JUDGMENT
Pendse, J.
1. Rule returnable forthwith. Shri Desai waives service on behalf of the respondents. Heard counsel.
2. The petitioner Company manufactures Vacuum Brake Hoses. In March 1986, the petitioner Company filed a classification list classifying the product under sub-heading 4009.92 of the Central Excise Tariff Act, 1985. The classification list was approved on October 3, 1986. The Company filed fresh price list on December 17, 1986 classifying the product under sub-heading 4009.99. The classification list was examined by the Assistant Collector of Central Excise and by order dated March 25, 1987, the classification as sought by the petitioners was turned down and the list was approved under sub-heading 4009.92. The Company preferred appeal against the order passed by the Assistant Collector and the appeal was allowed by Collector of Central Excise (Appeals) by order dated March 14, 1988 and the product manufactured by the Company was classified under sub-heading 4009.99 as claimed by the Company. Against the order passed by the Appellate Collector, the Department preferred an appeal before the CEGAT but the appeal was not entertained as it was filed beyond period of limitation, and the CEGAT found that there was no reason whatsoever for condonation of delay. Accordingly, the order passed by the Appellate Collector has acquired finality.
3. The Company, in pursuance of the order passed by the Appellate Collector, sought refund of the duty paid in accordance with the order passed by the Assistant Collector and which order was found to be erroneous. The application for refund was not disposed of by the respondents, but, on the other hand, show cause notice dated January 13, 1989 was served upon the petitioner Company to explain why duty on the basis that the manufactured product of the Company falls under sub-heading 4009.92 should not be recovered. As the application for refund of duty was not examined and, on the other hand, show cause notice was served, the petitioners filed the present petition under Article 226 of the Constitution of India.
4. Shri Vahanvati, learned counsel appearing on behalf of the petitioners, submitted at the out-set that the Company is restricting the claim of refund before the respondents for the period commencing from December 17, 1986 onwards. The learned counsel submitted that in regard to the claim for refund from December 17, 1986, the Department could not resist the same on any count whatsoever. The submission of Shri Vahanvati is correct and deserves acceptance. The duty was recovered from the Company on the basis that the product manufactured attracts sub-heading 4009.92 of the Tariff and that was the basis of order passed by the Assistant Collector. The order of the Assistant Collector was set aside by the Appellate Collector and it was ordered that the duty is payable under sub-heading 4009.99 of the Tariff. The order of the Appellate Collector has acquired finality and, therefore, excess duty recovered by the Department is liable to be refunded. Shri Vahanvati referred to the provisions of Section 11B(3) of the Act and it is obvious that the Department is bound to refund the excess duty paid from December 17, 1986 onwards. This Court has repeatedly held that when provisions of Section 11B(3) are attracted, then the Department cannot decline the claim on the ground of limitation or by reference to doctrine of unjust enrichment.
Shri Desai, learned counsel appearing on behalf of the Department, submitted that the petitioners are not entitled to seek refund of duty because the petitioners did not pay the duty after December 17, 1986 under protest. According to the learned counsel, Rule 173B(3) of the Central Excise Rules demands that the refund is permissible provided the duty paid under protest. The submission is entirely misconceived. Sub-rule (3) reads as under :
“Where the assessee disputes the rate of duty approved by the proper officer in respect of any goods, he may, after giving an intimation to that effect to such officer, pay duty under protest at the rate approved by such officer.”
The mere perusal of the sub-rule makes it clear that the question of dispute of rate of duty arises only after the order is passed by the Assistant Collector on the classification list filed by the manufacturer. Sub-rule (3) of Rule 173B cannot be read in such a manner as to defeat the provisions of Section 11B(3) of the Act. In our judgment, the Department has no defence whatsoever to the claim for refund made by the petitioners. The show cause notice issued by the Department was also entirely misconceived and is, therefore, required to be quashed.
5. Accordingly, rule is made absolute and show cause notice dated January 13, 1989 is quashed. The respondents are directed to calculate the amount of refund payable to the petitioners in respect of excess duty paid from December 17, 1986 onwards and, accordingly, pass the order of refund. The Department is also directed to pay the amount of refund to the petitioners on or before December 31, 1990. In case, the amount is not calculated and paid before Dec. 31, 1990, then the Department shall pay the said amount of refund along with interest at the rate of 15% per annum from today till the date of refund. The bonds executed and the Bank guarantee furnished by the petitioners to stand discharged. In the circumstances of the case, there will be no order as to costs.