(1.) The defendants in the suit O.S. 339 of 1977 on the file of the Subordinate Judge of Krishnagiri, viz., the Secretary, Ministry of Finance, Government of India, New Delhi, the Collector of Central Excise, Madras and the Superintendent of Central Excise, Dharmapuri, are the appellants in the above appeal. The respondent herein, viz., a partnership firm engaged in the manufacture of matches filed the suit, O.S. 339 of 1977 on the file of the Subordinate Judge, Krishnagiri, for the recovery of a sum of Rs. 13,839.60 being the amount alleged to have been illegally collected from it by the appellants. The case of the respondent (plaintiff) before the lower court is follows : For the period from 22-7-1967 to 31-12-1974, the plaintiff paid excise duty at the rate of Rs. 3.75 per gross of matches of 50 boxes. The Superintendent of Central Excise, Dharmapuri, issued a demand notice dated 4-6-1975 alleging that the Supreme Court of India by its judgment dated 4-11-1974, held that duty leviable was Rs. 4.30 per gross of matches of 50 boxes and hence called upon the plaintiff to pay the differential duty of Rs. 33,152.62. The Superintendent of Central Excise, Dharmapuri, threatened the plaintiff with preventing the clearance of matches unless and until the differential duty was paid. Subsequently the plaintiff paid the 1/3rd of the amount of differential duty viz. Rs. 11839.20 under protest. The plaintiff contended that the whole demand was time-barred under the provisions of the Central Excises and Salt Act, hereinafter referred to as the Act, but the same was not heeded to by the authorities. The plaintiff's case was that where there is any short-levy or non-payment of duty rule 9, rules 10 and 10-A of the Central Excise Rules, 1944, provided for the collection of such duties. Rule 10-A has been struck down as invalid by the High Court of Madras. Hence Rule 10 governs the case of non-payment of short-levy and the demand can be made only in respect of the period within three months before the date of demand. Under the law, the authorities have no power to collect any day beyond the period of three months prior to the date of demand notice. This question has been finally decided by the High Court of Madras in its judgment in W.P. 4145 of 1975, dated 30-9-1975 which directly applies to this case. Rule 11 does not apply to the plaintiff's case, because that refers to duty paid under Rules 9 when the authorities had power to collect the duty. As the demand notice issued is illegal, the defendants are bound to return the amount, collected from the firm. The plaintiff issued a notice under S. 80 C.P.C. The plaintiff claimed interest at 12 per cent from the date of payment.
(2.) The third defendant, viz., the Superintendent of Central Excise, Dharmapuri, filed a written statement contending that the plaintiff was allowed concessional rate of duty at the rate of Rs. 3.75 per gross of matches of 50 boxes from 22-7-1967 to 21-12-1974, as per the notification No. 162/1967 dated 21-7-1967. The said notification was subsequently amended by notification No. 205/1967 dated 4-9-1967 which introduced certain conditions for grant of concession at the rate of Rs. 3.75 per gross. As the plaintiff did not satisfy the conditions, he is bound to pay Rs. 4.30 per gross. But as a result of the decision of the High Court of Judicature at Madras striking down sub-clause (b) of clause (i)(a) of the proviso to notification No. 162/1967 as amended by notification No. 205/1967 the plaintiff was allowed concessional rate of assessment as per the declaration filed by the plaintiff every year. The department filed an appeal in the Supreme Court, against the judgment and the per the judgment dated 4-11-1974, the Supreme Court dismissed the writ petitions filed by the parties setting aside the order of the High Court. Hence the plaintiff ought to have paid Rs. 4.30 per gross, but had not paid due to the decision of the High Court. So a demand notice was issued to the plaintiff calling upon him to pay the differential duty of Rs. 33,152.62. Since many of the match manufacturers pleaded their inability to pay the huge amount of differential duty, the Government of India took a lenient view and ordered that 2/3rd of the amount of duty due and outstanding will be remitted in case 1/3rd of the mount of duty was paid by them prior to 30-9-1975. The plaintiff paid the amount voluntarily without any protest. It is false to say that the plaintiff was threatened with any prevention of clearance of matches. After the decision of the High Court of Madras and in order to avid contempt of court but nevertheless subject to the result of the appeal in the Supreme Court the department resorted to assess the plaintiff at the lower rate and not that it had given up its right of collection of differential duty, There is no question of time-limit in the matter of collection of duty. The claim is not barred by limitation. It is not correct to say that the collection in the above case is devoid of authority of law. The decision rendered in W.P. 4145 of 1975 is not applicable to the facts of this case. It is incorrect to say that Rule 11 does not apply to the facts of this case. Hence the third defendant prayed for the dismissal of the suit.
(3.) The written statement filed by the third defendant was adopted by the defendants 1 and 2.