UNION OF INDIA Vs. WOOD PAPERS LIMITED BILIMORA

JUDGEMENT

(1.) Leaving aside glass the plaintiff in short claim: we have committed mistake. We were ignorant of law. Had we known the law we would not have paid the amount of tax recovered by you. No matter we ourselves have not suffered the burden of tax. But the amount of tax has reached to the State coWers through our hands. Therefore refund the amount of tax to us. In response to such claim question arises whether allowing the claim would or would not amount to permitting the plaintiffs to fence the pockets of the people i. e. unidentifiable and innumerable unwary consumers who suffered the burden of tax ? Can such claim be allowed ? Let us examine the claim and the question posed.

(2.) The respondents are original plaintiff. Respondent No. 1 is a Company registered under the Companies Act and respondent No. 2 is the Managing Director thereof. The plaintiffs are engaged in the business of manufacturing straw-boards duplex boards packing and wrapping papers and such other materials. The plaintiffs filed suit for a declaration that Rule 11 of the Central Excise Rules 1944 is ultra vires the Constitution and is also ultra vires certain provisions of the Contract Act and the Limitation Act and therefore the same be declared to be illegal and void and that the order passed by the Assistant Collector Surat rejecting the application for refund of Rs 34 922.23 ps. and Rs. 2 79 242.3 ps. respectively be declared to be illegal and void and for further declaration that the recovery of excise duty in excess of 25% on the product in question be also declared illegal and void and for a prayer that an amount of Rs. 2 13 219.91 ps. paid as excise duty be ordered to be refunded with interest.

(3.) It was the case of the plaintiff-Company that it started manu- facturing packing and wrapping papers since year 1965. Since the grammage of the product was 220 gram per sq.m. it was classified as straw board. According to the plaintiff they improved their product from 1967 onwards and the grammage was reduced to 120 to 160 grams per sq.m. The product in question is covered by Item No. 17(3) of Schedule-I to the Central Excise Act 1944 Initially on 14/05/1965 when the sample was sent for purposes of test it was of 221.75 grammage. The product was classified by the plaintiff-Company as straw board. In August 1969 self-removal procedure was introduced. At that time again the plaintiff-Company sent classification vide Exh. 40 dated 14/08/1969 The department made query as regards the grammage of the product. Again sample was sent and it was tested. As per the test report (Exh. 43) dated 24/10/1969 the grammage was below 180 gram per sq.m. Thereafter as per Exh. 44 dated November 17 1969 the product was classified as plucking and wrapping paper. Ultimately on 15/05/1970 vide Exh. 46 the department informed the plaintiff that from 5/09/1965 onwards the product was considered as packing and wrapping paper and the duty was payable accordingly. Be it noted that by notification bearing No. 208 of 1967 dated 8-9-1967 75 of the duty on certain items falling within Item No. 17(3) were exempted. The notification inter and provides that papers other than paper boards newsprint cigarette-tissue glassine paper grease proof paper coated papers and paper of a substance not exceeding 25 grammar per square meter were eligible for exemption. It is an admitted position that straw board was not subjected to exemption as per the notification. However on introduction of self removal procedure when the plaintiff- Company was required to submit another sample for testing and when the department made query with regard to the grammage of the product according to the plaintiffs they realised the importance of grammage. Ultimately when the department classified the product in question as packing and wrapping paper the plaintiffs felt that all the while from 1967 onwards they were labouring under a mistake on account of ignorance of law. Therefore the plaintiffs felt that on the straw boards having grammage less then 180 they would be entitled to refund of the excise duty paid in excess of 25% of the duty leviable thereon. The plaintiffs therefore submitted an application dated 22/11/1969 for refund of Rs. 34 922.53 ps. for the month of August 1969 i. e. for the period commencing from 11/08/1969 to Augu 31/08/1969 After sometimes the plaintiffs requested that they would like to submit a consolidated application covering the period from September 196 7/08/1969 and therefore they requested that they be permitted to withdraw the application. In fact the plaintiffs submitted another application dated 10/11/1970 and claimed refund of Rs. 2 79 242.3 ps.