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TMI Blog1990 (11) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the Trade Notice No. 175 of 75 dated 3-10-1975 issued by the defendants and that the said notice provides that the primary function of such product should not be by a lubricant. The plaintiff became aware that the speciality oil manufactured by him is not subject to the levy of excise duty and the payment of excise duty was made under a mistake and that therefore, on 17-5-1977 an application was made by the plaintiff for the refund of the said excise duty on the ground that the duty was paid under a mistake, which was received by the first defendant on 21-5-1977. The said application was rejected by the 2nd defendant by its order C. No. V/11D/18/2/77 T2 dated 26-6-1978 and that the request for the refund was rejected on the ground that there was no proof of satisfying the condition of the notification. Consequently an appeal was filed against the order of the second defendant to the Appellate Collector of the Central Excise and that the appellate authority by his order in A. No. 577/78 dated 9-5-1980 remanded the case to the second defendant for re-examination of the claim of the plaintiff and that consequently, the second defendant after such remand, issued a further show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation provided under Rule 11 of the Central Excise Rules will have no application and only the general limitation as prescribed by the Law of Limitation Act will be made applicable for refund of money paid under mistake and that consequently, the plaintiff issued a notice to the defendants on 9-3-1981 under Sec. 80 of the Code of Civil Procedure and that whereupon claiming a refund of Rs. 2,71,754.40 and that even so, the defendants have not made refund and that upon the basis of which the claim for the refund of Rs. 2,93,266.98 deducting the refund ordered already, totalling to Rs. 2,71,754.40 with the interest is claimed. 4. The further projection of the case in the plaint is that the suit of the plaintiff is not barred by limitation as the plaintiff is entitled to exclude the period from 21-5-1977 to 28-11-1980 during which time the plaintiff was prosecuting with due diligence other legal proceedings for the recovery of the money. On the basis of the above-said allegations, the plaintiff was constrained to file the suit. 5. Both the defendants are resisting the claim of the plaintiff by filing their written statements and their contentions in substratum is gathered from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even so, that the plaintiff could have realised their mistake as soon as the trade notice was issued and that the plaintiffs have not explained their delay for the late claim being made which was received by the second defendant only on 31-5-1977. While admitting the proceedings initiated and conducted by the 2nd defendant, the defendants contend further that there was no documentary evidence to prove that the products manufactured and cleared during the relevant period are only speciality oils and not lubricating oils and that as per the classification list filed by the plaintiffs, they have shown it as compounded lubricating oils falling under 11-B Tariff and that even after the issuance of the trade notice in respect of the speciality oils, the plaintiff was fully aware that what they had manufactured was only lubricating oils and not speciality oils and that no samples had been drawn and tested during the crucial period to prove that the products in question were only speciality oils and that further, even though the Appellate Collector remanded the matter for fresh disposal by the 2nd defendant by his order in A. No. 577/78 dated 9-5-1980, no appeal had been preferred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund in various cases, inclusive of the mistaken payment of duty and that the claim of the plaintiff accordingly was straightly rejected by the defendant as time barred and further that the suit filed in 1982 for the recovery of payment made during 1-4-1973 to 21-5-1976 has been clearly time barred and that the payments made by the plaintiffs was made under error, mis-construction or inadvertence and the limitation prescribed under the Central Excise Act squarely apply to the present case. The defendants claim further that the plaintiff cannot claim any exclusion of the time during the period between 21-5-1977 to 28-11-1980, to maintain the suit under the law of limitation. The further contention of the defendants are that besides there is no cause of action for the suit, each payment made by the plaintiff was on the basis of individual gate-passes given to and that as such on the basis of the individual cause of action and claiming of each of such payment through the suit is clearly barred by limitation, and that further, it was alleged that the plaintiff had not produced the necessary evidence and relevant duty paid documents in support of their claim at any time during the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accompanied with the classification list as per the Central Excise General Circular No. 13/72: Ex. D4 dated 3-5-1974 is the letter from M/s. Castrol Limited addressed to the Assistant Collector of Central Excise, Madras I Division : and Ex. D5 dated 11-8-1972 and 1-3-1973 proforma to be accompanied with the classification list as per the Central Excise General Circular No. 86/72 dated 11-8-1972. 14. Findings on Issue Nos. 1 and 2: Since the questions to be decided and involved in both the issues are interrelated to each other and form the basis for the plaintiff to make the suit claim, both the above-said issues can be grouped together and are taken for consideration. It is the common case that the Castrol Ltd., the original plaintiff was amalgamated by the order of the company Court and that pursuance to, the present plaintiff took over the administration of the same and that by way of amendment as per the order passed by this court, the plaint has been amended substituting the present name of the plaintiff and that accordingly, the amended plaint has been filed, and that, further the plaintiffs are manufacturers and suppliers of various lubricating oils and the speciality o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant appears to have considered this refund application filed by the plaintiff and rejected the same stating that there was no satisfactory proof offered and forthcoming in furtherance of the conditions stipulated in the trade notice Ex. D1 as per the order passed by the 2nd defendant on 26-6-1978. Then the plaintiff filed an appeal against the order of the 2nd defendant before the Appellate Collector of Central Excise, Madras and the Appellate Authority after considering the merits of the case in its entirity, remanded the whole matter to the lower authority namely the 2nd defendant herein to re-examine the claim afresh by passing the order on 9-5-1980 under appeal No. 1325/80 covered under Ex. P2. Consequently, the second defendant has issued a show cause notice dated 11-9-1980 covered under Ex. P3 to the plaintiff and thereby called upon him, it appears that, to show cause as to why the application for refund cannot be rejected on the ground that under Rule 11B read with Rule 173J of the Central Excise Rules, 1944, the claim for the refund for the period from 1-4-1973 to 31-3-1978 which was received only on 25-9-1977 was time barred. It appears further that for this show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant claim which reflects the suit amount. It is in evidence, both oral and documentary - that the claim of the plaintiff for the refund of the excise duty paid under Rule 11B for the manufacture and release of a speciality oil a non-lubricant was exempted under the trade notice Ex. D1 and that the duty has been paid out of sheer mistake and that as such the plaintiff is entitled to the refund of the duty paid under mistake as contemplated under Sec. 72 of the Contract Act. 16. During the cross examination, P.W.1 has given a very categorical answer to the searching questions of the learned counsel appearing for the defendants that what was manufactured was only a speciality oil and not lubricating oil. An attempt was made on behalf of the defendants, that to show that the plaintiff has not referred to the product of the oil in the classification list submitted by him before releasing the oil for marketing during the relevant period under Ex. D4 and that as such, the plaintiff is not entitled to claim the refund of the duty paid on the ground that payment was made under mistake. But, in my view, this attempt made by the learned counsel appearing for the defendants is highly be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anction the refund to the extent he is satisfied. The appeal is accordingly disposed of." 18. A careful perusal of the operative portion of the order passed by the Appellate Collector as above referred, clinches the fact that a sample of the manufactured product was taken and tested by the chemical examiner on 4-10-1977 apparently for the purpose of ascertaining that what was manufactured and marketed by the plaintiff during the relevant period in question was a speciality oil and was not compounded lubricant oil; but for the reasons known to the authorities concerned, the result of the said test was not taken into account and that it appears that not even an attempt was made to peruse the said report of the chemical examiner. I do not see any reason for the second defendant to exclude such a material factor while rejecting the consistent demand made by the plaintiff for the huge amount paid by them. So also, even the Appellate Authority has directed the 2nd defendant to consider the entire question afresh, but even then in my respectable view, the second defendant has not conducted the enquiry as was directed by the Appellate Authority, but on the other hand, in spite of followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mony of P.W.1 which appears to me rather convincing, natural and satisfactory, consistent from the very beginning itself, clinchingly proves the fact that what was manufactured and marketed by the plaintiff during the relevant period was only a speciality oil, consequently comes under the exempted items specified under Ex. D1, the trade notice. Adding to this, the more relevancy in this context comes through the order passed by the second defendant on 28-11-1980, covered under Ex. P6. In disposing the matters remanded by the Appellate Collector of the Central Excise, Madras and that pursuance thereto a show cause notice was given to the plaintiff followed by the reply given by the plaintiff and after giving a personal hearing, the Assistant Collector namely the second defendant herein, it appears had not followed the directions given by the Appellate Collector in disposing the entire matter afresh but, took into account only the limited aspects of as to whether the claim for refund of the excise duty made by the plaintiff was within the time or not as contemplated under Rule 11B and 173J of the Central Excise Rules, and that in doing so, it is manifest that the second defendant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that it was in existence as issued by the defendants exempting the speciality oil manufactured out of duty paid base mineral oil free from any excise duty and that the said direction and the claim of the plaintiff based on the said trade notice was accepted by the second defendant. In Ex. P6 relating to the refund claim for the period 1976-1977 which also was substantiated by the findings of the Appellate Collector of the Central Excise as was referred to above. Thus, having given the due regard and a very careful analysis of the contents of those documents filed on behalf of the plaintiff as well as the orders passed by the defendants herein, I have no doubt in my mind to conclude that the claim of the plaintiff that what was manufactured by them during 1973-1977, for which the excise duty was paid wrongly, was only a speciality oil and not a lubricating oil, squarely comes under the exempted category as provided under Ex. D1 and that the excise duty paid for the above-said items during the period was clearly under a mistake as was clearly demonstrated by the proved aspects of the plaintiff's case. The defendants on the other hand, though disputing the claim of the plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, the plaintiff is entitled to the refund of the excise duty paid under mistake and that the limitation provided under Rule 11 or 173J of Central Excise Rules will have no application and only the general law of limitation prescribed under the Limitation Act will apply and that as such the suit is not barred by limitation. On the contrary, the defendants have vehemently resisted the contention by stating that the relevant Rule 11 and 173J of Central Excise Rules squarely applicable to the facts of the present case and that the application for refund of the amount made on 17-5-1977 was clearly out of time and is not coming within the ambit of the above-said general rules and that as such the claim of the plaintiff was hopelessly barred by limitation and that the general law of limitation will not be made applicable to the facts of the present case. In this context, as I have already observed on issue Nos. 1 and 2 that the payment of the excise duty made by the plaintiff was only a mistake and as such I have no difficulty in holding that the suit transaction attracts the provision of Sec. 72 of the Contract Act. Section 72 of the Contract Act has envisaged the two circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner even if the assessee has himself filed a wrong classification list and paid higher tax than it was required to pay." This decision has been substantiated by another ruling reported in a case between Sales Tax Officer, Banaras Others v. Kanhaiya Lal Mukundlal Saraf (1959 Supreme Court Reports 1350). It was held in the above case that voluntary payment of liability was not by itself enough to preclude recovery of the said amounts under Sec. 72 of the Contract Act the only two circumstances there indicated entitling the party to recover money back and that money must have been paid under a mistake or under coercion. If mistake of either law or facts have been established, he is entitled to recover the monies back and the party receiving the same is bound to repay or return them irrespective of any consideration whether the monies have been paid voluntarily or not. 23. Applying the principles laid down in the above-said rulings, it is perfectly clear that the proved facts of the present case clearly come under the ambit of Sec. 72 of the Contract Act and that therefore, whether the plaintiff has committed a mistake of fact or law in the proved circumstances in this case it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Per contra, the learned counsel Thiru P. Narasimhan stoutly resisted the claim of the palintiff on the ground that the relevant rule and section will not apply to the facts of the present case and in support of this contention he has relied on the judgment rendered by the Supreme Court in the case between Union of India v. A.V. Narasimhalu - (1970 (2) S.C.R. 145). In this case, while dealing with the identical provision under the Customs Act, the Supreme Court in the above ruling had upheld the exclusion of jurisdiction of the Civil Court to entertain the suit. But the facts upon the basis of which the Supreme Court has held in the above case was clearly a different one and that in the circumstances, I am unable to persuade myself to import the law laid down by the Supreme Court to the facts of the present case. But, even so, it has become necessary and relevant for me to extract certain passages laid down by the Supreme Court at page 149 in para-3 in the said ruling which are as follows: "We, however, deem it necessary to observe that the civil courts have jurisdiction to examine cases in which the Customs Authority has not complied with the provisions of the statute or the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities cannot be excluded for the purpose of calculating the limitation in furtherance of the relevant section and rules provided under the Central Excise Act. In this context, I may stale that what is necessary and required is of filing a refund application with the authorities concerned must be within three years from the date of knowledge and that there cannot be dispute that the plaintiff had filed the refund application on 17-5-1977 i.e., within three years from the date of knowledge of mistake as he has stated that he came to know of the existence of the trade notice only during the 2nd or third week of May 1977 and that the said application was rejected by the 2nd defendant followed by an appeal before the Appellate Collector and the remand of the matter back for fresh consideration and the subsequent order passed by the 2nd defendant refunding a part of the amount and rejected the rest of the same. It is seen that in passing the order under Ex. P6 on 28-11-1980, the Assistant Collector, namely the 2nd defendant has recognised and approved the excise duty paid by the plaintiff for the relevant period was under a mistake and that consequently he has allowed part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaintiff has filed the suit, after giving due notice within the stipulated time under Sec. 80 of the Civil Procedure Code. Since the claim of the plaintiff is partly accepted by the 2nd defendant by his order covered under Ex. P6 has become the final one and the rejection of the part of the claim of the plaintiff has be come agreed that the order allowing the part of the claim made by the Assistant Collector in his order dated 28-11-1980, - It was the contention of the plaintiff that the period of limitation started only from 28-11-1980 onwards. In support of this position, strong reliance was placed in a case between Roman Electricals v. Union of India [1988 (35) E.L.T. 275 (All.)] by the learned counsel Thiru Dulip Singh during the course of his argument. Where it has been held that, "that the knowledge of payment under mistake of law gives rise to two remedies, one in the statute which can be enforced within six months and the other under the general law which can be availed of within three years from the date of knowledge and it is this period which has been held to be reasonable period within which the payer of duty is entitled to invoke extraordinary jurisdiction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80,I have no hesitation and doubt in my mind to hold that the proceedings are the civil proceedings as contemplated by the case laws and that if the said view is deployed, then I have no difficulty in bringing the facts of the present case within the ambit of Sec. 14 of the Limitation Act and that the said period can be excluded for the purpose of limitation. 29. Having given due regard and a careful analysis of all the case laws relied on and cited before me by the counsel for the respective parties, and the oral and documentary evidence of this case, I am inclined to hold that the plaintiff has proved that his claim made in the suit is perfectly within the time and not barred by the law of Limitation as contended by the defendant in this case and that there is no force or merits in the defendant's case that the suit is hit by the law of limitation and that accordingly I answer this issue in favour of the plaintiff and against the defendants. 30. Findings on Issue No. 4 : It is seen that the suit claim has been made by the plaintiff for the refund of the excise duty paid which reflects 20% of the excise duty paid under Tariff Item 11B wrongly and that even so as per the clas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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