UNION OF INDIA UOI Vs. STERLING VARNISHES

JUDGEMENT

(1.) Respondent is the manufacturer of industrial varnishes whose product is liable to excise duty under the Central Excise and Salt Act, 1944. The Central Government however issued a notification No. 116/74 dated 21-7-1974 acting under Rule 8 of Central Excise Rules 1944, exempting such goods from excise duty provided that the value of the total production does not exceed Rs. 2,00,000/-. The respondent was not aware of such notification till about the month of April 1978 when it was brought to their notice by a certain official of the Central Excise Department. Therefore, as usual it paid the duty on the goods manufactured during 1974-75 and 1975-76. For these two years the total excise duty paid came to Rs. 10,194-93ps. As the respondent has been paying excise duty in accordance with provisions of Section 79B of the Central Excise Rules the fact that the respondent is not liable to pay any excise duty could be made out only at the end of March 1976 at which time the total products of the year could be made out as the said duty was the one paid under mistake. Notice under Section 80-C, CPC was issued to the appellants and the Original Suit came to be filed before the trial Court for refund of the said duty amount of Rs. 10,194-93ps and interest at 18% per annum amounting to Rs. 3,670-07ps and the total claim before the trial Court was Rs. 13,865/-.

(2.) The suit was resisted by the appellants on the ground of limitation and want of jurisdiction in the Civil Courts to entertain the claim. It was contended by the appellants-defendants that the respondent-plaintiff paid the duty for these two years on his own and there was no demand from the appellants. A notification was published in the Official Gazette of India in addition to its circulation to Chamber of Commerce and Trade by trade notification. Under the self removal scheme envisaged under Chapter-VII A of the Central Excise Rules 1944 the plaintiff made payment as and when excisable goods were cleared from the factory. Therefore there was no question of any mistake under which the plaintiff could have paid the duty. None of the officials of the Department invited his attention to the exemption notification. The plaintiff respondent ought to have claimed refund by filing application in accordance with Rule 11 read with Rule 173-J of the said Rules within one year from the date of such payment or adjustment of the same in his account. As the Central Excise and Salt Act (the Act for brief) is a self-contained enactment and when the machinery is provided for claiming refund, the Civil Courts have no jurisdiction to entertain any suit.

(3.) The Court below found that it had jurisdiction to entertain the suit, that it was the duty paid under mistake and out of the Act, Section 72 of the Contract Act is attracted and the period of limitation being three years from the knowledge of such mistake the suit is in time. It also found that failure on the part of the respondent to claim refund under Rule 11 of the Rules under the Act, is not fatal to the suits. Two separate suits were filed for separate claims for respective years. Consequently, the suits came to be decreed for the duty actually paid, claim of interest having been negatived.