Chandrasekhara Menon, J.
1. The petitioner is the proprietor of a small scale Industrial unit known by the name 'Royal Smiths'. It has its establishment at Kunnamkulam, Trichur District. He is manufacturing steel furniture for home consumption. By Notification dated 30.4.1968, marked in the case as Ex. Pl, Small scale industries whose turnover during a financial year does not exceed rupees 2 lakhs were given exemption from payment of excise duty on the goods cleared upto a value not exceeding Rs. 50,000/-. The exact wording of the notification would be important. So the relevant portion of which is extracted below:
'In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts steel furniture falling under item No. 40 of the first schedule to the Central Excise and Salt Act, 1944 (1 of 1944) upto a value not exceeding rupees fifty thousand, cleared on or after the first day of April in any financial year by or on behalf of a manufacturer from one or more factories for home consumption from the whole of the duty of excise leviable thereon: -
(1) this exemption shall not be applicable to such manufacturer whose value of steel furniture so cleared during such financial year exceeds Rs. two lakhs'.
2. During the financial year 1969-70 the petitioner had cleared goods worth Rs 1,44,241-50. In the light of Ex. Pl he was entitled to exemption from payment of excise duty. Excise duty for the year had been paid duriug the year between 2.4.1969 and 24.9.1969. The last payment was on 24.9.1969. The petitioner states that as he was not sure whether the total turnover would not exceed rupees two lakhs by the end of the financial year so that he may be entitled for exemption, he was paying excise duty during each transactions. As per Ex. Pl as the petitioner was entitled to refund of the excise duty which came to Rs. 10.000 an application for refund was filed on 29.3.1971 well within the period of limitation of one year from 31.3.1970, the end of the financial year 19.9.70. The 1st respondent considering that the claim is put forward after the period of limitation issued a show cause notice to show reasons why the claim should not be rejected as time barred. This is marked as Ex. P2 in the case. It is stated in Ex. P2 that 'in the present claim, it is seen that duty was paid between 2.4.1969 and 24.9.1969. The original claim of the party was seen to have been preferred only on 29.3.1971, i.e., after more than the statutory time limit of 1 year laid down in Rule 11 of the Central Excise Rules. The claim is thus time barred and is liable to be rejected.' The arguments of the petitioner was repelled by the 1st respondent and the claim petition was rejected by order dated 13-11-1972.
3. Against this order the petitioner filed an appeal to the Appellate Collector of Central Excise, Madras. In the appeal the petitioner took up the contention that he had remitted the excise duty on all the clearances but after the close of the year it was found that the production fell short of the expectation, and therefore the Assistant Collector was wrong in rejecting the claim for refund on the ground of limitation. The appeal was rejected by the 2nd respondent. He was also of the view that the period of limitation would start from 24.9.1969 and not from 31.3.1970. Ex. P4 is that order.
4. Against Ex. P4 order the petitioner filed revision petition to the Government) of India : Ex. p5 is the copy of the revision memorandum where the, petitioner put forward his contention that his claim is not barred by limitation at all. But this revision was rejected by the Union Government, Ministry of Finance by its order Ex. P6. The relevant portion of Ex. PS reads :
'Government of India have considered the points raised in the revision application and observe that the duties of which the refund is claimed were actually paid between 2.4.69 to 24.4.69; there was no production or clearance from October 1969 onwards. The petitioners had, therefore, sufficient time to file the claim for the refund for the earlier payments well within the time limit, prescribed under the Central Excise and Salt Act, 1944.'
5 In this O.P the petitioner seeks to quash Ex. P6 order of the respondent by which his claim has been rejected. It is contended that according to the terms of Ex. PI notification, the petitioner will be entitled for exemption from payment of excise duty only if his total turnover does not exceed rupees 2 lakhs by the end of the financial year 1969-70 viz., 31.3.1970. Excise duty is being paid as and when sales are effected. It is not as if that a refund application should be filed whenever excise duty is paid. The petitioner also could not refuse to pay excise duty when sales are effected because he cannot be sure whether his total turnover will not exceed rupees two lakhs by the end of the financial year. Therefore only after the end of the financial year he can know whether he is entitled for exemption from payment of excise duty as per Ex. PI Notification. According to him the date on which he will become entitled for claiming exemption is 31.3.70. The computation of the period of limitation will, therefore, commence only from 31.3.70. The petitioner had filed a claim petition on 29.3.71, and therefore it is urged that his petition is well within the period of limitation of one year as provided under Rules 11 and 173 J of the Central Excise Rules. The Rules read :
'Rule 11.-No. refund of duties or charges erroneously paid unless claimed within three months. No duties or changes which have been paid or have been adjusted on an account current maintained with the Collector under Rule 9 and of which repayment wholly or in part is claimed through inadvertence, error, misconstruction, shall be refunded (unless the claimant makes an application for such refund under his signature and lodges it with proper officer) within three months from the date of such payment or adjustment, as the case may be. Rule 173J-Time limit for recovery of short levy or refund of excess levy. The provisions of Rules 10 and 11 shall apply to the assessee as if for the expression, 'three months' the expression one year were substituted in these rules.'
Rules of Procedure 20 in confirming 173J states that 'by virtue of a specific provision in Rule 173J the time bar for recovery of short levy or refund of excess levy under Rules 10 and 11 have been extended to one year instead of the time limits of three months for recovery/refund under the normal procedure for clearance.
6. I think the petitioner should succeed in this O.P. The view of the authority is that the claim should have been filed within one year from 24.9.69, which is the last day of payment of duty by the petitioner in respect of the year concerned. As the petitioner points out in his revision memorandum before the Government of India suppose if there is payment of duty after 24.9.1969, according to the Authorities the last date should be taken for counting limitation. If that be case, payment made upto 31.3.69 should be taken in a lump and the claim should be a consolidated one for the entire payments effected in that financial year ended on 31.3.70. On the payment of the duty on 24.9.69 it cannot be taken finally at that time that there need not be any payment of excise duty. It is only at the end of the financial year that one can know whether he is entitled for exemption from payment of excise duty as per Ex. Pl notification. As the petitioner pertinently points out in the O.P., it is not as if that a refund application should be filed whenever excise duty is paid. One cannot refuse to pay excise duty when sales are effected, because one cannot be sure at that time whether his total turnover will or will not exceed rupees two lakhs by the end of the financial year. Moreover, if the view of the respondents is correct the period of limitation for claiming refund during different periods between 2.4.69 and 24.9.69 will start from different dates. For example to claim refund for payment of excise duty on 2.4.69 the period of limitation will commence from 2.4.69 and so on. I do not think that Ex. Pl contemplates that.
7. The period of limitation will only commence from the last date of the year and in that view the petitioner's application should not have been rejected as time barred.
8. Therefore, I allow this O.P. and declare that Exs. P6 and P4 order of the third and 2nd respondents respectively and order No. 7/40/18/32/72 dated 30.11.72 of the 1st respondent are illegal and that the claim petition filed by the petitioner is within the period of limitation and would direct the 1st respondent to consider the petitioner's claim for refund in accordance with law on the basis that it has been filed within the period of limitation.
O.P. is disposed of as above, but I make no order as to costs.