JUDGMENT
R.M. Sahai, J.
1. Refund of excise duty paid on aerated water under mistake of law after expiry of six months from the date of payment is the issue raised in this petition.
2. Dispute is about payment made between 18th March, 1973 and 17th June, 1977. Aerated water became exigible to duty with effect from 1st April, 1970 by introduction of Item I-D in the Schedule of Central Excises and Salt Act, 1944. It read as under :
"ID -Aerated Waters, whether or not fla-voured Ten per cent
or sweetened whether or not containing ad valorem.
vegetable or fruit juice of fruit pulp."
3. It was enhanced to 20% with effect from 17th March, 1972 on aerated water, in the manufacture of which blended flavouring concentrates in any form was used'. In 1976 the entry I-D was amended and the amended entry reads as under :
"Aerated Waters, whether or not flavoured or sweetened and whether or not containing vegetable or fruit juice or fruit pulp (1) Aerated waters, in the manufactures of which blended flavouring concentrates in anv form are used -
(a) For each unit container Twenty-five paise.
containing 200 millilitres or
less
(b) For each unit container Twenty-five paise plus ten paise
containing more than 200 for every hundred millilitres
milli-litres or fraction three in excess of
200 millilitres.
(c) All others Fifty-five per cent ad valorem.
(2) All others Twenty per cent ad valorem."
But by a notification issued by Central Government on 16th March, 1983 in exercise of power conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 exemption was granted to aerated waters falling under sub-item (2) of Item No. I-D of the First Schedule from so much of the duty of excise leviable thereon as was in excess of ten per cent ad valorem. Therefore, aerated water in the manufacture of which blended flavouring concentrates was not used was exigible to duty at 1096 ad vaiorem, only, from 17th March, 1972 onwards.
4. M/s. Agra Beverages Corporation, the petitioner manufactured Coca-Cola and Fanta Orange from material supplied by Coca-Cola Export Corporation. Both these beverages are undisputedly aerated waters. Their exigibility to 20% duty depends on if they were manufactured with blended flavouring concentrates. That depends on as to what is meant by this expression. What would be included in it. The expression was explained by Bombay High Court in Duke and Sons Ltd. v. G.T. Rundani (Civil Misc. Writ No. 944 of 1977, decided on 8th/11th October, 1976). It was held that essence and concentrates were distinct and not synonymous with each other not only by their trade or commercial meaning but also in its technological sense and dictionary meaning. This decision was accepted by the Collector, Central Excise of Hyderabad in Appeal No. 80/79, decided on 22-2-1979 and it was held that in manufacture of Coca-Cola and Fanta ‘blended flavouring concentrates’ were not used. The Collector further held that the manufactures were entitled to refund even though they had made declaration to the contrary. The importance of this decision lies in the fact that a three member committee of Government of India not only affirmed it on review on 26th September, 1980 but held that, ‘Government observe that the party’s earlier declaration about their products containing blended flavouring concentrates was a clear case of mistake on their part’. In yet .another decision in M/s. Chennai Bottling Co., Madras decided by Government of India on 26th September, 1980 the decision of Bombay High Court was followed and it was held, ‘Government agree with the petitioner’s stand that their earlier declaration about their products containing “blended flavouring concentrates”, was a case of mistake of law’. From decision of Bombay High Court and various orders of Government of India as Review Committee it stands established that Coca-Cola and Fanta were manufactured with synthetic essence and not by blended flavouring concentrates. In coming to this decision reliance has been placed in the decisions referred above on volume of material which need not be reproduced here. Even the Deputy Chief Chemist in his letter (No. 70 Ex. D/80, dated 23rd August, 1980) opined that Coca-Cola was not manufactured by ‘blended flavouring concentrates’. Thus it is too late in the day to claim the Coca-Cola and Fanta were manufactured with ‘blended flavouring concentrates’. The levy of duty at 20%, therefore, was not warranted by law.
5. Constitutional protection granted under Article 265 against revy or collection of tax except in accordance with law extends to ‘excise duty as well. Tax paid where it was not payable, either because of compulsion provisions in the statute or notification or even in ignorance of legal position is a payment made under mistake of law [Sales Tax Officer Banaras v. Kanhaiya Lal Mukundi Lal Saraaf (A.I.R. 19.59 S.C. 135), State of Madhya Pradesh v. Bhailal Bhai (A.I.R. 1964 S.C. 1006), State of Kerala v. Aluminium Industries]. Since Section 72 of Contract Act does not make any distinction between mistake of law and mistake of fact the development of law in English and American Courts where a tax payer has no right to ask for refund of the amount of tax paid under mistake of law has no relevance. Morality or hardship are alian in fiscal matters, both for tax payer and tax collector. “There was no warrant for describing any limited meaning to the word ‘mistake’ as has been used therein, and the true principle is that if one party under a mistake whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid” (A.I.R. 1959 S.C. 135). In Patel India Pvt. Ltd., Appellant v. Union of India (1973 A.I.R. S.C. 1300) it was held that excess duty charged by Customs authorities in violation of statutory provision was without authority of law, therefore, without jurisdiction. Consequently it could not be lawfully retained. The principle was extended further and it was held in D. Cawasji & Co. v. State of Mysore, 1975 A.I.R. S.C. 813 :
“Nor is there any provision under which the Court could deny refund of tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them, or, for any reason it is impracticable to do so.”
In Associated Bearing Co. v. Union of India [1980 E.L.T. 415 (Bombay)] it was held by Bombay High Court that if any duty is recovered in such a manner the duty comes to be levied on price which is not permissible in law the levy is either in excess of jurisdiction or without any jurisdiction. In Durga Shanker Industries v. Government of India [1979 E.L.T. 1. 227 (Madras)] it was held by Madras High Court that no tax shall be levied or collected except by authority of law and that if excess import duty collected was without authority of law it was refundable irrespective of time limit. Similar view has been expressed in Ceat Tyres India Ltd. v. Union of India [1980 E.L.T. 563 (Bombay)], Lipro Products Ltd. v. Union of India [1981 E.L.T. 531 (Bombay)], J.T.C. Ltd. v. M.K. Chipkar [1985 E.L.T. 373 (Bombay)]. It should, therefore, be taken as settled that any payment of duty under mistake of law can be directed to be refunded if the claim is not stale and the payer of duty approaches within reasonable time from the date the mistake of law becomes known.
6. Resistance to the claim is every possible objection from denial that the beverages were manufactured from essence to estoppel due to petitioner’s declaration that Coca-Cola and Fanta were manufactured from blending flavouring concentrates and limitation as the application for refund was made much beyond six months from the date of payment. In our opinion the government it precluded from agitating that the beverages were manufactured from blending flavouring concentrates as the issue was not only decided in Duke and Co. but the view taken by Bombay High Court was accepted by Department and Review Committee of Government of India, the highest body under the Act to adjudicate upon such disputes. The Assistant Collector, Excise, therefore, committed manifest error of law in disregarding the order of Government of India and rejecting claim of petitioner for refund of part of excise duty paid between 1st August, 1976 to 17th June, 1977 because it was manufactured from concentrate. Even the plea that petitioner cannot. be permitted to go behind the declaration made by it is not well founded. Estoppel cannot operate against constitutional prohibition. Neither the tax payer can be estopped from claiming refund of amount paid under mistake of law nor can the Tax Collector be permitted to take shelter behind estoppel and refuse return of the money paid as excise duty on goods which were not excisable or exempt as, ‘No question of estoppel arises where both parties…are labouring under mistake of law and one party is not more to blame than the other’ (1959 A.I.R. S.C. 135). Even the Government of India held that declaration by manufacturers that beverages were manufactured by blended flavouring concentrates did not prevent them from claiming that it was made under mistake of law.
7. Issue that still survives consideration is if the claim is oarred by time. The claim has to be examined in two parts one relating to rejection of applications filed within six months from the date of knowledge of mistake of law and other filed in July, 1980 that is nearly three years from the date it became known to petitioner that the amount was collected as duty even though no duty was leviable. Section 11B(1) as it stood prior to 1980 read as under :
“Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the date of payment :
Provided that the limitation of six months shall not apply where any duty has been paid under protest.”
8. By Finance Act 2 of 1980 the expression, ‘from the date of payment’ was substituted with expression, ‘from the relevant date’. The same Act deleted explanation to Sub-section (1) but added clause (B) to the explanation at end of Sub-section (5) and explained the meaning of relevant date used in Sub-section (1). It has six clauses. For each clause the period of six months is to be counted from the event mentioned in it. For instance under clause (a) the six months is to be counted for goods exported outside of country from the date they are loaded or leave the frontier. Under clause (b) for the goods returned for remake it is the date of entry into the factory. The clause which is relevant is clause (f). It reads as under :
“in any other case, the date of payment of duty.”
The question is if it applied to claim for refund contemplated in subsection (5) which is extracted below :
“Notwithstanding anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no Court shall have any jurisdiction in respect of such claim.”
9. A bare reading of Sub-section (1) and (5) demonstrates in no unmistaken terms that one deals with refund of ‘excise duty’ and other with amount, ‘collected as duty of excise’. But the Legislature having itself made distinction between ‘payment of duty’ and ‘collection of amount as excise duty’ cannot be intended to have included in clause (f) collection of amount as duty by implication. ‘If the clause would have read, ‘in any other case from the date of payment’ then it could apply both the Sub-section (1) and (5). But use of word ‘duty’ in clause (f) confines its applicability to Sub-section (1) only. When two words ‘duty’ and ‘as duty’ are used in the two sub-sections then in absence of any indication to the contrary the word ‘duty’ in sub-clause (f) has to be understood in the sense it has been used in Sub-section (1). Therefore, it cannot apply to collection ‘as duty of excise’. Further more if clause (f) is held to apply to Sub-section (5) and the application for refund can be filed within six months only from the date of payment of duty the remedy of refund may, in majority case, stand frustrated. How can the application for refund be moved when the knowledge that the goods were not excisable or were exempt under notification itself becomes known to the person making the application and even to the department much after six months from the date the amount was paid. The Legislature cannot be assumed to have provided a remedy which cannot be enforced. To avoid such anamolous consequences the provision has to be construed in a manner which may advance objective of its enactment. The legislative intention of permitting a person to apply for refund within six months is apparent. Therefore, in absence of any specific provision but to perpetuate the legislative objective same period should be available to a person who applied for refund under Sub-section (5). Since the occasion to apply for refund is the knowledge that goods in respect of which the amount was collected were not excisable or were entitled to exemption the application should be made within six months from the date of knowledge of mistake of law. To obviate any further dispute the Government may consider advisability of adding a specific clause in this respect. It. shall have the advantage of clarifying the legal position and reduce pressure on High Courts. Because a person approaching under Article 226 after expiry of six months from the date of knowledge may on facts have to explain laches.
10. From what has been stated above it is apparent that the Assistant Collector acted erroneously in rejecting the application for refund for remaining amount paid between August, 1976 to June, 1977 as barred by time since petitioner had filed application in August, 1977 much within six months from July, 1977, alleged date of knowledge of the amount having been paid under mistake of law. For same reason the order dated 14th August, 1980 rejecting application for refund of the amount paid between March, 1972 to May, 1973 cannot be sustained as the application for refund was made in November, 1977. That remains to be considered is if the opposite party committed any error in rejecting the claim for payments made between June, 1973 to December, 1973, 1974, 1975 and January to July, 1976 by its order dated 14th August, 1980 as the application for refund was made on 30th July, 1980. In light of what has been said earlier the application having been filed much after six months eyen from the date of knowledge of mistaken law, the Assistant Collector did not commit any error in rejecting the application as barred by time. Submission however, was that even though remedy of petitioner might have become barred under the statute it was still entitled to a direction from this Court in its extraordinary jurisdiction, as there was no limitation for issuing direction by this Court specially when the action of opposite party was in violation of constitutional prohibition in Article 265. That there is no limitation for filing a writ petition cannot be disputed. Nor the right of payer of tax or duty to approach under Article 226 for refund is eroded because the remedy under statute is barred. In Shri Vallabh Glass Works Ltd. v. Union of India (1984) 3 S.C.C. 362] it was held by the Hon’ble Court that remedy under Article 226 was in addition to the ordinary remedy provided under statute for which there is no limitation. However, the very absence of any rule or law limiting the exercise of power unde Article 226 has resulted in growth of self imposed restrictions and propriety of exercise of discretion. In the very case of Shri Vallabh Glass Works, the Hon’ble Court observed, ‘Whether relief should be granted to a petitioner under Article 226 of the Constitution where the cause of action had arisen in the remote past is a matter of sound judicial discretion governed by the doctrine of laches’. Law helps the vigilant. Therefore, a person invoking extraordinary jurisdiction under Article 226 must approach within reasonable time as “Delay defeats equities”. Although as observed in Vallabh Glass Works there ‘cannot be a rigid formula’ and ‘each case has to be judged on its own facts and circumstances, but the yardstick of reasonable time in relation to refund of tax or duty paid under mistake of law which may disentitle a person from seeking relief has been explained thus in Bhai Lal Bhai case (A.I.R. 1964 S.C. 1006) :
“It appears to us, however, that the maximum period fixed by the legislature as the time within which the relief by a suit in a Civil Court must be brought may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under Article 226 can be measured. This Court may consider the delay unreasonable even if it is less than the period of limitation prescribed; for a civil action for the remedy but where the delay is more than this period, it will almost always be proper for the Court to hold that it is unreasonable.”
11. It was reiterated in Aluminium Industries Ltd. [(1965) 15 S.T.C. 689 (S.C.)]. In D. Cawasji case A.I.R. 1975 S.C. 813] even though the right of refund was upheld the relief was refused as the High Courts finding that petitioner was guilty of laches did not suffer from any error. In Vallabh Glass Works, 1984 3 S.C.C. 362] the Hon’ble Court directed refund of amount paid three years prior to the date of making the application only.
12. Therefore, it is necessary to examine if petitioner can be said to have approached this Court within reasonable time. The decision in Duke & Co. was given by Bombay High Court in October, 1976. On 11th July, 1977 the Technical Manager of The Coca-Cola Export Corporation issued certificate that Coca-Cola and Fanta were manufactured with mixture of sugar water and carbon dixidi and they did not contain any natural fruit juice or pulp or their concentrates. In paragraph 18 of the writ petition it is stated that petitioners came to know about the judgment of Bombay High court for the first time in July, 1977 when they received a letter from Coca-Cola Export Corporation that since the beverages contained only synthetic materials and not any blended flavouring concentrates they were liable to pay at lower rate. Assuming it to be so the claim for refund covered by the application made in August and November, 1977 are being accepted. But what prevented petitioner from moving the application in respect of other payments. Why did it wait till July, 1980. Even this petitioner was presented on 10th July. That is just on the day three years was expiring if the period of three years is calculated from 11th July, 1977. There was no warrant for this waiting. The test of reasonable period laid down in Bhailal Bhai’s (Supra) case is not available to petitioner. By its own conduct it has forfeited its claim. The rule of discretion that a person may approach this Court for refund within three years does not create a statutory limitation which permits a petitioner to claim that since one day still remained its claim was within limitation. The petitioner having come to know of the mistake of law in July, 1977 could not wait till 1980 and claim that the delay in approaching the opposite party or this Court was reasonable. In Vallabh Glass Works, it was observed by Hon’ble Court, ‘there may be cases where even a delay of shorter period may be considered to be sufficient to refuse relief in a petitioner under Article 226 of the Constitution. Since petitioner is guilty of laches in respect of its claim for the amount paid during June, 1973 to December, 1973, 1974, 1975 and January, 1976 to June, 1976 it is not entitled to any relief.
13. In the result this petition succeeds and is allowed in part. A direction is issued to opposite party to refund excise duty amounting to Rs. 4,79,682 and 21,16,952.90 levied between 1st July, 1976 and 17th June, 1977 on Fanta and Coca-Cola respectively. The opposite party shall further refund Rs. 7,92,597.20 excise duty collected between 18th March, 1972 and May, 1973. The claim of petitioner, however, for refund Rs. 73,660.90 for period between June, 1973 to December, 1973, Rs. 6,77,986.40 excise duty and Rs. 3,38,968.20 auxiliary duty for 1974, Rs.7,39,198.00 and auxiliary duty of Rs. 3,00,599.00 for 1975 and Rs. 27,16,118.00 and auxiliary duty Rs. 24,461.50 for 1976 is rejected. In view of divided success parties shall bear their own costs.