1989 (4) TMI 90 - HC - Central Excise

Summary

Issues involved:
The issue in this case is whether the claim of refund of excise duty paid by the petitioner on certain goods, which were exempted under a notification, was made within the prescribed time limit.

Summary:

Issue 1: Refund of excise duty within time limit
The petitioner claimed a refund of excise duty paid on goods exempted under a notification issued in June 1977. The Central Excise Collectorate provided instructions for set-off of duty, which the petitioner sought approval for in March 1978. The Assistant Collector initially rejected the application, stating that the notification did not allow for cash refund but only set-off at the time of clearance. However, the appellate authority overturned this decision, noting that the petitioner had been seeking approval since March 1980 and had maintained proper accounts. The appellate authority directed the Assistant Collector to allow the credit or set-off, which was later confirmed by the Range Superintendent. Despite a show cause notice being issued for being time-barred, the petitioner's claim was rejected by the Assistant Collector and upheld in appeal.

Issue 1 Details:
The High Court found that the Assistant Collector and the appellate authority were not justified in refusing the petitioner's claim based on limitation. The Court emphasized that once an exemption is allowed, it operates fully, removing the power to levy any duty. The delay in processing the claim by the department could not erode the petitioner's legal entitlement to set-off or refund, as the claim was raised in March 1978. The Court held that the limitation provision under Section 11-B did not apply to goods entitled to exemption, and the Assistant Collector was obligated to refund the amount without the petitioner having to make a claim, as directed by the appellate authority. Therefore, the Court allowed the petition and directed the opposite parties to refund the duty amount determined by the Range Superintendent in accordance with the Assistant Collector's order dated October 7, 1986.