1984 (3) TMI 64 - SC - Central Excise

Refund under Item 23A(1) allowed for figured, coloured, rolled, coolex-wired glass (28 Sep 1973-20 Feb 1976); wired glass denied

SHRI VALLABH GLASS WORKS LTD. AND ANOTHER Versus UNION OF INDIA AND OTHERS

SC allowed the appeal in part, holding the claim for refund of excess excise duty payable under Item 23A(1) succeeds for figured glass, coloured figured ... Entitlement to claim refund of excess excise duty which had been paid by them prior to February 20, 1976 - payment of excise duty under Item 23A(1) of the First Schedule to the Central Excises and Salt Act, 1944 - Whether they are entitled to claim refund of such duty paid between October 1, 1963 and February 20, 1976 or during any shorter period? Held that:- Since it is convenient to dispose of the second question at this stage, we shall take it up first. A few more facts which are relevant to this issue have to be stated here. As mentioned earlier, the goods in respect of which dispute had been raised by the appellants in their application dated February 20, 1976 were figured glass, wired glass, coloured figured glass, rolled glass, and coolex wired glass. But it is seen that in respect of wired glass, a dispute had arisen between the Department and the appellants earlier and in that case while the Department claimed that wired glass was subject to payment of duty under Tariff Item 23A(4) the appellants pleaded that wired glass was liable to duty under Tariff Item 23A(1). In the instant case, the appellants had in fact approached the High Court on September 28, 1976 itself by filing Special Civil Application for directing repayment of the excess duty paid by them. But no relief could be granted in that petition in view of the provisions of Article 226 of the Constitution as it stood then and the petition had to be withdrawn. Hence even granting that on the date of making each payment of excise duty in excess of the proper duty payable under law, the appellants should be deemed to have discovered the mistake, all such excess payments made on and after September 28, 1973 which would fall within the period of three years prior to the date on which Special Civil Application No. 1365 of 1976 was filed should have been ordered to be refunded under Article 226 of the Constitution. But the High Court declined to do so on grounds of estoppel and acquiescence. While we do agree that the appellants should not be granted any relief in respect of payment made between October 1, 1963 and September 27, 1973 which would fall beyond three years from the date of the first writ petition filed in this case we do not find it proper and just to negative the claim of the appellants in respect of excess payments made after September 28, 1973. In the instant case the appellants had made excess payments on being assessed by the department and such payments cannot be treated as voluntary payments precluding them from recovering them. We do not also find that the conduct of the appellants is of such a nature as would disentitle them to claim refund of excess payments made in respect of goods other than wired glass. We modify the judgement and order passed by the High Court by quashing the assessments of excise duty made in respect of the goods in question other than wired glass viz. figured glass, coloured figured glass, rolled glass and coolex wired glass for the period between September 28, 1973 and February 20, 1976 also and directing the assessing authority to make a fresh assessment in accordance with law in the light of the decision of the High Court. The respondents are further directed to refund after such fresh determination any excess duty that may be found to have been paid by the appellants. The fresh assessments shall be completed within four months from today. The appeal is however, dismissed in so far it relates to the claim for refund of excess duty paid in respect of wired glass during that period. Appeal allowed in part. Issues Involved:1. Entitlement to refund of excess excise duty paid prior to February 20, 1976.2. Applicability of refund to all goods in question.Issue-wise Detailed Analysis:1. Entitlement to Refund of Excess Excise Duty Paid Prior to February 20, 1976:The appellants, a company engaged in manufacturing various types of glass, contested the excise duty levied on their products under Item 23A(1) of the First Schedule to the Central Excises and Salt Act, 1944. They argued that their products should fall under Tariff Item 68, which was introduced on March 1, 1975. The Assistant Collector of Central Excise rejected their refund claim, but the High Court later ruled in favor of the appellants, classifying the goods under Tariff Item 68 and directing a refund for the period after February 20, 1976. The Supreme Court considered whether the appellants were entitled to a refund for the period between October 1, 1963, and February 20, 1976. The Court noted that the appellants had paid excess duty under a mistaken belief, which could have been challenged within the limitation period prescribed by law. The Court held that refunds for payments made beyond three years from the date of the first writ petition (filed on September 28, 1976) were not warranted due to estoppel and acquiescence. However, the Court allowed refunds for excess payments made between September 28, 1973, and February 20, 1976.2. Applicability of Refund to All Goods in Question:The appellants sought refunds for various types of glass, including figured glass, wired glass, colored figured glass, rolled glass, and coolex wired glass. The High Court had ruled that these products did not fall under Item 23A(1) but under Item 68. The Supreme Court differentiated the case of wired glass, where a previous government order had accepted the appellants' classification under Item 23A(1). Consequently, the Court rejected the refund claim for wired glass prior to February 20, 1976, as the appellants had paid duty based on their own earlier stand. For other types of glass, the Court upheld the High Court's decision, directing fresh assessments and refunds for excess payments made between September 28, 1973, and February 20, 1976.Judgment:The Supreme Court modified the High Court's judgment, quashing the assessments of excise duty for figured glass, colored figured glass, rolled glass, and coolex wired glass for the period between September 28, 1973, and February 20, 1976. The assessing authority was directed to make fresh assessments and refund any excess duty found. The appeal was dismissed concerning the refund claim for wired glass during the specified period. The appeal was allowed in part, with no costs awarded.