Calcutta High Court
Gonterman Peipers (India) Limited vs Additional Secretary To The Government ... on 5 May, 1986
Equivalent citations: 1987(13)ECC33, 1991ECR286(CALCUTTA), 1986(26)ELT471(CAL)
JUDGMENT Ajit Kumar Sengupta, J.
1. In this application under Article 226 of the Constitution the petitioner has challenged a show cause notice dated 10th September, 1981 issued by the Additional Secretary, Government of India under Section 36(2) of the Central Excises and Salt Act, 1944 for revising the order passed by the Appellate Collector of Central Excise dated 30th April, 1981. The notice dated 27th November, 1981 has called upon the petitioner to pay duty at the rate of 8% under item 68 of the Central Excise Tariff. The facts leading to the issuance of the said impugned notice are stated briefly hereafter.
2. The petitioner manufactures cast iron rolls and cast steel rolls. Central Excise duty under the Central Excises and Salt Act, 1944 (hereinafter referred to as the said Act) was at all material times leviable on the manufacture of the said Cast Iron Rolls and Cast Steel Rolls under. Item Nos. 25 and 26AA. respectively of the First Schedule to the said Act. The duty leviable under the said Act was exempted from time to time either wholly or in part under the various notifications issued under the provisions of the Central Excise Rules, 1944 (hereinafter referred to as the said Rules), During the period when the duty was exempt only in part, the Central Excise authorities levied and collected duty on Cast Iron Rolls under Item No. 25 and Cast Steel Rolls under Item No. 26AA.
3. Cast Iron Rolls are being manufactured by the petitioner since the year 1968 and cast steel rolls since the year 1969. Till March 1, 1975 it was the admitted position that cast iron rolls and cast steel rolls were classifiable under Item No. 25 and Item No. 26AA. respectively of the First Schedule, to the Central Excises & Salt Act, 1944 (hereinafter referred to as the said Act). On the aforesaid basis exemptions under notifications No. 74/62 C.E. dated April 24, 1962 and 133/65 C.E. dated August 20, 1965 were granted to the petitioner in respect of cast iron rolls and cast steel rolls respectively.
4. On March 1, 1975 item No. 68 was inserted in the First Schedule to the said Act providing for levy of duty on all other goods not elsewhere specified. After insertion of the said item No. 68 the Central Excise authorities started taking the view that duty in respect of cast iron rolls was payable under Item No. 68 and not under Item No. 25. While approving the classification list filed by the petitioner on January 11, 1978, the Assistant Collector, by his order dated July 11, 1978 made on the said classification list, held inter alia, that cast iron rolls would be liable to duty under item No. 68. Similarly while approving the classification list filed in respect of cast steel rolls the Assistant Collector by his order dated October 6, 1977 (made on the said classification list itself) held inter alia that the said cast steel rolls before machining would be liable to duty under item No. 26AA. and after machining the same would be again liable to duty under item No. 68.
5. The petitioner filed appeals against the said orders dated July 11, 1978 passed in respect of cast iron rolls and October 6, 1977 passed in respect of cast steel rolls. Both the said appeals were taken up for hearing by the Appellate Collector and by a consolidated order dated April 30, 1981 the Appellate Collector held inter alia that the said cast iron rolls and cast steel rolls are covered by item Nos. 25 and 26AA. respectively and that the same could not be classified under item No. 68. It was further held that it would not be correct to classify the said products under item No. 68 which was meant for goods not falling under any other item of the Central Excise Tariff. The orders passed by the Assistant Collector on July 11, 1978 and October 6, 1977 on the said classification lists were set aside and directions were given for refund of the amounts realised in respect of the said products under item No. 68.
6. Thereafter, the Additional Secretary, Government of India issued the said notice dated September 10, 1981 as stated hereinbefore. By the said notice the Additional Secretary also directed that the said order dated April 30, 1981 passed by the Appellate Collector should be kept in abeyance pending the decision by the Central 'Government.
7. The petitioner thereafter made the present application under Article 226 of the Constitution before this Court challenging the said notice and the proceedings initiated pursuant thereto.
8. During the pendency of the writ application the provisions of the Act were amended. Section 36 of the Act under which the said notice dated September 10, 1981 was issued has been substituted. In respect of proceedings which had already been initiated under the unamended Section 36 of the Act, the amended provisions provide for transfer to and hearing of such proceedings by the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as the Tribunal).
9. The validity of the said notice dated September 10, 1981 and the proceedings initiated thereunder has to be judged with reference to the provisions of Section 36 of the Act as it stood at the time of initiation of the said proceedings. The substituted Section 36 has no application.
10. It is contended by Mr. R.N. Rajoria learned Advocate appearing for the petitioner that the said notice "dated 10th September, 1981 issued by the Government of India is wholly illegal, invalid and without jurisdiction inasmuch as none of the conditions precedent for assumption of jurisdiction under Section 36(2) of the said Act exist and/or has been complied with. It is contended that unless there are materials on record for assuming jurisdiction under Section 36(2) of the Act from which it could appear that the order sought to be revised is not correct, legal or proper. It is contended that there are no such materials on record for arriving any such satisfaction for initiation of proceeding in the instant case. The contention is that the order of the Appellate Collector which is sought to be revised is correct, legal and proper and no reasonable person on the materials could entertain any belief that the said order is not so.
11. On the other hand, it is contended by Mr. N.C. Roy Chowdhury learned counsel appearing for the respondents that the present application is not maintainable. The petitioner has challenged the notice to show cause. This cannot be done in the writ jurisdiction. He has relied on a decision of the Supreme Court in the case of Geep Flash Light Industries Limited v. Union of India and Ors. . In that case a notice dated 10th February, 1975 issued under Section 131(3) of the Customs Act, 1962 prior to its amendment was impeached. The contention of the appellant was that the power of suo motu revision under Section 131(3) of the Customary Act in so far as it relates to a case of non levy or short levy of duty must be exercised within the period of limitation prescribed in Section 131(5) of the Act. In short, the appellant's contention was that the power of suo motu revision contained in Section 131(3) of the Act is subject to the provisions contained in Section 131(5) of the Act. The provisions contained in Section 131(3) of the Act are as follows:
'The Central Government may of its own motion annul or modify any order passed under Section 128 or Section 130'.
The Supreme Court in that case held thus:
"The Appellant's prayers for writs of certiorari and mandamus are misconceived. There is no order either judicial or quasi-judicial which can attract certiorari. No mandamus can go because there is nothing which is required to be done or forborne under the Act. The issue of the notice in the present case requires the parties to represent their case. There is no scope for mandamus to do any duty or act under the statute. A writ of prohibition cannot be issued for the obvious reason that the Central Government has jurisdiction to revise".
12. It is therefore contended that Section 36(2) of the Central Excises and Salt Act being in similar term, the High Court cannot quash the notice issued under Section 36(2) of the Act. It is contended that this Court is not concerned with the merits of this case but would only consider whether Central Government on the date it had issued the said notice had jurisdiction or power to issue such a notice revising the order of the Appellate Collector.
13. I am, however, unable to accept this contention. Under Section 36(2) of the said Act, as it is stood at the relevant time, the Central Government was empowered to call for and examine the records of any proceeding in which any decision or order was passed under Section 35 or Section 35A for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and to pass such order thereon as it thought fit. It is therefore evident that there are certain conditions precedent to be complied with for assumption of jurisdiction under Section 36 of the said Act. The condition is that no proceeding under Section 36(2) could be initiated unless on proper materials and reasons and on examination of the records of the proceedings the Government could be satisfied that the order sought to be revised is not correct, legal or proper. There must be sufficient materials on the record for assuming jurisdiction under Section 36(2) of the said Act from which it could appear that the order sought to be revised is not correct or legal or proper. The officer concerned cannot proceed on his subjective satisfaction. The satisfaction must be based on objective factors and when the challenge is thrown that the conditions precedent are not satisfied the Court would examine the records to find out whether there are materials and if so whether on such materials, it could be said that the order of the Appellate Collector which is sought to be revised is not correct, legal or proper.
14. The respondents were given liberty to produce the relevant records as regards the issuance of show cause notice dated 10th September, 1981. Inspite of adjournment granted the relevant file has not been produced. The records which have been produced do not contain the records relating to the issuance of the said notice. The Assistant Collector of Central Excise by his letter dated 14th February, 1986 addressed to the Superintendent (Law) Central Excise, Calcutta-1 Collectorate intimated inter alia as follows:
"As desired the original case file No. V(26AA)(3) 26/Cal-V/VC/73 (Loose) of M/s. Gonterman Peipers (I) Ltd. is sent herewith for necessary action at your end. It would be evident from P. 185 and 219 that other connected case records have been sent to Senior Technical Officer (RA) Government of India, Ministry of Defence (D.R.) New Delhi".
15. At page 185 of the file referred to above and produced before this Court there is a letter from Superintendent (Appeals), Central Excise, Calcutta dated 13th August, 1981 addressed to S. Ganguly, Senior Technical Officer (RA) Government of India, Ministry of Defence, (DR) that the Assistant Collector had been directed to forward the original case file No. V/26AA/3/26/Cal.V/73 and V/68/3/106/Cal.V/75 direct to him. At page 219 of the file the copy of the parawise comments to the writ application are found. There at para 4(e) it is stated that the connected papers have been sent to Additional Secretary, Government of India, New Delhi. The respondents have withheld the records which would have indicated if there were any materials before the Revisional Authority for arriving at the satisfaction as enjoined by Section 36(2). The affidavit in opposition has not been affirmed by the Additional Secretary, the respondent No. 1 who issued the impugned notice. It is affirmed by the respondent No. 4, the Assistant Collector of Central Excise on behalf of all the respondents. The, material averments made in the said affidavit are based on information derived from records. When the said affidavit was affirmed on 20th July, 1983 the deponent did not have the record relating to the issuance of the impugned notice. Even then the said deponent affirmed the affidavit stating therein that the information was derived by him from the records when admittedly the relevant records were not before him.
16. In the file which has been produced before this Court there is nothing to indicate that there was any material to arriving at the alleged satisfaction for initiation of the said proceedings under Section 36(2). There is no document or evidence in the said file on the basis whereof the alleged satisfaction for issuing the said show cause notice could be arrived at. If the Court comes to the conclusion that the show cause notice itself is without jurisdiction, the Court has the power to set aside such a notice. If the Court does not interfere at this stage then that the assessee has to move the revisional authority and if that authority ultimately comes to definite finding that the order of the Appellate Collector was correct, legal or proper, then and then only the assessee can challenge such finding. This would only involve multiplicity of proceedings. The notice must be based on prima facie grounds which would show that the order sought to be revised by the authority is wrong, illegal or incorrect. In Duncan Agro Limited v. J. Banerjee and Ors. reported in 1984 ECR 1140 a show cause notice was issued by the Central Board of Excise and Customs under Section 35A of the Central Excises and Salt Act, 1944 was impugned. There I have held that where there is no question of any further investigation of fact and on the undisputed fact the notice and/or order of the Revenue Authority appears to be illegal, the High Court can interfere in such case under Article 226 of the Constitution of India. In that case the Board with a view to revise the order passed by the Assistant Collector issued the impugned notice giving the grounds therefor. The jurisdiction of the Board to issue the said notice depends on whether the grounds are sustainable or not. On the facts it was held that the grounds were exfacie untenable and accordingly the notice was quashed.
17. In the case of Godrej & Boyce Manufacturing Co. Pvt. Ltd. v. Union of India the Bombay High Court held as follows:
'The respondents also contend that they, should be allowed to proceed with the show cause notice. It is open to the petitioner to go in appeal from the orders that may be passed in respect of the show cause notices. The respondents submitted that Article 226 of the Constitution should not be resorted to at the stage of the issue of show cause notices. In the present case however, the show cause notices are wholly without jurisdiction and hence the respondents can be prevented from proceeding with show cause notices. In the case of Light Roofing Ltd. v. Superintendent of Central Excise, Kancheepuram and two Ors. reported in 1981 ELT 738 (Mad) the Madras High Court held that if the show cause notice was void illegal and barred by limitation the High Court was competent to intervene by way of a writ under Article 226 of the Constitution and it could quash the illegal notice".
18. The Supreme Court in the case of East India Commercial Co. Ltd. v. Collector of Customs reported in AIR 1962 SC 1898 has observed at page 1903 thus:
"If on a reading of the said notice 'it is manifest that on the assumption that the facts alleged or allegations made herein were true, none of the conditions laid down in the specified sections was contravened, the respondent would have no jurisdiction to initiate proceedings pursuant to that notice. To state it differently if on a true construction of the said two sections, the respondent has no jurisdiction to initiate proceeding or make an inquiry under the said sections in respect of certain acts alleged to have been done by the appellants, the respondent can certainly be prohibited from proceeding with the same." In Manoj Tin Containers v. Union of India and Anr. reported in (1984) SCC 386 Division Bench of the Madhya Pradesh High Court held that if the Assistant Collector had no jurisdiction to issue the notice impugned there, even though an alternative remedy was available the writ petition could be entertained.
19. The preliminary contention of Mr. Roy Chowdhury therefore, must fail.
20. I shall now turn to the merits of this case. The impugned notice is in the following terms:
"The brief facts of the case as seen from the case records are that the assessee submitted classification lists claiming iron base rolls and steel base rolls manufactured by them to be classifiable under Tariff Item Nos. 25 and 26AA(5) of the Central Excise Tariff as casting. The Assistant Collector, however, held that the subject goods should be assessed under Tariff item 68 in as much these goods were delivered in finished condition i.e. after machining/grinding/polishing when the goods have already acquired identity as machine parts.
The assessee being aggrieved by the Assistant Collector's above decision filed appeals before the Appellate Collector who allowed the appeals on the ground that steel or iron castings continued to remain are machined and could not, therefore, be classified under Tariff Item 68.
On examination of the case records the Central Government is tentatively of the view that the order of the Appellate Collector of Central Excise, Calcutta is not proper, legal and correct for the following reasons:
(i) It is a process of manufacture which should be guiding factor for classification for such product. If the product has been subjected to only the process of castings, it would be covered under item 25 or 26AA as the case may be. However, if any process other than casting are employed on such product, the goods would appear to fall under item 68 as such casting thereby acquired the character of recognisable machine part as distinguished from more casting.
(ii) In the present case it appears that the base rolls which were cast initially had undergone certain processes like machining, polishing etc. which gave them a distinct shape and character as machine parts and as such these could no longer be classified as mere castings under Item 25 or 26AA(5) as the case may be'.
21. It therefore appears that the said notice has been issued on the allegation that the castings manufactured at the factory of the petitioner become different goods after machining/polishing etc. In paragraph 2 of the writ petition the petitioner has set out the process of manufacturing of the said cast iron and cast steel rolls. The petitioner buys old and used duty paid scrap from the market. Such scrap is melted at the factory of the petitioner and molten metal is poured into the ladles/mounds. The molten metal is thereafter allowed to cool down and after cooling down it gets solidified. The foreign materials, runners and risers etc. are thereafter removed from the rolls. The rolls are then fettled and rough turned. However, the castings in the aforesaid stage are generally not saleable in the market and to make them saleable same finishing and polishing work has to be undertaken. Such iron castings, however, continue to remain in crude form. This according to the petitioner is the process of manufacture of cast iron rolls. Similar is the process of manufacture of cast steel rolls. The said process has not been disputed by the respondents. In paragraph 12 of the petition it has been stated by the petitioner that the cast rolls cleared from the factory of the petitioner are and continue to remain castings. The finishing and/or polishing work undertaken at the factory of the petitioner to remove foreign materials, runners and risers etc. does not and cannot make or convert the said castings into machine parts. The said processes are undertaken only to make the castings marketable. The customers of the petitioner in fact have to convert the said castings into machine parts as per their own requirements by employing machining/turning/processing like groove cutting and grinding etc. In this connection certificate from the Bhilai Steel Plant of the Steel Authority of India Limited, one of the major customers of the petitioner's product has been annexed to the petition. The said certificate is to the following effects:
"This is to certify :-
(i) that all varieties of Rolls of Cast Iron or of Cast Steel/Steel Base qualities supplied earlier or being supplied to us by M/s Gonterman Peipers (India) Ltd., 68, Ganesh Chandra Avenue, Calcutta-13 are Castings /blanks i.e. made by Casting process and that to the best of our knowledge the said supplier are equipped for the supply of Cast/blank-Rolls only.
(ii) that all cast Rolls supplied by above supplier M/s Gonterman Peipers (India) Ltd., are not completely finished products for direct use for our Mills but they require certain further machining/turning/ processing like groove cutting and grinding etc. before they are put into use in our Mills of Bhilai Steel Plant, Bhilai (M.P.)."
Apart from referring to a Trade Notice and making certain general denial, factual' statements made in paragraph 22 of the writ petition as stated hereinbefore have not been denied by the respondents nor did the respondents dispute the correctness of the said certificate from Bhilai Steel Plant.
22. The facts are therefore undisputed. From the impugned notice dated 10th September, 1981 and averments made in paragraph 22 of the affidavit-in-opposition, it would be evident that the only reason for initiating the said proceeding is that according to the respondents the casting process is complete when the product is taken out of moulds. According to the respondents, it is only mere Castings taken out of the Moulds which would be covered by item Nos. 25 or 26AA as the case may be. Thereafter when further process is undertaken and they are further subjected to machining and finishing, the Castings become distinct machine parts to be used as parts of Rolling Mills attracting duty under Tariff Item 68. Thus the respondents contend that the Castings represent only the rough substance as it comes out of the moulds before being subjected to any other process. The contention however cannot be accepted for more than one reason.
23. Section 2(f) of the said Act defines the expression manufacture to include any process incidental or ancillary to the completion of the manufactured product. In so far as the castings are concerned, the same are not marketable in the condition in which they come out of the moulds. The castings at this stage are not finished castings. For making the said rough substance coming out of the moulds a marketable product, finishing operation has to be undertaken. In such finishing operation some machining work is also involved. Foreign materials, runners, risers etc. have to be removed from the said rough substance and the polishing work is also to be undertaken. However, due to the aforesaid there is or can be no question of the castings being converted into an identifiable machine part. The said finishing/polishing operations are undertaken only to complete the manufacture of the castings. Such finished cast iron rolls and cast steel rolls are known and dealt with in the market as cast iron rolls and cast steel rolls respectively. The said products are never known, dealt with or regarded in the market as finished machine parts. For making machine parts out of the said cast iron rolls and cast steel rolls manufactured at and cleared from the factory of the petitioner, the customers concerned have to undertake various processes such as groove cutting, grinding, combering etc. This would also be evident from the said certificate of the Bhilai Steel Plant.
24. In this connection reference may be made to the findings of the Appellate Collector in the case of Tata Yodogwa Ltd. There the point for consideration was whether the product manufactured by the said Tata Yodogwa Ltd., namely, Cast Iron Rolls are classifiable under Tariff Item No. 25 as 'Iron Cast in any other shape or size' or that the said Cast Iron Rolls after undergoing certain manufacturing processes, has emerged as a new and different product classifiable under Tariff Item No. 68 as "all other goods, not elsewhere specified".
25. It was contended there that the castings at the crude stage are not finished castings and cannot be sold in the market unless it undergoes further process of finishing/polishing and to conform the said castings to the specifications of the customers. The finishing operation only completes the casting, it does not produce any new article or goods. Such finished cast iron roll is known in the market as cast iron. It retains its charter, identity nomenclature of casting even after finishing and by such process no new article emerges having any different identity, character, use of nomenclature. The buyers place order for cast iron rolls or use the same and treat and regard the. finished roll only as cast iron roll. It is never used as an integral part of any machinery nor can it be used temporarily in aid of any machinery without undergoing further processing of the said cast iron oil at the user's end. In support of the said contention M/s. Tata Yodogwa Ltd. relied on letters issued by Indian Iron and Steel Co. Ltd., Burnpur, The Tata Iron & Steel Co. Ltd., and Steel Authority of India Ltd. The Appellate Collector recorded the contents of the said letter as follows:
"The purport of the above letters are that all cast iron rolls supplied by the appellants are castings, i.e. made by casting process and that all cast rolls which have been supplied by the appellant to the above mentioned parties are not completely finished products for direct use in their mills, they require certain further machining/processing like groove cutting, grinding, cambering etc. before they could be put into use at the other end. M/s. Indian Iron & Steel Co. Ltd., in their letter dated 26-9-1977, produced by the appellant during the personal hearing, have further stated that the bulk of their requirement of rolls of these qualities are obtained from M/s. Tayo Jamshedpur. These rolls are manufactured by castings process and the manufacturers machines the journals and driving end of the rolls only. Any size of roils of any quality used in any types of Mills would require subsequent machining, grinding and other operations at the user's end to make them suitable for use in the Mills. For this, we are to maintain a separate department 'Roll Turning Shops' with sub-sections manned by highly skilled staffs and workers for effecting these jobs to make the rolls suitable for use in the Mills.
As such, the rolls as supplied by the roll manufacturers are never a finished product for the Rolling Mills and it can never be used as they are obtained from roll makers."
26. It is thus evident that the steel plants who mainly buy the said cast rolls from the petitioner and similar other manufacturers of cast iron rolls and cast steel rolls have to maintain huge workshops for manufacture of the machine parts according to their requirements out of the case rolls so purchased. By using the cast roll various machines parts can be made. The further processing/machining/groove cutting/grinding/ cambering etc. undertaken by the said steel plants depends upon the particular machine part which they want to manufacture out of the cast rolls in question. It is only after such detailed processes at the said workshops of the steel plants and other purchasers that the machine part comes into existence. There can be therefore no question of the said rolls cleared from the factory of the petitioner being regarded as the machine parts.
27. Neither the Assistant Collector to his orders dated 11th July, 1978 and October 6, 1977 or the Government of India in the said show cause notice dated 10th September, 1981 nor the Assistant Collector of Central Excise who affirmed the affidavit in this proceeding mentioned about the processes undertaken by the petitioner by which the said Cast rolls are allegedly converted into identifiable machine parts. The bare allegation is that the said cast rolls were delivered from the factory of the petitioner in finished condition i.e. after machining, grinding and polishing by which the said cast rolls acquired identity as machine parts. As indicated earlier and as found as a fact by the Appellate Collector in the case referred to above that the said processes are undertaken simply to make the castings marketable. The Steel Plants have also corroborated the said fact. There is thus no material whatsoever on record nor any evidence has been adduced in support of the contention that any identifiable machine part is manufactured at the factory of the petitioner.
28. In issuing the impugned notice, the respondents proceeded on assumption of fact. The assumption is that by the said machining and polishing etc. a distinct shape and character is given to the said products. This assumption has no basis. The product acquires the shape as and when it comes out of the mould. The cast rolls when taken out of the mould emerge in the shape, size and form of the roll in which it was cast.
29. Item No. 25 of the First Schedule to the said Act covers, inter alia, iron cast in any shape or size. Similarly Item No. 26AA of the First Schedule to the said Act covers all steel castings. There is absolutely no restriction whatsoever in the said item Nos. 25 and 26AA that the castings, in order to be covered by the said items, must not be subjected to any process or that they should be rough castings as they came out of the mould. If a product is iron casting, the same would be covered by the item No. 25 alone and if a product is still casting the same would be covered by the item No. 26AA alone. The fact that such casting is capable of being used as a machine part does not alter its basic character as castings. Item Nos. 25 and 26AA do not provide that castings which can be used as machine parts would not be castings under the said Tariff Items. On the other hand the said items seek to include castings in any shape or form. The cast iron and cast steel rolls are admittedly iron castings and steel castings respectively but according to the respondent No. 1 after machining and polishing it ceases to be so and acquires a distinctive shape and character as machine parts. The said products cannot be taken out of the purview of the Item Nos. 25 and 26AA as castings even if any machining is done. The basic fact is that the said cast iron rolls and cast steel rolls are made by the process of casting and the same are iron castings and steel castings which can be covered only by item Nos. 25 and 26AA respectively. When a particular product comes under a specific item of the Tariff Schedule, it cannot at the same time fall under the residuary item 68 of the Tariff Schedule. A product which is specifically made chargeable under a distinct head cannot be brought to a charge under a different head in lieu of, or in addition to, being charged under a specific head. The charge under the specific head is obligatory on the Department which has no option in the matter. The effect of the tariff schedule is to classify the product under different heads according to the character of the product for the purpose of duty. Even if the assessee has shown a product under a wrong head, even then the Department cannot levy duty on the basis of such admission. In any event, if a case appears to fall within either of the two heads, it is the right of the assessee to claim that he should be taxed under one which leaves him with a lighter burden. It is now well settled that when a specific head covers the product, the residuary head cannot be called in aid. Item 68 of the Tariff Schedule does not come into operation until the preceding heads are excluded. This residuary head can be resorted to only if none of the specific heads is applicable to the product.
30. Admittedly, prior to finishing, the said cast iron roils and cast steel rolls are covered by Item Nos. 25 and 26AA respectively. The machining and/or finishing of the said rolls does not and cannot change the said product so as to make them altogether a new and different product. By machining and finishing the basic product is not changed. What is machined or finished is the product already in existence. When the castings are made they became distinct products as cast. Whether one casts a machine part, pipe, man-hole cover or railway sleeper, it is the casting that counts. The already cast material cannot become a different and distinct material by finishing or machining. Accordingly the castings do not cease to be so by machining or finishing to goods different from that cast comes into existence. Item No. 68 of the First Schedule accordingly does not and cannot have any application. The said products are classifiable only under Item No. 25 or Item No. 26AA as the case may be and there can be no question of the same being again covered after machining by Item No. 68 which is a residuary item.
31. The view I have taken is supported by the decision of the Patna High Court in the case of Tata Yodogwa Limited v. The Assistant Collector of Central Excise reported in 1983 ELT 17. There the question before the Patna High Court was whether the Steel Castings are liable to duty under Item 26AA(V) of Central Excise Tariff or under Item 68. Patna High Court was of the view that merely because some machining or polishing is being done on the products, the basic character of such products as castings does not alter. It was further held in the said decision that item No. 26AA does not speak about semi-finished or finished castings and that since the manufacture is not complete until all the processes incidental or ancillary to the completion of the manufacture have been carried out, it cannot be said that semi-finished castings are excisable as Castings and after cleaning, machining and polishing the same are again liable to duty under item No. 68.
32. The Patna High Court observed thus:
"According to the appellate authority, if at the time of casting the end use of - that casting as part of a certain machinery is already known, duty is payable as identifiable machine part. If that is the position in law, the Steel Casting of the petitioner are excisable at one point only and under Item 68. But that is not the case of the respondents. Moreover as laid down by the Supreme Court in Dunlop's case (Supra) if the goods can be clearly classified under a particular tariff item then it must be classified under that item and the ultimate use of the goods cannot be taken note of for the purpose of its classification. The reasoning of the appellate authority cannot be accepted.
"It was contended by Mr. Joshi that under Item 26AA(V) all other steel castings not otherwise specified in item 26AA(i) to (iv) are to be classified. According to him this item does not speak about crude steel casting or even finished steel casting and even if at the end of the processing by the petitioner it remains steel casting, the respondents cannot take recourse to item 68 for the purpose of duty on the finished steel casting. This submission was made by Mr. Joshi with reference to Annexure 1. From Annexure T it appears that respondent No. 1 is of the view that semi-finished castings after cleaning, machining, polishing becomes excisable under Item 68. There is no warrant for this reasoning. Item 26AA(V) does not speak about semi-finished and finished castings. In considering a fiscal statute, the language used in the statute cannot be allowed to be strained in order to hold a subject liable to tax (The State of Punjab v. Jullendur Vegetable Syndicate - ).
"According to the definition 'manufacture' in the Act, as interpreted in Hindustan General Electrical Corporation Ltd. (supra), the manufacture of goods is not complete until all the processes incidental or ancillary to have been completed. According to the petitioners it manufacture goods according to the specifications and designs of individual customers and what is excisable is when the goods is finished after completion of all processes according to those specifications and designs. It is in evidence that the petitioners for the purpose of castings of molten steel pours it into moulds of different types depending upon individual customer's ultimate requirements as per its drawing, designs and specifications. It is not the case of the respondents that the molten steel is poured into one particular type of moulds and from these castings thereafter rolls of different designs, drawing and specifications according to customers' order are manufactured. Had that been the case, perhaps duty would have been payable when the casting was taken out of the mould. In this case the whole process from the start to the finish must be held to be 'manufactured' within the meaning of the Act. At no stage the goods become anything other than an item to be classified under Item to be classified under Item 26AA(V). Since there is no difficulty in this case for classifying the goods in question, the respondents cannot take recourse to the residuary item i.e. Item 68 as has been laid down by the Supreme Court in Dunlop's case (Supra). For the reasons aforesaid, it must be held that the goods in question manufactured by the petitioners is steel castings excisable under Item 26AA(V) and at no stage it becomes excisable under Item 68."
33. This decision fully supports the contention of the petitioner. Mr. Roy Chowdhury, the learned Advocate for the respondents has submitted that Special Leave Petition has been filed before the Supreme Court against the said judgment of the Patna High Court. He has submitted that it is a question of fact whether the end-product as commercially known falls under which item. It is the view of the Central Government that the end-product is really a machine part and is not specified in Items 25 or 26AA. Patna decision has not. taken all these factors into consideration nor had it sufficient evidence on record to make the said finding. It appears that the said Special Leave Petition was filed in 1983 being SLP No. 9480/83. But the Supreme Court did not grant any stay as yet of the said judgment. Patna High Court considered the nature of the processes and held that steel castings would come under Item 26AA. Mr. Roy Choudhury has not indicated what evidence the Patna High Court failed to take into account. As indicated earlier primary facts regarding the processes carried on by the petitioner are not in dispute nor the certificates of the Steel Plants considered by the Tribunal in similar cases have been assented.
34. Another contention of Mr. Roy Chowdhury at this stage must be disposed of. It is his contention that in view of the amendment to provisions of Central Excise Act, the provisional application would be decided by the Tribunal to whom the proceedings must be deemed to have been transferred from 11th October, 1982. It will be open to the petitioner to agitate before the Tribunal to decide the jurisdiction and validity of the Notice dated 10th September, 1981. I am, however, unable to accept this contention for more than one reason. Firstly, there is already a decision of the Patna High Court on the identical question. Secondly, there are several decisions of the Tribunal taking the same view on this question on fact and law. It will be, therefore, an idle formality to ask the petitioner to go before the Tribunal and then again come to this Court. I have already held that there are no materials which would justify the issuance of the show cause notice in this case. It was faintly contended that the Tribunal is the fact finding authority and the processes undertaken by the petitioner have to be determined by the Tribunal on the facts of this case. In other words, the contention is that the actual manufacturing processes undertaken by the petitioner is a question of fact and that can only be gone into by the Tribunal and accordingly, the Tribunal should decide this question. I am, however, unable to accept this contention. As indicated earlier, the respondents did not say anywhere that what are the processes undertaken by the petitioner in manufacturing the cast rolls. On the other hand, the processes described by the petitioner have not been disputed. There is, therefore, no question of finding out the actual manufacturing processes undertaken by the petitioner. If it is contended that it is a question of fact, in that event, the finding given by the Tribunal in different cases against the Excise Authority would be binding on them. There cannot be different processes undertaken in the manufacture of cast iron or cast steel rolls by different manufacturers. The steel plants who are consumers of the products manufactured by the petitioner and other similar manufacturers have also categorically stated the process undertaken by them for the purpose of making the casting into identifiable machine parts.
35. My attention has been drawn to several decisions of the Tribunal where the Tribunal found that cast iron rolls have no doubt undergone some machining and polishing after these are taken out of the moulds but such processing are incidental and ancillary to the completion of the casting iron in any other shape or size and for the purpose of converting cast iron into identifiable machine parts certain other processes of manufacturing are still required to be undertaken. Only after completion of further manufacturing process the cast iron rolls can be treated as identifiable machine parts. One of the said decisions is in the case of Jamshedpur Engineering & Machine Manufacturing Company Ltd. v. Collector of Central Excise reported in 1984 (4) Excise Tribunal Reporter p. 591. In that case Tribunal referred to and relied on an earlier decision of the Tribunal in Alloy & Engineering, Trichur v. Collector of Central Excise, Cochin, reported in (1984) 3 E.T.R. 527 and the judgment of the Patna High Court in Tata Yadogwa Ltd. (Supra). There the Tribunal in arriving at its finding relied on the certificates issued by Bharat Engineering Co. Ltd., Iron Steel Products Ltd., Bhilai Steel Plant etc. inter alia, to the effect that cast iron or cast steel supplied by the appellant therein were in incomplete condition and not completely finished products for direct use in their mills, those rolls cannot be considered as identifiable machine parts.
36. It is very significant that the Customs Department contended before the Tribunal in Tata Engineering Locomotive Company Limited v. Collector of Customs reported in 1983 E.L.T. 1122 that the processes such as annealing, straightening, buffing, rough machining, surface protection by metallic or non-metallic coatings etc. were not such as would convert castings into another identifiable article and that the castings still remained only the castings even after the said processes.
37. In that case the question before the Tribunal was levy of additional duty on casting in semi-finished condition under item 25 of the Central Excise Tariff. Under the Customs Tariff Act, 1975 an additional duty equal to excise duty, is levied, Section 3 of the Customs Tariff Act provides that any article which is imported into India shall, in addition, be liable to a duty, (referred to as the additional duty) equal to the excise duty for the time being leviable on a like article, if produced or manufactured in India. In that case before the Tribunal the Customs Department raised the same contention as has been raised before me in this writ application.
38. The Tribunal held as follows:
"During the hearing before us today, the appellants maintained that the subject goods, after being cast, underwent further processes of annealing, straightening, buffing and rough machining and surface protection by metallic or non-metallic coatings in the foreign country before being shipped to India. They stated that after these processes, the goods ceased to be mere iron cast in any shape or size and became semi-finished articles which were not covered by item 25 CET. Since there was no other item of the CET covering such goods at the material time, the goods were free from countervailing duty. The Department's representative stated that the further processes which the goods underwent in the foreign country were not such as would convert that into another identifiable articles and that the goods still remained iron castings only. He added that the expression "iron cast in any other shape or size", being a general one, would include all varieties of iron castings (ECR 1983-65 D-BOM).
"We have carefully considered the matter. We agree with the Department's representative that the further processes mentioned by the appellants which the subject goods reportedly undergone in the foreign country are such as would not convert iron castings into another identifiable article and these processes are in the nature of cleaning and strengthening of the iron castings. The machining which they undergo is only rough machining to give a smooth surface. The real processing or machining which would convert the iron casting into motor vehicle parts takes place after importation of the castings into India. In view of these facts, we hold that the subject goods were covered by Item 25 CET and were correctly charged to countervailing duty thereunder."
39. Thus the Casting under Tariff item No. 25 cannot have two different connotations - one while construed for the purpose of levy of additional customs duty, other for the purpose of levy of excise duty. As a matter of fact it is the same article which calls for determination under both the Acts. But basically the question is whether excise duty was leviable on the said article under Tariff Item No. 25 or not ? The Revenue cannot take two different stands in respect of the same article.
40. A side argument of the respondents is that the Revisional Jurisdiction has since stood transferred to the Tribunal and it is for the Tribunal to decide the question and the Court should not interfere at this stage. I have already referred to the decision of the Tribunal where the Tribunal have uniformly accepted the contention which the petitioner as well as the Customs Authorities raised. In that view of the matter even this case would have been transferred to the Tribunal, the Tribunal could not have decided in a different way as the question involved is identical.
41. Mr. Roy Chowdhury, learned counsel for the respondents however, has contended that the Tribunal is a quasi-judicial authority. Its earlier decision cannot be resjudicata or a precedent for subsequent decision but it is an important factor to be seriously taken into consideration and the Tribunal can differ on cogent grounds. There is no dispute on this proposition. The Tribunal is not a Court, therefore, the doctrine of resjudicata does not apply to its decision. But although the rule of resjudicata may not apply, the Tribunal cannot reopen a question previously decided. Only if fresh fact comes to light that may clothe the Tribunal to come to conclusion different from the one previously reached. The Tribunal being a quasi-judicial authority cannot arbitrarily depart from the finding reached after considering material evidence. It is not the case of the respondents that in the decisions rendered by the Tribunal, the Tribunal did not take into account the material evidence. Nor has it been suggested what new materials should have been taken into consideration in this case. This argument, therefore, has no substance.
42. It is then contended by Mr. Roy Chowdhury that the petitioner in effect has challenged the classification of the products and no writ would lie in such a case. He has submitted that test has been laid down by the Supreme Court to determine whether a product is liable to duty and what is manufactured which would depend upon the facts of each case and the matter has to be heard and considered by the Tribunal. He has relied on the decisions of the Supreme Court in Empire Industries Ltd. v. Union of India and Khandelwal Metal & Engineering Works and Anr. v. Union of India and Ors. in support of his contention that etymologically the word "manufacture" would cover the case of transformation and whether by such transformation a different commercial commodity having a distinct character, use and name and commercially known as such has emerged or not is a question depending upon the facts and circumstances of the case. Accordingly this is a question which should be decided by the Tribunal. I am unable to accept the contention of Mr. Roy Chowdhury. Firstly in Empire Industries Ltd. (Supra) the Supreme Court was considering the extended definition of manufacture as given in Section 2(f)(v) of the said Act by the Central Excises & Salt and Additional Duties of Excise (Amendment) Act, 1980. The effect of various amendments inserted by the Amendment Act was to include the processes of bleaching, dyeing and printing etc. within the definition of the word 'manufacture'. Supreme Court held that the concept of process being embodied in certain situation in the idea of manufacture, the impugned legislation is only making "small repair" and that is permissible mode of legislation. In that case there was no challenge to the classification of any product. In Khandelwal Metal & Engineering Works (supra) the question was with regard to the interpretation of the Customs Tariff Act, 1975. There again the Supreme Court was not concerned with the question of jurisdiction of the Court to decide the validity of the classification of the product.
43. The question, however, in this case is whether the Central Excise Authorities have any jurisdiction to levy duty on the cast rolls at two stages, firstly under item 25 or 26AA when the castings are taken of the moulds, then again under item 68 after polishing and finishing work is done. The initiation of the proceedings for classifying the cast iron rolls under item 68 is also under challenge. It has been uniformly held by the different High Courts that if the classification sought to be made by the Department is perverse or the view adopted by the Department is unreasonable, the High Court can interfere under Article 226 of the Constitution. Several decisions have been cited from the Bar.
44. In Alkali and Chemical Corportation of India Limited v. Union of India and Ors. reported in 1981 E.L.T 22 Delhi High Court held that if the Department had not adopted any reasonable view in interpreting the entries of Central Excise Tariff or the views of the Department were wholly perverse and against their own interpretation and stand, the High Court can interfere under Article 226 of the Constitution.
45. In Techni-Glass Limited v. Union of India and Ors. reported in 1981 E.L.T. 147 Bombay High Court held that it is well settled that if adjudicating authority in customs or excise matters have preferred one of the possible meanings or placed a product in one category which could perhaps be better placed in another, the court should not ordinarily interfere. But, if the adjudicating authorities have given a strained meaning to an expression used in ordinary parlance or acted in a manner not warranted by settled rules of interpretation then the court has not merely the right to interfere but also a duty.
46. In Navin Chamanlal Sutaria v. Union of India and Ors. reported in 1981 E.L.T. 913 Bombay High Court held that if the departmental authorities did not go to the root of the matter before deciding the classification of a product, it clearly amounts to non-application of mind which merits interference by the High Court under Article 226 of the Constitution.
47. In the case of T.I. Miller Ltd. v. Union of India and Anr. reported in 1984 ECR 1977 Madras High Court held that in a matter of classification, the court has always adopted the principle that under writ jurisdiction it could examine the correctness of a particular classification. Right from the earliest days, the courts were of the view that the classification of a particular item whether perverse or not is a matter which falls within the writ jurisdiction.
48. In the case of Union of India and Ors. v. T.S.R. & Co., Kumbakonam, reported in (1985) 5 ECC 177 the Division Bench of the Madras High Court held that if the classification is found to be arbitary and unreasonable so as to make it perverse the Court acting under Article 226 of the Constitution will be justified in interfering, with such classification.
49. Supreme Court in the case of Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan and Ors. reported in 1980 E.L.T. 383 held that if the question relates to the construction of a Tariff item, the matter was of substantial importance and not a question of fact and therefore, there was a sufficient justification for the Supreme Court to entertain the appeals against it under their civil appellate jurisdiction.
50. The Supreme Court observed : "Finally, it is urged by Shri Sinha that the question whether the rayon tyre cord fabric falls within the expression "rayon fabrics" is a question of fact and the assessing authority, the appellate authority and the Revenue Board are all agreed that it cannot be classified as a rayon fabric and, therefore, this Court should not interfere in these appeals. It is also pointed out that under Section 15, of the Rajasthan Sales Tax Act a proceeding by way of reference is available to merits, should exercise no wider jurisdiction than that available to it if it had entertained a reference, We are unable to agree that the question is one of fact. It is a question which concerns the construction of Item 22 of the Schedule to the Additional Duties of Excise (Goods of Special Importance) Act by that item it is exempt from sales tax and there is no jurisdiction in the sales tax authorities to assess the appellants on its turnover. The question is one of substantial importance, and having regard to the circumstances there is good reason for entertaining the appeals and deciding them on the merits."
51. In the case of State of Uttar Pradesh v. Indian Hume Pipe Co. Ltd. the Supreme Court observed: "Lastly, it was feebly argued by Mr. Manchanda that the High Court ought not to have entertained the writ petition and should have allowed the assessee to avail of the remedies provided to him under the U.P. Sales Tax Act, particularly when question of fact had to be determined. In the instant case, the question as to what is the true connotation of the words "sanitary fittings" and whether the hume pipes manufactured and sold by the respondent were sanitary fittings within the meaning of that expression was a question of law and since the entire material on the basis of which this question could be determined was placed before the Sales Tax Officer and it pointed in one and only one direction, namely, that the hume pipes were not sanitary fittings and there was nothing to show otherwise, the High Court was justified in entertaining the writ petition. Moreover, there is no rule of law that the High Court should not entertain a writ petition where an alternative remedy is available to a party. It is always a matter of discretion with the Court and if the discretion has been exercised by the High Court not unreasonably or perversely, it is the settled practice of this Court not to interfere with the exercise of discretion by the High Court. The High Court in the present case entertained the writ petition and decided the question of law arising in it and in our opinion rightly. In these circumstances, therefore, we would not be justified in the interest of justice in interfering in our jurisdiction under Article 136 of the Constitution to quash the order of this High Court merely on this ground after having found that the order is legally correct."
52. The facts are not in dispute in this case. The processes undertaken by the petitioner have been set out hereinbefore. The views taken by the Tribunals on fact after considering certificates of the Steel Plants have also been considered. The Patna High Court on the identical question held that the interpretation sought to be placed by the respondents on the scope of Item 25 and 26AA is erroneous. This Court in such a case has jurisdiction to entertain the writ application. It is essentially a question of law as to whether cast rolls would come under Item 25 and Item 26AA or Item 68. Accordingly the contention of the respondents has no substance and must fail.
53. The last but not the least contention of Mr. Roy Chowdhury which requies consideration is that the petitioner although paid the duty, has collected the full amount of such duty from the public. Such excise duty paid by the petitioner is included in the sale price. Thus, if now excise duty paid is refunded to the petitioner, it will amount to unjust enrichment and/or double payment to the petitioner. If any amount is refundable it has to be refunded to the customers of the petitioner who purchased the goods from the petitioner. In this connection, several decisions have been relied on by the learned Advocates.
54. Supreme Court in D. Cawasji & Co. v. State of Mysore observed:
"A tax is intended for immediate expenditure for the common good and it would be unjust to require its repayment after it has been in the whole in part expended, which would often be the case, if the suit or application could be brought at any time, within three years of a court declaring the law under which it was paid to be invalid, be it a 100 years after the date of payment. Nor is there any provision under which the court could deny refund of tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them, or, for any reasons, it is impracticable to do so."
55. Bombay High Court in Maharashtra Vegetable Products Pvt. Ltd. v. Union of India reported in 1981 E.L.T. 468 observed at page 473 thus:
"We are unable to read the decision in Cawasji's case as an authority for the proposition that in every case, where the manufacturer who has paid the Excise Duty and has passed it on to the consumers and has recovered it, the claim to recover monies from the Government should be rejected."
56. The Division Bench after carefully analysing Cawasji's case observed at page 474 thus:-
"It appears from the judgment of the Supreme Court that the fact that the appellants had not given any reason as to why that claim was not made in the earlier writ petition heavily weighed with the Supreme Court when they declined to interfere with the decision of the High Court. We are, therefore, unable to accept the contention advanced on behalf of the Union of India that the petitioners are not entitled to any refund as the levy has already been passed on to the consumer."
57. The ground of unjust enrichment as a defence against the claim of restitution was rightly rejected in Maharashtra Vegetable Products Pvt. Ltd. This ground of unjust enrichment has -been successively rejected in three later decisions of the Bombay High Court in Wipro Products Ltd. v. Union of India, 1981 E.L.T. 531. Leukoplast, 1983 E.L.T. 2106 and Chemicals & Fibres (1982 E.L.T. 917). It therefore follows that duty or money collected, without the authority of law, thus illegally, is refundable even if the incidence of tax has been passed on to the consumers and recovered by the assessee.
58. Mr. Roy Chowdhury has contended that in view of the provisions of Section 11B it is clear that it is the ultimate buyer who would be entitled to omission or refund of the excise duty under mistake of law and not the manufacturer. Most of the High Courts have consistently taken the view that if the collection is without jurisdiction then the plea of unjust enrichment cannot be advanced to deprive the persons who paid duty under mistake of law or otherwise. In the adjudication proceeding the question of unjust enrichment was never raised. There is no finding that the petitioner is not required to refund the amount to the ultimate consumers. The refund claimed cannot be rejected on the ground that the manufacturer has no intention to refund the same or on the ground of unjust enrichment. The Supreme Court in the case of D. Cawasji & Co. (supra) held that there is no provision under which the court could deny refund of tax even if a person who collected it from a customer and has no subsisting liability or intention to refund it to them, or for any reason, it is impracticable to do so.
59. In the case of Associated Bearing Company Limited v. Union of India reported in 1980 E.L.T. 415 the Division Bench of the Bombay High Court following the decision in the case of D. Cawasji & Co. (Supra) has held that there is no provision in the Central Excise Law under which a manufacturer can be denied the refund of duty illegally collected from him even though had recovered it from the customer and had no intention to refund it to them. Similar view was also taken by the Division Bench of the Rajasthan High Court in the case of Prem Cables Pvt. Ltd. v. Assistant Collector (Principal Appraiser) Customs, Bombay, reported in 1981 E.L.T. 440. The Division Bench after considering the various decisions, inter alia, a decision of the Supreme Court in Bhailal Bhai reported in A.I.R. 1964 S.C. 1006 held that the consequential relief for the refund of illegally collected amount can be granted by the Court in exercise of its jurisdiction under Article 226 of the Constitution.
60. In Mahindra and Mahindra Limited v. Union of India and Ors. reported in 1984 E.L.T. 262 Bombay High Court held that the State is under an obligation to refund monies which have been recovered without authority of law. Merely because the extra duty has been collected from the consumers and refund would result in unjust enrichment of the manufacturer a refund cannot be denied to the petitioners except in exceptional circumstances if the Court strongly considers it unjust to do so.
61. This Court in the case of Union Carbide Co. Ltd. v. Assistant Collector of Central Excise reported in 1978 E.L.T. 180 held that 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. The theory of unjust enrichment therefore cannot be invoked.
62. The Madras High Court in the case of Soft Beverages (Pvt) Ltd. Madurai v. Union of India and Anr. reported in 1982 E.L.T. 119 held that the refund of duty paid and collected under the mistake of law cannot be denied even if the duty has already been recovered from the customer. In other words, the refund of duty wrongly paid under the mistake of law cannot be denied even if the duty has already been recovered from the customer. In other words, the refund of duty wrongly paid under the mistake of law cannot be denied by the Government on the principle of unjust enrichment. The Madras High Court was of the view that the law declared by the Supreme Court in D. Cawasji & Co. (Supra) holds the field and accordingly the contention of the respondents was rejected.
63. The Division Bench of this Court in the case of Kharda Company Ltd. v. Union of India and Ors. reported in (1981) 1 CLJ 433 also considered the contention of the respondents as regards unjust enrichment and observed as follows:
"If the liability imposed is of the assessee alone and if the assessee is liable to pay irrespective of whether he can pass on the 'liability to this customers, for the very same reason he can demand refund of all unauthorised levy irrespective of whether he had actually borne the burden himself or not, unless the statute provides it otherwise. The answer to the objection raised by Mr. Banerjee is to be found in the observations of the Supreme court in the case of D. Cawasji & Co. v. State of Mysore, relied on by the Bombay High Court in its later decision which though obiter appear to enunciate the true legal principle which follows from their earlier decisions referred to hereinbefore."
64. In the case of ITC Limited v. M.K. Chipker Bombay High Court held that Rule 11 of the Central Excise Rules applies to the cases where duties have been paid through inadvertance, error or misconstruction and where refund application has to be made within three months from the date of such payment. But, if duty is collected without authority of law, the department cannot retain the excess duty collected but under an obligation to return the excess duty collected and the petitioner has a corresponding legal right to recover it. It is also held that if payment was made under mistake of law Rule 11 does not apply to the claim of the refund. However, it does not prevent the department from taking cognizance of the claim in its administrative capacity by treating such application as representation for refund. Moreover, even if the department is held obliged to grant refund only if the application is made within the prescribed period of one year and in no other -case, it does not mean that the High Court cannot grant refund in a petition under Article 226 of the constitution.
65. In any even on the facts of this case there cannot be any question of any unjust enrichment of the petitioner. The ground of refund of the amounts collected without any authority of law is only consequential to the order passed by the Appellate Collector on 30th April, 1981 quashing the orders made by the Assistant Collector on 6th October, 1977 and July 11, 1978. It is not a case that excise duty is payable by the manufacturer. If there is a short levy of duty it is the manufacturer who would be liable to pay the same on demand being raised by the Central Excise Authority under Section 11A of the said Act. In such a case, Central Excise Authority will not consider whether the manufacturer would be entitled to realise the short levied duty subsequently from the customers. According to the Excise Authorities this is not a relevant consideration in demanding short levied duty. By the time such duty is demanded the manufacturers may have sold the goods and they cannot realise it from the customers. This hardship has not been a ground for not imposing the burden on the manufacturer. If this is an irrelevant consideration, on parity of reasoning if there is an excess payment it is the manufacturer who shall be entitled to refund under Section 11B of the said Act. It is immaterial whether the customers of the manufacturer had already paid as and by way of consideration any excise duty included in the price for sale of the goods. This cannot in any way affect the rights and liabilities of the manufacturer vis-a-vis of Central Excise Authority. The Central Excise Authority cannot proceed on two different standards one in asking the manufacturer to pay the duty short levied and in refusing to grant refund to the manufacturer duty collected in excess. If the collection has been made without any authority of law, the respondents cannot retain the same and are bound to refund to the manufacturers from whom such duty had been realised. If the orders are set aside being illegal or void all consequences of such determination must follow logically and if the consequence is to grant refund of the duty collected pursuant to the orders held to be bad and illegal, such duty must be refunded to the manufacturers on whom the liability to pay excise duty was fixed.
66. For the reasons aforesaid this application succeeds. The Rule is made absolute. Let appropriate writs be issued. The Show Cause Notice dated 10th September, 1981 is set aside. The respondents shall give effect to the order dated 30th April, 1981 of the Appellate Collector, and shall refund the sum of Rs. 92,28,857.03 to the petitioner payable in consequence of the said order dated April 30, 1981 of the Appellate Collector within eight weeks from the date of communication of this order.