1990 (7) TMI 126 - HC - Central Excise

Summary

Issues:
1. Whether the process of galvanizing constitutes manufacture under Section 2(f) of the Central Excises and Salt Act.
2. Entitlement to refund under Section 11B(3) of the Central Excise Act.
3. Interpretation of Section 11B by the Assistant Collector regarding refund eligibility and limitation period.

Analysis:

Issue 1:
The petitioners argued that the process of galvanizing does not result in the creation of a new product with a distinct name, hence not constituting manufacture under Section 2(f) of the Central Excises and Salt Act. The Collector of Central Excise (Appeals) and the Customs Excise & Gold (Control) Appellate Tribunal both ruled in favor of the petitioners, stating that galvanizing does not amount to manufacture. This decision formed the basis for the petitioners' claim for a refund of excise duty paid under Item 68 of the Act.

Issue 2:
Following the favorable appellate decisions, the petitioners sought a refund under Section 11B(3) of the Central Excise Act for the period from January 1978 to July 1981. Despite providing details of the duty paid during this period, the refund was not granted as the matter was under appeal before the Tribunal. Justice Mrs. Manohar directed the Department to verify the refund claim and ordered the refund to be processed within three weeks, noting that the verification had already been completed.

Issue 3:
The Assistant Collector of Central Excise, in compliance with the court order, verified the refund claim and determined that only a portion of the claimed amount was refundable, citing a limitation under Section 11B for the balance amount. The petitioners contended that the Assistant Collector misinterpreted Section 11B, arguing that when a refund becomes due as a result of an appellate order, the Assistant Collector is obligated to refund the amount without requiring a separate claim. The court agreed with the petitioners, setting aside the Assistant Collector's decision and directing the immediate refund of the disputed amount.

In conclusion, the High Court ruled in favor of the petitioners, directing the respondents to refund the disputed amount within two weeks. Failure to comply would result in interest being payable at a rate of 15% per annum until the payment is made. The respondents were also ordered to bear the costs of the petitioners.