Union of India (Uoi), S.K. Bharadwaj, Assistant Collector of Central Excise, C.L. Nangia, Appellate Collector of Central Excise and C.T.A. Piliai, Joint Secretary, Government of India Vs. Advani-oerlikon Limited and G.H. Malkani, Director - Court Judgment

Excerpt:
valuation : discount - trade discount cannot be included in the assessable value : central excises & salt act 1944 section 4.;refund - mistake of law--limitation under special law can not apply to cases of mistake of law : central excises & salt act, 1944: section 11b.;mistake of law - see refund. - practice & procedure --review; [r.m. lodha, s.a. bobde & s.b. deshmukh, jj] power of review held, power of review is not inherent in the court and such power has to be vested in the court or quasi judicial authority by express provision or by necessary implication.bharucha, j.1. this appeal arises out of the judgment and order of pendse, j. making absolute the writ petition filed by the respondents and permitting the appellants to ascertain the amount of excise duty to be refunded within three months.2. the respondents manufacture and sell electrodes. the electrodes are sold in the course of whole sale trade to dealers at the factory gate. excise duty was levied on the electrodes on 29th may, 1971. between june, 1971 and march, 1972 the respondents paid excise duty on the basis of a price list submitted by them and approved by the appellants. it was assessed on the maximum price list fixed by the respondents and the maximum price chargeable by the respondents' declares from their customers. the price charged by the dealers was loaded with, inter alia, the trade discount allowed to the dealers by the respondents. the respondents became aware, it was their case by reason of the judgment of the supreme court in a.k. roy v. voltas ltd., : 1973ecr60(sc) delivered on 1st december, 1972, that they had made a mistake of law in including the amount of the trade discount in the assessable value of the electrodes. accordingly, by letters dated 10th april 1973 and 12th june, 1973, the respondents filed a refund application in the sum of rs. 3,31,933.12 for the period between june, 1971 and march, 1973. this was the amount of excise duty attributable to the inclusion of the element of the trade discount in the assessable value of the respondents' electrodes. on 12th november, 1973 the respondents were issued a notice to show cause why their refund application should not be dismissed on the ground of limitation as provided by the central excise rules. the respondents were given a hearing and, on 7th february, 1974, the assistant collector of central excise rejected the refund application on the ground that rule 11 of the aforementioned rules was mandatory and the application was, accordingly, barred by limitation. the appeal preferred by the respondents was rejected, as also the revision application.3. on 11th october, 1977 the respondents filed the writ petition impugning the orders of the assistant collector, the order in appeal and the order in revision. the learned single judge upheld the contention of the respondents that the payment of excise duty in the manner in which it has been made was due to a mistake of law; that the receipt of the amount thereof by the appellants was without authority of law and that, therefore, rule 11 had no application. the learned judge referred to the decisions of division benches of this court in maharashtra vegetable products pvt. ltd. v. union of india 1981 elt 468 : 1982 ecr 929 and vipro products ltd. v. union of india 1981 elt 531: 1981 ecr 380. the learned judge rejected the appellants contention that the respondents could have discovered their mistake with some diligence before the decision in the voltas case and noted that the identical contention had been rejected by the division bench in the case of maharashtra vegetable products ltd. 1982 ecr 929. the learned judge permitted the appellants to ascertain within 3 months the amount of the trade discount that had been given by the respondents to their dealers during the relevant period, and, on that basis, to determine the amount of excise duty to be refunded.4. mr. master, learned counsel for the appellants, submitted to us that it was clear from a perusal of the explanation to section 4 of the central excise and salt act as it stood as the relevant time that deduction of a trade discount was permissible in arriving at the assessable value, as indeed it is. mr. master submitted that, therefore, the payment that had been made by the respondents was not made under a mistake of law. it was, he urged, made erroneously or due to inadvertence. mr. master cited the judgment of the supreme court in madras rubber factory ltd. v. union of india and others, 1983 e.l.t. 1579: 1985 ecr 2298 (sc). it is not necessary to deal with the judgment for the question of a payment having been made under a mistake of law was not in issue.5. it is clear from the explanation to section 4 that a trade discount is not to be taken into account in fixing the assessable value. payment of excise duty upon a basis which includes the trade discount in the assessable value is a payment made under a mistake of law, being a mistake in regard to what has to be taken into account for the purposes of determining the assessable value.6. by reason of the explanation to section 4 the appellants had no authority to recover excise duty on the basis of an assessable value which included the element of a trade discount. it has repeatedly been held that where the payment is received without authority of law, the limitation provided by rule 11 does not apply. [see : 1985(19)elt373(bom) and : 1985(22)elt334(bom) ] i.t.c. ltd. v. u.k. chipkar and ors. [1987 (10) ecr 531 (bom).7. in the result, the appeal is dismissed with costs.8. by reason of the interim order in the appeal, the appellants have deposited the amount of rs. 3,32,000/- in court and the respondents have withdrawn the same while furnishing a bank guarantee of the equivalent amount. mr. master affirms that this deposit was made after ascertaining the amount of excise duty refundable to the respondents. the bank guarantee given by the respondents shall, accordingly, stand discharged.