Bombay High Court
Btx Chemicals Pvt. Ltd. vs Collector Of C. Ex. on 1 January, 1800
Equivalent citations: 1989(22)ECR167(BOMBAY), 1989(41)ELT377(BOM)
JUDGMENT
1. The petitioners, who are manufacturers of fine organic chemicals, drugs, drugs intermediates and pharmaceuticals, have filed the present Petition seeking to challenge the order dated the 30th of March, 1981 passed by the Assistant Collector of Central Excise, Division IV, Baroda, allowing the claim of the Petitioners for refund in respect of the duty paid by them during the period 19th of February, 1980 and 29th February, 1980 being within the period of six months from the date of the filing of the application and rejecting their claim for refund for the period 1st April, 1979 to 18th of February, 1980 on the ground that the same was barred by the period of limitation contemplated under Rule 11 of the Central Excise Rules as that claim was filed beyond the period of six months. The Petitioners also challenged the order dated the 7th of October, 1983 passed by the Collector of Central Excise (Appeals) Bombay where by the order of the Assistant Collector dated the 30th of March, 1981 was confirmed. The Petition makes a claim of refund of a sum of Rs. 1,10,995.97 on the ground that the same was paid under mistake of law.
2. Under Notification No. 55/75-C. E., dated the 1st of March, 1975 total exemption from payment of excise duty was granted to all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified. By notification NO. 89/79, dated the 1st of March, 1979 exemption was granted to all other commodities mentioned in Item No. 68 of the First Schedule to the Act on clearance for home consumption on or after the first day of April upto the aggregate value not exceeding Rs. 15,00,000/-. It is the case of the Petitioners that they were unaware of the aforesaid Notifications and they paid the duty on their total turnover of Rs. 38,18,443/-for the period 1st April, 1979 to 31st March, 1980. According to the Petitioners, under the first notification they were entitled to total exemption in respect of goods of the value of Rs. 24,24,188/-. In regard to the balance of Rs. 13,94,255/-they were entitled to total exemption under the second notification as the same were within the aggregate value of RS. 15,00,000/-. According to the Petitioners, they came to know of the aforesaid Notification only after the 19th of June, 1980 when a further Notification was issued enhancing the exemption limit contained in the second notification from Rs. 15,00,000/-to Rs. 30,00,000/-. The Petitioners, therefore, on the 19th of July, 1980 applied for refund and the said claim having been rejected by the impugned orders passed by the Assistant Collector and the Collector (Appeals), they have filed the present Petition.
3. In view of the decisions in the case of Mills India Ltd., Baroda v. Appellate Collector of Customs, Bombay 1983 (13) E. L. T. 1026 (C. E. G. A. T.), and Miles India Ltd. v. The Assistant Collector of Customs, 1987 (30) ELT 641 = 1985 ECR 289 (S. C.), it will have to be held that the Assistant Collector and the Collector (Appeals) being creatures of statute, were bound by the period of limitation provided in Rule 11 of the Central Excise Rules. Their impugned decisions, therefore, cannot be successfully assailed.
4. Shri Shah, the learned Counsel appearing on behalf of the Petitioners, by placing reliance on the case of T. T. Pylunny Royal Smiths, Kunnakulam v. Union of India and Others, decided by the Kerala High Court and reported in 1978 E. L. T.(J 705) sought to contend that the application for refund having been made within a period of six months from the end of the financial year ending 30th March, 1980 was within the period of limitation. The concerned authorities had, therefore, erred in holding that the application for refund was beyond the period of limitation as provided in Rule 11 of the Central Excise Rules.
5. In my judgment, there is no merit in the aforesaid contention as the notification which was under consideration provided -
"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 Excises 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 the manufacturer from one or more factories for home consumption from the whole of the duty of excise leviable thereon :
Provided that :
(1) this exemption shall not be applicable to such manufacturer whose value of steel furniture so cleared during such financial year exceeds Rs. 2 lakhs".
The proviso contained in the aforesaid notification makes it clear that in order to avail of the exemption contained in the said notification the manufacturer should not have cleared the steel furniture exceeding Rs. 2,00,000/- during the financial year. The entitlement for the exemption in that case can only be determined at the end of the financial year. Hence, if the application for refund is made within a period of six months from the end of the financial year, the same would be well within the period of limitation. The exemption notifications in the instant case are, however, distinct. They give exemption in the case of first clearance of goods upto the aggregate value of Rs. 15,00,000/-. If the duty was paid at the time of clearance in respect of good. within the limit of Rs. 15,00,000/-, the period of limitation would begin from the date of the payment of the duty. This part of the contention of Shri Shah is, therefore, liable to be negatived.
6. However, merely because the Assistant Collector or the Collector (Appeals) has no power to grant refund or to condone the delay, the same would not detract from the power of the Court to order refund. In the case of Union of India and Other v. Advani Oerlikon Limited and Another, 1987 (31) E. L. T. 44(Bom.), this court held that where the duty is paid on in correct value, it was a payment under mistake of law. Receipt thereof by the Department is without the authority of law. The time limit laid down for refund under the Act in such a case was not applicable and a refund claim filed beyond the time limit laid down under the relevant provisions was not barred by the Law of Limitation. In such a case the Department had no authority to recover the duty. Since the payment was received without the authority of law, the limitation provided by the relevant provision did not apply.
7. In the case of Kay Foam Limited v. Union of India, 1988 (34) E. L. T. 449 (Bom.), this Court held that it is now well settled that the duty recovered without any authority of law cannot be retained by the authority and the provision for filing application within period of six months from payment of duty has no application to such a case. It is open for the tax payer to demand back duty which was recovered without authority of law at any stage. In this view of the matter, I am inclined to hold that the bar of limitation cannot be a hurdle in the way of the Petitioners to claim refund in the present Writ Petition. The Respondents had been paid the duty under a mistake and, therefore, they are liable to refund the same under provisions of Section 72 of the Indian Contract Act. Section 17(c) of the Limitation Act provides that where, in the case of any suit or application for which a period of limitation is prescribed by this Act, the suit or application is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the applicant has discovered the mistake or could, with reasonable diligence, have discovered it. In the present case, the mistake was discovered when the Petitioners came to know of the aforesaid Notification only after the 19th of June, 1980 when a further Notification was issued enhancing the exemption limit contained in the second notification from Rs. 15,00,000/- to Rs. 30,00,000/-. Article 113 of the Limitation Act prescribes a period of three years for filing a claim of the present nature. This Petition having been filed well within that period, there would be no justification not to grant the relief prayed for in the Petition. Furthermore, this would be a tax collected by the Respondents without the authority of law. The Respondents would be bound to refund the same.
8. Shri Deodhar, the learned Counsel appearing on behalf of the Respondents, however, admitted that this is not a case where the Petitioners are entitled to an order of refund. The Petitioners have already recovered the burden by passing on the same to their consumers. Any order of refund would bring about an unjust enrichment. The Petitioners cannot be permitted to be unjustly enriched by grant of the relief claimed in the Petition. According to Shri Deodhar, the Petitioners had not borne the burden of the duty and it is only the ultimate consumers who have borne the burden of the duty and it is only the ultimate consumers who have borne the burden of the additional levy. Since it is not possible for the Petitioners to trace their ultimate consumers to repay the additional payments made by them, the grant of any relief in the present petition would unjustly enrich the petitioners which could not be permitted to be done.
9. Shri Shah, the learned Counsel appearing on behalf of the Petitioners, however, contended that the Respondents have not filed any affidavit in reply. There is nothing on record to hold that the Petitioners have passed on the burden on the levy upon their customers. Hence it would not be open to the Respondents to raise the plea of unjust enrichment.
10. In my view, having regard to the fact that the Petitioners had paid the duty on account of their ignorance of the exemption notifications, it would be reasonable to infer that they have passed on the burden of the levy upon their customers. Having regard to the fact that the issue regarding the entitlement of refund, in view of the objection in regard to unjust enrichment, has been referred to the Full Bench in Writ Petition No. 1336 of 1987, I hold that the relief prayed for in prayer clause (b) of the present Petition would abide by the result of the said petition by the Full Bench. In the meanwhile, it would be open to the contending parties to file their respective affidavits on the issue of unjust enrichment. This petition is directed to be placed on board for further orders after the disposal of the Writ Petition No. 1336 of 1987 by the Full Bench.