1986 (7) TMI 251 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Coca Cola and Fanta (Orange) under Central Excise Tariff.
2. Applicability of Section 11B of the Central Excise Act versus Common Law for refund claims.
3. Time limitation for filing refund claims.
4. Doctrine of 'Lis' and its relevance to the date of discovery of the mistake.

Detailed Analysis:

1. Classification of Coca Cola and Fanta (Orange) under Central Excise Tariff:
The appellants manufactured Coca Cola and Fanta (Orange) under a franchise agreement and filed a classification list under Rule 173B of the Central Excise Rules, declaring these beverages under T.I. 1D of the First Schedule with a duty rate of 20% ad valorem. This classification was approved by the Superintendent of Central Excise. In 1976, the tariff description was amended, reducing the duty to 10% for aerated waters under T.I. 1D(2). The appellants continued to classify the beverages under the mistaken impression that they contained blended flavouring concentrate. An order in the case of Sri Krishna Bottlers (P) Ltd. later clarified that Coca Cola and Fanta (Orange) did not contain blended flavouring concentrate and should fall under T.I. 1D(2) with a 10% duty rate.

2. Applicability of Section 11B of the Central Excise Act versus Common Law for refund claims:
The appellants argued that their refund claim was governed by Common Law or General Law, not by the Central Excise Act. They cited several judgments to support the view that there was no limitation for claiming refunds in cases of tax levied without authority of law. The Department, however, contended that Section 11B, which came into existence before the refund claim was filed, imposed a six-month limitation period for such claims.

3. Time limitation for filing refund claims:
The appellants filed their refund claim on July 13, 1983, within three years of discovering the mistake, as per the order in the case of Sri Krishna Bottlers (P) Ltd. The Department rejected the claim as time-barred under Section 11B. The appellants argued that the relevant date for the limitation period should be the date of discovery of the mistake, not the date of filing the refund claim.

4. Doctrine of 'Lis' and its relevance to the date of discovery of the mistake:
The Tribunal observed that the doctrine of 'Lis' supports the view that the cause of action arises when the mistake is discovered. In this case, the mistake was discovered when the Government of India issued the order in the case of Sri Krishna Bottlers (P) Ltd. The Tribunal held that the law applicable on the date of discovery of the mistake, not the date of filing the refund claim, should govern the case. Since Section 11B was not in force at the time of the discovery, the claim should be governed by Common Law, which allows a three-year limitation period from the date of discovery of the mistake.

Conclusion:
The Tribunal concluded that the refund claim was within time as it was filed within three years from the date of discovery of the mistake. The lower authorities were directed to consider the matter accordingly and pass appropriate orders. The appeal was allowed, and it was held that the claim was not time-barred.