1991 (10) TMI 52 - HC - Central Excise

Summary

Issues:
Validity of levy of excise duty on flush doors under Tariff Item 16B of the Central Excises and Salt Act, 1944 and consequent refund of the amount collected without authority of law.

Analysis:

1. The petitioner, a public limited company manufacturing plywood and allied products, challenged the levy of excise duty on flush doors under Tariff Item 16B of the Central Excises and Salt Act, 1944. The petitioner argued that flush doors do not fall under Item 16B and should be classified under item 68 as "goods not elsewhere specified," as per a judgment by the Delhi High Court.

2. The Delhi High Court's judgment in M/s. Wood Craft Products Ltd.'s case was accepted, classifying flush doors under Item 68. The Government of India, through a circular, agreed to classify flush doors accordingly. Subsequently, the petitioner filed a refund claim for the excess excise duty paid on flush doors.

3. The respondent Assistant Collector of Central Excise partially admitted the refund claim but rejected a portion as time-barred under Section 11B of the Act. The respondents argued that the petitioner voluntarily classified flush doors under Tariff item 16B, precluding them from claiming a refund based on a mistake of fact or law.

4. The court noted that Section 11B, effective from 17-11-1980, governs refund claims post that date, similar to Rule 11 of the Central Excise Rules. However, precedent cases established that if an amount is paid under a mistake of law, neither Rule 11 nor Section 11B would bar the claim based on limitation.

5. Precedent cases like D. Cawasji & Co. and Others v. The State of Mysore emphasized that the period of limitation for recovering money paid under a mistake of law is three years from the date the mistake is known. The court also cited cases like Ceat Tyres of India Ltd. v. Union of India, Associated Bearing Company Ltd. v. The Union of India, and Maharashtra Vegetable Products Pvt. Ltd. v. Union of India, supporting the view that the provisions of Rule 11 or Section 11B would not bar refund claims based on mistakes of law.

6. The court concluded that once the recovery of excise duty is deemed illegal, Rule 11 or Section 11B would not apply, and a claim for refund could be entertained within three years from the date the mistake of law was discovered. The petitioner's claim for a refund of Rs. 5,51,453.90 was allowed, with interest at 12% per annum from the date of filing the petition until payment. The respondents were directed to pay the amount within four weeks.

7. The petition was allowed, the impugned order was quashed, and the respondents were directed to pay the excess excise duty with interest. No costs were awarded in the matter.