SANDOZ INDIA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this petition filed under Article 226 of the Constitution, the petitioners are challenging legality of order dated July 22, 1980 passed by the Asstt. Collector of Central Excise, Thane division II, rejecting the claim for refund made by the petitioners for the period covering from december 30, 1971 to May 20, 1974 on the ground that the claim is barred by limitation prescribed under Rule 11 of the Central Excise Rules. The facts giving rise to the passing of this order are not in dispute.

(2.) PETITIONER No. 1 is a joint stock company governed by the provisions of the Companies Act, 1956 and runs a factory at village Kolshet in Thane District. The petitioners manufacture synthetic resins, viz. (i) Finish K : V : S : Lig new; (ii) Finish-P; (iii) Finish-L. CRN; (iv) Finish l. C. R. ; (v) Finish-P I; (vi) Finish-E N I Pasta; and (vii) Finish- V. K. S. The petitioners were paying excise duty on the manufacture of these products under Tariff Item No. 15a (1) of the first Schedule to the old Excise Act. The department issued trade notice dated April 22, 1977 and trade notice dated January 18, 1978 clarifying that the products manufactured by the petitioners are classifiable under residuary Tariff Item No. 68 and not under Tariff Item No. 15a (1) of the First Schedule. The petitioners claimed that they became aware of the trade notice in May 1977 and realised that the duty was paid under mistake of law. The petitioners thereupon filed refund claims on September 1, 1977, September 7, 1977, December 20, 1977 and december 22, 1977 seeking refund of duty paid wrongly under mistake of law. The amounts claimed were Rs. 1,68,113. 74 for the period between December 22, 1971 and May 9, 1974; Rs. 1,28,887. 44 for the period between July 16, 1973 and May 9, 1974; Rs. 2,05,297. 87 for the period between December 30, 1971 and May 20, 1974; and Rs. 18,12,824. 39 for the period between April 27, 1966 and March 18, 1977.

(3.) THE Asst. Collector Central Excise by the impugned order held that the manufacture of goods prior to March 1, 1975 when Tariff Item No. 68 was introduced were not liable to payment of excise duty. The Asst. Collector accepted the claim of the petitioners that the duty was paid under mistake of law. The Asst. Collector declined to grant the refund as claimed by the petitioners solely on the ground that the claim is barred under clause (4) of Rule 11 of the central Excise Rules. The Asst. Collector held that the claim for refund was filed on May 6, 1977 and the petitioners are entitled to refund of duty which was paid only one year prior to that date. The refusal to grant refund with reference to Rule 11 of the Central Excise Rules is under challenge in this petition.