GOVERNMENT OF INDIA Vs. PRABHAKAR MATCH INDUSTRIES

JUDGEMENT

(1.) DEFENDANTS in O. P. of 1977 on the file of the Sub-Court, dharmapuri, are the appellants. The plaintiff/respondent filed a suit to recover Rs. 13, 830. 60. It was claimed in the plaint that the plaintiff firm was manufacturing matches and for the period from 22-7-1967 to 31-12-1974, it paid excise duty at the rate of Rs. 3. 75 per gross of matches of 50 boxes. Third defendant issued a demand notice dated 4-6-1975 claiming that the Supreme court of India by judgment dated 4-11-1974 has held that the duty leviable was rs. 4. 30 per gross of matches of 50 boxes and hence called upon plaintiff to pay the differential duty of Rs. 33, 152. 62. Later on, it was asked to pay one-third of the amount viz. Rs. 11, 839/20 and it was paid under protest on 17-9-1975, because the entire demand was barred by limitation under Central excises and Salt Act. There was no short-levy or non-payment of duty under rules 9, 10 and 10-A of the Central Excise Rules, hereinafter referred to as 'the Rules'. Rule 10-A had been struck down by this Court. Rule 10 governs the case of non-payment or short-levy. Under the law, the authorities have no power to collect any duty beyond the period of three months prior to the date of demand notice, and this has been finally decided in W. P. No. 4145 of 1975 and which applies to the facts and circumstances of this case. Hence, the suit had been filed to recover the illegally collected amount with interest at 12 per cent from date of payment.

(2.) THIRD defendant stated that plaintiff was allowed concessional rate of duty at the rate of Rs. 3. 75 per gross from 22-7-1967 to 31-12-1974, as per Notification No. 162 of 1967, dated 21-7-1967. This notification was amended by Notification No. 205 of 1967, dated 4-9-1967, which introduced certain conditions for grant of concessional rate of Rs. 3. 75 per gross. Plaintiff did not comply with the conditions, and hence was bound to pay rs. 4. 30 per gross. As a result of the decision of the High Court of Madras striking down clauses (b) and (ia) of the proviso to Notification No. 162 of 1967 amended by Notification No. 205 of 1967, plaintiff was allowed a concessional rate of assessment as per the declaration filed every year and without prejudice to the rights of Department. Department had filed an appeal before Supreme Court against the said judgment and it was allowed. Hence, plaintiff sought to have paid Rs. 4. 30, but the amount could not be collected from time to time, because of the pendency of the matter in the Supreme Court. Therefore, he was called upon to pay the differential duty of Rs. 33, 152. 62, but. . . . . . . . . . . . . . . . match manufacturers pleaded inability to pay huge amounts, government of India took a lenient view and ordered that if one-third of the amount which had become due was paid by 30-9-1975, then two-thirds of the amount would not be recovered. Taking advantage of this concession, plaintiff paid the amount without any protest. Hence, there is no question of any time limit being applied, and it is not barred by limitation. There is no question of any short-levy. Rule 10 does not govern the levy and collection in this case. The decision in W. P. No. 4145 of 1975 (S. Mahaboob Bani Beevi and othersv. The Inspector, Central Excise M. O. R. II; Kovilpatti) is not applicable to this case. It is equally incorrect to state that Rule 11 does not apply to plaintiff's case. The plaintiff having failed to make the necessary applications before the proper officer, within the period prescribed for refund of amount under Rule 11, the present suit is not maintainable.

(3.) THIS Court struck down certain clauses in Notification Nos. 162 and 205 of 1967. But for it, the plaintiff would have been always demanded to pay duty at the rate of Rs. 4. 30 per gross. He did not satisfy the conditions for grant of concessional rate of Rs. 3. 75 and, therefore, in law, he was liable to pay only Rs. 4. 30 per gross. The demand could not be made by defendants because the appeal filed by it against the said judgment was pending in the Supreme court, and it allowed it only on 4-11-1974. Therefore, for this period from 22-7-1967 to 31-12-1974, a sum of Rs. 33, 152. 62 became payable. It was on representations made by the trade, Union of India resolved to collect only one-third of the amount which had become due, and hence issued Ex. B-1 trade notice extending concession which was available only till 30-8-1975. Responding to this concession, plaintiff had paid one-third of the amount. Ex. A-2 produced by plaintiff shows that it had paid the amount of Rs. 11, 839. 20 on 17-6-1975 under protest. It was a payment made based on the trade notice under ex. B-1 dated 27-6-1975. There was absolutely no threat in Ex. B-1. Only a period had been fixed within which the concession could be availed of. In paragraph 3, it is stated that, if one-third of the amount is not paid by the said time, it would entail forfeiture of this concession and the entire outstanding dues would be recovered from the Unit concerned. Therefore, the word'forfeiture'used, in a sense inappropriately, was with reference to the concession that was extended, and not any other threat or coercion. No doubt, the plaintiff had paid the amount under protest but still whether defendants are precluded from collecting the amount which had become lawfully recoverable is the only other aspect to be considered. The decision in W. P. No. 4145 of 1975 has no relevance, because it enactment with the striking down of Rule 10a. No doubt, the matter is now pending in the Supreme Court, but until then, the contents therein cannot be looked into, for the purpose of this case at this point of time. Hence, the plaintiff's contention is that, only Rule 10 governs the case, and when the duty had been short-levied, the demand made under Ex. A-1 dated 4-6-1975 is hopelessly barred by limitation. But for the threat under ex. A-1 and trade notice issued under Ex. B-1, plaintiff would not have paid the amount. Authorities refused to deliver the goods unless the amount is paid and that was why in Ex. A-2, the remittance was made with the caption, "under protest".