UNION OF INDIA Vs. BINNY LIMITED

JUDGEMENT

(1.) In this writ appeal, presented by Union of India, by its Secretary, Ministry of Finance and the Assistant Collector of Central excise, III Division, Bangalore, the following two questions of law arise for consideration:

(2.) The facts of the case, in brief, are these: During the period commencing from 1st September, 1975 and ending on 30th September, 1983, the respondent-Binny Limited, paid excise duty on textile goods manufactured by it assessing the value of the manufactured goods also taking into account the freight and transit insurance charges paid by the assessee on those goods. The Supreme Court, in the case of Union of India v Bombay Tyre International Limited, AIR 1984 SC 420 decided on 9-5-1983, held that the freight and transit insurance charges do not form part of the assessable value of the goods manufactured under Section 4 of the Central excise and Salt Act, 1944 ('the Act' for short). The order of the Supreme Court was pronounced on 9-5-1983, but the reasons in support of the order were pronounced on 7-10-1983. Thereafter, the assessee-respondent, realizing that it had paid excise duty in excess of what it was required to pay in law, made two applications before the Assistant Collector of Central excise, Bangalore. In one of the applications, the assessee claimed refund of the excess amount paid which fall within the period of six months from the date on which the duty was paid. In the second application, the assessee claimed refund for the rest of the period commencing from 1-9-1975 to 30-9-1983, which came to Rs. 14,37,600-72. In this representation, the respondent expressly stated that the above claim for refund was being made outside the purview of Section 11-B .of the Act in the light of the ratio of the Judgment of the Supreme Court in the case of Bombay Tyre International Limited, AIR 1984 SC 420.

(3.) As far as the first application is concerned, the Assistant Collector granted the refund. This refund was on the basis that the assessee had paid more amount of excise duty than payable in law and this had happened on account of the inclusion of the freight and transit insurance charges in the value of the goods for the purpose of computing excise duty. As regards the rest of the claim, which related to the period earlier to the date of six months on which the duty was paid, a notice was issued by the Assistant Collector to the respondent calling upon it to show cause as to why the refund application should not be rejected on the ground that it fell outside the purview of Section 11-B of the Act. The respondent appeared before the authority and submitted that as the higher rate of excise duty was paid by it on account of mistake of law and the correct position in law was declared by the Supreme Court on 7-10-1983, the assessee was entitled to claim the refund of the excess amount paid by it. The Assessing Authority, however, rejected the submission made by the respondent and held that in view of the Judgment of the Supreme Court in D.R. Mills v Commissioner of Civil Supplies, AIR 1976 SC 2243 he had no authority to make any refund outside the purview of Section 11-B of the Act. Aggrieved by the said order, the respondent presented the writ petition.