ORDER
1. These 3 petitions have come up for preliminary hearing after notice. The respondents have been served and they have been represented, Respondents counsel has been heard.
2. The short question that falls for determination in this case is whether the claim of refund made by the petitioner/Company before the Assistant Collector of Central Excise which came to be partly disallowed may be sustained in law and refund of the duty paid under the Central Excises and Salt Act, 1944 may be directed by a writ of mandamus.
3. The relevant facts may be stated and they are as follows :
The petitioner/Company is incorporated under the Companies Act. It manufactures and sells parts and accessories of tractors and hydraulic gear pumps and in that behalf it obtained licence under the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The products of the company were classified under Tariff Item 68 of the erstwhile Schedule I to the Act. But, after the Central Excise Tariff Act, 1985 which was brought into force on 1-3-1986, the products of the company were classified under the Chapter Heading 87.08 of the Schedule to the Central Excise Tariff Act 1985 by mistake, instead of classifying the parts and accessories of motor vehicles under Chapter Heading 87.08 and hydraulic gear pumps under Chapter Heading 84.13 of the said Tariff Act as required. The petitioner paid the duty for the following periods, viz., from 23-9-1987, to 18-11-1987, from 1-3-1986 to 30-3-1987 and from 21-3-1987 to 21-9-1987, by 3 separate applications. While the refund claimed is allowed for the period from 10-4-1987 to 18-11-1987, the rest of the claim was rejected by the 1st respondent as evidenced by his common order passed as at Annexure F to the petitions.
4. A perusal of the said order indicates that, while the facts stated by the petitioner were not disputed in regard to the classification of goods wrongly under the relevant entries in the Act even after coming into force the Tariff Act, refund has been refused on the ground that it is time barred under Section 11-B of the Act. The general principle enunciated by judicial decisions in this country, notably in the case of Patel India (P) Ltd. : 1973ECR1(SC) is that unauthorised levy of tax or duty in whatever form collected is liable to be refunded by the State as it is not authorised by law, if the refund is demanded. Merely because a particular period is prescribed in Section 11-B of the Act that prescription does not take away the right to claim refund of unauthorised levy and thereby deny the persons who have suffered the levy, the benefit of refund.
5. Identical question arose before this Court in the case of I.T.C. Ltd. v. Union of India and Others. Applying the ration decidendi in Patel India's case, refund was directed on the ground that what is paid under a mistake of law is liable to be refunded as far as the refund is claim within the period prescribed under the general law limitation and even under Article 226 of the Constitution and the question of filing a suit would not arise for recovery of such sums. On an appeal the view expressed by the Court has been affirmed by the Division Bench of this Court in Union of India and Others v. I.T.C. Ltd. and Another [1985(21) ELT 655 (Karnataka)].
6. The payment here was made by the petitioner under a mistake of law because payment of duty was not in accordance with the provisions of the Tariff Act for the period from 23-9-1987, though the Tariff Act had come into force on 1-3-1986, by calculating the rate in accordance with the provisions of the Act. It cannot be classified as a mistake of fact as contended by Mr. Padmarajaiah, learned counsel for the respondent. The amount is paid by mistake as to the law under which it was imposed to be paid and, therefore, the excess payment is resulted and it amounts to collecting excess duty under the Tariff Act. Therefore, the levy was unauthorised and it is liable to be refunded not withstanding Section 11-B of the Act. In that view of the matter, the question of permitting only partial refund and refund and refusing the remaining amounts for the different periods which have been extracted above cannot be sustained in law.
7. Learned counsel also contended that permitting refund to the petitioner would amount to allowing the amount which it has transferred to its buyers to be retained by it thereby unjustly allowing it to enrich itself. This aspect also is covered by the Supreme Court decision in Patel India's case. This contention must also be rejected.
8. Accordingly, rule issued is made absolute. The impugned orders are quashed. The refund as prayed for by the petitioner shall be made within one month from the date of this order.