1979 (12) TMI 70 - HC - Central Excise

Lozenges and Candy - Classification - Mistake of Law - Duty paid under - Namely - Connotation of

Summary

Issues Involved:
1. Classification of Lozenges under Central Excise Tariff Item 1-A(1).
2. Entitlement to a refund of excise duty paid on Lozenges.

Detailed Analysis:

1. Classification of Lozenges under Central Excise Tariff Item 1-A(1):
The petitioners, manufacturers of confectionery items, sought to exclude 'Lozenges' from the list of excisable items under Item 1-A(1) of the First Schedule to the Central Excise and Tariff Act, 1944. They argued that Lozenges do not fall within the specific categories listed under Item 1-A(1), which include boiled sweets, toffees, caramels, candies, nuts coated with sweetening agents, and chewing gums. The petitioners supported their claim with technical opinions from the Indian Standards Institution and the Central Food Technological Research Institute, which distinguished Lozenges from candies based on the manufacturing process. Lozenges are made without heating or cooking, unlike candies, which involve boiling and cooking.

The Assistant Collector and subsequent appellate and revisional authorities had concluded that Lozenges fell under the category of 'candy' without providing detailed reasoning. The court emphasized that the term 'namely' in Item 1-A(1) indicated an exhaustive list, and thus, the general meaning of 'confectionery' should not be considered. The court found that the manufacturing process for Lozenges did not involve boiling or cooking, essential for items listed under Item 1-A(1). Therefore, Lozenges could not be classified as 'candies' and were not excisable under Item 1-A(1).

2. Entitlement to a Refund of Excise Duty Paid on Lozenges:
The petitioners requested a refund of the excise duty paid on Lozenges, arguing that the duty was paid under a mistake of law. They filed for a refund on 20-10-1973, and the court had to determine the eligibility for a refund for periods before and after this date. The court noted that payments made under a mistake of law could be recovered within three years from the date of knowledge of the mistake. Since the petitioners paid the duty under protest from 20-10-1973, they were entitled to a refund for the period after this date.

For the period before 20-10-1973, the court discussed the applicability of Rule 11 of the Central Excise Rules, which allows for a refund of duties paid through inadvertence, error, or misconstruction if claimed within three months from the date of payment. The court concluded that the petitioners were entitled to a refund for a period of three months prior to 20-10-1973, based on their application date.

Conclusion:
The court allowed the writ petition, issuing a writ of mandamus directing the respondents to reconsider the refund application in light of the observations made. The petitioners were entitled to a refund for the period of three months prior to 20-10-1973 and for the period subsequent to 20-10-1973, during which they paid the duty under protest. There was no order as to costs.