2014 (6) TMI 307 - HC - Central Excise

Denial of refund claim - Bar of limitation - payment of duty under mistake of law - Held that - Hon ble Court has laid down that the suit cannot be instituted for refund of claim based on discovery of mistake of law and Section 72 of the Contract Act, 1932 and provisions of Section 17(1)(c) of the Limitation Act has no application in such a claim for refund. Further while dealing with the pending litigations, the Hon ble Court provided for time to make such application seeking refund, however, it further ruled that if proceedings have already been taken for refund and the parties have failed, they would not be entitled to the benefit of the said direction. The suit filed by the plaintiff seeking refund of excise duty paid on blended yarn for a period 14.9.1966 to 15.3.1972 was not maintainable before the civil court and was clearly barred by limitation. As admittedly, the plaintiff had approached the Superintendent, Central Excise by way of application seeking refund and the Collector (Appeals) by way of appeal against the rejection of its application seeking refund and had failed - Following decision of Mafatlal Industries Ltd. v. Union of India 1996 (12) TMI 50 - SUPREME COURT OF INDIA - Decided in favour of Revenue.

Summary

Issues:
1. Jurisdiction of civil court to deal with refund claim.
2. Limitation period for filing a suit seeking refund of excise duty.
3. Maintainability of the suit based on discovery of mistake of law.

Analysis:
1. Jurisdiction of Civil Court: The trial court concluded that there is no provision in the Central Excise Act, 1944 barring the jurisdiction of the civil court to entertain a claim for refund. The defendant challenged this by arguing that the civil court had no jurisdiction to deal with the issue of refund, which should be addressed under Rule 11 of the Central Excise Rules, 1944. However, the trial court found the suit maintainable before the civil court.

2. Limitation Period: The trial court determined that the suit seeking refund was within the limitation period. It was observed that the suit was filed within three years from the date the mistake of law, regarding the duty not being payable under certain tariff items on blended yarn, came to the notice of the plaintiff. The defendant contended that the suit was ex-facie barred by limitation, citing a Constitution Bench judgment of the Supreme Court in a related matter.

3. Maintainability based on Mistake of Law: The plaintiff filed the suit seeking a refund of excise duty paid on blended yarn due to a mistake of law. The Hon'ble Supreme Court, in a similar case, held that a person cannot claim a refund based on a decision in another person's case. The Court emphasized that Section 72 of the Contract Act and Section 17(1)(c) of the Limitation Act have no application to such refund claims. The Court further directed that pending litigations seeking refunds should file applications within a specified time frame. However, if parties had already taken refund proceedings and failed, they would not benefit from the said direction.

In conclusion, the appeal was allowed, and the judgment and decree of the trial court were set aside. The suit seeking a refund of excise duty was dismissed as it was found not maintainable before the civil court and was barred by limitation. The plaintiff's previous attempts to seek a refund through the Superintendent and Collector (Appeals) without success also precluded them from benefiting from the directions provided by the Hon'ble Supreme Court.