ivil Appeal No 469 of 1975
From the Order dated 3151974 of the Government of India Ministry of Finance Department of Revenue and Insur ance New Delhi in Order No 615 of 1974 on Central Excise Revision Application
Dr YS Chitale Ms M Ray and HK Dutt for the Appel lant
VC Mahajan NP P Parmeshwaran and RP Srivasta va for the Respondents
K R Nambiar for the Intervener
372 The Order of the Court was delivered by RANGANATHAN J
The appellant assessee manufactures goods known in the market as cushion repair compound tread repair compound and cover
compound
These materials ac cording to the assessee are used to mend injured and defec tive sections of tyres and are not meant to be used either in the resoling or in retreading of tyres
Under the Cen tral Excise  Salt Act 1944  the Act  the above goods were normally dutiable under tariff item No 15A 2
Howev er the assessee claimed exemption from duty under notifica tion No 71 of 1968 dated 141968
By this notification under section 8 of the Act the Central Government exempted all rubber products in the form of plates sheets and strips unhardened whether vulcanised or not and whether combined with any textile material or otherwise other than the products which are made either wholly or partly of rubber and which are used for the resoling or retreading of tyres including the products commonly known as tread rub ber camel back cushion compound cushion gum tread gum and tread packing strips falling under sub item 2 of this item from the whole of the duty of excise leviable thereon
The Superintendant of Central Excise having re jected the claim for exemption and charged the goods in question to duty at 20 basic under the tariff item above mentioned the assessee preferred an appeal to the Collector of Central Excise West Bengal
The Collector also rejected the claim observing that there was no evidence that the goods in question could not be used for the resoling or retreading of tyres
The assessee thereupon preferred a revision to the Central Government under section 36 of the Act as it then stood
In the revision petition it was pointed out that tread repair compound and cushion repair compound were primarily meant for and also used as repair material only with reference to the treads and cushions of tyres and that since they were designed to serve the limited purpose of mending small sections of tyres it would be grossly erroneous to hold that these repair materials could be used in place of tread rubber or camel back which only have the necessary physical dimensions and technical proper ties to serve as retreading and resoling material
Similarly cover compound it was said was material which was used only for repairing conveyor belting and was also marketed by the assessee solely for the purpose of repairing damaged sections of the conveyor belting
It was not meant for use in retreading and resoling of tyres since their sole intend ed use was to repair conveyor belts
The Central Government however dismissed the revision petition by its order dated 2151974
The Government referred to the fact that the 373 notification of exemption specifically excluded cushion compound cushion gum and tread gum and observed that in view of this cushion repair compound and tread repair compound would also be assessable to duty under item No 16A So far as cover compound was concerned it was observed that its composition was such that its use for repair of conveyor belts was indistinguishable from the other use of resoling of tyres
The present appeal has been preferred from the order of the Central Government
On behalf of the appellant it is pointed out that the whole purpose of the exemption notification was to exclude products which were used for the resoling and retreading of tyres
The Government has overlooked that while tread rub ber cushion compound and tread gum are all items used for resoling or retreading of tyres that was not the use to which the articles manufactured by the assessee were put
The statement of the assessee that the goods manufactured by it were employed only for repairing tyres and conveyor belts has not been disbelieved
It is therefore submitted that the Government erred in holding that the goods produced by the assessee are not eligible for the exemption in question
In support of his contention learned counsel for the appellant relied on two important circumstances
One is that by a notification No 27 of 1973 dated 131973 notifica tion No 71 of 1968 was amended and the words used for resoling retreading or repairing of tyres was substituted for the words used for the resoling or retread ing of tyres
This amendment was not effective for the period with which we are concerned and it is therefore argued that the compounds used for repairing as against resoling or retread ing will not be covered by the exclusion in the exemption notification
The second circumstances relied upon by the learned counsel for the appellant is this
Earlier there was a notification No 31 of 1964 under which the duty leviable in respect of latex foam sponge as well as products commonly known as tread rubber or camel back including cushion compound cushion gum tread gum and tread packing strips were subjected to a concessional rate of duty while other rubber products falling under item 16A were granted an exemption from the levy of duty
In the context of that notification a question arose as to whether rubber products which are capable of being used for retreading or resoling of tyres but are only used for repairs would attract duty or not
The position was clarified by the Central Board of Excise and Customs in its circular No Rubber 166 dated 721966
The relevant part of the circular reads as fol lows 374 2
Those rubber products which are not latex foam sponge  may be excisable under the said tariff item No 16A but would not attract Central Excise duty unless commonly known as per description given in Column 2 against section No 2 of the table to the above cited notifi cation
While the scope of the levy on the rubber products thus gets very much restrict ed it may so happen that different brand names are given by different manufactures to the same or similar product giving rise to the question whether or not a particular product can be deemed to be commonly known as tread rubber  camel back  cushion compound  cushion gum  etc so as to attract duty
Doubts of the above nature should not in fact arise in view of para 6 to the 1962 Budget instructions
It was made quite explic it therein that item is  fairly comprehen sive as to wording but the intention  is to subject only latex foam sponge  and the rubber products popularly known as tread rubber  or camel back  used for the resoling or retreading of tyres to duty
That being the intention a rubber product which is neither latex foam sponge  nor used for the resoling or retreading of tyres is classifiable as all other products  and therefore exempt from whole of the duty leviable thereon under section No 3 of the Table to the above cited notifi cation
It is possible that some of the rubber products are capable of being used for re treading or resoling of tyres
Mere capacity does not however attract duty in the absence of normal usage in that manner being estab lished it would not be appropriate to hold that the products are dutiable
Rubber products used for repair of tubes or tyres also in view of what has been stated above does not attract duty
Pending cases regarding assessment of rubber products may be finalised accordingly
Learned counsel submits that the above interpretation is equally applicable in the context of notification No 71 of 1968
375 We are of opinion that the appellant s contention is well founded
The notification of 1978 only reproduces with some modifications the notification of 1964 however the broad purport of both the notifications is to exempt rubber products other than those which are commonly sold under certain descriptions and are used for the resoling or re treading of tyres
The circular of 1966 which can be con sidered as a contemporaneous exposition of the understanding of the Government while issuing the exemption notification of 1964 makes it clear that at that time it was not intended to deny exemption to rubber products used merely for repair purposes
The notification of 1973 was one in which various amendments were carried out to a series of notifications relating to various items and does not contain anything to suggest that it was only a clarification that was intended to be given and not a prospspective amendment of the previous notification
As already mentioned the fact that the appellant is using or marketing the products for use only for repairing tyres and conveyor belts is not controverted
In these circumstances we are of opinion that the appellant assessee was entitled to exemption under the notification
In one sense any rubber compound has a compo sition which theoretically permits it to be used either for repair purposes or for resoling or retreading of tyres
But the assessee s contention is that the product marketed by it  has not the physical dimensions or technical properties to be capable of use for retreading or resoling
Also the notification talks of products used for resoling and retreading of tyres and that is not the case here
The notification thus imports a limitation on the exclusion from the exemption specified in the paranthetical clause of the notification
That exclusion is only in respect of compound used for resoling or retreading
For the reasons mentioned above we allow this appeal and set aside the order of the Central Government under section 36 of the Central Excise Act as well as the orders of the subordinate authorities and hold that the assessee is enti tled to the exemption prayed for
The concerned assessment will be modified accordingly
We however make no order as to costs
GN Appeal allowed


Summary:
Under section 72 of the   A person to whom money has been paid  by mistake or under coercion must repay or return it 
The respondent a registered firm paid sales tax in respect of its forward transactions in pursuance of the assessment orders passed by the sales tax officer for the years 1949 51 but in 1952 the Allahabad High Court having held in Messrs Budh Prakash jai Prakash vs Sales Tax Officer Kanpuy  that the levy of sales tax on forward transactions was ultra vires the respondent applied for a refund of the amounts paid by a writ petition under article 226 of the Constitution
It was contended for the sales tax authorities that the respondent was not entitled to a refund because 1 the amounts in dispute were paid by the respondent under a mistake of law and were therefore irrecoverable 2 the payments were in discharge of the liability under the Sales Tax Act and were voluntary payments without protest and 3 inasmuch as the monies which had been received by the Government had not been retaine but had been spent away by it the respondent was disentitled to recover the said amounts
Held that the term  mistake  in section 72 Of the Indian Con tract Act comprises within its scope a mistake of law as well as a mistake of fact and that under that section a party is entitled to recover money paid by mistake or under coercion and if it is established that the payment even though it be of a tax has been made by the party labouring under a mistake of law the party receiving the money is bound to repay or return it though it might have been paid voluntarily subject however to questions of estoppel waiver limitation or the like
Shib Prasad Singh vs Maharaja Srish Chandra Nandi 1949 LR 76 IA 244 relied on
Where there is a clear and unambiguous provision of law which entitles a party to the relief claimed by him equitable considerations cannot be imported and in the instant case the fact that the Government had not retained the monies paid by the respondent but had spent them away in the ordinary course 1351 of business of the State would not make any difference and under the plain terms of section 72 Of the Act the respondent was entitled to recover the amounts
Observations in Nagorao vs Governor General in Council A 1
R  374 to the effect that where a party receiving money paid under a mistake has no longer the money with him equitable considerations might arise disapproved