TaxTMI 
TaxTMI 
TaxTMI 
1988 (7) TMI 65
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....78 when Notification No. 35/76-C.E., under which the petitioner-Factory was entitled to claim exemption, was in force. 2. The petitioner had set up a sugar factory in the year 1977 and it commenced production on 27-11-1977. The excise duty leviable on the sugar manufactured by the factory was normally at the rate of 37-1/2%. In order to help the newly started sugar factories the Government of India issued Notification No. 35/76-C.E. in exercise of the powers conferred under Rule 8(1) of the Central Excise Rules, 1944 with sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, on 25-2-1976 exempting for a period of three years from payment of excise duty and additional excise duty, sugar pro....
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....ition is grounded is that the mistake in regard to the applicability of the notification was on both sides - the petitioner as well as the Excise officials. 4. In the counter-affidavit, there is no denial about the applicability of Notification No. 35/76-C.E., dated 25-2-1976. The application filed by the petitioner seeking refund was admitted. The sole ground on which the claim of the petitioner is opposed is that the period of six months prescribed under Rule 11B of the Rules had expired long ago and, therefore, no refund could be ordered. The only remedy available to the petitioner, it is pleaded in the counter-affidavit, is that it should follow the procedure prescribed under the Act. The allegation that there was mistake on both sides....
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....aim for refund of any duty shall be entertained." (Rule 11 was deleted with effect from 17-11-1980). 7. During the relevant period, it is not in controversy, the petitioner was liable to pay the excise duty at the reduced rate of 20% by virtue of Notification No. 35/76. In the affidavit filed by the Administrative Officer of the petitioner in support of the writ petition, it is stated "At the end of 1981 the petitioner was informed by the General Manager, A.P. State Federation for Cooperative Sugar Factories Limited that we are entitled for a rebate in the excise duty and the excise duty we were paying was higher than what we ought to pay and he pointed out to us a Notification No. 35/76, dated 25-2-1976 stating that...". It is true that ....
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.... party. Such an illegality can neither be legitimised nor legalised by recourse to the rule of limitation. Rule 11 has no application to cases where the Department breaches a legal duty by acting contrary to the terms of the exemption notification. The failure on the part of the affected party to claim refund within the period of limitation prescribed in Rule 11 cannot absolve the Department of the legal duty cast upon it, the latter outweighs the former. 9. It appears that the petitioner-factory worked only during the period February, 1978 to August, 1978 and thereafter the production had come to a halt because of certain other difficulties. In the course of hearing, we have been told that the factory is not running now. In the particular....
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....11. The petitioner had knowledge about the notification only towards the end of 1981 and even assuming that exemptions granted under Rule 8 also are subjected to the rule of limitation, the period begins to run from the date of knowledge, but not from the date of payment of the excess tax. We would, therefore, reject the contention advanced on behalf of the learned standing counsel for the Central Government that the writ petition must fail on the ground of limitation. 12. It is urged by the learned standing counsel for the Central Government that if refund is ordered to the petitioner-factory, it would amount to unjust enrichment and in support of this, he relied upon a decision of the Supreme Court in M/s. Amar Nath Om Prakash v. State o....