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Chemical Process Equipments Private Ltd. and anr. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtMumbai High Court
Decided On
Case NumberWrit Petition Nos. 1243 and 1244 of 1981
Judge
Reported in1989(20)LC192(Bombay)
AppellantChemical Process Equipments Private Ltd. and anr.
RespondentUnion of India (Uoi) and ors.
Excerpt:
refund - limitation is inapplicable where duty was collected on plastic articles under mistake of law--full refund admissible from date of exemption notification. cesa : section 11b; ceti 15a(2); notfn. 69/71-ce, dt. 29.5.1971. - code of criminal procedure, 1973 [c.a. no. 2/1974]. section 41: [ swatanter kumar, cj, smt ranjana desai & d.b. bhosale, jj] arrest of accused - held, a police officer or a person empowered to arrest may arrest a person without intervention of the court subject to the limitations specified under the provisions of the code. the provisions of section 41 of the code provides for arrest by a police officer without an order from a magistrate and without a warrant. a distinct and different power under section 44 of the code empowers the magistrate to arrest or order..........by the excise authorities under tariff item 68 (the residuary item) and the petitioners paid excise duty between 1st march 1975 and 31st december 1978 upon this basis. on 7th march 1978 the petitioners filed a classification list for the articles classifying them under item 15a. on 8th september 1978 a trade notice was issued by the central excise collectorate, bombay, clarifying that articles of glass fibre reinforced plastic would appropriately be liable to excise duty under item 15a(2). on 30th december 1978 the excise authorities informed the petitioners that their classification list of 7th march 1978 was approved. in the light of the said trade notice the petitioners, articles were classified as articles of plastic under item 15a(2). the letter stated that by virtue of a.....
Judgment:

S.P. Bharucha, J.

1. These two writ petitions can be conveniently disposed of by a common judgment.

2. The petitioners manufacture plastic articles reinforced with glass fibres. These articles were being classified by the excise authorities under Tariff Item 68 (the residuary item) and the petitioners paid excise duty between 1st March 1975 and 31st December 1978 upon this basis. On 7th March 1978 the petitioners filed a classification list for the articles classifying them under Item 15A. On 8th September 1978 a trade notice was issued by the Central Excise Collectorate, Bombay, clarifying that articles of glass fibre reinforced plastic would appropriately be liable to excise duty under Item 15A(2). On 30th December 1978 the excise authorities informed the petitioners that their classification list of 7th March 1978 was approved. In the light of the said trade notice the petitioners, articles were classified as articles of plastic under Item 15A(2). The letter stated that by virtue of a notification of 29th May 1971 articles of plastic were exempted from payment of excise duty. The classification had been approved accordingly. This would have effect from the date of issue of the trade notice.

3. The petitioners filed an appeal before the Appellate Collectorate Central Excise & Customs against the order of 30th December 1978 whereby exemption was granted only from the date of issue of the trade notice. The Appellate Collector held on 22nd August 1979 that the notification was effective from the date on which it was issued and would have to be given effect accordingly. He, therefore, allowed the appeal.

4. On 16th April 1979 the petitioners filed an application for refund of the excise duty paid for the period 3rd September 1977 to 27th February 1978. Refund claims were also filed for the periods 17th March 1978 to 31st August 1978 and 13th September 1978 to 1st January 1979, which refunds were allowed and have been made. On 29th May 1981 the Assistant Collector of Central Excise disallowed the petitioners' claim for refund for the period 3rd September 1977 to 27th February 1978. He held that the claim was time-barred under Rule 11 of the Central Excise Rules, 1944.

5. On 15th September 1981 Writ Petition No. 124 of 1981 was filed impugning the order dated 29th May 1981.

6. Learned Counsel appearing on behalf of the petitioners placed reliance upon the judgment of a Division Bench of this Court dated 5th March 1980 in Special Civil Application No. 2118 of 1976, Associated Bearing Co. Ltd. v. Union of India 1980 E.L.T. 415 : 1982 ECR 516. The court held that once it was found that the recovery of excise duty was illegal the provisions of Rule 11 would not be attracted and a claim for refund had to be considered in the light of the fact that it was made on the footing that the payment had been made under a mistake of law and was made within three years from the time when the mistake was discovered. The claim for refund could be entertained even in proceedings under Article 226 of the Constitution.

7. Mr. Devdhar, learned Counsel for the respondents, sought to distinguish this authority upon the ground that in it the court had itself held that the recovery of the duty was illegal whereas in the instant case the petitioners had paid and the respondents had recovered the excise duty under Item No. 68 until the trade notice was issued. The distinction does not appear to me to have any force. The basic principle appears to be this: if recovery of excise duty is illegal, a claim for refund of monies so recovered must be considered as being a claim for monies paid under a mistake of law, whereon the provisions of Rule 11 will not apply. It is not material that the recovery has been held to be illegal by a court of law or has been acknowledged to be such by the parties themselves.

8. Mr, Devdhar also drew my attention to the judgment of a Division Bench of this Court dt. 25th June 1982 in Miscellaneous Petition No. 326fof 1972 Chemicals and Fibres India Ltd. v. Union of India 1982 E.L.T 917: 1981 ECR 492. It was submitted, relying upon this judgment, that the only refund that could be ordered was refund in respect of payments made for a period of three years prior to the filing of this petition. In the CAFI case, the claim for refund was founded on a judgment in a petition by Nirlon Synthetic Fibre & Chemicals Ltd. filed in 1964 and rendered on 30th April 1976. There was no explanation in the petition as to why the petitioners did not think it worthwhile to approach the court themselves and challenge the levy which according to them was illegal. The court held that an order for refund could be made only in respect of the recoveries for the period of three years prior to the filing of the petition. The petitioners before me have not been guilty of the laches that the Division Bench held CAFI to be guilty of. They made the application for refund promptly and with diligence and are accordingly entitled to full refund.

9. In Writ petition No. 1244 of 1981, refund was claimed in respect of recoveries made between 1st March 1975 and 7th September 1977. It was rejected on identical grounds. The petition challenges the rejection.

10. Both the petitions are, therefore, made absolute in terms of prayer (c) with costs. The refund ordered shall be made within a period of 8 weeks from today.


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