1991 (3) TMI 143 - HC - Central Excise

Summary

Issues:
1. Claim for refund of excise duty based on exemption notification.
2. Rejection of refund claim by Assistant Collector.
3. Consideration of refund claim on merits.
4. Availability of exemption benefits due to lack of manufacturing activity during the base period.
5. Claim for refund based on ignorance of law and mistake of law.
6. Requirement of injury suffered due to mistake of law for claiming restitution.

Analysis:
1. The petitioner, a Sodium Silicate manufacturer, sought a refund of excise duty amounting to Rs. 24,940.22 ps, claiming benefits under Notification No. 198/76. The base period for clearance fixation was 1975-76, with manufacturing commencing in May 1977. The claim was made for the period May 14, 1977, to March 31, 1978, citing overpayment of duty due to exemption eligibility.

2. The Assistant Collector rejected the refund claim on July 26, 1979, citing the application's submission beyond the limitation period of six months from the last duty payment date. The rejection was deemed lawful under the Central Excises & Salt Act, 1944, as the claim was filed on April 2, 1979, post the limitation period.

3. Despite the rejection on limitation grounds, the petitioner's counsel urged the court to assess the claim on merits. Upon examination, it was found that the petitioner failed to demonstrate compliance with the conditions of Notification No. 198/76, rendering the claim ineligible for exemption benefits, even on substantive grounds.

4. The exemption notification necessitated a base period with production activity, precluding claims based on nil production during the base period for subsequent clearances. As the petitioner did not engage in manufacturing during the base period, the claim for exemption benefits was further invalidated, irrespective of the limitation issue.

5. The petitioner contended that ignorance of the law justified the duty payment and subsequent refund claim. However, the court clarified that ignorance of law differs from a mistake of law, requiring a showing of injury due to the mistake for restitution claims. In this case, the petitioner failed to establish any injury resulting from the duty payment error, negating the basis for restitution.

6. Ultimately, the court dismissed the petition, ruling against the petitioner's claim for refund, as it lacked merit both in terms of the limitation period violation and the absence of injury due to the alleged mistake of law. The petition was rejected, and the rule was discharged, upholding the Assistant Collector's decision.