Prakash Narain, C.J.
1. The petitioner challenge an order of the Assistant Collector, Central Excise, Rohtak passed on November 7, 1980 consequent to the issue of a Tariff Advice by the Government of India bearing No. 23/79 of July 9, 1979. The petitioners also challenge the said Tariff Advice. By virtue of the ruling given in the said Tariff Advice certain exemptions/concessions in payment of excise duty cannot be claimed by the petitioners. According to the impugned Tariff Advice 'Barley Malt' and 'Malt Extract' cannot be classified as 'Food Products' or 'Food Preparations' for the purpose of Notification No. 55/75-CE, dated March 1, 1975 (as amended).
2. The petitioners claim that they are engaged in the manufacture of 'Malt' and 'Malt Extracts I.P.'. These are manufactured by processes set out in paragraph 2(ii) of the petition, relevant portion of which reads as under :-
'Malt. - Barely is screened and stepped (soaked in water tank). Then it is transferred to Germination Box for germination. From there, it is transferred to Drying Chambers for drying. After the process of drying is complete, the product is known as MALT.
Malt Extract. - Malt is crushed and mixed with hot water. The wort (syrup) is concentrated in vacuum evaporator. The concentrate is MALT EXTRACT'.
3. The two items manufactured by the petitioners fell within the purview of the Central Excise levy under Tariff Item No. 68 with effect from March 1, 1975. The Tariff Item at the relevant time read as under :-
------------------------------------------------------------------------Item No. Tariff Description Rate of duty------------------------------------------------------------------------68. All other goods, not elsewhere 1% ad valoremspecified, manufactured in afactory but excluding -(a) alcohol all sorts includingalcoholic liquors for humanconsumption;(b) opium, Indian hemp and othernarcotic drugs and narcotics; and(c) dutiable goods as defined inSection 2(c) of the Medicinal andToilet Preparations (Excise Duties)Act, 1955.Explanationn - In this Item, the expression 'factory' has themeaning assigned to it in Section 2(m) of the Factories Act, 1948.------------------------------------------------------------------------
4. The Central Government issued a Notification No. 55/75, dated March 1, 1975 exempting certain produces from the levy of duty under Item 68 of C.E. Tariff as per the Schedule appended to the said Notification. This was later on amended in May 1975. Under this Notification the Items mentioned in the Schedule were wholly exempted from payment of duty livable thereon. The Items exempted, inter alia, included food products and food preparations, the relevant entry reads as under :-
'1. All kinds of food products and food preparations including -
(i) meat and meat products;
(ii) dairy products;
(iii) fruit and vegetable products;
(iv) fish and sea foods;
(v) bakery products; and
(vi) grain mill products.'
5. The petitioners continued to pay the excise duty under Tariff Item 68 though they held the view that they were not liable to pay the same as their products could be described as 'foods products' and 'foods preparations'. up to the end of February 1978, the petitioners paid duty without protest. The pinch appears to have been felt thereafter, as with effect from March 1, 1978, the rate of excise duty in Tariff Item 68 was increased from 2% to 5%. From March 1, 1978, petitioners started paying excise duty under protest. We may note that the scope of Notification No. 55/75 was enlarged by including therein sub-item 19 in the Schedule of the Notification reading : 'All drugs, pharmaceutical and drug intermediates.' Petitioners contend that even if the items manufactured by them were not classifiable as 'food products' and 'food preparations' - the same were certainly entitled to claim exemption from payment of duty under the newly added sub-item 19, referred to above.
6. As desired by the Superintendent of Central Excise, Gurgaon, the petitioners filed a classification list in respect of the items manufactured by them. The Superintendent by his communication dated March 27, 1978 informed the petitioners that 'malt' did not appear to be exempt from the levy under Tariff Item 68 but 'Malt Extract and 'Malt used in the factory' appeared to be exempt from duty. The Superintendent, however forwarded the classification list as filed by the petitioners to higher authorities for approval. In the meanwhile, the petitioners were asked to continue paying duty at 5% on 'Malt' cleared from the factory till the classification list was finally approved by the Competent Authority. The petitioners paid the duty under protest on 'Malt' cleared from the factory, while 'Malt extract' and 'Malt consumed in the factory' were cleared without payment of duty. With effect from March 1, 1979 the rate excise duty on these products was enhanced from 5% to 8 %. The Superintendent, Central Excise, Gurgaon asked the petitioners to pay duty not only on the 'malt' cleared from the factory but also on 'malt extract' at the enhanced rate. The petitioners protested and filed an appeal before the Appellate Collector on May 25, 1979 against the said decision of the Superintendent. The Superintendent, Central Excise, Gurgaon chose to finalise the Assessment Returns relating to the period from April 1978 to February 1979 by subjecting the clearances to the rate of excise duty at 5%, as then prevalent without waiting for the approval of the classification list earlier filed by the petitioners. The petitioner filed appeals before the Appellate Collector of Central Excise against the said assessment orders.
7. With effect from August 1, 1979, there was a change in the pattern of Excise Control, inasmuch as Self Removal Procedure was replaced by Production Based Control and the petitioners were asked to submit another classification list. Petitioners submitted the same indicating 'nil' rate of duty against 'malt' and 'malt extract'. The Assistant Collector modified the classification list submitted by changing the 'nil' rate to 8% allegedly without affording the petitioners an opportunity to explain their position. The petitioners continued to pay duty under protest. The petitioners, however, filed 18 refund claims before the Assistant Collector of Central Excise for the refund of duty erroneously charged from the petitioners and paid under protest by them on 'malt' and 'malt extract' cleared from their factory from March 1, 1975 onwards. The refund claims were based on the following submissions :-
'(a) Malt and Malt Extract being food products/food preparations were exempt from duty under S. No. 1 of the Schedule annexed to Notification No. 55/75-CE, dated 1-3-1975 as amended.
(b) M/s Cadburys who were customers of Malt Malt Extract manufactured by the Appellants had stated that the appellants' products should comply strictly with the provisions of Prevention of Food Adulteration Act which goes to show that in common parlance Malt and Malt Extract are regarded as food products.
(c) According to the Chapter 11 and 19 of the Indian Customs Tariff based on the BTN, Malt was regarded as product of Milling Industry and Malt Extract as preparation of cereals, flour and starch.
(d) According to the Ministry of Health Notification dated 12-9-1974, Malt Extract was mentioned as food preparation.
(e) According to Controller of Drugs Certificates dated 18-4-1978 and 7-9-1978, Malt Extract is a bulk drug and accordingly qualifies for exemption under S. No. 19 of the above mentioned Notification No. 55/75-CE dated 1-3-1975 as amended.
(f) According to Rule 55 of Prevention of Food Adulteration Act, 1944, Beer and Alcoholic wines etc. were treated as articles of food.
(g) The end use of Malt and Malt Extract is for food and pharmaceuticals.'
8. The Assistant Collector issued a show cause notice to the appellants to show cause why the refund claims be not rejected, as according to him, 'Malt' and 'Malt Extract' could not be classified as food products/food preparations for the purpose of Notification No. 55/75, as amended. Petitioners submitted their representation in response to the said show cause notice. In the meanwhile, Tariff Advice No. 23/79 was issued by the Government of India on July 9, 1979, which has been noticed earlier. The petitioners contend that apart from applying wrong principles of law and disregarding Rule 173B of the Central Excise Rules, the Assistant Collector based his impugned order dated October 7, 1980 on the ruling in Tariff Advice No. 23/79 dated July 9, 1979. It is the petitioners' case that in the face of the said Tariff Advice no excise authority is free to uphold the contention of the petitioners that they are entitled to exemption for their products and are not liable to pay any excise duty at all their products in view of the exemption notification No. 55/75, as amended.
9. Since the petitioners challenge the Tariff Advice besides challenging the order of the Assistant Collector dated October 7, 1980, they have moved this Court for issue of a writ of certiorari or a writ of mandamus or any other writ, order or direction praying for the quashing of the impugned order dated October 7, 1980, Tariff Advice No. 23/79 dated July 9, 1979 and for a declaration that 'Malt' and 'Malt Extract' are food products/food preparations and as such entitled to exemption under Notification No. 55/75-CE, as amended up to date or alternatively a declaration that 'Malt Extract' is a 'drug, medicine, pharmaceuticals and drug intermediates' as contemplated by sub-entry 19 in the Schedule to the Notification No. 55/75-CE, as amended up to date. The petitioners also pray for an order restraining the respondents from levying excise duty on 'Malt' and 'Malt Extract' manufactured by them so long as Notification No. 55/75-CE as in force today continues to be in force.
10. At the hearing, a writ for issue of refund of duty paid up to the end of February 1978 was not pressed but it was submitted that duty paid under protest from March 1, 1978 should be ordered to be refunded, if the petitioners' pleas find favor with this Court, inasmuch as it will be a consequential relief to upholding the plea of the petitioners and setting aside of the impugned order dated October 7, 1980, and quashing of Tariff Advice dated July 9, 1979.
11. By way of return to the rule nisi obtained by the petitioners, the respondents have filed an affidavit of Shri S. L. Chopra, Assistant Collector, Central Excise, Rohtak. In the affidavit so filed, the Assistant Collector has asserted the correctness of the impugned order and has traversed the contentions of the petitioners. It has been averred that the petitioners did not dispute their liability to pay excise duty for their products till February 1978. It was only thereafter that they started questioning the excisability of their products. The petitioners were required to file classification list under Rule 173B in view of the fact that from August 1, 1979, Rule 173 pp was amended vide Notification No. 235/79 dated July 23, 1979, according to which most of the procedural relaxations, barring a few were withdrawn and the pattern of SRP control as was in vogue prior to August 1, 1979 was replaced by production based control as was already in force in case of other excisable commodities covered under Chapter No. VII(A) of the Central Excise Rules, 1944. The petitioners, as noticed earlier, filed classification list on August 23, 1979 claiming 'nil' rate of duty. The Assistant Collector further goes on to depose in the affidavit, 'as the issue of excisability of Malt and Malt Extracts vis-a-vis the approval of the classification list effective from August 1, 1979 was still under consideration with the Assistant Collector, Central Excise, Rohtak, a Tariff Advice No. 23/79 circulated vide instruction No. 44/79-CE (14, NES) dated July 19, 1979, copy enclosed, reached in the meantime clearly confirming that Malt and Malt Extract could neither be treated as Food Preparations falling under Seriall No. 1 nor drugs/pharmaceuticals - Drug intermediates falling under Seriall No. 19 respectively of the Schedule attached to exemption Notification No. 55/75, as amended.' Reasserting that the Assistant Collector Central Excise, Rohtak having considered all the facts in the representation, till then filed, by the petitioners and 'keeping in view of the various directions guidelines, advices received from the board and circulated vide instructions referred to in the proceedings paras, approved the classification list of petitioners' factory by changing nil rate of duty to 8% as per the provisions of Rule 173B and approved copy sent direct to the petitioners' factory'. The Assistant Collector, it is asserted, in consequence, also rejected all the 19 refund claims filed by the petitioners.
12. Regarding the exemption claimed by the petitioners that 'Barley Malt' and 'Malt Extract' were food products or food preparations, the Assistant Collector has asserted that the 'Malt' and 'Malt Extract' manufactured by the petitioners is not a food item in itself but used as an ingredient in manufacture of various industrial products and as such cannot be considered as food products and food preparations not can the same be considered to be a drug.
13. The respondents also challenged the maintainability of the writ petition contending the non-availing of by the petitioners' of departmental remedies or statutory remedies of appeals and revisions.
14. The petitioners with the leave of the Court filed an additional affidavit by which they sought reliance on I.S.I. Specification for Barley Malt and Malt Extract, Chapter 11, 19 and 21 of B.T.N., letter dated March 4, 1985 form the Directorate General of Technical Development, Udyog Bhawan, New Delhi, letter dated July 5, 1984 from Central Food Technological Research Institute, petitioners' letter of June 6, 1984, letter dated June 24, 1984 from Central Food Technological Research Institute to the petitioners and certain technical reference books. Petitioners also filed a rejoinder and reiterated their contentions in the petition, and clarified that petitioners did filed an appeal against the impugned order of the Assistant Collector directing him to dispose of the same in accordance with the decision of this Court.
15. The point in dispute, thereforee, is within a very narrow compass. What has first to be determined is whether the products manufactured by the petitioners can or cannot be classified as 'food products' or 'food preparations' for purposes of Notification No. 55/75-CE dated March 1, 1975 as amended or fall under sub-item 19 of its Schedule.
16. Before deciding the above issue, we might as well dispose of the plea of the respondents that the present petition should not be entertained inasmuch as it is contended, the petitioners have failed to avail of the statutory or departmental remedies. As noticed earlier, petitioners had filed an appeal and the case was remanded by the Collector to the Assistant Collector. thereforee, the issue was once again before the Assistant Collector. In our opinion, however, the case before the Assistant Collector at this stage can only be regarded as an appeal from Caesar to Caesar. The Assistant Collector is bound by the Tariff Advice issued by the Government of India. Indeed, in the original impugned order he has relied on it. The respondents have also relied upon it. So long as the Tariff Advice No. 23/79 dated July 9, 1979 continues to be operative, petitioners can have little chance of success in a rehearing before the Assistant Collector. The Tariff Advice is also challenged by the petitioners. thereforee, we cannot hold that the petition is not maintainable.
17. We have already read the relevant part of Tariff Item No. 68 as well as Notification No. 55/75 dated March 1, 1975 exempting certain products from levy of duty under item 68 of Central Excise Tariff. What was exempted was all kinds of food products and food preparations including meat and meat products, dairy products, fruit and vegetable products, fish and sea foods, bakery products and grain mill products. By auditing sub-item 19 all drugs, pharmaceuticals and drug intermediates were also exempted from payment of duty.
18. We may straightway say that the end use of a product is wholly irrelevant for the purpose of levy of excise duty. The duty is attracted on the product as manufactured and is not livable on the basis of to what use or purpose that product can be put. There is no reference either in Tariff Item 68 or in the exemption notification to the end use or adaptation of the product set out in the schedule to the exemption notification. We take support for this view from the observations of the Supreme Court in Dunlop India Ltd. v. Union of India and others, 1983 E.L.T. 1566 (S.C.) = A.I.R.1977 S.C. 597
19. In the impugned order of the Assistant Collector we find a peculiar approach though he did not dispute that M/s Cadburys were a big consumer of the petitioners' produce. He goes on to say that there was no valid reason to assume and it cannot be granted that all raw materials or inputs to be used by Cadburys must invariably be covered by good products/food preparations only. With regard to Chapters 11 and 19 of the Indian Customs Tariff Act, upon which the petitioners relied, he rejected the contention that any assistance could be taken from Chapter 19 but has not adverted to Chapter 11 at all. He goes on to say that major use of Barley Malt is in the manufacture of alcoholic beverages and only a small quantity is used for manufacture of food products and food preparations. Further malt extract was used in manufacturing processed food for infants/children or in the manufacture of medicinal preparations. Malt and malt extract is also used as inputs or raw material in the manufacture of food products/food preparations but not all inputs could be equated with the manufactured finished products. He held that malt and malt extract being inputs in the manufacture of other goods like alcoholic beverages, food products, drugs/medicinal preparations are admittedly different from the 'finished products'. He observed that these two commodities 'by themselves are neither food products/food preparations, falling under S. No. 1 nor Drugs falling under S. No. 19 respectively of the Schedule appended under Notification No. 55/75 dated March 1, 1973, as amended.'
20. Chapter 11 of the Customs Tariff Act, 1975, we find rather relevant. It deals with the products of milling industry, malt and starches, gluten and inulin. In the table under Section 'B' is mentioned 'Barley'. There can be no doubt that Barley is the product for a milling industry. That it is so cannot be disputed at all. Indeed, it is a cereals. Mr. D. K. Kapur, learned counsel for the respondents has urged that this is not. He relied upon Brooke Bond India Limited v. Union of India and others, 1980 E.L.T. 65 We do not see how this case helps the respondents at all.
21. What is exempted from duty by item No. 1 of the Schedule to the exemption notification No. 55/75-CE dated March 1, 1975, as amended is 'all kinds of food products and food preparations'. The definition then goes on to 'include' items like meat and meat products, fish and sea foods and grain mill products. Now normally as human-beings we do not consume raw meat or raw fish or raw grain mill products. These are processed and then consumed as food. Nevertheless, meat, vegetables, fish and cereals even in the raw form are food. It is rather a flimsy argument to say that though barley as such may be a grain mill product and fall both under the head food products or food preparations but processed barley will not be so. We have already read in extenso the process by which malt and malt extract is obtained. Barley is like meat or vegetables without being cooked. Surely, mead and vegetables cooked will not attract excise duty. The end use of malt and malt extract for production of children's food or alcohol is wholly irrelevant. We have to see the product as manufactured. In our opinion, it clearly falls under Entry 1 of the schedule, as barley which is grain mill product has been processed without adding anything except water to make malt and then by further processing in the form of crushing and mixing with hot water after obtaining malt extract.
22. If male or malt extract is used for preparation of processed food made for infants and children it is like sugar being mixed in milk but then the end use has no relevance. The end us may become relevant for these products under entry 19 of the schedule to the exemption notification.
23. Under item or entry 19 of the schedule to the exemption notification what is exempted from duty is all drugs, pharmaceutical and drug intermediates. Now obviously, malt and malt extract is not a drug and the Assistant Collector was right in holding so. But he did not read the entry completely. The drug intermediates are also exempted. The letter dated July 5, 1984 from the Central Food Technological Research Institute clearly states that malt and malt extract when used in pharmaceutical products will have to conform to any of the pharmacopoeia specifications. The institute confirmed that so long as malt and malt extract conform to a particular standard the same could be used in pharmaceutical products. In the I.S.I. Specification for Barley malt filed on record, it is clearly written that though malt is an important basic ingredient for use in brewing and distilling industries, in addition, malt is used for preparing male extract, malt vinegar, processed foods meant for infants and children for medicinal preparations. thereforee, the products of petitioners would qualify under entry 19 as well for claiming exemption from duty. Tariff Advice No. 23/79, dated July 9, 1979 is thus untenable and also liable to be quashed.
24. Faced with the above situation, learned counsel for the respondents strenuously contended that no direction for refund of duty paid under protest from March 1, 1978 should be given as that would amount to unjust enrichment. The contention was that though the petitioners have paid duty under protest they have already recovered the same from their customers and refund of duty now could not be passed on to the customers resulting in the petitioners unjustly enriched. This argument was based on the observations of the Supreme Court in The Newabganj Sugar Mills Co. Ltd. and others v. The Union of India and others : 1SCR803 . We may read the observations of Krishna Iyer, J. in that case to understand in what circumstances and in what context this concept was evolved. His Lordship started the judgment thus :
'We should have made short shrift of this batch of appeals on the brief but fatal ground that the appellants all sugar millers who had over-priced this essential consumer article and had failed in their challenge of the controlled price had no moral nor legal claim to keep the huge sums which the High Court had rightly directed them to disgorge. When the price of 'levy sugar' was pegged down by the State, these factory owners rushed to the Court impeaching the validity of the control and secured a stay of operation of the order. Under cover of the Court's stay order which was granted, on bank guarantee for the excess price being furnished to the Court, the appellants sold sugar at free market rates - a euphemism for black-market racket - unfortunately, with judicial sanction. Crores of rupees were admittedly funneled into the millers, tills. But, eventually, the High Court upheld the control of price and the unhappy obligation to restore the unjust enrichment arose. The High Court, whose process kept the control price in cold storage, had to do justice by the community of consumers who were the unwitting victims of this judicially declared holiday from control which was quickly converted into a fleece-as you-please seller situation.'
25. Mr. Kapur also relied upon Hyderabad Asbestos Cement Products Ltd. and another v. Union of India, 1980 E.L.T.735 A Bench of this ......Court made certain observations in para 32 of the judgment, which can only be regarded as obiter. After upholding the validity of the imposition of the excise duty and noting that the question of refund did not arise, it referred to the observations of V. R. Krishna Iyer, J. in M/s L. H. Sugar Factories and Oil Mills v. Union of India S.L.P. No. 1330 of 1975, decided on 10-7-1975 and said the question of refund would not have arisen in any case.
26. A learned Single Judge of this Court in his judgment dated November 6, 1984 in Civil Writ No. 123 of 1980 in M/s Delhi Bottling Co. Pvt. Ltd. v. Union of India and others, also took the same view but there is no discussion in his judgment as to why he took that view. In Union of India and others, Ahmedabad . and others, 1984 E.L.T. 246 a Bench of the Gujarat High Court observed that the provisions of Section 11B of the Central Excise Act should be read subject to the provisions contained in Section 64A of the Sale of Goods Act. thereforee, it would be the ultimate buyer who would be entitled to remission or refund of the excise duty paid under mistake of law and not the manufacturer.
27. In our respectful opinion, the Gujarat view cannot be said to be correct. Section 11B of the Excises Act clearly lays down that limitation of six months shall not apply where any duty has been paid under protest. The question of Sale of Goods Act being attracted does not arise. Excise is a statutory levy if recovered in accordance with the provisions of the statute or the notification issued there under. If there is an illegal levy and the duty is paid under protest refund can be claimed without the bar of limitation. As far as the question of unjust enrichment is concerned, one would be inclined to act on that theory and in its discretion this court may refuse refund if there is undue delay or the mistake of fact or law has been discovered after long long time. In the present case, the petitioners protested to the payment of duty with effect from March 1, 1978. They approached this court in the first week of January 1981 after the passing of the order of the Assistant Collector dated October 7, 1980, inter alia, basing his decision on the Tariff Advice dated July 9, 1979. There was neither delay nor laches. The Supreme Court in the case usually relied upon evolved a procedure and made the observations relied upon in the circumstances set out in the paragraph that we have already extracted from the judgment of Krishna Iyer, J. The law otherwise to us is very clear. In M/s D. Cawasji and Co. etc. etc. v. State of Mysore and another, : 1978(2)ELT154(SC) , the Supreme Court held that where a suit lies to recover moneys paid under a mistake of law, a writ petition for refund of tax within the period of limitation prescribed i.e. within 3 years of the knowledge of the mistake, would also lie. For filing a writ petition to recover the money paid under a mistake of law, the Supreme Court held 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 Calcutta High Court in Union Carbide Co. Ltd. v. Assistant Collector of Central Excise and others, 1978 E.L.T (J 180) dealing with the theory of unjust enrichment held that the State had no right to collect unauthorised tax or illegal tax. Good fiscal administration enjoins that all lawful taxes should be properly collected and taxes which are not due if realised by the State should be refunded. Such fiscal administration alone ensures the atmosphere of tax compliance. The Bombay High Court in Associated Bearing Company Limited v. Union of India and another, 1980 E.L.T. 415 has taken the same view. We are, thereforee, in good company when we hold that petitioners are entitled to refund of excise duty paid under protest from March 1, 1978.
28. In the view that we have expressed, we quash the Tariff Advice No. 23/79 dated July 9, 1979 and the assessment proceedings culminating in the order of the Assistant Collector, Central Excise, Rohtak passed on October 7, 1980. As far as the order of the Collector, New Delhi is concerned, it remanded the matter back to the Assistant Collector, who will now dispose of the matter in accordance with the law laid down by us. The petition is accepted. The rule is made absolute. Petitioners would be entitled to costs Counsel fee Rs. 2,000.