1982 (10) TMI 46 - HC - Central Excise

Summary

Issues:
1. Refund of excise duty paid by petitioners.
2. Application of Rule 11 of the Excise Duty Rules.
3. Jurisdiction of Central Excise authorities regarding refund claims.
4. Interpretation of the period of limitation for refund applications.
5. Exemption from payment of excise duty and its implications.

Analysis:

1. The petitioners, engaged in re-rolling iron and steel products, paid excise duty amounting to Rs. 1,92,944/01 p. under Item 26-AA(la) of the Central Excises and Salt Act, 1944. They later discovered that their products were exempt from excise duty as per Notifications issued in 1963 and 1965. Upon filing a fresh Classification List reflecting the exemption, the respondents approved it, and the petitioners' products were treated as exempt from excise duty.

2. The petitioners applied for a refund of the excise duty paid for the period between March 1971 and February 1973. However, their refund claim was rejected as time-barred under Rule 11 of the Excise Duty Rules, which required refund applications to be made within three months of payment. Despite the one-year limitation period under other rules, the petitioners' application was filed after the expiry of one year.

3. The petitioners argued that the Central Excise authorities were obligated to refund any amount collected unlawfully, even if beyond the limitation period specified by Rule 11. Citing precedents like Golden Tobacco Company Limited v. The Union of India, it was emphasized that recovery of duty beyond the lawful scope constituted an excess of jurisdiction and could not be justified as an error or misconstruction under Rule 11.

4. The respondents contended that since the petitioners were exempted from excise duty, their failure to claim the exemption did not constitute an unlawful recovery by the authorities. They argued that any payment made in such circumstances could be considered inadvertent and subject to the provisions of Rule 11 and its specified limitation period.

5. The Court held that when products are exempted from excise duty, any attempt by the authorities to recover such duty is unlawful and beyond their jurisdiction. Relying on established principles from prior judgments, the Court quashed the orders rejecting the petitioners' refund claim and directed the respondents to refund the undisputed amount of Rs. 1,92,944/01 p. within three months. The decision reaffirmed that the authorities must adhere to the law when collecting or refunding excise duty, especially in cases of exemptions.