M/s. Mathrubhumi Printing and Publishing Company Limited vs Asst.Collector of Central Excise and Others

Chettur Sankaran Nair, J.—Petitioner seeks to quash Ext. P5 order (in part) made by the 1st respondent confirmed in appeal by Ext. P7 by 2nd respondent, and affirmed in a second appeal, by 3rd respondent Tribunal by Ext. P9. Petitioner claimed exemption from excise duty on ''trade discount''. Petitioner was found eligible to get exemption. However, for the period 1-3-75 and 14-3-76 refund was not granted, on the ground that the claim was barred by limitation. For the succeeding period refund was granted. The Department kept the application for refund Ext. P1, pending for a while awaiting decision on a similar claim. By Ext. P2 (e) the Appellate Collector, Madras found that duty was not leviable on ''trade discount'', in the related matter. Following the decision in Ext. P2 (e), refund was allowed, but not for the period between 1-3-75 and 14-3-76, on the ground of delay in making the claim, as already noticed.

According to respondents, the claim for refund cannot be entertained beyond the period prescribed by Rule 173 J. of the Central Excise Rules, then in force. The period prescribed for making an application for refund under that rule is one year.

Learned counsel for petitioner would submit that question of refund will arise, only in cases of a payment demanded and made erroneously, but under authority of law. When there is no authority for the demand, it is an illegal levy, and the concept of refund does not arise, submits counsel. Case of refund arises, where funding was under colour of authority. If collection or demand is not supported by an authority in law, then the question of refunding does not arise. That would be a case of payment under a mistake of law, squarely falling within section 72 of the Contract Act A demand could be made with authority, but erroneously. A demand could be made without authority, also The former would be a case of refund under Rule 173J, and the latter would be a case of restitution. In Raj Kumar Mohan Singh and Others Vs. Raj Kumar Pasupatinath Saran Singh and Others, and D. Cawasji & Co. & Others Vs. State of Mysore (AIR 1975-SC 813), the Supreme Court held that a claim for return of money illegally collected, can be made within the period of limitation of three years, and that Article 226 of the Constitution can be invoked to claim return of such payment.

Excise duty can be levied only on the price, at which the article is ordinarily sold in wholesale trade. Otherwise put, ''trade discount'' given to the wholesaler or the agent as in this case, will not form part of the price, on which a duty of excise is exigible in the contemplation of the charging section viz. Section 4 of the Central Excise and Salt Act, 1944 That is the view taken by the Department itself in Ext. P2(e) also. Levy made outside the authority of the charging section viz. section 4 is a levy without authority of law. A levy, without authority of law, is not governed by Rule 173 J. which governs only cases of refund, of money claimed under authority of law. The case on hand is covered by the decision of Supreme Court in Cowasji''s Case. In the result, Ext. P5 order rejecting the claim of petitioner and Exts P7 & 9 confirming the same are quashed. Respondents will return the amount within two months from today, failing which they will be liable to pay interest at 6% per annum on the amount as indicated in the India Cements Ltd. Vs. Collector of Central Excise, .

Original petition is allowed. There will be no order as to costs.