1991 (12) TMI 71 - HC - Central Excise

Summary

Issues:
1. Interpretation of Tariff Items under the Central Excises & Salt Act, 1944
2. Constitutional validity of Section 11B of the Act
3. Claim for refund under Article 226 of the Constitution of India
4. Application of Section 72 of the Contract Act, 1872
5. Exercise of extraordinary jurisdiction under Article 226 for relief

Interpretation of Tariff Items:
The case involves a Mill Company manufacturing blended yarn with man-made and cotton fibers. The dispute arose regarding the classification of the product under Tariff Item No. 18A or 18E of the Central Excises & Salt Act, 1944. The company argued that the blended yarn did not fall under either category, leading to a challenge against the levy of excise duty.

Constitutional Validity of Section 11B:
The petitioner contested the constitutionality of Section 11B, citing a previous judgment in favor of a different party. However, the court referenced a Division Bench decision that upheld the validity of the section. Consequently, the challenge against the constitutional validity of Section 11B was dismissed.

Claim for Refund under Article 226:
The petitioner sought a refund of excise duty paid on blended yarn, amounting to Rs. 8,03,369/-, arguing that the duty collection was unconstitutional. The court, citing precedents, outlined the requirements for claiming restitution under Article 226, emphasizing the need to prove payment under a mistake of law or coercion, along with legal injury. As the petitioner failed to establish these elements, the claim for refund was rejected.

Application of Section 72 of the Contract Act, 1872:
Even if the petitioner met the conditions of Section 72 of the Contract Act, the court deemed it inappropriate to grant relief under Article 226 after a significant period. Referring to a Supreme Court case, the judgment highlighted limitations on relief for illegal exactions, emphasizing that relief would be restricted by the relevant rules of limitation.

Exercise of Extraordinary Jurisdiction under Article 226:
Considering the circumstances and legal principles, the court concluded that it would not be proper to grant relief under Article 226 for the refund of the tax collected by the department. The petition was found to lack substance and was ultimately rejected, with the rule discharged.

In summary, the judgment addressed the interpretation of tariff items, the constitutional validity of Section 11B, the criteria for claiming refund under Article 226, the application of Section 72 of the Contract Act, and the exercise of extraordinary jurisdiction for relief. The court dismissed the petition, emphasizing the need to fulfill legal requirements and limitations in seeking refunds for tax collections.