1992 (3) TMI 63 - HC - Central Excise

Court grants central excise duty refund, rejects retrospective application of amended law

GOPAL HOSIERY Versus ASSISTANT COLLECTOR OF CENTRAL EXCISE

GOPAL HOSIERY Versus ASSISTANT COLLECTOR OF CENTRAL EXCISE - 1992 (58) E.L.T. 542 (Cal.) Issues Involved:1. Classification of hosiery goods under Tariff Item No. 682. Refund of central excise duty paid from March 1, 1975, to March 31, 19803. Limitation period for claiming a refund4. Application of amended Section 11B of the Central Excises and Salt Act, 19445. Compliance with court orders and contempt proceedingsIssue-Wise Detailed Analysis:1. Classification of Hosiery Goods under Tariff Item No. 68:The petitioner, a manufacturer of hosiery garments, was initially not liable to pay central excise duty under Tariff Item No. 22D, which excluded hosiery articles. However, with the introduction of Tariff Item No. 68 in 1975, the Central Excise Authorities required the petitioner to obtain a central excise license and pay duty on hosiery goods. This classification was disputed by the Bengal Hosiery Manufacturers' Association and later by the petitioner individually.2. Refund of Central Excise Duty Paid from March 1, 1975, to March 31, 1980:The petitioner paid Rs. 1,11,580.86 from March 1975 to June 1977 without protest and Rs. 6,16,597.49 from July 1977 to March 1980 under protest. Following a favorable judgment from the Gujarat High Court in Darshan Hosiery Works v. Union of India, which held that hosiery goods were not liable under Tariff Item No. 68, the petitioner sought a refund of the total amount paid. The Assistant Collector and subsequent appellate authorities rejected the refund claim, maintaining the classification under Tariff Item No. 68.3. Limitation Period for Claiming a Refund:The High Court initially remanded the matter to the Appellate Authority to decide on the limitation issue. The Collector of Customs and Central Excise (Appeals) held that the refund claim for the period March 1975 to June 1977 was barred by limitation, as the six-month period was computed from the date of duty payment. However, for the period July 1977 to March 1980, the Assistant Collector was directed to verify the relevant returns and process the refund claim accordingly.4. Application of Amended Section 11B of the Central Excises and Salt Act, 1944:The Central Excises and Customs Laws (Amendment) Act, 1991, which came into force on September 20, 1991, amended Section 11B to impose stricter conditions on refunds. The respondents argued that this amendment nullified the court's order for a refund. However, the court held that the amended Section 11B did not have retrospective effect and could not reopen cases where refund applications had been disposed of before the amendment's effective date. The court distinguished between pending applications and those already finalized, asserting that the amended provisions applied only to pending or new applications post-amendment.5. Compliance with Court Orders and Contempt Proceedings:Despite the court's order on August 23, 1991, directing the refund of Rs. 1,11,580.86 for the period March 1975 to June 1977, the respondents failed to comply, leading to a contempt proceeding. The court noted the respondents' delay in filing an application to recall the order only after the amendment came into force. Ultimately, the court dismissed the application for review or modification, emphasizing the non-retrospective nature of the amended Section 11B. The contempt rule was discharged after the respondents handed over a cheque for the refund amount in court.Conclusion:The court upheld the petitioner's entitlement to a refund for the period March 1975 to June 1977, rejecting the application of the amended Section 11B to finalized cases. The respondents' failure to comply with the court's order led to a contempt proceeding, which was resolved upon payment of the refund amount. The decision reinforced the principle that legislative amendments cannot retroactively affect concluded judicial orders.