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TMI Blog1988 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had already been taken as proforma credit by M/s. Karthika Industries, it is evident that there has been a double refund of duty paid or shutter lathe sections and in this view, the Collector had set aside the orders of the Assistant Collector dated 29-12-1980 directing refund. The present writ petition has been filed to quash the said order of the Collector of Central Excise dated 6-2-1982. 4. Mr. Habibullah Badsha, learned Senior Counsel appearing for the petitioner submits that after a careful consideration the Assistant Collector of Central Excise has passed final orders on 29-4-1980 classifying the items manufactured by the petitioner as falling under Tariff Item 26AA(ia). The petitioner has accepted the said order. This order has also been acted upon by the department when an order of refund was made on 20-12-1980. If the department felt aggrieved by the orders of the Assistant Collector, dated 29-4-1980, they could seek a revision under Section 35A of the Act. But such a revision could be sought for only within a period of six months from the date of the order. But in the instant case, no proceedings for revision were initiated under Section 35A of the Act at all against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11B of the Act does not impose any such condition for obtaining refund. Therefore, the second reason contained in the order of the Collector of Central Excise is unsustainable. In support of the contentions of the petitioner, reliance is placed on the judgment of the Supreme Court reported in D. Cawasji and Co. v. State of Mysore (1978 E.L.T. 154) and the judgment of this Court reported in Soft Beverages (P) Ltd., Madurai v. Union of India and Another (1982 E.L.T. 119) and Madras Rubber Factory Ltd. v. Assistant Collector of Central Excise, Madras and Another (1981 E.L.T. 565). Reliance is also placed on the judgment of the Supreme Court reported in Commissioner v. Auriaya Chamber (1986 E.L.T. 867) where it has been held that when tax or duty has been illegally collected, there is an obligation on the State to refund the same. 5. Thiru T. Somasundaram, learned Counsel appearing for the respondents submits that the judgment of a Division Bench of this Court reported in Madras Aluminium Co. Ltd. and Another v. Union of India (1981 E.L.T. 478) is directly on point and as held therein that in so far as the petitioner has passed on already the excise duty paid on the goods manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und ordered by the Assistant Collector of Central Excise was erroneous. In the contrary proceedings had been initiated under Section 35A of the Act which, in Section 35A(2), vests a suo motu power in the Collector of Central Excise to call for and examine the record of any proceedings in which any decision or order has been passed under the Act by a Central Excise Officer subordinate to him for the purpose of satisfying himself as to the correctness, legality or propriety of such decision or order and he may pass such order thereon as he thinks fit. Sub-section (4) of Section 35AA of the Act 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. 8. In the instant case, the Collector of Central Excise has initiated action under Section 35A of the Act by issue of a show cause notice dated 24-6-1981. Obviously when the issued such show cause notice on 24-6-1981, a period of one year had already lapsed from 29-4-1980 when the Assistant Collector passed final orders classifying the items manufactured by the petitioner as one falling under Tariff Item 26AA(ia). Therefore, by purporting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners. If erroneously any proforma credit had been given to such purchasers by applying Notification No. 201/79, it is open to the department to proceed against these purchasers who had that unjust benefit and recover the amounts given credit to erroneously. But that would not enable the department to proceed against the petitioner who are admittedly entitled to the benefit of Tariff Item 26AA(ia) and who are liable to pay excise duty only under that item 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. This claim of the petitioner had been sustained by the department itself when it ordered refund of the excess excise duty paid by them by orders dated 29-12-1980. There is no error in the said order of refund passed by the Assistant Collector of Central Excise. The order of the Collector of Central Excise to the contrary is clearly without jurisdiction and is unsustainable and is liable to be quashed and is quashed. 11. However, before parting with the case, it is necessary to refer to the several judgments cited at the Bar. The first judgment, on which the learned Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d over to the State. Under Section 9B, Clause (3) of the Act, as it stood at the material times, the amount realised by any person as tax on sale of any goods shall, notwithstanding anything contained in any other provision of the Act, be deposited by him in a Government treasury within such period as may be prescribed if the amount so realised exceeded the amount payable as tax in respect of that sale or if no tax is payable in respect thereof. As the tax collected by the assessees was not exigible in respect of the sales from the purchaser, a statutory obligation arose to deposit it with the State and by paying that tax under the assessment, the assessee must be deemed to have complied with this requirement. But the amount of tax remained under Section 9B of the Act with the Government of Orissa as a deposit. If with a view to prevent the assessee who had no beneficial interest in those amounts from making a profit out of the tax collected, the Legislature enacted that the amount so deposited shall be claimable only by the persons who has paid the amounts to the dealer and not by the dealer, it must be held that the restrictions on the right of the assessees to obtain refund was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sji and Co. v. State of Mysore (1978 E.L.T. 154 at Page 156) it was held: "Nor is there any provision under which the court could deny refund of tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them, or for any reason, it is impracticable to do so." In Commissioner v. Aruiaya Chamber (1986 E.L.T. 867) the Supreme Court held in paragraph 28 as follows :- "As we read this order in the instant case, when the assessee or dealer made an application for revision, the Additional Judge (Revision) could direct a refund because money was being illegally retained by the revenue. If mistake either of law or of fact is established, the assessee is entitled to recover the money and the party receiving them is bound to return it irrespective of any other consideration." In paragraph 29, it is held : "If excess amount is realised, refund is also contemplated by the scheme of the Act. In this case, undoubtedly sales lax on forward contracts has been illegally recovered on a mistaken view of law. The same is lying with the Government. The assessee or the dealer has claimed for the refund in the revision……….." In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the difference between the supply price and the ex-factory price of sugar was to be credited to Madhya Bharat Government Sugar Fund. This fund was held to be in violation of Article 265 of the Constitution of India. Therefore, the petitioner applied to the Government. It was under these circumstances, the High Court ordered that the State must restore to the petitioner the amounts collected from them and that the Government cannot keep the same on the ground that plaintiffs too have been wrongly allowed to collect the same. When the matter came to the Supreme Court, it was held as follows in paragraph 14 :- 'The principles laid down in the aforesaid case where based on the specific provisions in those Acts but the same principals can safely be applied to the facts of the present case inasmuch as in the present case also the respondents had not to pay the amount from their coffers. The burden of paying the amount in question was transferred by the respondent to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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