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Andhra Fertilisers Ltd. Vs. Assistant Collector of Central Excise - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAndhra Pradesh High Court
Decided On
Judge
Reported in1980(6)ELT16(AP)
ActsConstitution of India - Article 226; Limitation Act; Central Excise Rules, 1944 - Rules 9, 11 and 52
AppellantAndhra Fertilisers Ltd.
RespondentAssistant Collector of Central Excise
Excerpt:
.....- refund - article 226 of constitution of india, limitation act and rules 9, 11 and 52 of central excise rules, 1944 - petitioner company through writ sought refund of amount paid by them as excise duty - claim resisted by collector of central excise on ground that it is barred under rule 11 - rule 11 not applicable in instant case as payment by petitioner in no sense voluntary payment but under force of authorities - respondent contended that claim barred by limitation as it was made after eight years of payment - powers of discretion under writ jurisdiction may be exercised even if claim is barred by limitation - discretionary powers accordingly exercised which led to forming of opinion that no laches observed on part of petitioner company for claiming refund - petitioners entitled..........arose, the government of india in their order on november 22, 1971 held 'rule 9 of the central excise rules, 1944 prescribed that duty of excise is to be collected at the time of removal of excisable goods from the factory'. the 'fertilizers' could be delivered 'only' in bags 'the stocks available on the mid-night of 28-2-1969/1-3-1969 not packed in gunny bags were subject to duty under item 14 hh of the schedule to the central excise act, 1944'. the ranipet factory and the shah wallace company assailed the orders of the government of india in the high court, madras. koshai, j., on march, 11, 1976 in writ petitions nos. 1746 of 1972 and 1676 of 1973 held : the fertilisers that were available in stock on the night of 28-2-1969/1-3-1969 were not subject to excise duty for the stocks on.....
Judgment:

1. The Andhra Fertilizers Ltd. (the Company) manufacture fertilizers at their factory at Tadepalli. The company was formerly known as E.I.D. Parrys Ltd., and had factories at Ranipet and Ennore. In this writ petition, the Company seeks refund of Rs. 3,59,113.68 paid by them as excise duty in March, 1969. It was in 1969 the Central Excise and Salt Act, 1944 (the Act) was amended and in the Schedule to the Act Item 14 HH was added. When the Company was demanded duty under the Act on their stocks the company declared their stocks to be 10,738- 5047 metric tonnes of Superphosphate as 'on the night' of February 28, 1969 and disputed the eligibility of any duty under the Act, in their letter on March 25, 1969 and on April 26, 1969 to the Assistant Collector of Excise and represented their stock on hand was fit for sale though the fertilizers were not filled in bags. The provisions of the Fertilizers Control Order, 1957 were referred and it was represented that Phosphoric content of fertilizers, therefore, their stocks were not filled in bags. The manufacturers particularly in the year 1969 experienced 'glut' in their sales for the Government of India imported massive stocks of fertilizers in that year. Like other manufacturers the company found scarcity of space due to the recession. The fertilizers, if stocked in bags, the company urged the bags at the bottom in the warehouses 'hardened' and that in turn, required cakes to be broken; bags to be restricted before they were offered to the consumer. Such a process added enormously to their cost of production and the company impelled by the expense involved and experience they had, did not to bag the fertilizers. There were similar disputes by other manufacturers raised all over the country. The Association of Fertilizer Manufacturers made representation s to the Excise authorities that the stocks of fertilizers available by the close of the day of February 28, 1969 were not liable to duty and fertilizers manufactured from March 1, 1969 alone were covered under Schedule 14 HH of the Act. In the case of the Shah Wallace Company and the factory at Ranipet, when similar disputes arose, the Government of India in their order on November 22, 1971 held 'Rule 9 of the Central Excise Rules, 1944 prescribed that duty of excise is to be collected at the time of removal of excisable goods from the factory'. The 'fertilizers' could be delivered 'only' in bags 'the stocks available on the mid-night of 28-2-1969/1-3-1969 not packed in gunny bags were subject to duty under Item 14 HH of the Schedule to the Central Excise Act, 1944'. The Ranipet factory and the Shah Wallace Company assailed the orders of the Government of India in the HIgh Court, Madras. Koshai, J., on March, 11, 1976 in writ petitions Nos. 1746 of 1972 and 1676 of 1973 held : the fertilisers that were available in stock on the night of 28-2-1969/1-3-1969 were not subject to excise duty for the stocks on that day were fully manufactured earlier to the imposition of the levy under the Act. The learned Judge relied on a judgment of the Bombay High Court in Civil Application No.2070 of 1963, decided on January 18, 1965 where a similar view was taken. The dispute thus finally came to be deiced against the Excise authorities. Whether fertilizers in stock i.e. 10,738- 5040 metric tonnes stocked with the petitioner on February 28, 1969 is liable to pay excise duty is not disputed and is not at issue in the instant case and the question is not argued in the instant writ petition.

2. The clam made in the writ petition is resisted by the Collector of Central Excise because under Rule 11 of the Central Excise Rules 1944, such a claim is barred : because the refund under the rules cannot be ordered for the laches of the company; and also because the company made their claim on April 22, 1977 either years after the payment was made, therefore, it is urged that the claim is barred under the Statute of Limitation had the company filed a suit instead of a writ petition to recover the amount before a civil court.

3. The circumstances narrated above in no way warrant the application of Rule 11 of the 1944 rules, The company had not paid the amount by 'inadvertence', by 'error' of by 'misconstruction' of any rule. The payment was in no sense a voluntary payment except that the excise officials enforced the payment and duty was paid. Therefore, without any further discussion, Rule 11 of the rules is held to have no application on the facts of the case.

4. The learned counsel for the respondent cited a judgment of this Court in W.P. No. 3710 of 1977 dated March 13, 1978 to show that rule 11 has application. In that writ petition, Chinnappa Reddy, J. considered the scope of rule 11 and observed : 'It is not permissible for me to re-write the rule' and found on facts that rule 11 was attracted and the claim made by Shri Ganesh Sugars on that basis was dismissed. The judgment shows on facts in the writ petition that rule 11 was 'held' applicable and the claim made by Ganesh Sugars was beyond three months. The facts in the instant case do not warrant the application of rule 11. The contention that the claim is barred under rule 11 therefore fails.

5. Next it is urged on behalf of the company that the claim amount was paid under 'mistake' within the meaning of section 72 of the Indian Contract Act and the mistake came to be dispelled on March 11, 1976 when the Madras High Court decided the dispute within six weeks. Therefore on April 28, 1977 the claim was made by the company but the Excise Collector rejected the claim on July 15, 1977 and this writ petition was lodged on November 9, 1977. The argument is that the claim made within six months of the realisation of mistake cannot be held to have been barred under the Indian Limitation Act, 1963.

6. The scope of 'mistake' in Section 72 of the Contract Act is now settled for the privy Council in Shiba Prasad Singh vs. Srish Chandra Nandi - (1) 76 I.A. 244 held : Payment made on a wrong view of the law when money was not 'due' can be received under section 72 of the Act. This interpretation of Section 72 of the Indian Contract Act was applied by the Allahabad High Court to payments made under Sales Tax Act in Sate of Uttar Pradesh vs . Kanhaiya Lal Makundlal- (2) : AIR1956All383 and the Supreme Court confirmed that view in the Sales Tax Officer, Banaras and Others vs . Kanhaiya Lal Mukund Lal Saraf and others - (3) : AIR1995SC135 .

7. The learned counsel for the respondent argued that the amounts were paid by the company in the instance case not under a mistake but 'may have been paid' under 'coercion' within the meaning of section 72 of the Contract Act : when amounts are paid 'under protest'. Payment so made may not be voluntary and may be payment in the circumstances by the Company 'under Protest.' Such a payment it is urged on behalf of the respondent cannot be 'mistaken' payment and the company 'may have been recovered', in such a case, the claim must be made under the provisions of the Limitation Act within years of payment and claim after 8 years of the payment it is urged, is barred under the Statute of Limitation.

8. The case in Tilokchand Motichand and others vs . H. B. Munshi, Commissioner of Sales Tax, Bombay and others (4) : [1969]2SCR824 , in my view furnishes the answer to this tangled question. The judgment of that court was rendered by five judges, Mitter, J. gave out the facts, in his opinion : The question arose under the Bombay Sales Tax Act. The amount involved was Rs. 13,42,165.15 paid by the assessee and claimed the refund of that amount. The assessee collected amount as tax from its 'Customers' under section 12-A (4) of the Bombay Sales Tax Act and yet claimed refund of the amount. This aspect of their claim appears to have marred their relief in equity. The Supreme Court struck down section 12-A (4) in the case of Kantilal Babulal and Bros. vs . H. C. Patel and others, respondents : The New Shorrock Spg. and Mfg. Co. Ltd., Intervener (3) : [1968]1SCR735 on September 29,1967 and soon after the decision of the Supreme Court, the assessee firm claimed refund of tax paid as mistaken payments by them. The contention of the assessee earlier in the course of assessments touching the validity and non-liability of the firm were rejected by the Tax authorities. The firm contended the mistake in payment to the Sales Tax authorities was realised by the assessee only after the judgment in Kantilal Babulal Bros. vs . Intervener (5) : [1968]1SCR735 on September 29, 1977 and soon thereafter the claim was made by them and reliance was placed on the ratio of decision in The Sales Tax Officer, Banaras and others vs. Kanhaiya Lal Mukund Lal Saraf and others (3). The Learned single Judge and the Division Bench of the Bombay High Court on appeal on facts in their 'discretion' rejected the writ petition. Before the Supreme Court on appeal, Mitter, J. on the facts of the case held the assessee 'coerced' to make the payment but the case was not that of 'mistake' under section 72 of Contract Act and in para 50 observed : -

'I can however find no merit in the contention that because there is an invasion of a fundamental right of a citizen he can be allowed to come to this Court, no matter how long after the infraction of his right he applies for relief. The constitution is silent on this point : nor is there any statute of limitation expressly applicable, but nevertheless, on grounds of public policy I would hold that this court should not lend its aid to a litigant even under Article 32 of the constitution in case of an inordinate delay in asking for relief and the question of delay ought normally to be measured by the period fixed for the institutions of suits under the limitation Act.'

Bagawati, J. agreed that view and expressed that there was no 'mistake' within the meaning of section 72 of the Contract Act and adverting to the rights under Articles 32 and 226, the learned Judge observed in para 27.

'Where the remedy in a writ application under Article 32 or Article 226 corresponds to a remedy in an ordinary suit and latter remedy is subject to the bar of a statute of Limitation, the Court in its jurisdiction acts by analogy to the statute, adopts the statute ass its own rules of procedure and in the absence of special circumstances imposes the same limitation on the summary remedy in the writ jurisdiction..........'

Hidayatullah, the Chief Justice agreed with the conclusion drawn by Mitter and Bagawati, JJ. and observed :

'.....a petition under Article 32 is not a suit and is also not a petition or an application to which the Limitation Act applies.'

'I should say that utmost expedition is the sine quo non for such claims. The party aggrieved must move the Court at the earliest possible time and explain satisfactorily all semblances of delay.'

'........the question is one of discretion for this court to follow from case to case. There is no lower limit and there is upper limit. A case may be brought within Limitation Act by reason of some Article but this court need not necessarily give the total time to the litigant move this Court under Art. 32. Similarly in suitable case this Court may entertain such petition even after a lapse of time. It will all depend on what the breach of the fundamental right and the remedy claimed are and how the delay arose.

(There is unanimity of all the five Judges on the view expressed in the words emphasised which is supplied).

Sikri, J. (as he the was) observed on the facts of the case at para 27 as under :

'In my opinion, the petitioner was under a mistake of law, when he paid up, the mistake being that he thought that section 12-A (4) was a valid provision in spite of its imposing unreasonable restrictions......'

Hegde, J. observed :

'The provisions of the Limitation Act have no relevance either directly or indirectly to proceedings under Article 32.' ' ...I see no justification to reject the plea of the petitioners that they became aware of the provision only after the decision of the Court in Kantilal Babulal's case, : [1968]1SCR735 (Supra)] which decision was rendered on September 29, 19676. The petition was filed very soon thereafter. Hence this case under any circumstances falls within the rule laid down by this Court in Bhailal Bhai's case, : [1964]6SCR261 (Supra).'

The views expressed by five judges would show : Bagawati and Mitter, JJ construed the facts to all within the meaning of 'coercion' under Section 72 of the Contract Act. The suit ought to have been filed 'within three years from 1-1-1964' the date on which the Limitation Act came into force and the claim was barred under the Limitation Act.

9. Hidayatullah, the Chief Justice held on facts and in his 'discretion', for the dismissal of the clam, Hegde, J. considered the clam from the aspect in fundamental rights and under Article 226 of the Constitution of India to allow the claim as payment was in his view a mistaken payment. Sikri, J. considered the facts and the assessee was held to have properly explained the delay in approaching the Court and facts of the case indicated of a 'mistake' within the meaning of Section 72 of the Contract Act. The two Judges (Mitter, J. and Bagawati, J.) thus have held the claim was barred under Statue of Limitation. Among the three Judges who exercised their 'discretion', the Chief Justice exercised the discretion to dismiss the claim and in his opinion did not construe the facts either falling under the category or cases of 'coercion' or that of 'mistake' under Section 72 of the Contract Act.

10. The facts in the instance case are : The Company before the revenue authorities resisted the duty when it was demanded by the Revenue Authorities and finally paid Rs. 3,59,113.68 ps. 'under protest' for clearance of fertilisers under Rule 52. The payments, the company represented in unequivocal terms, was made under protest. The payment was made as a measure in business expediency under the compulsion of circumstance. The payment in such circumstances it can be lost sight of the fact was never made under item 14 HH or under any other provision of the Central Excise and Salt Act, 1944. The payment was made under force of authorize and in that sense under 'mistake' or under 'coercion,' no doubt is a question hedged in unusual difficulty and intermixed with legal nineties and capable of no easy answer. In the instant, it is not necessary to unravel the knot for the claim is made under the jurisdiction of Article 226 of the Constitution of India. There is power within that jurisdiction to exercise the powers of discretion of this Court as held in Bhailal Bhai's case - (6) 1964 (6) SCR 261 and as exercised by three of the Judges in the case of (4) (above) even if the claim is barred under the Statute of Limitation.

11. The company's case, if it is understood from the standpoint of mistake the clam was made within six weeks from March 11, 1977, the date of the Judgment of Madras High Court. The learned counsel for the respondent in this connection referred to the judgments of the Bombay High Court in City Municipality, Bhusawal vs. Nusserwanji Hormusji Madon and others (7) AIR 1940 BOmbay 252 and a Division Bench of this Court in A. Santhana vs. The State of Madras (New Andhra Pradesh) represented by District Collector, Kurnool (8) 1957 (11) An W. R. 260, another decision of the Supreme Court reported in State of Madhya Pradesh, appellant in all the appeals vs . Bhailal Bhai and others (9) : [1964]6SCR261 , wherein a batch of writ petitions under Articles 304 and 301 of the Constitution were considered from the stand point of Art. 62 (repealed) Limitation Act. The learned Counsel for the respondent emphasised that in the instant case, it is 8 years after the payment refund is claimed and the claim, it is emphasised, is barred hopelessly under the Limitation Act, 1963.

12. The above arguments on facts of the case raise two questions : (1) if the issue is to be considered from the stand point of the provision to be applied under the Limitation Act that question depends on the question whether it was a 'mistake' or 'coercion' under section 72 of the Contract Act when amounts were paid : (2) The claim if not even is barred under LImitation Act if it was a mistake and in the context of the authority and jurisdiction, this Court is empowered even as regards barred claims to have regard to the circumstances and exercise 'discretion' as indicated in the above cases. Following the observations of Das Gupta, J. in regard to causes barred under Limitation Act, the discretion in (9) (above) and the rational propounded by the Chief Justice Hidayatullah, Sikri, JJ. in the case of (4) (above) on the facts of the case, it is held that there was no laches on the part of the petitioner company and in my discretion, the writ petitioner is entitled to the refund of Rs. 3,59,113.68.

13. The learned counsel for the petitioner raised in the course of debate argued with reference to the payment under rule 52 : when the goods were cleared, the petitioner company had made a protest that it was a `nil' assessment therefore, amounts are liable to be refunded and in that connection, referred to two decisions. The State of Madras vs. A. M. Safiulla and Company (10) 21 STC 274 and N. B. Santhana vs. The Elphinstone Spinning and Weaving Co. Ltd., Nirlon Synthesis Fibres & Chemicals Limited, Intervener (11) : 1973ECR6(SC) . Having regard to the conclusion indicated above, it is not necessary to go into the issue thus raised under Rule 52 of the 1944 Rules.

14. In the result, the writ petition is allowed as prayed for, but, in the circumstances there will be no order as to costs.


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