PHENOWELD POLYMER PVT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner No. 1 Company carries on manufacture of Moulded Plastic Articles at their factory at Saki Vihar Lake Road, Bombay-400 072. The items manufactured by the petitioners were liable to payment of excise duty under Tariff Item 15 (A) (2) of the First Schedule to the central Excises and Salt Act, 1944. The Finance Bill, 1975 introduced Tariff Item No. 68, which is residuary item, to the First Schedule of the Act and thereupon the Department claimed that the duty on moulded plastic articles manufactured by the petitioners shall be paid under Tariff Item 68 instead of Tariff Item 15 (a) (2 ). The petitioners paid the duty under mistaken belief that the claim of the Department is correct.

(2.) ON October 19, 1978, the petitioners informed the Assistant Collector that the products manufactured by them are liable to payment of duty under Tariff Item 15-A (2) and not under tariff Item No. 68. The Assistant Collector accepted the contention by order dated January 16, 1979 and directed that the petitioners should be granted consequential relief. Accordingly the assistant Collector by order dated January 25, 1979 granted refund for the period commencing from July 1, 1978 and ending with December 30, 1978. On January 24, 1980, the Superintended of Central Excise served show cause notice upon the petitioners to explain why the claim for refund for the period between March 1, 1977 and June 30, 1978 should not be rejected on the ground of claim being made beyond period of limitation. The petitioners gave reply to the show cause notice but the Assistant Collector by order dated august 2, 1980 rejected the claim as barred by limitation as prescribed under Rule 11 of Central excise Rules, 1944. The order of the Assistant Collector is under challenge in this petition filed under Article 226 of the Constitution of India.

(3.) SHRI Parekh, learned Counsel appearing on behalf of the petitioners, submitted that the limitation prescribed by Rule 11 of Central Excise Rules, 1944 is not open as a good defence in proceedings adopted by the petitioners in exercise of writ jurisdiction. Shri Parekh submitted that rule 11 may prevent the Assistant Collector from awarding refund for the period prior to six months from the date of making application for refund but this limitation does not come in the way of High Court granting the relief. The submission is correct and deserves acceptance. By catena of decisions of this Court, it has been held that the Department cannot resist refund of payment of duty recovered without any authority of law. The Assistant Collector found that the duty recovered from the petitioners by resort to Tariff Item 68 was not in accordance with law and the petitioners were entitled to refund of excess duty paid. In our judgment, the order passed by the Assistant Collector refusing refund on the ground of limitation cannot be sustained and the petitioners are entitled to the relief sought.