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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S. RAMALINGAM
Tube Products of India - Appellant
Versus
Union of India - Respondent
Case No : Writ Petition No. 1833 of 1982
Decided On : 27 September 1988
CENTRAL EXCISE - REFUND - CLASSIFICATION OF GOODS - SHUTTER LATHE SECTIONS - CLASSIFICATION UNDER TARIFF ITEM 26AA(IA) - ORDER OF ASSISTANT COLLECTOR - REVISION - LIMITATION - SECTION 35A OF CENTRAL EXCISES AND SALT ACT, 1944 - JURISDICTION OF COLLECTOR - REFUND OF EXCISE DUTY - SECTION 11B OF CENTRAL EXCISES AND SALT ACT, 1944 - RIGHT OF ASSESSEE - UNJUST ENRICHMENT - PRINCIPLE NOT APPLICABLE.
Fact of the Case:
The petitioner, a manufacturer of iron and steel items including shutter lathe sections, filed refund claims for the difference between the duty already paid under Tariff Item 68 and the one payable under Tariff Item 26AA(ia). The Assistant Collector, by his order dated 29-4-1980, classified the products manufactured by the petitioner as falling under Tariff Item 26AA(ia). The Collector of Central Excise, purporting to exercise powers under Section 35A of the Central Excises and Salt Act, 1944, issued a show cause notice to the petitioner calling upon the petitioner to show cause as to why order of the Assistant Collector dated 29-12-1980 sanctioning refund should not be set aside.
Finding of the Court:
The Court held that the order of the Collector of Central Excise dated 6-2-1982 is quashed. The Court held that the Collector of Central Excise had no jurisdiction to interfere with the orders dated 29-4-1980 because bar of limitation had set in. The Court also held that the petitioner is entitled to obtain refund of the excess excise duty paid by them on the wrong classification on the products manufactured by them as one falling under Tariff Item 68.
Issues: 1. Whether the Collector of Central Excise had jurisdiction to interfere with the orders dated 29-4-1980? 2. Whether the petitioner is entitled to obtain refund of the excess excise duty paid by them?
Ratio Decidendi: 1. The Court held that the Collector of Central Excise had no jurisdiction to interfere with the orders dated 29-4-1980 because bar of limitation had set in. The Court relied on Section 35A(4) of the Central Excises and Salt Act, 1944, which states that no proceedings shall be commenced under the said section after the expiration of a period of one year from the date of the decision or order. 2. The Court held that the petitioner is entitled to obtain refund of the excess excise duty paid by them on the wrong classification on the products manufactured by them as one falling under Tariff Item 68. The Court relied on Section 11B of the Central Excises and Salt Act, 1944, which states that any person claiming refund of any duty of excise may make an application for refund of such excise duty to the Assistant Collector of Central Excise before the expiry of six months from the date of payment of duty ..... and if on receipt of such application, the Assistant Collector is satisfied that the whole or any part of the excise duty paid by the applicant should be refunded to him, he may make an order accordingly .....'
Final Decision: The Court allowed the writ petition and quashed the order of the Collector of Central Excise dated 6-2-1982.
This Writ Petition coming on for hearing on this day upon perusing the petition and the affidavit filed in support thereof the order of the High Court, dated 9-3-1982 and made herein, and the counter-affidavits filed herein and the records relating to the order in C. No. III/10/488/8l-IA(RC), dated 6-2-1982 on the file of 2nd respondent comprised in the return of said respondents, to the writ made by the High Court, and upon hearing the arguments of Mr. Habibullah Badsha for M/s. E.S. Govindan and S. Suresh Kumar, Advocates for the petitioner, and of Mr. T. Somasundaram, Additional Central Government Standing Counsel on behalf of the respondents, the Court made the following Order :-
The petitioner is a manufacturer of iron and steel items including shutter lathe sections. According to the petitioner, the relevant Central Excise Tariff applicable to the manufacture of shutter lathe section would be Item 26AA(ia). But when the residuary Tariff Item 68 was introduced in the year 1975, the Assistant Collector of Central Excise, by his order dated 17-7-1976, classified the said product under Tariff Item 68. The petitioner preferred an appeal to the Appellate Collector and by the order dated 23-12-1977, the appeal was allowed and the matter was remanded to the Assistant Collector for fresh disposal. But once again the Assistant Collector, by his order dated 23-2-1979, held that the item is classifiable under Tariff Item 68 which necessitated the petitioner to prefer an appeal to the Appellate Collector and on a direction from the Appellate Collector by his order dated 16-1-1980, the Assistant Collector visited the factory of the petitioner on 25-4-1980 and after studying the process of manufacture of shutter lathe in detail, passed an order dated 29-4-1980 classifying under Tariff Item 26AA(ia). This order of the Assistant Collector dated 29-4-1980 had become final. The department did not seek a review of the said order classifying the products manufactured by the petitioner as falling under Tariff Item 26AA(ia).
2.On the basis of the order of the Assistant Collector dated 29-4-1980, the petitioner filed refund claims being the difference between the duty already paid under Tariff Item 68 and the one payable under Tariff Item 26AA(ia). In the light of the decision of the Assistant Collector dated 29-4-1980, claims for refund were ordered on 29-12-1980.
3.The second respondent, who is the Collector of Central Excise, Madras, purporting to exercise powers under Section 35A of the Central Excises and Salt Act, 1944, hereinafter referred to as the 'Act' issued a show cause notice to the petitioner calling upon the petitioner to show cause as to why order of the Assistant Collector dated 29-12-1980 sanctioning refund should not be set aside. The main grounds on which the show cause notice under Section 35A of the Act was issued are as follows:- (1) The shutter lathe sections will not fall under Tariff Item 26AA(ia), but will fall under Tariff Item 68 and consequently the benefit of exemption under the erstwhile Notification No. 75/67-C.E., dated 20-5-1967 will not apply; and (2) The Assistant Collector has not verified before sanctioning refund whether any set off was availed in terms of Notification No. 178/77-C.E. and Notification No. 201/79-C.E. by persons who manufactured shutters out of shutter lathe sections purchased from the petitioners. The petitioner submitted his explanation. The second respondent, by his order, dated 6-2-1982, held that since Tariff Item 26AA(ia) covers all other rolled forged or extruded shapes and sections not otherwise specified, the products manufactured by the petitioner would rightly be classified under Tariff Item 68 and not under Tariff Item 26AA(ia). On the second point, the Collector of Central Excise held that since the classification by the Assistant Collector by his order, dt. 29-4-1980 is found to be wrong, no refund was due to the assessees. The Collector further held that it is notic
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