I T C LIMITED Vs. M K CHIPKAR

JUDGEMENT

(1.) This appeal is directed against the decision dated April 6, 1977, of the learned Single Judge (Rege J.) dismissing the petition filed under Article 226 of the Constitution claiming a refund of excess excise duty paid under a mistake of law. This appeal was heard by the Division Bench consisting of Lentin and Sawant JJ. On a difference of opinion expressed by their separate judgments the matter has been placed before me.

(2.) The facts leading to this appeal which are not in dispute are these. The appellants - I.T.C. Limited formerly known as India Tobacco Co. Ltd., manufacture and sell cigarettes and tobacco products. They sell their products to the wholesale buyers who in turn sell the same to the secondary wholesalers of their choice. The secondary wholesalers in turn sell the said products to the retailers who ultimately sell them to the consumers. Between 1st September 1970 and 6th October 1972 I.T.C. effected sales of cigarettes bonafide in usual course of business at arms length on principal-to-principal basis to wholesale buyers. I.T.C. did not derive any extra benefit from the wholesale buyers and dealers and all the sales made by the I.T.C. did not have any consideration other than the price of the products. During the aforesaid period I.T.C. followed the self removal procedure provided in Chapter VIII-A of the Central Excise Rules. Till September 1972 I.T.C. were removing their goods under self removal procedure after paying excise duty thereon on the basis of prices charged by the wholesale buyers to the secondary wholesalers. Between September 1, 1970 and October 6, 1972, I.T.C. declared the assessable value under Section 4 of the Central Excises and Salt Act, 1944, in the price list according to the prices charged by the wholesalers to the secondary wholesales and accordingly paid the excise duty to the department. On August 14, 1970, a Division Bench of this Court in Voltas Limited v. A. K. Roy, 73 Bombay Law Reporter, 229, held that the correct basis of the assessment of the excise duty on the manufactured goods was the price charged by the manufacturers to their immediate wholesalers i.e. first wholesalers. This judgment was upheld by the Supreme Court on December 1, 1972, in A. K. Roy, v. Voltas Ltd. - 1977 ELT (J 177) (SC) = A.I.R. 1973, Supreme Court, 225 (hereinafter referred to as 'the Voltas case').

(3.) As a result of the Supreme Court decision in Voltas case, I.T.C. discovered that for the periods 1st September 1970 to 28th May 1971 and 29th May 1971 to 14th February 1972, they had paid excess excise duty amounting to Rs. 10,05,944.99 and Rs. 13,20,083.47 respectively aggregating to Rs. 23,26,028.46 and that for the periods 15th February 1972 to 16th March 1972 and 17th March 1972 to 6th October 1972 the excess excise duty paid was Rs. 1,83,685.67 and Rs. 10,16,417.83 respectively aggregating to Rs. 1,00,103.80. These excess amounts represented the over-paid duty on prices charged by I.T.C.'s wholesalers to the secondary wholesale dealers. There is a dispute between the parties as to the date of discovery of mistake by I.T.C.