Parle Entitled To Refund Of Excise Duty

The Bombay High Court has held that Parle is entitled to refund of excise duty voluntarily paid duty although not due.

The bench of Justice M. S. Sonak and Justice Jitendra Jain observed that the biscuits exported by the Petitioner, Parle did not have the retail sale price in rupee embossed on the package. A person must emboss the retail sale price on the package as per the Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Packaged Commodity) Rules 1977.

The bench observed that the Standards of Weights and Measures Act and the Rules do not apply to the goods exported out of India. Therefore, the description of the goods specified in notification No.03 of 2006 would not answer the biscuits exported by the Petitioner since there is no retail sale price per kg. equivalent not exceeding Rs.100 on the package.

Background

The Petitioner/assessee, Parle has challenged an order d passed by the Revisional Authority under Section 35EE of the Central Excise Act, 1944, in which the rebate claim of the Petitioner allowed by the Appellate Authority has been reversed.

The petition raised very peculiar issue where Parle is claiming that they are not covered by exemption notification with respect to biscuits exported out of India and Respondent – department is contending that Parle is entitled to the exemption notification but since the Petitioner has voluntarily paid duty although not due they are not entitled to the rebate / refund of sum so wrongly paid.

Arguments

Parle contended that for claiming exemption under notification No.03 of 2006, the retail sale price per kg. of biscuits in package form should not exceed Rs.100. Since goods are exported, the provisions of the Standards of Weights and Measures Act and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 are not applicable. The retail price does not get reflected on the package to show the value in rupees. Therefore, the goods cleared for export do not qualify for exemption, and hence, they paid the duty, which is claimed by way of rebate under Rule 18 of the Central Excise (No.2) Rules, 2001.

Parle contended that the department had denied similar claims in the past, which were carried in appeals, and two Appellate Authorities vide orders dated 15th April 2010 and 29th July 2010 have allowed the claim of rebate, and the said Appellate orders have been accepted by the department on merits.

The department contended that the exemption notification No.03 of 2006 was not conditional notification and the Petitioner was not required to pay the duty under Section 5A(1A) of the Central Excise Act, 1944 on such exempted goods. They have paid the duty, which they were not required to pay. There is no provision in the Act for a refund of the said duty wrongly paid. Further, she submitted that in the absence of any enabling provisions for the grant of refund of the amount wrongly paid by the Petitioner, Article 265 of the Constitution of India also cannot be pressed into service.

Conclusion

The court held that even in cases where the manufacturer pays duty which is not leviable, he may be entitled to claim refund of the same. Therefore, the Department may not be right in retaining the duty paid by the Parle.