1988 PLP 2192 (CLC)

AJMAL MIAN, J.‑‑The petitioner through this petition has prayed for the following relief:‑ . "Therefore, it is respectfully prayed that this Hon'ble Court be pleased to direct the respondents to refund to the petitioner a sum of Rs.1,92,679:50 being the amount of excise duty realised from the petitioner under mistake of fact and law."

2. The brief facts leading to the filing of the above petition are that the petitioner which is a company incorporated under the provisions of Companies Act, 1913 has been manufacturing polyester yarn. Under the relevant notification excise duty at the rate of Rs.5 per pound was leviable on the polyester yarn and nylon yarn. It seems that under Notification No. SRO‑5577/72, dated 3rd August 1972 the excise duty was reduced on nylon yarn to Rs.350 per pound. It may be advantageous to reproduce herein below item No. 40(d) mentioned at serial No. 33 of the said notification which reads as follows:‑ "(d) Nylon yarn, other than 40 three rupees Nylon yarn covered by and fifty paisas clause (a) or (b). per pound."

3. It seems that the Excise Department continued to levy the excise duty at the rate of Rs.5 per pound on polyester yarn even after the above SRO by treating the same as a different item than a specie of nylon yarn. Both the petitioners and the Excise Department under a mistake of fact continued to treat polyester yarn as observed hereinabove as a separate item other than nylon yarn. However, the Central Board of Revenue under Central Excise General Order No.3 of 1973, dated 4th July, 1973 hereinafter referred to as Order No.3, clarified that polyester yarn is in fact a specie of nylon yarn and therefore, it will be subjected to the levy of excise duty at the same rate at which nylon yarn was chargeable.

4. It seems that after the above clarification the petitioner on 15‑10‑1973 lodged a claim of Rs.3,23,735.50 being the difference between the rate at which the excise duty was recovered namely Rs.5 per pound and rate, which should have been charged namely Rs.3.50 per pound. The Assistant Collector by order dated 19‑6‑1974 allowed the refund of Rs.1,31,058 on the plea that the above clarification was a prospective and not retrospective. Appeal filed by the petitioner was dismissed by order dated 12‑12‑1974. Revision filed by the petitioner also met with the same fate and was dismissed by an order, dated 20‑5‑1975. The petitioner being aggrieved by the above order has filed the present petition.

6. Adverting to Rule 11 it may be advantageous to reproduce the same which reads as follows:‑ "

11. No refund of charges erroneously levied or paid, unless claimed, within (one year). No duty which has been paid, or has been adjusted in an account‑current maintained with the Collector under Rule 9, and of which repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded (and no abatement in duty shall be allowed), unless a written claim is lodged with the proper officer within (one year) from the date of such payment or adjustment as the case may be."

7. A perusal of the above Rule indicates that if an adjustment in an account maintained with the Collector under Rule 9 or payment has been made through inadvertence, error or misconstruction, the refund is to be claimed within one year from the date of such payment or adjustment as the case may be. Mr. Mohsin Tayyab Ali learned counsel for the petitioner has fairly conceded that the petitioner shall be entitled to have the refund of the amounts which fall within the year of the date of payment or adjustment. It may be observed that the petitioner had made application for the refund on 15‑10‑1973 and therefore, the petitioner shall be entitled to have refund of the amount adjusted or paid within the year preceding the above date. We, therefore, allow the petition and declare the impugned orders being without lawful authority to the extent of disallowing the refund to the petitioner for the amount adjusted or paid within the year preceding to 15‑10‑1973. We would further direct the respondent No.2 to refund the amount to the petitioner on the above basis. There will be no order as to costs. H . B . T . / R‑52 / K Petition allowed