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TMI Blog1991 (7) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... fication and falling under Item No. 15A of the First Schedule was exempted from so much of the duty of excise leviable thereon as is in excess of the rate specified in the corresponding entry in Column (3) of the Table. The duty payable under the Exemption Notification in respect of Phenolic resin was reduced to 20% ad valorem. The notification recites that the expression "phenolic resins" means synthetic resins manufactured by reacting any of the phenols with an aldehyde and includes chemically modified phenolic resins and liquid phenolic resins but does not include blends of the phenolic resins with other artificial or synthetic resins. 2. The petitioners claim that manufacture of phenolic moulding powder falls within Item 3 read with Explanation III of the Notification dated June 1, 1971 and consequently the levy of duty cannot be at the rate of 40% ad valorem as prescribed under Item 15A of the First Schedule to Central Excise Tariff. The petitioners complained that in spite of the Exemption Notification, the Department unlawfully and illegally levied and recovered the duty at the rate prescribed under Item 15A of the First Schedule. The petitioners thereupon preferred Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd notice dated July 29, 1981 was served on the Company demanding duty amounting to Rs. 23,54,527/- for the period commencing from February 27, 1980 and ending with June 30, 1981. 4. The Company then filed the present petition on July 31, 1981, challenging legality of show cause notice dated July 29, 1981. The Single Judge of this Court by order dated August 3, 1981 directed the Company to file representation before the Department in respect of correct rate of duty and directed the Assistant Collector of Central Excise to dispose of the representation within four weeks. Accordingly, the representation was filed by the Company and after some correspondence, the Assistant Collector of Central Excise passed order on September 7, 1981 holding that the products manufactured by the Company are not covered either under Exemption Notification dated June 1, 1971 or February 27, 1980 and the Company is liable to pay excise duty at the Tariff rate as prescribed under Item 15A of the First Schedule to the Central Excise Act. The petitioners then sought amendment of the petition to challenge order dated September 7, 1981 and the amendment was granted on December 17, 1982. In the meanwhile c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petition by adding certain paragraphs and prayers and the amendment was granted and now, the petition is placed before us for final disposal. Return was filed on behalf of the respondents when the petition was called out for hearing and Shri Diwan, learned Counsel appearing on behalf of the petitioners, submitted that the hearing should proceed on the basis that the petitioners are denying each and every averment made in the return. 6. Shri Diwan submitted that initially there was dispute between the Company and the Department as to whether the advantage of Exemption Notifications dated June 1, 1971 and February 27, 1980 was available in respect of manufacture of phenolic formaldehyde moulding powder but in view of the occurrence of subsequent events, the dispute has lost its relevance. The learned Counsel urged that both the Company and the Department were under mistake of fact and law that the manufacture of phenolic moulding powder amounts to process of manufacture liable to levy of duty under Item 15A of the First Schedule to the Cental Excise Act. The learned Counsel urged that the Company went on paying duty under mistake right from year 1962 onwards and the dispute was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised classification of price list claiming no duty payable only from December 18, 1982 instead of May 12, 1982 loses all its significance and is only of academic interest. It is, therefore, not necessary to examine as to whether the petitioner Company was entitled to advantage of Exemption Notifications dated June 1, 1971 and February 27, 1982 as the petitioner Company was not liable to pay any excise duty all along. 7. Shri Diwan then submits that as the duty was recovered by the Department right from the year 1972 onwards under mistaken belief and such duty was paid also under mistaken belief, the Company is entitled to claim refund of the entire amount of duty. Shri Diwan referred to the decision of the Supreme Court reported in 1988 (33) E.L.T. 249 (S.C.) (Salonah Tea Company Ltd. Etc. v. Superintendent of Taxes, Nowgong Others, etc.) where Chief Justice Mukharji speaking for the Bench observed : "Normally speaking in a society governed by rule of law taxes should be paid by citizens as soon as they are due in accordance with law. Equally, as a corollary of the said statement of law it follows that taxes collected without the authority of law, as in this case, from a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the mistake came to be known just prior to filing of petition. The issue was squarely canvassed before this High Court and in the decision reported in 1986 (25) E.L.T. 625 (Shalimar Textiles Mfg. Pvt. Ltd. v. Union of India and Others) one of us (Pendse, J.) held that under Article 265 of the Constitution, no tax can be levied or collected except by authority of law, and in case any such tax is levied and collected without any authority of law, then it would not be permissible for the Department to refuse refund of such amount on the spacious ground that the claim for refund was made belatedly. It was further held that the authority which was recovering tax without jurisdiction cannot be permitted to retain the amount merely because the tax payer was not aware that the recovery was without jurisdiction and consequently if recovery is illegal and without jurisdiction, the claim of refund is not governed by law of limitation. It was further held that the refund would be admissible irrespective of the period covered by the refund application and not restricted only for a period of three years prior to the date of knowledge of mistake of law. Another Single Judge in the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed on to the customers. It is not the averment which is sufficient to examine the claim of unjust enrichment by Writ Court in absence of any data produced by Department. In accordance with the decision of the Full Bench, it is not possible to examine the claim of unjust enrichment, even assuming that such plea is permissible. A contention that the Government should not be directed to make refund because the Government has spent the duty amount received is only required to be stated to be rejected. If such contention is to be accepted, then there would be no refund even to the assessees under the Income Tax Act because normally the duty or tax collected is immediately spent by the Government. It is no defence that the amount is spent when the recovery of dues is without authority. In our judgment, the Department is liable to refund the duty wrongfully recovered. 9. Accordingly, petition succeeds and it is declared that the process of manufacture of phenolic moulding powder from phenolic resin is and was not liable to payment of excise duty at any stage in view of the decision of the Government of India that the process does not amount to manufacture inviting levy of excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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