1987 (12) TMI 43 - HC - Central Excise

Summary

Issues Involved:
1. Validity of the Notification dated 26-7-1975 under Section 3(2) of the Central Excises and Salt Act, 1944.
2. Claim for refund of excess excise duty paid.
3. Applicability of Section 4 in determining the tariff value under Section 3(2).
4. Delay in filing the petition and its impact on the claim.

Issue-wise Detailed Analysis:

1. Validity of the Notification dated 26-7-1975 under Section 3(2) of the Central Excises and Salt Act, 1944:

The petitioner challenged the notification issued under Section 3(2) of the Central Excises and Salt Act, 1944, which fixed the tariff value of sulphuric acid at Rs. 555/- per metric ton. The petitioner argued that this was in excess of jurisdiction and violated the basic concept of excise duty as contemplated under Section 4 of the Act. The respondents contended that the Central Government has the authority to fix tariff values under Section 3(2), which need not necessarily align with the manufacturing cost and profit of individual manufacturers. The Court noted that the notification was based on the weighted average of prices charged by different manufacturers in India, a method deemed fair and acceptable.

2. Claim for Refund of Excess Excise Duty Paid:

The petitioner claimed a refund of Rs. 9,14,050.96, arguing that the excise duty should have been calculated based on their manufacturing cost of Rs. 400/- per metric ton, not the Rs. 555/- per metric ton fixed by the notification. The Court ruled that for the period from 26-7-1975 to 30-9-1975, the petitioner is entitled to a refund based on their manufacturing cost, as the amendment to Section 4 came into effect only from 1-10-1975. For the subsequent period, the excise duty was correctly levied based on the tariff value fixed by the notification.

3. Applicability of Section 4 in Determining the Tariff Value under Section 3(2):

The Court analyzed whether the principles of Section 4 should apply when fixing tariff values under Section 3(2). It was noted that the Bombay, Madras, and Madhya Pradesh High Courts had previously held that the tariff values should not exceed the manufacturing costs and profits. However, the Kerala High Court dissented, stating that Section 3(2) allows for a different method of valuation. The Court concluded that the amendment to Section 4, effective from 1-10-1975, excluded its application to tariff values fixed under Section 3(2), thereby validating the notification for the period after the amendment.

4. Delay in Filing the Petition and Its Impact on the Claim:

The respondents argued that the petition was filed with undue delay. The Court noted that the petitioner discovered the mistake after the Bombay High Court's decision in Century Spinning and Manufacturing Co. v. Union of India in 1978 and filed the petition within three years. Citing precedents, the Court ruled that the claim for the period from 26-7-1975 to 30-9-1975 was within the limitation period, as the mistake was discovered only after the relevant judgment.

Conclusion:

The petition was partly allowed. The respondents were directed to adjust the excess amount paid as excise duty for the period from 26-7-1975 to 30-9-1975 towards future dues. There was no order as to costs, and the outstanding security amount was to be refunded to the petitioner.