1. On a memo filed by the respondents, Chandrakantharaj Urs, J. allowed this writ petition on 6-1-1982. But in W.A. No. 373 of 1982 filed by the respondents against the said order an appellate Bench of this Court, on 15-3-1982, set aside the same and remitted the case for fresh disposal with liberty to file their return and that is how this case has again come up before me for disposal.
2. M/s. Mafatlal Plywood and Industries Ltd., formerly called as 'Mysore plywood Ltd.' is a public limited company, incorporated under the Companies Act, which is the petitioner before me, is inter-alia engaged in the manufacture of 'Flush doors'. From 1962 and onwards, the petitioner had paid excise duty on the 'flush doors' manufactured by it under Tariff Item No. 16-B of the Central Excises and Salt Act, 1944 (Central Act No. 1 of 1944) (Act) at the rates stipulated against that entry from time to time. From 1962 to 3-5-1974, the petitioner paid excise duty on 'flush doors' roughly aggregating to a sum of Rs. 2,99,881.98 or so without demur.
3. On 4-5-1974, the petitioner for the first time, urged before the Assistant Collector of Central Excise, Bangalore (Collector), the assessing authority under the Act, that 'flush doors' were not dutiable to excise duty either under Tariff Item 16-B or any other entry of the Act and therefore, the same cannot be collected (Annexure-D). But notwithstanding the same, the petitioner continued to pay duty on 'flush doors' under protest. After some intermediate correspondence and affording an opportunity of hearing to the petitioner, the Collector on 31-10-1974, (Annexure-A), rejected the said claim and reiterated that 'Flush doors' were dutiable to excise duty under Tariff Item 16-B of the Act as earlier levied.
4. Against the said order of the Collector, the petitioner filed an appeal in Appeal No. 986/75 (HNR) before the Appellate Collector of Central Excise, Madras (Appellate Collector) who by his order dated 5-6-1975 (Annexure-B) dismissed the same.
5. Against the said orders of the Appellate Collector and the Collector, the petitioner filed a revision petition before Government of India, which was then exercising revisional powers under the Act. On 19-4-1977, Government dismissed the same and communicated its order to the petitioner, which was received by it 28-4-1977 (Annexure-C). In this petition under Article 226 of the Constitution, presented on 1-1-1981, the petitioner has challenged the orders of Government, Appellate Collector and Collector and has sought for a mandamus to refund the excise duty paid by it from 1962-63 till it approached this Court and thereafter.
6. Among other grounds, the petitioner has urged that 'Flush door' was not a door or ply-wood dutiable to duty under Tariff Item No. 16-B and all duties collected by Government were without the authority of law and the same was refundable to it.
7. On 14-12-1981, the respondents filed a memo in these terms :
'The petitioner has challenged the levy of Excise Duty under Tariff Item No. 16-B of Central Excise Act in respect of Flush Doors manufactured by the petitioner. It has now been clarified that the said articles are to be assessed under Tariff Item 68 and therefore, petitioner's grievance in the Writ Petition does not survive. Accordingly, the Writ Petition may be dismissed after recording the clarification and with liberty to the respondents to proceed to levy under Tariff Item 68.'
In their return filed thereafter, the respondents in justifying the impugned orders, have urged that there was a contumacious delay of more than 3 years 8 months in the petitioner approaching this Court after Government made its final order and this is a fit case in which this court should decline to exercise its extraordinary jurisdiction on that ground itself.
8. In its petition and reply, the petitioner has set out certain circumstances to ignore the delay in approaching this Court.
9. Sri S. G. Sundaraswamy, learned counsel for the petitioner, contends that 'flush doors' were not dutiable to excise duty under Tariff Item No. 16-B or any other entry of the Act prior to 1-3-1975 and the whole of excise duty collected prior to that date and the higher rate of excise duty collected from 1-3-1975 under Tariff Item 16-B and not under Item 68 of the Act that was placed on the Statute Book from 1-3-1975 only was without the authority of law and the same was legally and justly refundable without considering the unjust plea of limitation urged by the respondents as ruled by the Supreme Court in Patel India v. Union of India : AIR1973SC1300 and The Madras Port Trust v. Hymamshu International : 1979(4)ELT396(SC) .
10. Sri K. Shivashankar Bhat, learned Senior Standing Counsel for Central Government appearing for the respondents, refuting the contention of Sri Sundaraswamy, contends that the petitioner who had passed on the burden to the consumers, was not entitled for refund even if there was an illegal levy as ruled by a Division Bench of the High Court of Gujarat in Union of India v. Ahmedabad Manufacturing [1984 (17) E.L.T. 246]. In the very nature of things, it is necessary to examine this latter contention of Sri Bhat first and then with all other questions if that becomes necessary.
11. Excise duty under the Act, is levied and collected on the manufactured article from the manufacturer who is free to pass on the same to the consumer and invariably passes on to the consumer can hardly be doubted. But the question is whether a court can hold that as matter of law a manufacturer had passed on the burden to the consumer and therefore any refund claimed cannot be allowed by a Court at all.
12. In their return, the respondents have not alleged that the petitioner had passed on the burden to the consumer and was seeking to make an unjust enrichment in claiming refund. In the absence of a plea and proof, this court cannot, as a matter of law, hold that the petitioner had passed on the burden to the consumer and was seeking to make an unjust enrichment. From this, it follows that the principles enunciated by the Gujarat High Court in Ahmedabad Manufacturing's case, even if correct, on which it is not necessary to express any opinion, cannot be applied to the facts of this case. I, therefore, reject this preliminary objection urged by Sri Bhat and proceed to examine the other questions.
13. Sri Bhat next contends that the order made by Government that only affirmed the order of the Appellate Collector and Collector, had become final and that even otherwise, the belated challenge to the same should be rejected on grounds of delay and laches. Alternatively, he also contends that claims for refund beyond three years prior to the presentation of the writ petition as ruled by the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai : 6SCR261 and Sri Vallabh Glass Works Ltd. v. Union of India : 155ITR560(SC) cannot be granted by this Court.
14. In their memo set out in full, the respondents do not dispute that 'flush doors' manufactured by the petitioner were not dutiable to duty under Tariff Item 16-B of the Act. Evidently this memo, as pointed out by Sri Sundaraswamy, had been filed with due regard to the decision rendered by the High Court of Delhi in Woodcrafts Products Limited v. The Superintendent (Tech.) and Others (1980 E.L.T. 684) on the very question with which the Supreme Court concurred by dismissing the Special Leave Petition filed by the respondents on 16-4-1981. When once respondents concede that 'Flush doors' were not dutiable to duty under Tariff Item No. 16-B of the Act, there is hardly any ground for me to examine the validity of the impugned orders and pronounce of them at all. All that requires to be examined is the claim of the petitioner for refund and the defences that are urged by the respondents to deny the same. I, therefore, proceed to examine the same.
15. On the principles that should be borne in allowing refunds by this court in exercise of its prerogative powers under Art. 226 of the Constitution in Bhailal Bhai's case, a Constitution Bench of the Supreme Court, has expressed thus :
'At the same time we cannot lose sight of the fact that the special remedy provided in Art. 226 is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defences legitimately open in such actions. It has been made clear more than once that the power to give relief under Art. 226 is a discretionary power. This is specially true in the case of power to issue writs in the nature of mandamus. Among the several matters which the High Courts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved partly in seeking this special remedy and what excuse there is for it. Another is the nature of controversy of facts and law that may have to be decided as regards the availability of consequential relief. Thus, where, as in these cases, a person comes to the Court for relief under Art. 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment. Whether repayment should be ordered in the exercise of this discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule for universal application. It may however be stated as a general rule that if there has been unreasonable delay the court ought not ordinarily do lend its aid to party by this extraordinary remedy of mandamus. Again, where even if there is no such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the Court should ordinarily refuse to issue the writ of mandamus for such payment. On both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a civil court and to refuse to exercise in his favour the extraordinary remedy under Art. 226 of the Constitution.'
In Vallabh Glass Works case, dealing with a case of refund under the Act, the Supreme Court has only reiterated the above principles. Bearing these principles it is necessary to examine the claim of the petitioner seriously resisted by the respondents.
16. On the very concession made by the respondents in their memo and the principles enunciated by the Supreme Court in Bhailal Bhai's and Vallabh Glass Work's cases, the claim of the petitioner for refund of difference of excise duty paid for a period of three years prior to presentation of the writ petition, namely from 1-1-78 to 1-1-1981 and thereafter which are not barred by time, can hardly be resisted by the respondents or denied by this court also on any principle. Even otherwise. I do not see any justification for denying the benefit of refund for the period from 1-1-1978 and onwards.
17. But the case of the petitioner for other period does not stand on the same footing. I, therefore, now proceed to examine the same separately on its own merits.
18. For the period from 4-5-1974 to 31-12-1977, the petitioner had paid higher excise duty under protest and is normally entitled for refund of the same on what I have held earlier. But that claim is resisted by the respondents as barred by time. The plea of limitation is a legitimate legal plea and no court can even say the respondents or defendants cannot and should not urge such a plea that is legitimately available to them. After all, courts are not concerned with the morality of claims or defences urged to defeat or deny the claims placed before courts. As pointed out by the Supreme court in Bhailal Bhai's case reiterated in Vallabh Glass Work's case a High Court even in exercise of its extraordinary jurisdiction also, though there is no period of limitation for entertaining a writ petition under Art. 226 of the Constitution cannot ignore the plea of limitation at all. The ratio in Patel India Case, does not touch on the plea of limitation, with which as we are now concerned on this part of the claim. The homily expressed by a smaller bench of the Supreme Court in Madras Port Trust Case, cannot be read as barring the respondents from urging a legitimate legal plea available to them. When the dame is seriously urged by the respondents, this court cannot ignore the same, and grant relief all in the name of illegal collision or unjustness of the plea playing the role of a knight evrant. I am therefore bound to examine this plea and uphold if there is merit in the same.
19. Without any doubt the plea of limitation urged by the respondents that the claim of the petitioner for periods prior to 1-1-1978 and in any even for periods prior to 3-5-1974, cannot be rejected as a fanciful and absurd plea. If the petitioner had filed a civil suit in an ordinary Civil Court, that court even without a defense by the respondents, was bound to examine the same and very likely dismiss that suit only on the ground of limitation. I have, therefore, no hesitation in upholding the plea of the respondents for period prior to 1-1-1978 as barred by time and dismiss the same to that extent.
20. What is true of the claim of the petitioner for the period from 3-5-1974 to 1-1-1978 is more true for the period prior to 3-5-1974 when payments were made without demur.
21. In my view, the explanation offered by the petitioner for the inordinate delay of 3 years 8 months for approaching this court after it received the order of Government is not at all satisfactory and convincing. But still I will assume that the explanation offered by the petitioner is true, correct and convincing and examine its case on that basis also.
22. In my view, the explanation offered by the petitioner for the delay even if correct, does not make any difference in examining the plea of limitation urged by the respondents, which on the principles stated in Bhailal Bhai's case cannot be brushed aside at all. For this reason also the claim of the petitioner for the period prior to 1-1-1978 has necessarily to be rejected.
23. In the light of my above discussion, I make the following orders and directions :-
(i) I declare that the petitioner is entitled for refund of difference of excise duty paid by it from 1-1-1978 and onwards on 'flush doors' under Tariff Item No. 16-B of the Act and excise duty payable thereto under residuary Item 68 till Entry No. 16-B of the Act was amended by including flush doors also in that entry. But notwithstanding this declaration, the claim of the petitioner for refund of difference of excise duty paid for the periods prior to 1-1-1978 is dismissed as barred by time.
(ii) I direct the respondents to compute the difference of excise duty paid by the petitioner for the period from 1-1-1978 on the basis of the above declaration and refund the same, however exercising the first option to adjust those amounts to any of the amounts that are due from the petitioner under the Act with all such expedition as is possible in the circumstances of the case and in any event within 4 months from the date of receipt of this order.
24. Writ petition is disposed of in the above terms. But in view of their decided success and failure, I direct the parties to bear their own costs.