1987 (9) TMI 430 - HC - Central Excise

Summary

Issues:
Recovery of excise duty paid on transport charges, Barred by law of limitation, Date of discovery of mistake of law, Entitlement to recover excess duty paid, Deductibility of transport charges in assessable value determination, Calculation of interest on excess duty collected.

Analysis:
The plaintiffs, manufacturers of soft drinks, sought to recover excise duty paid on transport charges incurred for supplying products to wholesale dealers. The duty was paid under a mistake of law, as plaintiffs believed these charges were includible. The defendants contended that the plaintiffs had knowledge of this mistake earlier, referencing a Supreme Court judgment. The court noted that the plaintiffs' claim was for the period post the Supreme Court judgment, making the issue of discovery date academic. The suit was within the limitation period, as per the Limitation Act, 1963.

The court addressed the defendants' argument that the plaintiffs' inclusion of transport costs in price lists barred them from recovering the amounts. However, it was clarified that when duty is collected without legal authority, the State is obligated to refund it, irrespective of any estoppel claim. The court referenced relevant judgments to establish the deductibility of transport charges in determining assessable value for excise duty.

Regarding interest on the excess duty collected, the court cited previous cases where interest was awarded at 12% per annum. In line with these precedents, the court awarded interest at the same rate from the date of duty collection till payment. A decree was issued in favor of the plaintiffs for the recovery of excise duty paid on transportation costs, with interest and costs of the suit. The exact amount of excess duty collected was to be determined by the Assistant Collector, and the defendants were directed to pay the determined amount within a specified timeframe.

The judgment provided a detailed analysis of the legal issues involved, including the mistake of law, limitation period, deductibility of transport charges, and calculation of interest on excess duty. It clarified the plaintiffs' entitlement to recover amounts paid under a mistake of law and emphasized the State's obligation to refund duty collected without legal authority. The court's decision was based on established legal principles and precedents in similar cases, ensuring a fair resolution for the plaintiffs.