ASSOCIATED BEARING CO LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition is placed before me in accordance with the direction of the learned Chief Justice in view of the difference between Mr. Justice Shah and Mr. Justice Kolse-Patil on the question whether the Excise authorities are liable to refund excess excise duty collected without authority of law or whether the claim can be refused on the doctrine of unjust enrichment. Rule 15 of Chapter XVII of the Bombay High Court Appellate Side Rules, 1960 provides that in case of difference of opinion between the Judges composing the Division Court, the point of difference shall be decided in accordance with the procedure laid down in Section 98 of the Code of Civil Procedure, 1908.

(2.) Only few facts are required to be set out to appreciate the claim made by the petitioners in the petition filed under Article 226 of the Constitution of India on March 2, 1979. The petitioners are a Company incorporated under the Provisions of the Companies Act, 1956 and manufacture ball and roller bearings and textile machinery components. The ball and roller bearings, all sorts are classifiable under the Central Excise Tariff Item No. 49 which was introduced in Schedule I to the Central Excises and Salt Act, 1944 (hereinafter referred to as the "Act") on May 28, 1971. The petitioners also manufacture textile machinery components of two types : (a) Centering Sleeve Inserts, and (b) Top Rollers. According to the petitioners, Centering Sleeve Inserts and Top Rollers are different and distinct from the ball bearings. The petitioners claim that the components are liable to payment of excise duty under Tariff Item No. 68 which is a residuary item and this residuary item was inserted in the Schedule with effect from March 1, 1975. The Excise authorities had recovered duty on the components under Tariff Item No. 49 for the period commencing from August 1, 1972 and ending with September 30, 1975. The duty was paid by the petitioners under protest. Because of certain trade notices and orders passed by the authorities, the Department did not charge duty on the components between the period commencing from October 1, 1975 to December 10, 1978. The duty was again levied and recovered with effect from December 11, 1978 onwards and paid by the petitioners under protest upto March 30, 1979 when the petitioners secured interim orders from this Court in the present petition and payment of duty was deferred on furnishing of Bank guarantees.

(3.) The petitioners had adopted proceedings before the Excise authorities claiming that the duty levied and recovered by the authorities under Tariff Item No. 49 was not legal and valid and those proceedings ultimately ended by an order passed by the Central Government on October 12, 1978 holding that the petitioners are liable to pay the duty. The petitioners sought the following prayers in the petition :