JUDGMENT
Sujata Manohar, J.
1. At all material time the petitioners carried on the activity of preparing a solution known as Poly Vinyl Alcohol Solution (hereinafter referred to as PVA Solution) by mixing duty paid PVA powder with water and other additives. Pursuant to notices received from the Excise Department, the petitioners were required to file a classification list and pay excise duty on PVA Solution. For the period 10.8.1976 to 17.7.1977 the petitioners have paid duty on PVA Solution under Tariff Item 68 while for the period 18.7.1977 to 31.3.1979 the petitioners have paid duty under Tariff Item 15A. By a notice dated 24.10.1979 the Collectorate of Central Excise clarified that the process of making a solution of PVA Powder, either by adding water or water with other additives etc. was not ‘manufacture’ as in both the processes there was no chemical reaction. It further stated, “Even if the said change were to be taken, for the sake of argument, to amount to a ‘manufacture’, it would be a case of manufacture of an item to another item, both falling under the same sub-item of Item 15A …such an operation will not attract duty again.” (sic).
2. On 20.8.1981 the petitioners applied for refund of excise duty paid on PVA solution. They made two refund claims. One claim pertained to (1) the period 10.8.1976 to 17.7.1977 when duty had been paid under Tariff Item 68, and (2) 18.7.1977 to 31.3.1979 when duty had been paid under Tariff Item 15A. The second refund claim pertained to the period 12.4.1979 to 27.11.1980, during which period the petitioners had paid duty under protest. The claim of the petitioners for the period 12.4.1979 to 27.11.1980 was granted and the petitioners have received a refund of the excise duty paid during this period.
3. In respect of the first claim, the Assistant Collector by his order dated 9.7.1982 rejected the claim of the petitioners on the ground that the claim had not been filed within the statutory period of six months specified in Rule 11(1) of the Central Excises and Salt Act, 1944, read with Rule 173J of the Central Excise Rules, 1944 (then in force). On 3.12.1982, the petitioners preferred an appeal from this order. This appeal of the petitioners, along with similar Appeals of several other companies, was considered by the Appellate Collector. By his common order dated 31.10.1985 the Appellate Collector upheld the decision of the Assistant Collector and dismissed, inter alia, the Appeal of the petitioners on the ground that he had no power to go beyond the Central Excises and Salt Act and the rules framed thereunder. He held that since the claim for refund was beyond the period of six months prescribed by the Central Excises and Salt Act, 1944 and the Rules framed thereunder, it could not be accepted. It is not disputed that the order of 31.10.1985 was received by the petitioners on 13.5.1986. Thereafter the petitioners have filed the present petition on 13.8.1986 for recovery of the amounts of excise duty paid during the said periods as being without the authority of law.
4. The petition is for recovery of excise duty paid under a mistake of law. The Limitation Act does not strictly apply to a writ petition. The petitioners discovered that the amounts in question had been paid by them under a mistake of law when the clarification of 24.10.1979 was issued. Within less than 2 years of this clarification the petitioners filed refund claims. The final order of the Appellate Collector rejecting the refund claim in question was received by the petitioners only on 13.5.1986. The writ petition has been filed within 3 months thereafter. It is well settled that for recovery of an amount paid under a mistake of law, the claim would normally be allowed if filed within a period of 3 years from the date of discovery of the mistake. The latest judgment in this connection is in the case of Salonath Tea Company Ltd. v. Superintendent of Taxes, Nowgang where the Supreme Court has observed that, “Normally in a case where tax or money has been realised without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution the Court has power to direct the refund unless there has been avoidable laches on the part of the petitioner. It is true that in some cases the period of three years is normally taken as a period beyond which the Court should not grant relief but that is not an inflexible rule. The Court might consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy. Where the delay is more than that period it will almost always be proper for the Court to hold that it is unreasonable.” (See also in this connection 1982 ECR 165D (Bombay) The Swadeshi Mills Company Ltd. v. Union of India. In the present case the claim for refund was filed within less than 2 years of the clarification and the petition has been filed within months of the appellate order being received. The petitioners are, therefore, not guilty of any unreasonable delay in preferring the present writ petition.
5. It is urged on behalf of the respondents that the petitioners should not have filed their claim for refund before the department. It is difficult to appreciate this contention. In view of the clarification which was issued by the Excise authorities, the petitioners were entitled to ask the department to refund to them the amount of duty which was recovered from them without the authority of law.
6. It is also contended by the respondents that there is no specific paragraph in the petition to explain the delay. AH the relevant facts are, however, set out in the petition. From the averments made in the petition, the delay is clearly explained. Since the amount of duty has been recovered without any authority of law, the respondents are not entitled to retain the amount. There is, therefore, no question of any unjust enrichment.
7. Rule is, therefore, made absolute in terms of prayer (b)(ii), save and except that the rate of interest shall be 15% p.a. and not 21% p.a.
8. Amount to be refunded within 8 (eight) weeks from today.
