Sang Fasteners (Pvt.) Ltd. vs Union Of India on 24 March, 1988

Bombay High Court
Sang Fasteners (Pvt.) Ltd. vs Union Of India on 24 March, 1988
Equivalent citations: 1988 (17) ECR 315 Bombay, 1988 (36) ELT 591 Bom
Bench: R Jahagirdar


JUDGMENT

1. The petitioners are manufacturers of products known as nuts bolts and screws which are covered by Tariff Item No. 52 of the Central Excises and Salt Act. Between the period from 1st April, 1975 to 31st March 1976, the value of their total production did not exceed Rs. 5 lakhs. In terms of the notification dated 26-7-1971 (issued on 26th of July, 1971), bolts, nuts and screws, were not liable to any excise duty if the total production of the said items for home consumption did not exceed the value of Rs. 5 lakhs. The petitioners were, therefore, not liable to pay excise duty. However, they did pay excise duty to the extent of Rs. 47,792,52 without realising, when they paid the said amount, that the total value of their production for the year in question would not exceed Rs. 5 lakhs. That the value of the petitioners’ total production did not exceed Rs. 5 lakhs is an admitted position because it has been mentioned in the petition that an officer of the Excise Department has certified to the said effect. This has not been denied because there is no return filed to this petition.

2. The petitioners, therefore, made an application for refund of the amount on 26th October, 1978, which was rejected by the Assistant Collector of Central Excise and the petitioners’ appeal was also dismissed by the Collector in Appeal by his judgment and order dated 12th of October, 1981. The petitioners have now approached this Court under Article 226 of the Constitution of India for refund of the amount which, according to them, has been illegally collected by the Excise Department. The Assistant Collector of Central Excise and the Collector of Central Excise (Appeals) have been joined as respondents Nos. 2 and 3 in this petition.

3. Mr. Thakkar, the learned Advocate appearing in support of the petition, after narrating the facts which I have already summerised above and after inviting my attention to the orders passed in this case as well as the copy of the notification dated 26th July, 1971 annexed as Exhibit “A” to the petition, has contended that the respondents are in law bound to refund the amount which they have collected without the authority of law. I have already mentioned that the respondents have not filed any return to this petition. However, Mr. Bhatia, the learned Advocate appearing for the respondents, has vigorously argued that the petitioners are not entitled to the refund of the amount because, according to him, they were not required to pay excise duty. It is clear, says Mr. Bhatia, that the petitioners were aware that there was a notification and therefore it must be assumed that the petitioners were also aware that they were not liable to pay excise duty. If despite this knowledge on their part the petitioners chose to pay the excise duty they alone are to be blamed. Moreover, says Mr. Bhatia, a least after the relevant period was over the petitioners should have made an application within the time prescribed under Rule 11 of the Central Excise Rules for the refund of the amount. They having failed to do so, this Court should refuse to give by relief to the petitioners under Article 226 of the Constitution.

4. I am relieved of going into discussion on any complicated questions in this case because from what Mr. Bhatia has said it is clear that the respondents have collected the amount of excise duty without the authority of law. If it is contended, as it has been contended on behalf of the respondents, that the petitioners were not required to pay excise duty and still they paid the same, the said amount ought to be refunded to them. In fact it was contended, as I have noted the argument in my own hand, that the petitioners should not have paid the amount and Mr. Bhatia proceeded further and said that there is nothing on record, not even in the memo of the petition, to show that the petitioners were asked to pay the excise duty. In my opinion, this is sufficient to show that the amount has been collected by the respondents without the authority of law. Merely because a manufacturer pays certain amount to the Excise authorities, they cannot accept the same without examining the question as to whether they are entitled to accept the same. Further, if it is demonstrated, as it has been demonstrated in the instant case, that the petitioners were not required to pay excise duty in view of the exemption notification dated 26th July, 1971, it must be held that the acceptance thereof by the respondents is without the authority of law.

5. The petition must, therefore, succeed. Rule is made absolute in terms of prayer Clauses (a) and (b). The respondents shall also pay interest on the amount at 12% per annum from 1st November, 1978 till the date of payment. The respondents shall also pay costs of this petition to the petitioners.

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