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1. 27(a) Aluminium in any crude form including ingots bars etc.-basic excise duty Rs. 950 per M. Tonne plus special excise duty 20 % of basic excise duty.

2. 27(d) Extruded rods-basic excise duty 20% ad valorem plus special excise duty 20% of basic excise duty."

5. By its communication dated 31-7-1967 Malco wrote to the Collector of Central Excise, Madras, stating that Properzi Rods 3/8" diameter can be classified only under Tariff Item No. 27(a) and therefore suitable instructions may be issued to the Central Excise authorities at Salem for assessing Properzi rods under item 27(a) of the Tariff instead of under item 27(d). On 11-8-1967, the Inspector of Central Excise Mettur Dam has informed Malco that properzi rods of 3 x 8" diameter manufactured by them are classified under item 27(a) of the Central Excise Tariff. Later by letter dated 9-10-1968, the Senior Superintendent (Tech) Salem wrote to Malco stating that though according to Eoard's orders Properzi rods produced out of bauxite alumina or both were non-excisable as those rods did not fall in any of the sub-items of item No. 27, of the Central Excise Tariff and Properzi rods manufactured out of imported ingots in admixture with or without bauxite or alumina or both were also non-excisable, where aluminium in crude form e.g. ingots had suffered the appropriate duty, under item 27(a) should continue to be recovered on the crude aluminium contents of such rods, and called upon them to send an amended classification list accordingly for necessary aption and approval. Accordingly Malco submitted the classification list in the revised form on 20-2-1969. On the same day, the Superintendent (Tech) IDO, Salem had sent a communication stating that the original classification list was duly approved, that the question of excisability or non-excisability of the properzi rods is under examination by higher authorities that the question of extending. the concessional assessment under notification No. 24/68 in respect of products produced out of bauxite or imported ingots is also under examination and that an intimation will be sent later regarding the classification of properzi rods. But later no communication was received by Malco from any of the authorities. In the circumstances, set out above, Malco was manufacturing and supplying oroperzi rods and realised excise duty from its customers on the basis of the classification made by the authorities originally under item 27(d) and later under item 27(a).

6. One of Malco's customers to whom Properzi rods were sold is the petitioner in W. P. No. 4631 of 1975. It purchased from Malco 67098 M. Tonnes of EC Grade Electrolytic aluminium rods other than extruded and paid thereon excise duty of Rs. 5,96,845.26. Similarly Malco had supplied these rods to other constituents and paid excise duty on the supplies so made by them between January 1967 to 28th February, 1969 amounting to Rs. 1,24,28,992.92.

7. Later the High Court of Gujarat by its judgment dated 18-3-1972 in Special Civil Appln. Nos. 909 to 911 of 1970 (Prem Conductors Pvt. Ltd. v. Asstt. Collector of Customs) held that "in respect of electrolytic aluminium rods other than extruded, no excise duty was payable under the Central Excise Tariff and that as such they were not, on import, liable to countervailing duty under Section 2-A of the Indian Tariff Act, 1934". Taking advantage of the said decision of the Gujarat High Court, the petitioner company in W.P. 4631 of 1975 made a claim on Malco its seller, for the refund of the excise duty which it had paid as part of the price of the aluminium properzi rods. Apprehending that it will be exposed to similar claims from all the purchasers of Properzi rods in view of the judgment of the Gujarat High Cqurt, Malco claimed on 24-11-1972, refund of a sum of Rs. 1,24,28,992-92 being the excise duty paid for the period prior to the introduction of sub-item (aa) in item 27 of the First Schedule to the Central Excises and Salt Act, 1944 by the Finance Act of 1969.

"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 those rules."

13. This rule fixes the period of one year for claiming a refund of the excise duty paid. In this case the refund is not claimed on the basis of any error or inadvertence or misconstruction on the part of Malco. The excise duty is said to have been paid on a mutual mistake. It will be clear from the facts stated above that even at the initial stages of production of properzi rods Malco wanted the excise authorities to classify the goods for tariff purposes and it is based on that classification excise duty has been paid. It cannot also be disputed that at one stage the authorities themselves felt that excise duty is not payable on aluminium properzi rods. At a later stage th ey have applied different sub-items of item 27 to aluminium properzi rods at different periods. Malco which was purely guided by the advice and instructions given by the excise authorities now find that the excise duty levied from it by the authorities is not warranted by law. Therefore, Malco contends that it is entitled to claim a refund of the amount paid under a mutual mistake at any time within three years from the date of the discovery of the mutual mistake as 'money had and received' and that in this case, the discovery of the mistaken payment of excise duty was when Malco was made aware of the judgment of the Gujarat High Court which held that aluminium properzi rods are not taxable to excise duty at all.

18. Coming to the second issue as to whether the aluminium properzi rods manufactured by Malco is liable to excise duty at all, it will be clear from the facts set out above that originally in May 1967 the Assistant Collector of Central Excise, Salem classified properzi rods as coming under item 27(d) of the Central Excise Tariff providing for 20 per cent ad valorem as basic duty and 20 per cent special excise duty, that later in August 1967 the same item was classified as coming under item 27(a) providing for a duty at 950 per metric tonne and 20 per cent special excise duty, and that on 15-9-1967 a decision was given by the Central Board of Excise and Customs that the aluminium wire rods other than extruded ones are not covered by any of the items of Central Excise Tariff and, therefore, they are not liable to excise duty. In or about October 1968 the Senior Superintendent, Salem took up the stand that though according to the Board's orders properzi rods produced out of bauxite or alumina or those manufactured out of imported ingots in admixture with or without alumina were non-excisable as the rods do not fall in any of the sub-items of item 27, the aluminium in crude form, when produced out of bauxite or alumina wherein the appropriate duty has not been paid, a duty under sub-item (a) of Item 27 should continue to be recovered on the ?rude aluminium contents of such rods. Thus the question of excisability or non-excisability of properzi rods manufactured by Malco bad been in doubt right from the very beginning and as such Malco has been supplying properzi rods manufactured by them realising excise duty from its customers as per the classification made by the Central Excise authorities themselves from time to time. Between 1-1-1967 and 11-7-1967 Malco has been collecting excise duty from its customers on the properzi rods manufactured and sold by them under item 27(d) of the Tariff as classified by the excise authorities. Between 12-8-1967 to 28-2-1969, excise duty has been collected and paid by Malco as per item 27(a) of the Tariff, as per the revised classification made by the excise authorities. The total amount so collected and paid as excise duty between 1st January-, 1967 to 20th February, 1969, came to Rs. 1,24,28,992.92. It is this amount which is claimed by Malco from the excise authorities by way of refund on the ground that properzi rods manufactured by them are not liable to excise duty at all. Though during the relevant period excise authorities have proceeded to collect duty on the basis that properzi rods manufactured by Malco fell within item 27(d) of the Tariff or item 27(a), as the case may be, the stand taken before us by the respondents is that the properzi rods as such are not excisable as they do not fall either under Rule 27(a) or under Rule 27(d) but that aluminium in any crude form being liable to duty under item 27(a), aluminium content of the properzi rods is liable to excise duty under item 27(a). This is the stand taken by the Appellate Collector in his appellate order and the Government of India in its revisional order. According to the respondents in the course of manufacture of properzi rods, from the raw materials namely bauxite or almina a stage is reached when molten aluminium which is nothing but aluminium in crude form, from which, if the assessee had so chosen, aluminium bars and billets etc., could have been obtained which are admittedly assessable to duty under item 27(a). Thus the present stand taken by the respondents is that properzi rods are liable to excise duty with reference to its aluminium content under item 27(a). The question is whether the properzi rods are liable to duty with reference to its aluminium content under item 27(a) as contended by the respondents.