Chordia and Sons and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

Excerpt:
central excises and salt act, 1944 - section 11-b - limitation under applicability of - in respect of duty paid under a mistake of law the period of limitation prescribed under section 11-b -- is not applicable when refund is sought by filing a petition in the court -- cannot be believed that petitioners paid the duty knowing fully well that they were not liable to pay duty -- therefore, claim of petitioners cannot be thrown out on ground of limitation prescribed under section 11-b of the act. - - indeed, it is impossible to believe that the petitioners paid the duty knowing fully well that they were not liable to pay duty.m.l. pendse, j.1. petitioner no. 1 is a partnership firm and carry oil business of selling unmanufactured tobacco. the petitioners purchase raw tobacco crushed in the form of flakes and packed in bulk packs from the market. the petitioners repack the flakes in small paper packets and these small paper packets are sold with the petitioners' brand name. the petitioners paid duty on the process of repacking the flakes in small paper packets under tariff item no. 4.11(5) for the period commencing from january 1, 1979 and ending with june 30, 1986. the petitioners claim that the customs excise and gold (control) appellate tribunal by decision, dated october 29. 1985 in collector of central excise, pune v. jaikisan tobacco co., pune , held that unmanufactured tobacco packed in packets bearing brand name of the manufacturer does not amount to manufacture of chewing tobacco covered by tariff item no. 4 ii (5) of the central excise tariff and, therefore, not liable to payment of central excise duty. the petitioners thereupon filed application for refund of duty paid under mistake of law for the period between january 1,1979 and june 30, 1985, the application for refund was filed on november 19, 1986.2. the assistant collector, central excise and customs, sangli division, sangli, by order, dated december 18, 1986 dismissed the refund application on the ground that the claim was filed beyond the period of limitation as prescribed under section 11-b of the central excise act. the assistant collector held that duty paid between 1979 and 1985 was sought back by filing application on november 20, 1986 and, therefore, the claim beyond period of six months from the date of institution of .the refund application was time-barred. the decision of the assistant collector was challenged by the petitioners by filing appeal before the collector of central excise, bombay. the appeal was dismissed by order, dated january 19, 1987. the appellate authority agreed with the finding of the assistant collector. the decision of these two authorities declining to entertain the claim on the ground of limitation is under challenge in this petition filed under article 226 of the constitution.3. mr. deshpande, learned counsel appearing on behalf of the petitioners, submitted that though the authorities below are bound by the period of limitation prescribed under section 11-b of the central excise act this court while exercising writ jurisdiction is not bound by such period of limitation, in case it is established by the petitioners that duty was paid under a mistake of law. the submission is correct as it has been held by catena of cases that in respect of duty paid under a mistake of law the period of limitation prescribed under section 11-b is not applicable when refund is sought by filing a petition in this court.4. mr. sethna, learned counsel appearing on behalf of the department, made a faint attempt to urge that there is nothing to warrant a conclusion that the duty was paid under a mistake of law. it is not possible to accede to this submission.' it is not the claim of the department that the petitioners were fully conscious of the correct position in law and still paid the duty. the claim of the petitioners that they became aware of the correct position of law after the decision recorded by cegat in collector of central excise, pane v. jaikisan tobacco co., pune, , is not seriously controverted. indeed, it is impossible to believe that the petitioners paid the duty knowing fully well that they were not liable to pay duty. as such the claim of the petitioners cannot be thrown out on the ground of limitation prescribed under section 11-b of the central excise act.5. mr. sethna then submitted that inspite of this conclusion this court should not exercise writ jurisdiction and set aside the orders of the departmental authorities because the burden of the duty paid by the petitioners was already passed over to the customers. learned counsel for the respondents cited in support of this submission a decision of the full bench of this court in new india industries ltd. v. union of india, 1990 mlj 5. though the burden is upon the department to establish the fact that the duty was passed over to the customers by the manufacturers the burden is discharged claims mr. sethna, in the present case by the department by filing the return. mr. sethna submitted that the assertion of the department in respect of passing of the burden to the customers is not controverted by the petitioners by filing affidavit in rejoinder. learned counsel also submitted that in view of the amendment of section 11-b of the central excise act in cases where the duty is passed over to the customers the manufacturer is not entitled to refund inspite of the fact that duty was paid under a mistake of law. mr. sethna submitted that both these contentions should be decided in this writ petition. we decline to accept the invitation of the learned counsel to determine this questions, as in our judgment, it is the duty of the assistant collector to examine all the facts of the claim and thereafter record a finding of fact. it is not appropriate for this court in exercise of writ jurisdiction to undertake the exercise which is within the duty to be performed by the assistant collector. in our judgment, the orders of the two authorities below are required to be set aside and matter remanded to determine :(a) whether the claim of the petitioners that their case is covered by the decision of the cegat in collector of central excise, pune v. jaikisan tobacco co., pune, , is correct ;(b) whether the petitioners are entitled to refund of duty;(c) whether actual refund can be effected in view of the decision of the full bench of this court in new india industries ltd. v. union of india, 1990 mah lj 5 ; and(d) whether actual refund is permissible in view of the provisions of section 11-b of the act.6. mr. sethna referred to the decision of the supreme court in m/s. orissa cement ltd. v. state of orissa : [1991]2scr105 , and particularly to the observations made in paragraph 71 of the judgment. we are unable to appreciate how the observations are relevant for the purpose of the present case as we are not deciding whether the petitioners are entitled to refund or not. in our judgment, the impugned orders passed by the two authorities below are required to be set aside and matter remanded to the assistant collector for disposal on merits in accordance with the observations made hereinabove.7. accordingly, petition partly succeeds and order, dated december 18, 1986 passed by the assistant collector of customs and central excise, sangli division, sangli and order, dated january 19, 1987 passed by the collector of central excise (appeals), bombay are set aside and the proceedings are remanded to the assistant collector for disposal in accordance with the observations made in the judgment. in the circumstances of the case there will be no order as to costs.