1982 (6) TMI 56 - HC - Central Excise

Polyester polymer or polymer chips fibre - Liability to duty - Interpretation - Synthetic resins and plastic - Distinction between. - Duty paid under mistake of law - Import Policy Book - Alternative remedy - Existence of - Refund - Words and Phrases

Issues Involved:
1. Assessability of polyester chips to excise duty under Item 15A of Schedule I of the Central Excises and Salt Act, 1944.
2. Whether polyester chips are artificial or synthetic resins or plastic materials under Item 15A.
3. Market recognition of polyester chips as synthetic resins or plastic materials.
4. Validity of excise duty levy on polyester chips.
5. Claim for refund of excise duty paid on polyester chips.
6. Delay in filing the petition and limitation.
7. Unjust enrichment due to refund of excise duty.

Detailed Analysis:

1. Assessability of Polyester Chips to Excise Duty under Item 15A:
The primary issue was whether polyester chips of textile grade manufactured by the petitioners are assessable to excise duty under Item 15A of Schedule I of the Central Excises and Salt Act, 1944. The petitioners argued that the polymer chips are not plastics or artificial or synthetic resins within the meaning of Item 15A and thus should not attract excise duty.

2. Whether Polyester Chips are Artificial or Synthetic Resins or Plastic Materials:
The court analyzed the nature and scope of Item 15A, which includes artificial or synthetic resins and plastic materials. The court noted that the product in question, polyester chips, is a saturated linear polyester and a product of the polycondensation process. Given that polycondensation products are explicitly mentioned in Item 15A, the court concluded that polyester chips fall within the ambit of artificial or synthetic resins under Item 15A(1)(i).

3. Market Recognition of Polyester Chips as Synthetic Resins or Plastic Materials:
The petitioners argued that the polymer chips are not recognized in the trade as synthetic resins or plastic materials. However, the court emphasized that Item 15A should be interpreted based on its technical and scientific meaning rather than trade parlance. The court referred to various technical definitions and concluded that polyester chips, being polycondensation products, are indeed synthetic resins.

4. Validity of Excise Duty Levy on Polyester Chips:
The court held that polyester chips are covered by the term "artificial or synthetic resins" in Item 15A, making them liable for excise duty. The court rejected the petitioners' reliance on trade recognition, emphasizing the technical definitions provided in the Excise Act.

5. Claim for Refund of Excise Duty Paid on Polyester Chips:
The petitioners sought a refund of the excise duty paid from January 1965 to April 1972, amounting to Rs. 586 lacs, arguing that the duty was collected without authority of law. The court noted that the petitioners had paid the duty under protest until March 1970 and without protest thereafter. The court held that any refund claim must be limited to the period within three years prior to the filing of the petition.

6. Delay in Filing the Petition and Limitation:
The court observed that the petitioners had delayed filing the petition until April 1972, despite knowing of the alleged illegality of the duty since 1965. The court held that the petitioners' claim for refund was barred by limitation for any period beyond three years prior to the filing of the petition.

7. Unjust Enrichment Due to Refund of Excise Duty:
The court considered the respondents' argument that refunding the excise duty would result in unjust enrichment of the petitioners, as the burden of the duty would have been passed on to consumers. The court referred to previous judgments, including the Supreme Court's decision in D. Cawasji & Co. v. State of Mysore, which emphasized that the state is obligated to refund taxes collected without authority of law, regardless of whether the burden was passed on to consumers.

Conclusion:
The court concluded that polyester chips are assessable to excise duty under Item 15A of Schedule I of the Central Excises and Salt Act, 1944, as they fall within the category of artificial or synthetic resins. The petitioners' claim for refund of excise duty was limited to the period within three years prior to the filing of the petition, and the court rejected the argument of unjust enrichment.

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