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IN THE HIGH COURT OF BOMBAY
Mrs. Sujata V. Manohar, J.
Pure Drinks Pvt. Ltd. .... Plaintiffs.
Versus
Union of India.... Respondents.
Suit No. 1300 of 1976, decided on 7/8-9-1987.
Advocates appeared :
A. Hidaytullah with M.H. Kapadia and S.M. Parkar i/b. Daphtary Ferreira Diwan, for plaintiffs.
C.J. Shah with T.R. Rao, A.G.P., for defendants.
Section 4-10 determining assessable nature of goods for levy of excise duty transport charges from factory to premises of whole sale dealer are ductible - In the instant case whole-sale cash price of plaintiffs at other places is the same as their wholesale cash price at factory gate-Plaintiffs thus included in their whole sale cash price the overage freight-Assistant Collector, Central Excise directed to refund excess duty paid by plaintiffs.
It is On accepted position that under old Section 4 of the Central Excises and Salt Act, 1944, which was then in force and in the light of the decision of the Supreme Court in Vallas case and the recent judgment of the Supreme Court in (Union of India v. Bombay Tyre International Ltd.), reported in 1983 E.L.T. 1896 (sq, in determining the assessable value of goods for the levy of excise duty, the cost of freight or other transport charges from factory to the premises of the wholesale dealer are deductible as post manufacturing expenses. It was, however, pointed out by Counsel for the defendants that where the freight is averaged and the average freight is included in the whole. sale cash price so that the whole sale cash price at the factory gate is the same as the wholesale cash price at a place outside the factory gate the average freight which is included in such wholesale cash price has to be deducted in order to arrive at the real wholesale cash price at the factory gate, See in this connection (Union of India v. Bombay Tyre International Ltd. (supra). In the present case also the wholesale cash price of the plaintiffs at places other than the factory gate is the same as their wholesale cash price at the factory gate. The plaintiffs have also thus included in their wholesale cash price the average freight. The plaintiffs have annexed to the plaint certificates given by their charted accountants which include, inter alia, transport charges for each relevant year. In the particulars of claim at Exh. H. they have mentioned transport charges per case in respect of various claims which are included in Exh. H. On the basis of this material it will be open to the Assistant Collector of Central Excise to determine the freight for transporting the goods from the factory to the premises of the wholesale dealer, and to calculate average freight included in the wholesale cash price on which duty was wrongly collected. He shall quantity the duty paid for the suit period, on average freight so determined, which duty is required to be refunded to the plaintiffs. The Assistant Collector of Central Excise to determine the quantum of duty to be refunded to the plaintiffs as aforesaid within a period of four months from today. The defendants are ordered and directed to pay to the plaintiffs the amount so determined within four months thereafter.
Section 34-Rate of interest-Plaintiff claimed interest at rate of 18% p. a. on excess duty collected by defendants-Held that it would be just and fair to award to the petitioners interest at the rate of 12% p. a.
The plaintiff have claimed interest at the rate of 18 per cent p. a. on the excess duty collected by the defendants from the date on which the duty was collected till payment. Interest was awarded at the rate of 12 per cent on excise duty which was collected without the authority of law. In the circumstances of the case and in the interest of justice it would be just and fair to award to the petitioners interest at the rate of 12 per cent per annum from the date the duty was collected till payment.
Section 115-Duty collected without authority-Alleged, plaintiffs themselves included cost of transportation in their price lists-Hence not entitled to refund-Held that excise duty collected without authority to be refunded.
It is alleged by the defendants that these were voluntary payment made by the plaintiffs because in their price list the plaintiffs had themselves included the cost of transportation. Hence the plaintiffs are not entitled to recover these amounts. However, when such excise duty is collected by the State without any authority of law, it is the duty of the State to refused the tax. The plea of estoppel does not apply to duty of tax which is collected without the authority of law.
Article 115-Suit for recovery of excess duty paid-Plaintiffs entitled to file snit within 3 years from the date of payment-Plaintiffs required to give two months notice, hence claim for two months not included-Plaintiffs entitled to make claim for additional period of two months-Held, entire claim was within the period of limitation.
The plaintiffs have filed this suit to recover excess duty paid for a period of three years prior to the date of the suit i.e. within 3 years of payment, as money received by the defendant without the authority of law. The claim for the period 31st May, 1973 to July, 1973 has been included because the plaintiffs were required to give two months notice under Section 80 of Civil Procedure Code for filing the present suit. Hence it is not disputed that they are entitled to make a claim for this additional period of two months over and above the period of three years. Under Article 115 of Limitation Act, 1963, the plaintiffs are entitled to file a suit within a period of 3 years from the date of payment for recovery of the amount so paid. The entire claim is within the period of limitation.
2. Prior to 1970 the plaintiffs' beverages were not liable to any excise duty. Under the Central Excises and Salt Act, 1944 the excise duty was levied for the first time on aerated waters with effect from 1st March, 1970 when new Item 1-D was introduced in the First Schedule to the said Act. Thereafter the Assistant Collector, Central Excise, Bombay Division IV, called upon the plaintiffs to file a price-list of the products manufactured by the plaintiffs. Thereupon the plaintiffs furnished the necessary price lists from time to time. The price lists furnished by the plaintiffs mentioned that the plaintiffs were supplying their products to the wholesale dealers through the plaintiffs' salesmen in the plaintiffs' trucks and that no discount or commission was being paid by the plaintiffs to the wholesale dealers. The price lists so submitted were approved by the defendants from time to time. The plaintiffs paid excise duty as per the approved price lists. These price lists included transport charges or freight incurred by the plaintiffs for supplying their products in their trucks up to the wholesale dealers' premises. The plaintiffs contend that on account of inclusion of these charges which are post-manufacturing charges in the price lists, they have paid duty on transport charges and freight under a mistake of law. The present suit is to recover the excise duty paid by the plaintiffs on transport charges incurred by the plaintiffs for supplying their products in their own trucks up to the wholesale dealers' premises. The particulars of claim in the present suit are set out in Exh. H to the plaint. The claim for recovery of excise duty so paid is for the period 31-5-1973 upto 7th January, 1975 together with interest at 18% per annum. The present suit was filed on 14th July, 1976. Prior to the filing of the suit the plaintiffs gave a notice dated 11th May, 1976 under section 80 of the Code of Civil Procedure.
3. The defendants have denied their liability to pay to the plaintiffs the amount claimed. Several issues of law were raised in the Written Statement. After the filing of the suit however, a number of these issues have been covered by various decisions delivered by the Supreme Court and this High Court. In the light of these decisions and defendants have very fairly not pressed issues Nos. 1 and 2, which deal with the suit being barred by section 40(1) of the Central Excises and Salt Act, 1944 and the claim being not covered by Rule 11 of the Central Excise Rules, 1944. The parties have also agreed that in the event of the plaintiffs succeeding in the suit in respect of either the entire claim or a part of the claim, the claim should be referred to the Assistant Collector of Central Excise, Divn, G-I, Bombay for determination of the exact amount of central excise duty to be returned to the plaintiffs. In view of this agreement, there are no disputed questions of fact in the present suit. The remaining issues relate to the question whether the suit of plaintiffs is barred by the law of limitation; whether the plaintiffs came to know of the decision of the Supreme Court in the case of (A.K. Roy v. Voltas Ltd.)1, in June/July 1973 as alleged in para 15 of the plaint and whether the plaintiffs waived any irregularity in the assessment of duty because the plaintiffs themselves had included the transport charges in the price lists.
4. According to the plaintiffs, in the price lists submitted by them, from time to time, they included the transport charges for transporting the goods from the factory to the premises of the wholesale dealer under a mistake of law because they wrongly believed that such charges were includible. In para 15 of the plaint they have stated that they discovered the correct
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