1982 (7) TMI 91 - HC - Central Excise

Summary

Issues:
1. Interpretation of excise duty rates and notifications.
2. Application of Rule 11 of the Central Excise Rules.
3. Claim for refund based on a mistake of law.
4. Legal remedies available for refund of duty paid under a mistake of law.

Analysis:

Interpretation of excise duty rates and notifications:
The petitioner, a company manufacturing tread rubber, was initially paying excise duty at 35% ad valorem on its product as per Notification No. 54/1979. However, a subsequent notification, No. 186/1979, led to a demand for duty at 36% ad valorem. The company sought clarification from the Collector of Central Excise, who confirmed the duty at 35% ad valorem plus 6% excess duty. The company then demanded a refund of the excess amount paid, leading to a show cause notice from the Assistant Collector of Central Excise, Mangalore.

Application of Rule 11 of the Central Excise Rules:
The Assistant Collector rejected part of the refund claim as time-barred under Rule 11 read with Section 11B(2) of the Central Excises and Salt Act, 1944. The petitioner contended that the payment made in excess was due to a mistake of law and argued that Rule 11 should not apply in such circumstances.

Claim for refund based on a mistake of law:
The petitioner argued that the authorities should not retain tax collected due to a mistake of law, citing the consistent view taken by various courts, including the Supreme Court. The petitioner relied on precedents to support the claim that duty paid under a mistake of law should be refundable, and the Revenue should not retain taxes collected illegally.

Legal remedies available for refund of duty paid under a mistake of law:
The court referred to various judgments, including one by a Division Bench of the Andhra Pradesh High Court, emphasizing that duty collected illegally should be refundable, and the Revenue cannot deny refunds based on the passing on of duty to consumers. The court held that the impugned order was illegal and erroneous in law, quashing it and directing the refund of the disallowed amount to the petitioner.

In conclusion, the judgment focused on the legality of the duty collection, the application of Rule 11, and the rights of the petitioner to claim a refund based on a mistake of law. The court emphasized the need to provide a remedy to the petitioner without unnecessary delay, ultimately ruling in favor of the petitioner and ordering the refund of the excess duty paid.