JUDGMENT
M.L. Pendse, C.J.
1. The Assistant Collector of Central Excise, Cantonment Division, Bangalore, has preferred this appeal to challenge the legality of judgment dated November 12, 1990 delivered by the learned single Judge in Writ Petition No. 16151 of 1987. By the impugned – Judgment, the learned Judge directed the appellant to refund a sum of Rs. 83,627.50p within two months from the date of receipt of the order.
2. The facts which gave rise to the passing of this order are not in dispute and are required to be briefly set-out to appreciate the grievance of the appellant.
On March 1, 1986, new Central Excise Tariff Act came into force. The respondent-1 is a Company registered under the Companies Act, and inter alia manufacture and sell food products. The respondent-1 filed classification list on March 17, 1986 and claimed that manufacture of food products falls within Tariff item No. 2001.10 of First Schedule to the Central Excises and Salt Act. The rate of duty was 10% ad valorem, in view of the exemption Notification No. 113/86. The classification list was approved on March 26, 1986.
The respondent-1 company made first clearance from the Factory gate on April 12, 1986. Respondent-1 Company filed second classification list on May 28, 1986 and claimed that the manufacture of food products falls under Tariff Item No. 2107.91 of First Schedule to the Central Excises and Salt Act. The Company further claimed that in view of the Exemption Notification No. 286/86, there will be total exemption from payment of excise duty in respect of food items falling under Tariff Item No. 2107.91. The second classification list was finally approved by the Assistant Collector, on September 6, 1986. It is not in dispute that the respondent-1 company enjoyed the benefit of total exemption of payment of excise duty from May 5, 1986 onwards.
3. On September 8, 1986, the Government of India passed Central Duties of Excise (Retrospective Exemption) Act, 1986. The Act, inter alia, provides that the effect of rates of duties as prevailing on February 28, 1986 shall as far as possible be preserved and to give retrospective effect to notifications relating to exemption of duties from March 3, 1986 till September 8, 1986. In pursuance of the provisions of this legislature, the company filed refund application on November 27, 1986 for the duty paid for the duration commencing from April 12, 1986 and ending with May 5, 1986. The Assistant Collector, by order dated August 13, 1987 dismissed the claim holding that the Company is not entitled to the advantage of the provisions of the Central Duties of Excise (Retrospective Exemption) Act, 1986.
4. The Company feeling aggrieved, approached this Court by filing writ petition under Art. 226 of the Constitution. The learned single Judge held that the benefit of the provisions of the Act is available to the company and its claim for refund of duty paid could not have been denied. It was held that the duty was paid by the Company from April 12, 1986 and once the Act providing for retrospective exemption was available, the Department cannot decline to issue order of refund. The decision of the learned single Judge is under challenge.
5. Mr. Ashok Haranahalli, learned Counsel appearing on behalf of the appellant, submitted that the provisions of the Central Duties of Excise (Retrospective Exemption) Act, 1986, are not available to the Company. The learned Counsel submitted that the Company made the first clearance on April 12, 1986 and on that date, the clearance was made in pursuance of classification list which was approved on March 26, 1986. It was contended that a fresh classification list was approved and made applicable only from May 5, 1986 and therefore, the respondent-company cannot get the benefit for clearance which was made between April 12, 1986 and May 5, 1986.
We are unable to appreciate any merit in the contention. Once the second classification list was approved, then the items manufactured by respondent-company and cleared from the factory gate from April 12, 1986 would attract duty under tariff Item No. 2107.91 of the First Schedule to the Central Excises and Salt Act. It is not in dispute that there was total exemption from payment of duty in view of notification dated May 6, 1986. It is, therefore, clear that the duty recovered by the Department from April 12, 1986 was without authority of law, and the company is entitled to the refund of the said amount.
Mr. Haranahalli also submitted that as the company commenced manufacture for the first time on April 12, 1986 and was not doing so prior to March 1, 1986, the benefit of retrospective exemption is not available. The submission is not correct. The averments made in the writ petition clearly indicate that respondent-1 Company was manufacturing the goods even prior to March 1, 1986 but the said goods were not liable for payment of excise duty at the relevant time. In our judgment, the challenge to the claim made by the Company for refund cannot be accepted.
6. The learned Counsel for the Department finally submitted that the learned Judge was not right in directing the department to refund the amount and proper course would have been to remit the proceedings back to the Assistant Collector for ascertaining the amount of refund payable. It was also contended that in view of the amendment of the provisions of Section 11B of the Central Excises and Salt Act, it is necessary for the Assistant Collector to determine whether the refund should be paid to the company or the said amount should be credited to the fund. The submission is correct and deserves acceptance. The Assistant Collector shall compute the amount of refund payable to the Company and then decide the refund application in accordance with the amended provisions of Section 11B of the Central Excises and Salt Act.
7. Accordingly, appeal is partly allowed and while upholding the judgment of the learned single judge, the operative portion of the order is modified as follows :
“The proceedings are remitted back to the Assistant Collector of Central Excise, Cantonment Division, Bangalore, or any equivalent officer as is at present nominated to deal with the refund application. The concerned officer should ascertain the amount of refund payable to the company within a period of three months from the date of receipt to the order and pass an appropriate order as prescribed under Section 11B of the Central Excises and Salt Act. In case the officer comes to the conclusion that the amount is required to be refunded to the company then the said refund shall be made within a period of two weeks from the date of the order.
In the circumstance of the case, there will be no order as to costs.”