M/S SHREE MAHABIR STRAW BOARD FACTORY THROUGH NAND LAL PD. AND ANOTHER Vs. THE UNION OF INDIA THROUGH THE SECRETARY FINANCE AND OTHERS

JUDGEMENT

(1.) This is an application under Articles 226 and 227 of the Constitution for quashing the order of Assistant Collector of Central Excise, Laheriasarai (Annexure 1) rejecting the claim of the petitioners for refund of Excise duty paid by them during the period 19.6.1980 to 31.3.1981. Petitioner No. 1 is a firm owned by Nand Lal Prasad and petitioner No. 2 is its Manager. The factory commenced production of straw board in 1974. It holds a licence granted to it by the Central Excise Department. The rate of Excise duty payable by the petitioners was initially 40% of the value of the goods cleared. The rate of duty was modified in 1976 by Notification No. 70/76 dated 16.3.1976 (Annexure -2). By this notification the Central Government exempted Straw Board and Mill Board falling under sub -item (2) of item No. 17 of the First Schedule to Central Excise and Salt Act on the first 500 Metric tonnes cleared by any manufacturer for home consumption during any financial year. On the subsequent 500 Metric tonnes 25% Ad valorem duty was payable. The petitioners fall in the category of item No. 17, Sub -item (2) of the First Schedule to the Act. One of the provisions in this notification was that for determining the rate of duty applicable for the financial year beginning with first day of April, 1975 and ending on the 31st day of March, 1976, the quantity of the goods already cleared prior to the 16th day of March, 1976 was also to be taken into account. In 1980 came another notification (Annexure 3). This notification superseded the 1976 notification. By this notification the Central Government granted certain exemption to goods of the descriptions specified in column 3 of the table attached thereto, namely, paper and paper Board, of all sorts and specified articles thereof. It is not in controversy that this notification governs the petitioners as well. This exemption was granted to goods cleared for home consumption on or after the first day of April in any financial year. First clearance of the good upto an aggregate value not exceeding rupees seven and a half lacs was completely exempt from Excise duty. On clearance immediately followed the first clearance of the value exceeding seven lacs, 75% of the duty leviable on it would be exempted. The exemption granted carried two riders. The first was that the exemption would not be available where the aggregate value of clearance of all excisable goods for home consumption, from one or more factories, during the preceding financial year exceeded rupees twenty lacs. The exemption would not be available, if the aggregate value of clearance of the specified goods for home consumption, from one or more factories, during the preceding financial year had exceeded rupees fifteen lacs. To cut matter short the petitioners paid Excise duty in terms of the 1976 notification and not in terms of the notification of 1980. It is also not in controversy that the petitioners were entitled to a lower rate of duty in terms of the 1980 notification. On 26.9.1981 the petitioners filed a fresh Classification List claiming that they were liable to pay Excise duty at a lower rate in terms of 1980 notification. The Classification List was approved on 19.1.1982. Thereafter the petitioners prayed for refund of the excess amount paid by mistake. Prayer was made for refund of Excise duty paid during the periods (i) 19.6.1980 to 31.3.1981; (ii) 1.4.1981 to 25.9. 1981; and (iii) 26.9.1981 to 22.1.1982. The amounts paid during the three periods were respectively Rs. 30,281.03, Rs. 21,558.07 and Rs. 26,962.42. The Assistant Collector by order dated 30.1.1982 allowed the claim of the petitioners for refund of the duty paid during 1.4.1981 to 25.9.1981 and 26.9.1981 to 22.1. 1982, but rejected the prayer for refund of the duty of Rs. 30,281.03 paid between 19.6.1980 to 31.3.1981. The Assistant Collector conceded that the petitioners bad a right to refund of that duty, but rejected the claim on the ground that the petitioners had applied too late and their claim was barred by limitation. It would be useful to quote the observation of the Assistant Collector in this regard which reads as follows:

(2.) Sec. 11B of the Central Excises and Salt Act, 1944 provides that any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the relevant date. 'Relevant date' is defined in Explanation (B) to the same Sec. which reads as follows:

(3.) Mr. K. N. Jain, learned counsel for the petitioners contended that although it cannot be denied that claim for refund must be lodged within six months of the payment of duty in terms of Sec. 11B, clause (f) Explanation (B) but the date of final assessment in terms of Rule 173 -I must be held to be the date of payment and not the actual date when the duty is actually paid. He submitted that assessment of duty on goods cleared is done firstly when the goods are cleared, but that is followed by another assessment at the end of the financial year which is known as final assessment. That final assessment will in the very nature of things take place after the completion of the financial year and, there fore, the date of final assessment must be deemed to be the date of payment, although, in fact duty had been paid much earlier, i.e. at the time when the goods had been cleared.