1990 (11) TMI 156 - HC - Central Excise

Summary

Issues: Classification of product under Central Excise Tariff Act, 1985; Appeal against classification order; Refund of duty paid; Interpretation of Rule 173B(3) of Central Excise Rules; Show cause notice validity.

Classification of Product: The petitioner Company initially classified its product under sub-heading 4009.92 of the Central Excise Tariff Act, 1985, which was later approved. Subsequently, a new classification under sub-heading 4009.99 was sought but was rejected by the Assistant Collector. The Company appealed, and the Appellate Collector allowed the appeal, classifying the product under sub-heading 4009.99. The Department's appeal to CEGAT was dismissed due to a delay, making the Appellate Collector's decision final.

Refund of Duty Paid: Following the Appellate Collector's decision, the Company applied for a refund of the excess duty paid under the previous classification. However, the Department did not process the refund but instead issued a show cause notice demanding duty payment under the previous classification. The Company filed a petition under Article 226 of the Constitution of India seeking the refund.

Interpretation of Rule 173B(3): The Department argued that refund could only be claimed if duty was paid under protest as per Rule 173B(3) of the Central Excise Rules. The Court held that this rule did not apply retroactively and that the Department had no grounds to deny the refund under Section 11B(3) of the Act, which mandates refund in such cases.

Validity of Show Cause Notice: The Court found the show cause notice issued by the Department to be misconceived and ordered its quashing. It directed the Department to calculate and refund the excess duty paid by the Company from December 17, 1986, onwards by December 31, 1990. Failure to do so would result in interest payment at 15% per annum until the refund is made. Bonds and bank guarantees provided by the petitioners were discharged, and no costs were awarded in the case.