COATREX Vs. ASSISTANT COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) The prayer in the writ petition is as follows:

(2.) The petitioner is manufacturing PVC rexin goods after obtaining L-4 licence under the Central Excises and Salt Act, 1944, in various designs and the said goods are sold in the market as rexin. It is alleged in the affidavit that the raw materials shown in para 4 of the affidavit filed in support of the writ petition with PVC compound is subjected to manufacture, that the percentage of cotton cloth is less than 15% in the end product, that the cotton cloth content will not vary, that the product manufactured by the petitioner is predominantly used for seat cover to buses, cars, motor-cycles, bi-cycles, auto-rickshaws, etc., that the petitioner was called upon to clear the goods of PVC rexin on payment of excise duty and that the first respondent has classified the goods of the petitioner under Tariff item 19(iii) of the First Schedule to the Central Excises and Salt .Act, 1944, as it stood then. The petitioner alleges in the affidavit that the demand and collection of excise duty by the first respondent for the PVC rexin under Tariff item 19(iii) is illegal and without authority of law inasmuch as the goods are not under the definition of cotton fabric as provided in Tariff item 19(iii), that the first respondent has no jurisdiction to demand and collect duty on the goods manufactured by the petitioner, that by mistake of law, the petitioner has paid the duty, that he came to know in the month of May 1990 that a similar manufacturer of PVC rexin took up the matter for refund to the Customs, Excise and Gold Control Appellate Tribunal (in short as "CEGAT") with regard to the demand and collection of duty for PVC rexin and that the CEGAT by order dated 8-2-1990 has held that the PVC goods are not classifiable under Tariff item 19(iii) of the First Schedule to Central Excises and Salt Act, 1944 and that the same is classifiable under Residuary Tariff 68 direction the authorities to refund the amount collected under the said Tariff item 19(iii). It seems that in a suit filed by the very same manufacturer praying for a declaration, the trial Court (Sub Court, Ramanathapuram) in O.S. No. 29 of 1986 has decreed the suit that the PVC rexin is not falling under Tariff item No. 19(iii) and that the same has been confirmed in appeal. As such, it is alleged in the affidavit that on coming to know of the orders mentioned above, in the month of May 1990, the petitioner issued a notice on 7.5.1990 requesting the first respondent to refund the entire amount collected from the petitioner-company under Tariff item 19(iii) for the goods manufactured by the petitioner from the date of inception since it is paid under mistake of law, and that the petitioner has not received any letter. The petitioner further alleges in the affidavit that the end-product of the petitioner-company is PVC rexin, that it is a commodity by itself and in which the cotton is not prominent, that the end-product of the petitioner is not classifiable under Tariff item 19(iii) and that there is no bar for the petitioner-company to approach this Court for refund of duty which is collected by the respondents without authority of law. It is also stated in the affidavit that if by mistake of law, duty was collected by the respondent, it is bound to refund it and that the petitioner can approach this Court in a petition under Article 226 of the Constitution. It is alleged in the affidavit that the petitioner's claim comes to Rs. 39,00,000/- that based on the challans a consolidated order could be passed for refund, that there is no dispute relating to the payment of tax, that no disputed question of tax [fact?] involved in the matter since the classification of PVC rexin is settled as falling under Residuary Tariff No. 68 and that since the decision for refund is covered by a decision of CEGAT, the prayer of the petitioner in this writ petition for classification and refund of duty so collected should be ordered.

(3.) A counter-affidavit has been filed by the respondents claiming that the petitioner company had been manufacturing PVC rexin cloth falling under Item 19(iii) of the erstwhile Tariff from the year 1980-85, that the description of the goods was given as cotton fabrics impregnated, coated or laminated with preparation of cellulose derivatives or other artificial plastic materials, that after the advent of Central Excise Tariff Act, 1985 the impugned product is being classified under heading 3903.19 of the Tariff. It is further claimed in the counter affidavit that on 7.7.1990 the counsel for the petitioner had sent a letter stating that the PVC rexin was not classifiable under Tariff item 19(iii) and that his client was not applying under the refund procedure as it would not be applicable to him. It is also claimed in the counter-affidavit that as the PVC rexin was stated to be made of cotton fabrics, though coated or laminated or impregnated its classification under Item 19(iii) of the First Schedule to the Central Excises and Salt Act, 1944 is correct, that the product declared and manufactured by the petitioner are correctly classifiable under Tariff item 19(iii) and as such the collection of excise duty is legal and within authority of law. It is also claimed in the counter-affidavit that inspite [instead] of approaching the first respondent and exhausting statutory remedies, the petitioner chose to seek the remedy under Article 226 of the Constitution. It is also claimed in the counter-affidavit that as no refund claim was submitted by the petitioner following its letter dated 7.5.1990 no action could be initiated; that the petitioner, if aggrieved about the classification of the product could have approached the first respondent so that the first respondent could decide whether the product is classifiable under the different tariff headings, that Section 11-B of the Act provides that any person claiming refund of any duty should make an application before the first respondent herein, that in the present case the petitioner has not made any claim before the first respondent to decide on merits and that the petitioner has not made nay mistake as claimed by the petitioner. It is also claimed in the counter-affidavit that the petitioner is not entitled to refund inasmuch as it has collected the same from customers. It is also pointed out that the question of refund, if any, due to the petitioner is subject to an important qualification based on the equitable doctrine of unjust enrichment, that the petitioner has not filed any refund claim and that it having passed on the duty amount to its customers has not suffered any loss, and as such this Court should not exercise its discretion in favour of the petitioner. It is also pointed out in the counter-affidavit that the petitioner has not specified the period for the refund claim in detail, that it is not known as to how the petitioner arrived at the amount of Rs. 39,00,000/-. It is also claimed in the counter-affidavit that under Section 11-B of the Excises and Salt Act, 1944 a time limit is prescribed and as such the petitioner herein cannot get refund, and that the petitioner is not entitled to claim any refund as it has not filed any refund claim under the statutory provisions of the Act. It is further claimed that without following any procedure, the petitioner is trying to get refund of duty in a blanket prayer without proper documents and particulars.