UNION OF INDIA Vs. SANG FASTENERS PVT LTD

JUDGEMENT

(1.) BY the judgment under appeal, the learned Judge made the writ petition absolute and directed the respondents to the writ petition to pay to the petitioners interest on the amount of the refund ordered by him at the rate of 12 per cent per annum from 1st November, 1978 till the date of payment. The respondents are in appeal and Mr. R. V. Desai, their counsel, has, fairly, restricted his argument to the aspect of the interest that the learned Single Judge awarded.

(2.) THE petitioners manufacture nuts, bolts and screws. These are covered by Tariff Item No. 52 of the Central Excises and Salt Act. Their production for the period 1st April, 1975 to 31st march, 1976 did not, admittedly, exceed the value of Rs. 5 lakhs. By reason of an exemption notification issued on 26th July, 1971, nuts, bolts and screws were not liable to excise duty if the total production thereof for home consumption did not exceed the value of Rs. 5 lakhs. The petitioners, although they were not, accordingly, liable to pay any excise duty, did in fact pay excise duty in the sum of Rs. 47,792. 52 for the said period without realising that they were entitled to the benefit of the exemption. The petitioners made an application for refund only on 26th October, 1978. The application was rejected as barred by time. The appeal preferred therefrom was also rejected. The writ petition was filed on 8th April, 1982 and came to be decided on 24th March, 1988. The learned Judge ordered the refund and directed that interest should be paid on the amount thereof at the rate of 12 per cent per annum from 1st November, 1978 till the date of payment.

(3.) MR. Desai, learned Counsel for the respondents to the writ petition, pointed out that the refund application had been made almost two years after the date on which the last payment of excise duty had been made. The application was, therefore, clearly barred. It was only by reason of the powers of the Court under Article 226 that the refund could be ordered. The learned Judge ought, therefore, not to have awarded interest from 1st November, 1978. Mr. Thakkar, learned Counsel for the writ petitioners, submitted to us that the excise duty had been paid in the course of the provisional assessment and that the petitioners had provided to the respondents a bank guarantee upon the amount of which they had to pay interest to the bank. It was in his submission, therefore, appropriate that interest should have been ordered from 1st November, 1978 which was, approximately, the date upon which the refund application was made.