AROCHEM INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this petition filed under Article 226 of the Constitution of India, the petitioners are challenging legality of order dated November 16, 1981 passed by the Collector of Central Excise (Appeals), Bombay whereby the refund claim for the period from November 20, 1976 to March 31 1978 was rejected save and except for a day. The petitioners are a partnership firm and manufacture Organic Surface Active Agents liable to payment of excise duty under Tariff Item No. 15-AA of the First Schedule to the central Excise and Salt Act, 1944. The petitioners claim that with effect from November 20. 197 , power and/or steam is used for the manufacture of Organic Surface Active Agents. The Government of India published notification No. 198/76 dated June 16, 1976 providing for higher production incentive Scheme. The Scheme provides that the manufacturers who are entitled to the advantage of the notification would be liable to pay lesser amount of excise duty.

(2.) THE petitioners submitted declaration dated August 23-1978 to avail of the incentive Scheme and the same was approved by the proper Officer, i. e. Assistant Collector of Central Excise, Surat on September 13, 1978. The petitioners then applied for refund of Rs, 1,43,019,40 on September 30. 1978 for the period commencing from November 20, 1976 to March 31, 1978 as provided under Notification dated June 16, 1976. The Assistant Collector, central Excise, Surat by order dated September 1, 1980 held that the petitioners are entitled to have the advantage of the notification after the declaration was approved by the proper Officer. The Assistant Collector rejected the refund application solely on the ground that the application was barred by limitation as contemplated by Rule 11 of Central Excise Rules, 1944. The petitioners preferred appeal before the Collector, Central Excise (Appeals) Bombay to challenge legality of the order passed by the Assistant Collector. The appellate authority came to the conclusion that the claim of the petitioners for refund for the period prior to the date of the declaration is correct. After recording this finding, the Collector of Central Excise held that in accordance with the provisions of Rule 11, the petitioners would be entitled to refund of the amount for a duration of six months immediately preceding the date of filing of the refund application. The refund application was filed on september 30, 1978 and consequently, the Collector of Central Excise held that the petitioners would be entitled to the refund of the excess duty paid only on March 31, 1978. The decision of the Collector of Central Excise is under challenge.

(3.) SHRI Rajadhyaksha, learned counsel appearing on behalf of the petitioners, submitted that the Collector was in error in holding that Rule 11 of the Central Excise Rules is attracted to the facts of [the case. The learned counsel did not dispute that the Collector, who is a creation of the Statute, is bound by the provisions of the Act and the Rules and, therefore, could not have granted the claim for a duration beyond six months from the date of presentation of the refund application but urged that the bar of limitation has no application when the assesee approaches this Court by filing a petition under Article 226 of the Constitution of India. In our judgment, the submission is correct and deserves acceptance. In accordance with the decision of the Collector, the petitioners are entitled to claim refund for the period prior to the date of declaration, i. e. prior to September 13, 1978. In other words, the duty recovered from the petitioners for the earlier period was without any authority of law and consequently, the Department is bound to refund the said duty to the petitioners. Shri Desai, learned counsel appearing on behalf of the respondent, did not dispute that in view of catena of decisions of this court, the bar of limitation under Rule 11 is not applicable to the proceedings adopted under Article 226 of the Constitution of India but submitted that the authorities below have not ascertained as to what is the amount of duty repayable to the petitioners and for that purpose the proceedings will have to be remitted back to the Assistant Collector. Shri Desai also submitted that in view of the enactment of Central Act No. 40 of 1991 which has come into operation from September 20, 1991 even if some amount is found to be refundable to the petitioners, still the Department is not bound to pay the said amount but it will have to be credited to the fund created under the act. It is not necessary to examine the contention about the applicability of the Act in the present proceedings and it is sufficient that the finding of the collector that the claim was barred by limitation save and except for a day is set aside and the proceedings are remitted back to the Assistant Collector for ascertaining as to what is the amount of duty refundable to the petitioners. The other contentions raised by Shri Desai can be agitated after ascertainment of the amount.