also placed on behalf of the respondents on the decision of the Delhi High Court in Hyderabad Asbestos Cement Products Ltd. and another v. Union of India and others 1980 ELT735, and of the Madras High Court in Madras Aluminium Co. Ltd. and another v. Union of India 1981 ELT 478, in support of the proposition that the petitioners were not entitled to any refund.

49. The question as to whether a petitioner is entitled to an order for refund in a case where the levy had been found to be illegal has been considered at length in a decision of this Court in Maharashtra Vegetable Products Pvt. Ltd. and another v. Union of India and others 1981 ELT 468, by a Division Bench to which one of us (Chandurkar J.) was a party, and it has been held in that decision that the State is under obligation to refund moneys which have been recovered without authority of law and the defence that the grant of relief would amount to unjust enrichment is totally without any merit. That decision has been followed by another Division Bench of this Court in Wipro Products Ltd. and another v. Union of India and another 1981 ELT 531.

50. In Patel India (Private) Ltd. v. Union of India and others, : AIR1973SC1300 , the Supreme Court has clearly pointed out in the case of excess recovery of customs duty that if the Customs Authorities were not entitled to levy the excess duty and retain it, they were bound to return it to the company who had paid it under protest and only with a view not to incur demurrage charges unless there was some provision of the Act which debarred the company from recovering it.


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