1980 (2) TMI 88 - HC - Central Excise

Valuation - Duty collected in excess - Mistake of law - Duty illegally collected - Writ of mandamus - Civil Court - Jurisdiction - Limitation

Summary

Issues Involved:

1. Jurisdiction of the High Court under Article 226 of the Constitution of India.
2. Applicability of Rule 11 of the Central Excise Rules regarding the period of limitation for refund claims.
3. Mixed questions of law and fact requiring adjudication by a Civil Court.

Detailed Analysis:

Jurisdiction of the High Court under Article 226 of the Constitution of India:

The primary issue was whether the High Court could interfere with the impugned order of the 1st respondent and issue appropriate writs under Article 226 of the Constitution. The Court held that the collection and retention of revenue without the authority of law violated Article 265 of the Constitution. The Court referenced the Supreme Court's decision in Patel India (Private) Ltd. v. Union of India, which emphasized that illegally collected taxes must be refunded. The Court concluded that the writ petition was maintainable as the impugned order involved an illegal retention of money by the Revenue, which warranted judicial intervention.

Applicability of Rule 11 of the Central Excise Rules regarding the period of limitation for refund claims:

The second issue was whether the claims for refund were governed by the period of limitation prescribed under Rule 11 of the Central Excise Rules. The Court found that Rule 11 did not apply to the facts of the case because the payments made by the Company were under a mistaken interpretation of the law, and thus, the excess duty paid was without the authority of law. The Court relied on the Supreme Court's ruling in Patel India's case, which held that such payments could not be equated with inadvertence, error, or misconstruction. Consequently, the limitation period under Rule 11 was inapplicable, and the Company was entitled to a refund for payments made within three years from the date of application.

Mixed questions of law and fact requiring adjudication by a Civil Court:

The Court addressed whether the case involved mixed questions of law and fact that required adjudication by a Civil Court. The Court noted that the Revenue's denial of the Company's claims was a bald assertion without any substantial evidence. The Senior Standing Counsel for the Central Government admitted that excess payments were made by the Company. Therefore, the Court concluded that the case did not involve any complex mixed questions of law and fact that necessitated a Civil Court's intervention. The Court disagreed with the Bombay High Court's decision in Miscellaneous Petition No. 1151/1975, which suggested otherwise.

Conclusion:

The High Court quashed the impugned order of the 1st respondent and the portion of the 4th respondent's order limiting the refund to a period of one year. The Court issued a writ of mandamus directing the respondents to refund the amounts claimed by the Company on February 27, 1973, after verifying the accuracy of the claims. The respondents were ordered to comply with the mandamus within six months. The Court emphasized that the jurisdiction under Article 226 should be used to further the ends of justice and not be denied based on technicalities. The parties were directed to bear their own costs.