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Ashok Organic Industries Limited v/s Union of India

    Special Civil Application Appeal No. 765 of 1990

    Decided On, 10 January 1995

    At, High Court of Gujarat At Ahmedabad

    By, THE HONOURABLE MR. JUSTICE A.P. RAVANI & THE HONOURABLE MR. JUSTICE S.K. KESHOTE

    For the Appearing Parties: H.M. Mehta, J.D. Ajmera, Advocates.



Judgment Text

A.P. RAVANI, J.


(1) PETITIONER No. 1 is a company incorporated under the appropriate provisions of the Companies Act, 1956. Petitioner No. 2 is a shareholder and Director thereof. Petitioners are engaged in the manufacture of certain chemicals at their factory. In respect of certain goods manufactured and cleared by them, show- (6) Spl. C. A. 1126 of 1990 decided on 12-12-1994 by Guj. High Court cause notice was issued by the Asstt. Collector of Central Excise, Division V. Baroda, demanding an amount of Rs. 47,671. 72 ps. (Rupees forty-seven thousand six hundred seventy-one and paise seventy-two only), as the amount recoverable from the petitioners. The Assistant Collector confirmed the demand notice as per his order dated March 26, 1985. Against the said order the petitioners preferred appeal before the Collector (Appeals). In the appeal, the petitioners succeeded. The collector of Central Excise (Appeals), Bombay, reversed and set aside the order passed by the Assitant Collector and directed to grant consequential relief. As the petitioners were not paid the amount, they filed writ petition before this High court, and this Court directed to pay the amount in question.


(2) THE petitioners now pray that on the principal amount of Rs. 47,671. 72 ps. , interest at the rate of 18% per annum should be paid till the amount was refunded to them. Hence, the petition praying that the respondents be directed to pay the amount of interest at the rate of 18% on the principal amount from the date when the amount was recovered till the date of payment by the respondents. The petition is filed on February 5, 1990.


(3) IT is an undisputed position that the questions raised in this petition are covered against the petitioners by the decision of this Court in the case of Satellite engineering Ltd. v. Asstt. Collector of Central Excise, reported in 1992 (58)E. L. T. 503 (Guj.). The said decision has been followed by another Division Bench in Special Civil Application Nos. 1126, 1127 and 1128 of 1990 decided on december 12, 1994. We reproduce hereinbelow paras 2, 3 and 4 of the decision rendered in Special Civil Application Nos. 1126, 1127 and 1128 of 1990 :


"now the petitioners claim that they should be paid interest on the amount of excise duty which was unlawfully recovered and retained by the Government. Amount of interest as prayed for cannot be granted to the petitioners in view of the decision of Division Bench of this Court in the case of Satellite Engineering ltd. v. Asstt. Collector of Central Excise, reported in 1992 (58) ELT 503. In the aforesaid decision this Court has considered the earlier Division Bench judgment of this Court in the case of M/s. Vijay Textile v. Union of India, reported in (1979)XX GLR 944, wherein interest was awarded. However, the said decision has been reversed by the Supreme Court in the case of M/s. Ujagar Prints v. Union of India, reported in AIR 1988 SC 516 : [1990 (1) GLR 560 (SC)]. This Court further observed that the Supreme Court might not have touched the question with regard to the claim of interest, which was awarded in the case of Vijay Textile (supra), but the decision of the Division Bench of this Court ceases to be good law. This is so, because the decision in the case of Vijay Textile (supra) itself has been reversed and set aside. Once a decision is reversed and set aside, it is immaterial on which point the decision was reversed. On the reversion of the decision it ceases to be good decision in the eye of law. It may be noted that there is no statutory provision on the basis of which the petitioners could have claimed interest on the amount of refund of duty granted to them. Had the legislature thought it fit to award interest in cases where the amount of duty is refunded, the legislature would have made such provision. It is pertinent to note that such provisions are made in other taxing statutes such as gujarat Sales Tax Act, 1969 and Income-tax Act, 1961. There is no such provision in the Central Excise and Salt Act, 1944. Therefore, there is no basis in law on which the claim for interest could be founded. In this connection, the Division Bench of this Court, while deciding the case of Satellite Engineering Ltd. (supra), referred to a decision of the Bombay High court in the case of Municipal Borough, Ahmedabad v. Vadilal, reported in AIR 1944 (31) Bombay 233. The Division Bench inter alia observed as follows :


"reference may be made to a decision of the Bombay High Court in the case of municipal Borough, Ahmedabad v. Vadilal, reported in AIR 1944 (31) Bombay 233. In that case the question arose as to whether the tax payer was entitled to claim refund with interest on the amount of tax illegally recovered. The lower Court had allowed the claim of interest made by the tax payer. Beamont C. J. , reversed the judgment of the trial Court and held that interest can be claimed only in circumstances provided under the Interest Act. Negativing the contention that the interest can be claimed on the principle of justice, equity and good conscience, it is inter alia observed that interest cannot be allowed by way of damages. It may be allowed where there is an agreement for the payment of interest or it is payable by the usage of trade having the force of law. It is also held that the claim of interest would not be maintainable even in tort. Reference was made to Sec. 206 of Bombay Municipal Boroughs Act, 1925 which protected the Municipality and its officers for action taken in good faith. We are in respectful agreement with this decision of the Bombay High Court. Similar is the provision in Sec. 40 of the Central Excise Act, 1944 which protects the government and its officers for anything which is done or intended to be done in good faith in pursuance of the Act and the rules framed there under. It cannot be said that the duty of excise was not recovered from the petitioner in good faith. It is not even the case of the petitioner that the department lacked in good faith and acted with mala fides in recovering the amount of duty from it. On this count also, the petitioner has no case for claiming the amount of interest. "


Thus, above is the settled legal position. In view of this settled legal position, it is evident that the petitioners are not entitled to claim any amount of interest on the amount of refund of excise duty which has already been repaid to them.


(4) IT is brought to our notice that in the case of Jyoti Limited v. Union of india, reported in 1979 E. L. T. (J-546) : [ (1980) 21 GLR 450] Division Bench of this Court has awarded interest. In para 16 of the judgment, Division Bench (Coram : B. J. Divan, C. J. and R. C. Mankad, J.) has observed as follows :


"in the cases of processing houses, Special Civil Application Nos. 1552 of 1977 and 1553 of 1977 and Batch decided by a Division Bench of this Court on January 24, 1979, we have ordered that interest at twelve per cent per annum should be paid in all cases where the money was illegally collected by the excise authorities from the citizens. The same principle will apply in this case also and the respondents are directed to refund the above mentioned amounts with interest at twelve per cent from the respective dates when the amounts were collected from the petitioner. "


It may be noted that reference to the cases of processing houses, i. e. Special Civil application Nos. 1552 of 1977 and 1553 of 1977 and other allied petitions decided on January 24, 1979 is the reference to the decision of earlier Division Bench judgment in the case of Vijay Textile v. Union of India, reported in (1979) XX GLR 944. But the said decision has been quashed and set aside by Hon'ble Supreme Court in the case of M/s. Ujagar Prints v. Union of India, reported in AIR 1989 SC 516. As indicated hereinabove the Supreme Court might not have touched the question with regard to claim of interest which was awarded in the case of Vijay Textile (supra), but the decision of the Division Bench of this Court in the case of Vijay Textile (supra) ceases to be good law. This was so, because the decision in the case of Vijay Textile (supra) itself stood reversed and set aside. Once the decision is reversed and set aside it is immaterial on which point the decision is reversed. On rev

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ersion of the decision it ceases to be good decision in the eye of law. While deciding the case of Jyoti Limited (supra) the Court has merely referred to the earlier Division Bench decision of this Court in the case of Vijay Textile (supra) which, as indicated hereinabove, has ceased to be good law. Therefore, the decision rendered by Division Bench of this Court in the case of Jyoti Limited (supra) also cannot be cited as a precedent in support of the claim of the amount of interest on the principal amount already refunded. (5) IN view of the aforesaid legal position, the petitioners are not entitled to claim amount of interest on the amount of refund of excise duty. Nothing is pointed out to us to take a different view from the view taken by this Court In the aforesaid decision. No other contention is raised. There is no substance in the petition. Hence rejected. Rule discharged, with no order as to costs.
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