1978 (2) TMI 206 - HC - Central Excise

Issues Involved:
1. Entitlement to withhold the amount in suit due to the Order dated 14th April 1972.
2. Scope of the Order dated 14th April 1972 regarding excise duty paid up to 27th March 1968.
3. Obligation to repay or refund the amount in suit post the Order dated 14th April 1972.
4. Jurisdiction of the Court to determine excise duty on carpets manufactured by the Plaintiff.
5. Legal effect of the Orders dated 31st March 1973 by the Assistant Collector of Central Excise.
6. Whether the suit has become infructuous due to the Orders dated 31st March 1973.
7. Excisability of carpets manufactured by the Plaintiff and the Court's jurisdiction over this matter.
8. Payment of Rs. 7,31,153.08 under protest and its effect.
9. Payment under coercion or mistake and the Defendant's obligation to refund.
10. Suit barred by time.
11. Jurisdiction of the Court to try the suit.
12. Relief.

Issue-wise Detailed Analysis:

Issue Nos. 1 to 6:
The first six issues are interlinked and revolve around the scope and implications of the Order dated 14th April 1972 by the Joint Secretary, Government of India. The Plaintiff argued that woollen tufted carpets do not fall under the definition of woollen fabrics as per Entry No. 21 of the First Schedule of the Central Excises and Salt Act, 1944. Despite paying excise duty under protest, the Plaintiff's appeal was initially dismissed but later accepted in statutory revision, establishing that the carpets were not excisable. The Defendant contended that the Order only applied to a specific period and amount, not subsequent payments. The Court held that the Order had a broader scope and applied to subsequent periods, making the Defendant's actions of withholding refunds and demanding further payments illegal. The Civil Court has jurisdiction to address the matter as the Defendant's actions were arbitrary and in violation of the final and conclusive Order in revision.

Issue No. 7:
This issue pertains to whether excise duty can be levied on woollen tufted carpets under Item No. 21. The Plaintiff relied on the Supreme Court's interpretation in Union of India & Ors. vs. Gujarat Woollen Felt Mills, where it was held that non-woven woollen fabrics are not excisable. The Court concluded that woollen tufted carpets, being non-woven, are not excisable, and the Civil Court has jurisdiction to determine this issue.

Issue No. 8:
The Plaintiff paid Rs. 4,11,285.32 under protest and the remaining amount without protest. The Court ruled that the lack of protest does not negate the Plaintiff's right to a refund, as no excise duty was payable on the carpets. The entire amount is refundable, irrespective of whether it was paid under protest.

Issue No. 9:
The Court found that whether the payments were made under coercion or otherwise is immaterial. Since the Defendant is not entitled to the amount, it must be refunded. The issue was decided in favor of the Plaintiff.

Issue No. 10:
The Court determined that the suit was not barred by time. The Plaintiff's claim for a refund under common law is valid within three years plus two months from the date of notice. The suit, filed on 26th March 1973, was within the limitation period since the cause of action arose on 14th April 1972.

Issue No. 11:
The Court has jurisdiction over the subject matter of the dispute. The Plaintiff's right to civil action accrues due to the Defendant's failure to act according to the statutory Order. The Court's jurisdiction is affirmed.

Issue No. 12:
As a result of the findings on the various issues, the suit is successful. The Court granted a decree for the recovery of Rs. 7,31,153.08 in favor of the Plaintiff, along with future interest at six percent per annum from the date of the suit's institution to the date of realization. Costs were awarded to the Plaintiff.

Conclusion:
The Court ruled in favor of the Plaintiff on all issues, granting a decree for the recovery of Rs. 7,31,153.08 with interest and costs. The Defendant's actions were found to be illegal, and the Civil Court has jurisdiction to provide a remedy.

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