1975 (11) TMI 44 - HC - Central Excise

Summary

Issues: Interpretation of notification for exemption from excise duty based on turnover; Determination of the period of limitation for filing a claim for refund of excise duty.

Analysis:
1. The petitioner, a small-scale industrial unit manufacturing steel furniture, sought exemption from excise duty under a notification exempting industries with turnover below Rs. 2 lakhs from paying duty on goods cleared up to Rs. 50,000. The petitioner cleared goods worth Rs. 1,44,241.50 during the financial year 1969-70 and paid excise duty accordingly. A claim for refund of Rs. 10,000 was filed within the one-year limitation period, but the claim was rejected as time-barred by the authorities citing the date of the last duty payment as the starting point of limitation.

2. The petitioner contended that the limitation period for filing a refund claim should commence from the end of the financial year, i.e., 31-3-1970, as per the notification terms. The petitioner argued that since excise duty was paid as sales were made, it was only after the financial year's end that eligibility for exemption could be determined. The petitioner's claim was within the one-year limitation as prescribed under Rules 11 and 173J of the Central Excise Rules, allowing for a refund application within one year from the date of payment.

3. The High Court held in favor of the petitioner, stating that the limitation period should start from the end of the financial year and not from individual payment dates. The court emphasized that the petitioner could not predict total turnover during the year, necessitating payment of duty with uncertainty about exemption eligibility. The court rejected the authorities' interpretation that limitation starts from each payment date and directed reconsideration of the refund claim within the period of limitation.

4. Consequently, the court allowed the petition, declaring the rejection of the refund claim as illegal and directing the authority to review the claim within the prescribed limitation period. The court's decision was based on the understanding that the limitation period for claiming a refund should commence from the end of the financial year, ensuring fairness and practicality in excise duty refund procedures.