1981 (1) TMI 68 - HC - Central Excise

Valuation - Review - Refund of duty paid under mistake of law - Limitation for refund - Writ jurisdiction - Legality - Erroneous order - Price list

Issues Involved:
1. Jurisdiction of the Assistant Collector to issue a show cause notice for revocation of a refund order.
2. Applicability of excise duty on metal containers used for packing tread rubber.
3. Application of Rules 10 and 11 of the Central Excise Rules, 1944.
4. Limitation period for claiming a refund under Rule 11.
5. Ultra vires nature of Rule 11.
6. Maintainability of the writ petition.

Detailed Analysis:

1. Jurisdiction of the Assistant Collector to Issue a Show Cause Notice for Revocation of a Refund Order:
The petitioner argued that the Assistant Collector of Central Excise lacked the jurisdiction to issue a show cause notice for revocation of the refund order, claiming that the original refund order was quasi-judicial and could not be reviewed. The court held that "there is no inherent power of review in an authority while acting judicially or quasi-judicially," and that such power must be expressly conferred by statute. Since the Central Excises and Salt Act, 1944, and the Rules made thereunder did not confer such power, the Assistant Collector had no jurisdiction to issue the show cause notice.

2. Applicability of Excise Duty on Metal Containers Used for Packing Tread Rubber:
The court noted that the Appellate Collector had previously ruled that the value of metal containers should not be included in the assessable value of tread rubber for excise duty purposes. The Appellate Collector observed that "tread rubber is delivered to cartons or metal containers merely from commercial or marketing considerations" and that such charges "cannot form part of the assessable value of the tread rubber."

3. Application of Rules 10 and 11 of the Central Excise Rules, 1944:
The court examined whether the refund was "erroneously made" under Rule 10. It concluded that the refund was not erroneous because it was made pursuant to a quasi-judicial order. Rule 10 applies when duties have been "short-levied through inadvertence, error, collusion or misconstruction" or "erroneously refunded." The court found that the refund did not meet these criteria.

4. Limitation Period for Claiming a Refund Under Rule 11:
The court addressed whether the claim for refund was barred by the one-year limitation period prescribed under Rule 11 read with Rule 173-J. It held that the payment was made by mistake of law, and therefore, the period of limitation was three years under Article 113 of the Limitation Act, 1963. The court cited several precedents, including Bata Shoe Co. v. Collector of Central Excise, which distinguished between "mistake of law" and "inadvertence, error or misconstruction."

5. Ultra Vires Nature of Rule 11:
Given its finding that Rule 11 was not applicable to this case, the court did not need to address the contention that Rule 11 was ultra vires of the Act.

6. Maintainability of the Writ Petition:
The respondent argued that the writ petition was premature since only a show cause notice had been issued. The court rejected this argument, stating that if a notice issued by an authority is in excess of jurisdiction, the authority can be prohibited from proceeding further via a writ under Article 226 of the Constitution. The court cited Calcutta Discount Co. v. Income-tax Officer, which established that High Courts can issue orders to prevent unnecessary harassment from actions taken without jurisdiction.

Conclusion:
The court concluded that the Assistant Collector had no jurisdiction to issue the show cause notice and that the refund was not erroneously made. The writ petition was allowed, and a writ of prohibition was issued restraining the Assistant Collector from proceeding further with the show cause notice. The court also found that the refund claim was not barred by limitation and that Rule 11 was not applicable to this case.

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