1980 (2) TMI 87 - HC - Central Excise

Summary

Issues:
1. Refund of excise duty paid by the petitioner on tufted carpets under Item 21 of the Schedule to the Central Excises and Salt Act.
2. Applicability of Section 40 of the Central Excises and Salt Act on the suit filed by the petitioner.
3. Determination of the period of limitation for filing the suit for recovery of the duty paid.
4. Whether the tufted carpets manufactured by the petitioner fall under the definition of 'woollen fabrics' as per the Schedule to the Act.

Detailed Analysis:
1. The respondent-company manufactured tufted carpets on which excise duty was levied under Item 21 of the Schedule to the Central Excises and Salt Act. The petitioner filed a suit claiming a refund of the duty paid, contending that the carpets were not covered under the definition of 'woollen fabrics' as per the Act. The suit was decreed in full by the Single Judge, leading to an appeal.

2. The appellant argued that each illegal payment of duty constituted a separate cause of action, and the limitation period for filing the suit should be counted from the date of each payment. The respondent contended that the right to sue accrued only after a decision by the Taxing Authorities in favor of the plaintiff. The court held that the cause of action was the illegal payment itself, not the subsequent decision, and that the suit was maintainable without waiting for such decision.

3. Regarding the period of limitation, the court applied Article 113 of the Limitation Act, determining that the suit was within time for payments made from a specific date onwards, while payments made earlier were barred by limitation. The total amount eligible for refund was specified, taking into account the limitation period and the notice requirement under Section 80 of the Code of Civil Procedure.

4. On the merits, the court found that tufted carpets manufactured by the petitioner did not fall under the category of 'woollen fabrics' based on a decision by the Central Government in revision and a Supreme Court precedent. The appeal was allowed, modifying the decree to allow a refund of a specific amount while dismissing the claim for the remaining amount. The success of the appeal was primarily based on the limitation issue, and no costs were awarded due to the nature of the decision.