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1994 Supreme(Bom) 220
IN THE HIGH COURT OF BOMBAY
Dr. B.P. Saraf M.L. Dudhat, JJ.
M/s. Hindustan Cocoa Products Ltd..... Petitioners.
Versus
The Union of India and others.... Respondents.
Writ Petition No. 1371 of 1985, decided on 8-6-1994.
Advocates appeared :
S.A. Divan with C.M. Mehta, i/b M/s. Gagrat Company, for petitioners.
K.R. Bulchandani with K.C. Sidhwa, for the respondents.
Headnote:Section 1l-B-Scbedule Items 12 and 68-Limitatioo Act, 1963-Sectioo 3-Law-Mistake of-It does not can to be mistake of law due to lapse of time-Time for refund of payment made under mistake of law he three years from discovery-Payment date in irrelevant.
There is no dispute about the fact that the classification of deotorised cocoa butter by the petitioner under Item 12 was a mistake of law which was discovered neither by the petitioner nor by the respondents till the year, 1983. It was only in November, 1983, when the petitioner having come to know of the said mistake, filed a revised classification list c1essifying the above item under tariff Item 68 of the Schedule and on consideration of which the respondent Assistant Collector also approved the revised classification filed by the petitioner. The correct legal position, therefore, is that deotorised cocoa butter is classifiable under Item No. 68 of the Schedule and not under Item No. 12. The classification made earlier was a mistake of law. The respondents also, acting under the mistaken interpretation of law, issued show cause notices to the petitioner, in pursuance of which the petitioner paid the duty for period from 4-5-1974 onwards between the year, 1980. A mistake of law, does not cease to be mistake of law by lapse of time. It is also not material who was responsible for the mistake. Once it is held to be mistake of law, it has to be considered accordingly. In the instant case, it was a mistake of interpretation of a tariff item and which is a question of law and a mistake in that regard is nothing but a mistake of law. The payments were made by the petitioner under such mistake of law. The period of limitation for refund laid down in Section 11-B of the Act, therefore, cannot apply to such refunds. The petitioner is entitled to refund laid down in Section 11-B of the Act, therefore, cannot apply to such refunds. The petitioner is entitled to refund of such amounts. It is well settled that the claim for refund of amounts paid under a mistake of law should be made within the period of three years from the discovery or knowledge of the mistake. The date of payment is not the relevant consideration.
2. The petitioner manufactures deodorised coca butter which was classified by it for the purposes of central excise under Item 12 of the Tariff Schedule to the Central Excises Salt Act, 1944 ("the Act") which applied to "Vegetable non-essential oils". During the period from 4-5-1974 to 4-5-1979 the petitioner claimed full exemption of excise duty in respect of deodorised cocoa butter manufactured by it under Notification No. 33/63 dated 1-3-1963 which was duly allowed by the concerned authorities. On 4-5-1979, the petitioner was informed by the Superintendent of Central Excise that it was not eligible for exemption under Notification No. 33/63 in respect of payment of excise duty on manufacture of deodorised coca butter. The petitioner was asked to furnish clearance figures from 4-1-1978 onwards. By another notice dated 4-3-1980, the petitioner was called upon to explain why an amount of Rs. 18,660.08 should not be recovered from it for the period from 2-10-1976 to 3-1-1978. The petitioner paid the above amount on 31-3-1980 under an impression that the duty was leviable as stated by the Superintendent of Central Excise. By another notice dated 17-4-1980, the petitioner was asked to explain why a further amount of Rs. 28,535.80 should not be recovered from it in respect of the period from 4-5-1974 to 1-10-1976. The petitioner paid this amount also on 12-5-1980. The petitioner also paid a further sum of Rs. 16,682.98 in respect of the period from 4-1-1978 to 28-6-1979 on 2-7-1979.
3. Sometime in October-November, 1983, the petitioner discovered that the classification of deodorised cocoa butter manufactured by it under Item 12 of Tariff Schedule to the Act was a mistake of law. This mistake, according to the petitioner, was discovered from a letter dated 17-11-1983 from M/s. Cocoa Products and Beverages Ltd., Madras from whom the petitioner purchased some of its requirements. The said company had informed the petitioner that deodorised cocoa butter was correctly classifiable under Item 68 of the Tariff Schedule and was fully exempt from duty. Notification No. 104/82 dated 28-2-1982 was also referred in this connection. The petitioner thereupon filed a revised classification list on 3-12-1983 classifying deodorised cocoa butter manufactured by it under Item 68 and claiming exemption from levy of excise duty in respect thereof on the basis of exemption Notification No. 104 of 1982 dated 28-2-1982. However, pending approval of the revised classification list, the petitioner continued to pay the duty "under protest" at the rate chargeable on goods falling under Item No. 12 of the Tariff Schedule. The revised classification list was approved by the Assistant Collector on 12-9-1984 and the item deodorised cocoa butter was classified as item falling under Tariff Item 68.
4. There is no dispute about the fact that on approval of the classification of the said item as item falling under Item No. 68, no duty was payable thereon. The approval was given on 12-9-1984. On 15-10-1984 the petitioner applied for refund of Rs. 1,80,301.38 being the excise duty paid by it on deodorised cocoa butter under a mistake of law for the period from 4-5-1974 to 4-12-1983. The petitioner also applied for refund of another sum of Rs. 37,312.92 being duty paid mistakenly for the period from 5-12-1983 to 17-9-1984. This was done on 15-12-1984. The claim of the petitioner for refund for the period from 5-12-1983 to 17-9-1984 for Rs. 37.312.92 was accepted by the respondents and the said amount was duly refunded to the petitioner. The claims of the petitioner for refund for the period from 4-5-1974 to 4-12-1983 was however rejected by the Assistant Collector, by his impu
