1982 (1) TMI 201 - CGOVT - Central Excise

Summary

Issues: Interpretation of Notification No. 65 of 1972; Applicability of Rule 11 of Central Excise Rules, 1944 on refund claim.

In this judgment, the petitioners cleared yarn falling under item 18E of the Central Excise Tariff and later filed a refund claim, contending that the yarn had been used in another composite mill, making it eligible for exemption under Notification No. 65 of 1972. The Assistant Collector rejected the claim as time-barred under Rule 11, which was upheld in appeal. The petitioners argued that the time of weaving by a composite mill, not the clearance time, should determine duty liability for refund eligibility. They claimed the refund was not covered by Rule 11 but by the Limitation Act.

The government rejected the petitioners' argument, stating that even if they had a case on merits, the excess duty was paid due to error, triggering the refund claim under Rule 11. Rule 11 mandates refund claims for duties paid in error to be made within three months, extendable to one year. As the claim was filed beyond one year, it was rightly rejected as time-barred. The government emphasized that claims for excess duties due to error must be filed within one year.

Furthermore, the government found no merit in the petitioners' case regarding the interpretation of Notification No. 65 of 1972. The exemption under the notification applied only if the yarn was used in the same composite mill where it was manufactured, not in another mill. Extending the exemption to yarn used in other mills would render the condition of the exemption redundant. Therefore, the government concluded that the petitioners did not pay the duty under a mistake of law and upheld the rejection of the revision application.