UNION OF INDIA Vs. GTC INDUSTRIES LTD

JUDGEMENT

(1.) THIS Appeal has been preferred by the Union of India and another against the judgment and order of the Learned Single Judge in Writ Petition No. 2413 of 1985, by which the Rule has been partly allowed and the Appellants are ordered to refund the sum of Rs. 35,57,094. 74 being the amount of excess recovery made from Respondents for the period from 30th November, 1982 to 7th December 1982 together with interest therein at the rate of 6% per annum from the date of the judgment i. e. 4th November, 1987 until payment.

(2.) THE 1st Respondents are engaged in the manufacture of cigarettes having the factory situated at Vileparle, Bombay. The 1st Respondents are required to pay excise Duty on excisable articles produced or manufactured by the 1st Respondents as per the rates that prevail under The Central excises and Salt Act, 1944 (now referred to as 'the said Act. ). In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 (Now referred as 'the said rules') read with sub-Section (3) of Section 3 of the Additional Duties of Excise (Goods of special Importance) Act, 1957, the Central Government issued a Notification No. 30/79-C. E. , dated 1st March, 1979, exempting Cigarettes of the description specified in Column (1) of the table annexed thereto and falling under sub-item II (2) of Item No. 4 of the first schedule to the said Act, from so much of the duty of excise leviable thereon both under the said and the additional Duties on Excise Act, as is in excess of the duty specified in the corresponding entry in column (2) thereof. The said Notification granted partial exemption to cigarettes. By another notification No. 284/82-C. E. , dated 30th November, 1982 also issued by the Central government in exercise of powers conferred by the said sub-rule (1) of Rule 8 of the said Rules, read with sub-section (3) of Section 3 of the said Additional Duties of Excise Act, the said notification No. 30/79-C. E. , dated 1st March, 1979 was rescinded. On 14th December, 1982, the superintendent of Central Excise, Range IX, Bombay D N - KIII addressed a letter to the 1st respondents inviting attention of the 1st Respondents to the said Notification dated 30th november, 1982 by which the partial exemption granted under the said notification dated 1st march, 1979 was withdrawn. Some correspondence thereafter ensued between the Excise department and the 1st Respondents. On 3rd January 1983, the 2nd Appellant recovered from the 1st Respondent the sum of Rs. 54,40,642. 71 as differential duty in respect of clearances of cigarettes effected by the 1st Respondents during the period between 30th November, 1982 and 13th December, 1982 on the ground that the 1st Respondents were liable to pay the excise duty at the tariff rates as prescribed by the said Notification dated 30th November, 1982 and not at the concessional rates of duty prescribed under the said Notification dated 1st March, 1979.

(3.) AS averred in the petition, the 1st Respondents learnt about the judgment dated 19th August, 1984 delivered by the Madras High Court in the case of Asia Tobacco Company Limited v. Union of India and Others reported in 1984 (18) ELT 152 by which, the Madras High Court held that the said Notification dated 30th November, 1982 was placed on sale for public only on 8th december, 1982 and therefore, it was not permissible to enforce the withdrawal of the partial exemption as per the said Notification dated 1st March, 1979 earlier to that date. The recission of the said Notification dated 1st March, 1979 was held to be effective only from 8th December, 1982. Neither the 1st Respondents not even the Superintendent of Central Excise were aware of the said Notification dated 30th November, 1982 until 14th December, 1982 inasmuch as uptill 13th December, 1982, the Excise Authorities freely permitted the 1st Respondents to clear the cigarettes manufactured by the 1st Respondents by counter signing the gate passes on the basis of the partial exemption under the said Notification dated 1st March, 1979. On acquiring knowledge about the said Judgment of the Madras High Court, the 1st Respondents realised that the Appellants had erroneously recovered the said sum of Rs. 54,40,642. 71 from the 1st respondents and that the 1st Respondents had paid the said amount under a mistake of law. On 30th October, 1984, the 1st Respondents applied to the 2nd Appellant for refund of the said sum of Rs. 54,40,642. 71 being the amount, according to the 1st Respondents, wrongly recovered form the 1st Respondents as differential duty in respect of clearance of Cigarettes between 30th november, 1982 and 13th December, 1982.