CHORDIA AND SONS Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER No. 1 is a partnership firm and carry oil business of selling unmanufactured tobacco. The petitioners purchase raw tobacco crushed in the form of flakes and packed in bulk packs from the market. The petitioners repack the flakes In small paper packets and these small paper packets are sold with the petitioners' brand name. The petitioners paid duty on the process of repacking the flakes in small paper packets under Tariff Item No. 4.11(5) for the period commencing from January 1, 1979 and ending with June 30, 1986. The petitioners claim that the Customs Excise and Gold (Control) Appellate Tribunal by decision, dated October 29. 1985 in Collector of Central Excise, Pune v. Jaikisan Tobacco Co., Pune , held that unmanufactured tobacco packed in packets bearing brand name of the manufacturer does not amount to manufacture of chewing tobacco covered by Tariff Item No. 4 II (5) of the Central Excise Tariff and, therefore, not liable to payment of Central Excise duty. The petitioners thereupon filed application for refund of duty paid under mistake of law for the period between January 1,1979 and June 30, 1985, The application for refund was filed on November 19, 1986.

(2.) THE Assistant Collector, Central Excise and Customs, Sangli Division, Sangli, by order, dated December 18, 1986 dismissed the refund application on the ground that the claim was filed beyond the period of limitation as prescribed under Section 11 -B of the Central Excise Act. The Assistant Collector held that duty paid between 1979 and 1985 was sought back by filing application on November 20, 1986 and, therefore, the claim beyond period of six months from the date of institution of .the refund application was time -barred. The decision of the Assistant Collector was challenged by the petitioners by filing appeal before the Collector of Central Excise, Bombay. The appeal was dismissed by order, dated January 19, 1987. The appellate authority agreed with the finding of the Assistant Collector. The decision of these two authorities declining to entertain the claim on the ground of limitation is under challenge in this petition filed under Article 226 of the Constitution.

(3.) MR . Sethna, learned Counsel appearing on behalf of the department, made a faint attempt to urge that there is nothing to warrant a conclusion that the duty was paid under a mistake of law. It is not possible to accede to this submission.' It is not the claim of the department that the petitioners were fully conscious of the correct position in law and still paid the duty. The claim of the petitioners that they became aware of the correct position of law after the decision recorded by CEGAT in Collector of Central Excise, Pane v. Jaikisan Tobacco Co., Pune, , is not seriously controverted. Indeed, it is impossible to believe that the petitioners paid the duty knowing fully well that they were not liable to pay duty. As such the claim of the petitioners cannot be thrown out on the ground of limitation prescribed under Section 11 -B of the Central Excise Act.