Custom, Excise & Service Tax Tribunal
Cce, Tirunelveli vs M/S. Madura Coats Ltd on 2 January, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/441/2004
(Arising out of Order-in-Appeal No. 197/2003 dated 28.11.2003 passed by the Commissioner of Central Excise (Appeals), Tirunelveli)
For approval and signature:
Honble Shri P.G. Chacko, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
CCE, Tirunelveli Appellant
Vs.
M/s. Madura Coats Ltd. Respondent
Appearance Shri K.S.V.V. Prasad, Jt. Commissioner (AR) and Shri P. Arul, Superintendent (AR) for the Appellant Shri S.S. Thakur, Consultant for the Respondent CORAM Honble Shri P.G. Chacko, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing : 3/4.12.2012 Date of Pronouncement:
Final Order No. ______________ Per P.G. Chacko The respondent was engaged in the manufacture of core spun threads out of nylon / cotton and polyester / cotton yarns. They classified the product under Heading 54.02 of the Schedule to the Central Excise Tariff Act. The department objected to this classification and required the party to file a revised classification list classifying the product under Heading 56.06. The party filed such revised classification list on 19.12.1990 under protest. The Assistant Collected, by Order-in-Original No. 55/93 dated 30.11.1993 classified the above goods under Heading 56.06 and accordingly finalized the provisional assessment. Aggrieved by the decision of the Assistant Collector, the respondent preferred appeal to the Collector (Appeals) and the latter held the goods to be classifiable under Heading 54.02 and set aside the order of the lower authority by Order-in-Appeal No. 80/94 dated 9.11.1994. The Departments appeal (No. E/99/95) against this Order-in-Appeal was disposed of by the Tribunal in Final Order No. 553/2001 dated 19.4.2001 remanding the classification dispute to the Commissioner (Appeals) for fresh consideration. On the partys request, the Commissioner (Appeals) dismissed their appeal as withdrawn vide Order-in-Appeal No. 73/2001 dated 30.7.2001, whereby the classification (Heading 56.06) ordered by the Assistant Collector vide Order-in-Original No. 55/93 came to hold the field.
2. At the commencement of the classification dispute, that is, on the date (19.12.1990) on which the revised classification list was filed by the respondent, the effective rates of duty applicable to Heading 54.02 and 56.06 were nil and 15% ad valorem respectively. Later on, on account of budgetary changes in 1994, goods falling under Heading 54.02 became chargeable to duty at the rate of 20%, 30%, 50% and 60% , as the case may be, while the rate of duty applicable to Heading No. 56.06 continued to be 15% ad valorem. Thus, goods falling under Heading 54.02 became chargeable to duty at higher rates than those falling under Heading 56.06 with effect from 1.3.1994. In the wake of this development, the jurisdictional Superintendent of Central Excise issued to the respondent three letters dated 30.11.1994, 5.12.1994 and 30.3.1995. The first letter dated 30.11.1994 requested the assessee to file revised classification list in view of the order dated 9.11.94 of the Collector (Appeals). The second letter dated 5.12.1994 required the assessee to pay appropriate duty on their future clearances of goods. The third letter dated 30.3.1995 quantified the differential duty for the period from 1.3.1994 and called for its payment. Upon receipt of the first two letters, the respondent filed Writ Petition No. 21140/1994 in the High Court and obtained stay on 22.12.1994 for a period of six weeks. The stay was vacated by the Honble High Court on 14.2.1995. The Writ Petition was dismissed later. The Writ Appeal filed by the party also came to be dismissed. The respondent started paying appropriate duty from mid-February 1995.
3. The Central Excise Superintendent issued a formal show-cause notice dated 14.6.95 to the respondent demanding differential duty for the period 1.3.94 to 14.2.95 in terms of the appellate Collectors order No. 80/94 dated 9.11.94. This demand of duty was contested by the respondent on the ground that, in terms of Section 11A of the Central Excise Act, the department could claim differential duty only for a period of six months preceding the date of the show-cause notice. The Assistant Commissioner rejected this contention of the assessee and confirmed demand of duty of Rs.2,36,70,779/- (after extending MODVAT credit) for the above period as per Order-in-Original No. 123/95 dated 16.11.95. Against this order of the original authority, the respondent filed an appeal with the Commissioner (Appeals) and the latter passed Order-in-Appeal No. 45/96 dated 26.2.96 holding that differential duty was demandable only for the period of six months plus 55 days (period of stay by High Court) preceding 30.3.95. The appellate authority treated the Range officers letter dated 30.3.95 as a regular show-cause notice and accordingly restricted the demand of duty to Rs.1,76,35,187/- for the period from 17.9.94 to 30.3.95.
4. Against Order-in-appeal No. 45/96 dated 26.2.96, the respondent filed Appeal No. E/488/96 with this Tribunal praying that the period of six months under Section 11A ibid be reckoned from the date (14.6.95) of the show-cause notice and not from the date (30.3.95) of the Range Officers letter, and the department preferred Appeal No. E/837/96 to this Tribunal contending that the assessee was liable to pay differential duty for the whole period (that is, from 1.3.94 onwards) covered by Order-in-Original No. 55/93 dated 30.11.93. Both these appeals were disposed of by this Tribunal by a common order viz. Final Order No. 281 & 282/2000 dated 23.2.2000 holding that, as per the Honble Supreme Courts judgment in CCE Vs. Cotspun Ltd. 1999 (113) ELT 353 (SC), the assessee was not liable to pay any duty for any period prior to the date (14.6.95) of issue of the show-cause notice.
5. Aggrieved by the above final order of this Tribunal, the department raised a few questions of law and filed RCP Nos. 27 and 28/2001 with the Honble Madras High Court under Section 35H(1) of the Central Excise Act praying for a direction to this Tribunal to state a case and refer the said questions of law for the Courts opinion. The Honble High Court framed four substantial questions of law out of the Tribunals final order and directed the Tribunal to state a case and refer the said questions of law for the Courts opinion. Accordingly, the following questions of law have been referred to the High Court:-
1. Whether in the facts and circumstances of the case, the Tribunal is right in law in holding that no duty can be demanded by the department either prior to issue of show-cause notice or from the date of issue of Superintendent letter dated 30.3.1995?
2. Whether in the facts and circumstances of the case, the CEGAT is correct in deciding the issue against the Department by relying on the decision of the Supreme Court in the case of Cotspun Ltd. reported in 1999 (113) ELT 353 (SC) which is apparently not applicable to the present case inasmuch as the fact that the subject matter in this case is about the legality of demanding differential duty for the past period as per the classification already got revised under the Order-in-Appeal No. 80/94.
3. Whether in the facts and circumstances of the case the CEGAT is correct in rejecting the Departments contention that the revised classification as decided by the Appellate Authority is valid for the whole period that was covered in the Order-in-Original dated 30.11.1993 and the assessees have to pay duty from March 1994 onwards (from when-on the duty was levied in the Budget 94)
4. Whether in the facts and circumstances of the case, the CEGAT is right in law by rejecting the Departments plea that in this case the applicability of Rule 173B(5) or question of issuing a notice under Section 11A does not arise as the Appellate Order in effective from the date of initiation of the proceedings and accordingly the order of the Appellate Authority changing the classification is effective from the date of commencement of dispute i.e. from 19.12.1990
6. The reference is said to be pending with the Honble High Court.
7. The respondents had deposited a total amount of Rs.1,30,28,051/- towards duty on the subject goods during the pendency of their writ petitions (filed against demands of duty raised on them from time to time on the basis of Order-in-Appeal No. 80/94 dated 9.11.1994) with the Honble High Court. After Final Order No. 281 & 282/2000 dated 23.2.2000 was passed by this Tribunal, the respondents filed a claim for refund of the above amount, which was rejected by the Deputy Commissioner of Central Excise vide Order No. 49/2000 dated 1.6.2000 in view of the amendments brought to Section 11A of the Central Excise Act by the Finance Act, 2000. The Deputy Commissioner took the view that the said amendment validated past proceedings taken under Section 11A and consequently show-cause notice issued on 14.6.1995 for revising the classification of the goods to Heading 54.02 on the basis of Order-in-Appeal No. 80/94 dated 9.11.1994 and recovering differential duty of Rs.4,28,42,660/- from the assessee was valid and consequently the claim for refund of the duty already paid was liable to be rejected. Aggrieved by the Deputy Commissioners decision, the respondent preferred an appeal to the Commissioner (Appeals) and the latter passed Order-in-Appeal No. 197/2003 dated 28.11.2003, the operative part of which reads as follows:-
I have carefully gone through the facts and circumstances of the case. The refund claim for the refund of pre-deposit made under Section35F was rejected by the lower authority consequent on the retrospective amendments made in Finance Act, 2000 (Section 110) which validated the action taken under Section 11A. The appellants pleaded that the Deputy Commissioner has passed the impugned order without following the principles of natural justice. I find force in the argument of the appellate that no stay order has been obtained against the order of the CEGAT based on which the claim was filed. Therefore, the appellants are entitled for refund of pre-deposit as per Boards instructions cited by the appellants. Further, the lower authority has passed the impugned order without giving any opportunity to the appellants to explain their views. The Finance Act, 2000 has revalidated the action under Section 11A but this cannot automatically warrant recovery of demands in cases where proceedings were adjudicated by the Appellate forums based on the judgment of the Supreme Court in the case of M/s. Cotspun and this has been clarified by the Board vide Circular No. 588/25/2001CX dated 19.9.2001. Therefore, the impugned order is set aside. The present appeal of the Revenue is directed against the above order of the appellate Commissioner.
8. We have also come across a letter dated 5.11.2011 submitted to the Superintendent of Central Excise of the Range concerned by the respondent, which inter alia indicates that they took CENVAT credit of the amount of Rs.1,30,28,051/- (which was claimed as refund) on the premise that the said amount was a predeposit under Section 35F of the Central Excise Act and was not duty and hence there was no requirement of an application for its refund. We have also been told that the Department objected to the suo motu taking of CENVAT credit by the respondent and has issued a show-cause notice for its recovery.
9. Heard both sides.
10. The gist of submissions made by the learned Joint Commissioner (AR), assisted by the learned Superintendent (AR), is that the refund claim of the respondent is directly hit by the Finance Act, 2000. It has been argued that Section 110 of the Finance Act, 2000 sought to legitimize all actions taken for recovery of duty for the period from 17.11.1980 and, therefore, show-cause notice dated 14.6.95 issued by the Department for revising the classification of the goods and recovering duty from the assessee on that basis for the past period should be deemed to have been validly issued notwithstanding anything contained in any judgment or order of any court, tribunal or other authority or any approval of previous classification list. In this connection, the learned Joint Commissioner (AR) has also cited certain judgments of the Honble Supreme Court wherein the aforesaid amendment to Section 11A(1) of the Central Excise Act was considered. Some of these decisions are:-
(i) O.K. Play (India) Ltd. Vs. CCE, New Delhi 2005 (180) ELT 291 (SC)
(ii) Anand Nishikawa Co. Ltd. Vs. CCE, Meerut 2005 (188) ELT 149 (SC)
(iii) Collector Vs. BCL Forgings Ltd. 2005 (190) ELT 153 (SC)
(iv) Commissioner Vs. Kalpana Chemicals Ltd. 2006 (197) ELT 319 (SC) Reliance has also been placed on the Tribunals decisions in Godrej Hi-Care Ltd. Vs. Commissioner of Customs, Chennai 2007 (214) ELT 98 and Commissioner Vs. Sutlej Coach Builders (P) Ltd. 2012 (284) ELT 658.
It has also been emphatically pointed out that the Honble High Court while considering the assessees writ petitions did not accept their objections against the demand of duty based on classification of the goods under Heading 54.02. In this connection, the Honble High Courts judgment reported in 1996 (82) ELT 186 (Mad.) has been referred to.
11. The learned Joint Commissioner (AR) has also pointed out that the Tribunals Final Order No. 281 & 282/2000 dated 23.2.2000 setting aside the demand of duty raised in show-cause notice dated 14.6.1995 was not accepted by the Department and that the reference applications filed by the Department in relation to that Final Order are pending before the Honble High Court. The questions of law arising out of the said Final Order are awaiting the Honble High Courts decision. In the circumstances, according to the learned Joint Commissioner (AR), Final Order No. 281 & 282/2000 ibid cannot be said to have attained finality.
12. The submissions of the authorized representative of the respondent-company are to the effect that Order-in-Original No.55/93 classifying the goods under Heading 56.06 continues to hold the field due the dismissal of the assessees appeal filed against it vide Order-in-Appeal No. 73/2001 dated 30.7.2001 passed by the Commissioner (Appeals), that this Order-in-Appeal was not challenged by the Department and hence it is not open to them to revise the classification of the goods to Heading 54.02 as proposed in show-cause notice dated 14.6.95, that the proposal contained in the said show-cause notice which was issued on the basis of Order-in-Appeal No. 80/94 dated 9.11.1994 is unfounded inasmuch as this Order-in-Appeal was set aside by this Tribunal vide Final Order No. 553/2001 dated 19.4.2001, that this Final Order dated 19.4.2001 was also not challenged by the Department and therefore they cannot fall back upon Order-in-Appeal No. 80/94 dated 9.11.94 for revising the classification of the goods to Heading 54.02, that in Final Order Nos. 281 & 282/2000 dated 23.2.2000, this Tribunal set aside the demand of duty on the sole ground of limitation in view of the Honble Supreme Courts decision in Cotspuns case [1999 (113) ELT 353 (SC)] and therefore the reference proceedings pending before the Honble High Court are inconsequential, that the settled classification of the goods being Heading 56.06, the respondent was not liable to pay duty in terms of Heading 54.02 and hence entitled to refund of the duty paid in terms of the latter heading and that the claim for refund is not affected by the amendment brought to Section 11A(1) of the Central Excise Act by the Finance Act, 2000.
13. We have given careful consideration to the submissions and have also analyzed the effect of Section 110 of the Finance Act, 2000 and the relevant case law on the refund claim in question. We are unable to sustain the impugned order for the following reasons:-
(a) Sub-section (1) of Section 11A of the Central Excise Act as amended by the Finance Act, 2000 reads as follows:-
11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,
(a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with an intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect as if, for the words one year, the words five years were substituted:
Explanation: Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of one year or five years, as the case may be Section 110 of the Finance Act, 2000, validating actions already taken under Section 11A of the Central Excise Act, provided as under:-
110(1). Any notice issued or served on any person under the provisions of Section 11A of the Central Excise Act during the period commencing on and from the 17th day of November, 1980 and ending on the date on which the Finance Act, 2000 receives the assent of the President (hereinafter referred to as said period) demanding duty on account of non-payment, short payment, non-levy, short-levy or erroneous refund within a period of six months or five years, as the case may be, from the relevant date as defined in Clause (ii) of sub-section (3) of that section shall be deemed to be and to always have been, for all purposes, validly and effectively issued or served under that section, notwithstanding any approval, acceptance or assessment relating to the rate of duty on or value of, the excisable goods by any Central Excise Officer under any other provision of the Central Excise Act or the rules made thereunder.
(2) Any action taken or anything done or purporting to have been taken or done under Section 11A of the Central Excise Act at any time during the said period shall be deemed to be and to have always been, for all purposes, as validly and effectively taken or done as if Sub-section (1) had been in force at all material times and, accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, -
(a)? all duties of excise levied, assessed or collected during the period specified in Sub-section (1) on any excisable goods under the Central Excise Act, shall be deemed to be and shall be deemed to always have been, as validly levied, assessed or collected as if Sub-section (1) had been in force at all material times;
(b)? no suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of any such duties of excise which have been collected and which would have been validly collected if sub-section (1) had been in force at all material times;
(c)? recovery shall be made of all such duties of excise which have not been collected or, as the case may be, which have been refunded but which would have been collected or, as the case may be, would not have been refunded, if sub-section (1) had been in force at all material times.
Explanation. - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force. (underlining supplied) It is not in dispute that the show-cause notice dated 14.6.1995 proposed to revise the classification of the goods from Heading 56.06 to Heading 54.02 on the basis of Order-in-Appeal No. 80/94 dated 9.11.1994. In view of sub-section (1) of Section 110 of the Finance Act, 2000 which gave retrospective effect to the amended provisions of Section 11A(1) of the Central Excise Act, the above show-cause notice proposing to revise the classification of the goods and demand duty from the assessee on that basis has to be deemed to have been issued validly and effectively for all purposes notwithstanding any approval of classification list, acceptance of price list or finalization of provisional assessment. In view of the non obstante clause [notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority] of sub-section (2) of Section 110 of the Finance Act, 2000, the action initiated by the Department by issuance of show-cause notice dated 14.6.1995 was not affected by anything contained in Order-in-Original No. 55/93 dated 30.11.1993. The fact that Order-in-Appeal No. 80/94 dated 9.11.94 classifying the goods under Heading 54.02 was set aside by this Tribunal vide Final Order No. 553/2001 dated 19.4.2001 or that the assessees appeal against Order-in-Original No. 55/93 dated 30.11.93 was dismissed by the Commissioner (Appeals) vide Order-in-Appeal No. 73/2001 dated 30.7.2001 does not ipso facto alter this position. In the result, show-cause notice dated 14.6.95 and all proceedings in relation thereto are protected by Section 110 of the Finance Act, 2000.
(b) In adjudication of show-cause notice dated 14.6.95, the Assistant Commissioner vide Order-in-Original No. 123/95 dated 16.11.1995 quantified the demand of duty for the period from March 1994 to February 1995 in terms of Heading 54.02 and ordered its payment with interest. The assessee challenged only the quantum of duty and, in their appeal, the Commissioner (Appeals) restricted demand of duty to the period from 17.9.94 to 30.3.1995 vide Order-in-Appeal No. 45/96 dated 26.2.1996. Thus the quantum of duty stood reduced to Rs.1,76,35,187/- from Rs.2,56,20,679/- determined by the Assistant Commissioner. The classification of the goods, obviously, remained under Heading 54.02. That this classification was not contested by the assessee before the Commissioner (Appeals) in their appeal against Order-in-Original No. 123/95 dated 16.11.95 is beyond the pale of doubt inasmuch as, in their letter dated 5.11.2001 to the Superintendent of Central Excise, they have themselves categorically admitted this position. We quote one paragraph from that letter:-
We had appealed against the said Order-in-Original to the Commissioner of Customs & Central Excise (Appeals), Trichy as regards the quantum of duty demanded and the Commissioner (Appeals) had reduced the quantum of duty demanded in Order-in-Original No. 123/95 dated 16.11.95 vide his Order-in-Appeal No. 45/96 (MDU) dated 26.2.1996.
Before this Tribunal, the assessee and the Revenue filed appeals, No.E/488/96 and No. E/837/96 respectively, both against the quantum of demand only. While the assessee wanted the duty to be quantified only for six months prior to 14.6.95 (date of the show-cause notice), the Revenue asked for duty for the entire period from 1.3.1994 covered by Order-in-Original No. 55/93 dated 30.11.93. No classification issue was anywhere in the picture. Obviously, this Tribunal was required to decide only the limitation issue and, following the Supreme Courts judgment in Cotspun case, it held that no amount of duty for any period prior to the date of the show-cause notice (14.6.95) was payable by the assessee vide Final Order Nos. 281 and 282/2000 dated 23.2.2000. The sequence of events would thus show that the assessee acquiesced in the classification of the goods under Heading 54.02 and chose to stick to the plea of limitation all throughout in order to get the quantum of demand reduced to the extent possible. In such circumstances, the submission of the authorized representative of the assessee that the classification of the goods under Heading 56.06 as held in Order-in-Original No. 55/93 dated 30.11.93 attained finality with the passage of Order-in-Appeal No. 73/2003 dated 30.7.2001 cannot be accepted, and their plea that they were not liable to pay any amount of duty in terms of Heading 54.02 and hence entitled to refund of the duty already paid is also unacceptable.
(c) Four questions of law arising out of Final Order Nos. 281 & 282/2000 dated 23.2.2000 have been referred by this Tribunal to the Honble High Court for its opinion and this reference under Section 35H(4) of the Central Excise Act is pending before the Honble High Court vide RCP Nos. 27 & 28/2001. If the reference is answered in favour of the Department (who filed the RCPs), this Tribunal will be required to dispose of the appeals (E/488/96 filed by the assessee and E/837/96 filed by the Department) afresh in terms of the judgment of the Honble High Court vide sub-section (1) of Section 35K of the Central Excise Act which provides that the High Court shall decide the question of law and shall deliver its judgment thereon containing the grounds of which such decision is founded and a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case in conformity with such judgment. In this scenario, it has to be held that the Tribunals Final Order Nos. 281 & 282/2000 dated 23.2.2000 has not attained finality and that the reference proceedings are to be considered as proceedings in continuation of the Tribunals proceedings. This view is supported by the fact that, while a reference under the Central Excise Act or the Customs Act is pending before a High Court, the operation of the Tribunals Final Order which gave rise to the reference can be stayed by the Tribunal itself as held by the Honble Delhi High Court vide M.M.T.C. Ltd. Vs. Commissioner of customs 2001 (130) ELT 33 (Del.) following the Honble Supreme Courts ruling in Commissioner of Income Tax Vs. Bansi Dhar & Others 1986 (24) ELT 193 (SC).
(d) The refund claim of the respondent is found to be based on Final Order Nos. 281 & 282/2000 dated 23.2.2000 passed by this Tribunal. PART I of the refund claim addressed to the Deputy Commissioner of Central Excise, Tirunelveli, reads thus:-
Please refer to the enclosed copy of the Final Order No. 281 & 282/2000 dated 23.2.2000 of the CEGAT, Chennai.
As a result of the above Order, we are entitled to the following refunds. We have already held that the above Final Order of this Tribunal has not attained finality on account of the reference pending before the Honble High Court. Therefore, the refund claim filed by the respondent is premature also.
(e) The learned Commissioner (Appeals) has held that the respondent is entitled to refund of predeposit as per certain circulars issued by the Board. Even if the payments made by the assessee are treated as predeposit, they cannot claim its refund before final disposal of their appeal. We have already noted that this Tribunals proceedings in the two appeals (including the assessees appeal E/488/96) are inconclusive by reason of the reference pending before the Honble High Court. In this situation, the respondent cannot claim refund of any predeposit and, therefore, the above view taken by the learned Commissioner (Appeals) cannot be sustained.
(f) The learned Commissioner (Appeals) took the view that the Finance Act, 2000 which revalidated past actions taken under Section 11A of the Central Excise Act did not warrant recovery of duty in cases where appellate fora set aside demands in view of the Honble Supreme Courts judgment in Cotspun case. Obviously, this view was taken by the lower appellate authority regardless of the fact that the Tribunals Final Order dated 23.2.2000 had not attained finality and also the fact that the judgment in Cotspun case had been rendered prior to the enactment of the Finance Act, 2000. The learned Commissioner (Appeals) ought to have examined the effect of Section 110 of the Finance Act, 2000 on the facts of the respondents case.
14. In the result, the impugned order is set aside and this appeal is allowed.
(P.G. Chacko) Judicial Member Per Mathew John
15. While agreeing with the detailed order as recorded by my Ld Brother, I consider it may be proper to add a few paragraphs to put my logic in slightly different words.
16. This appeal before Tribunal challenges Order-in-Appeal No. 197/2003 dated 28-11-2003 issued by Commissioner (Appeal) holding that the appellant is entitled to refund of pre-deposit of Rs.1,30,28,051/- paid by them towards excise duty for core spun yarn manufactured and cleared during the period 01-03-94 to 28-02-95. The appellants had claimed this refund consequent to order No. 281&282/2000 dated 23-02-2000 of the Tribunal. This order was dealing with an appeal arising from order No. 45/96 (MDU) dt. 26-02-1996 of the Commissioner (Appeal) classifying the impugned goods under Tariff heading 54.02. The appellant had challenged this order before the Tribunal both on merits of the classification and also on time bar. The Tribunal did not deal with the classification issue. The Tribunal held that the demand was time barred because when duty is demanded consequent to a proposed change in classification no demand could be issued for any period prior to the date of notice, not even for one year prior to the date of issue of SCN as provided in section 11A of Central Excise Act. For this finding Tribunal relied on the decision of the Hon. Apex Court in the case of Cotspun Ltd [1999 (113) ELT 353 SC]. But the effect of this decision of the Apex Court has been annulled by a retrospective amendment made by Finance Act, 2000, with effect from 17-11-1980, to the effect that in such situation demand for a period of one year prior to the date of issue of SCN is maintainable notwithstanding any decision of any court to the contrary. Obviously the decision of the Tribunal dated 23-02-2000 was given before the amendment was made. So the challenge to the demand confirmed by the Commissioner (Appeal) in order dated 26-02-1996 on the ground of time bar became not maintainable notwithstanding the decision dated 23-02-2000 of the Tribunal. This aspect is not examined in the impugned order of the Commissioner (Appeal) endorsing the grant of refund.
17. The appellant also has a defense that the classification of the goods has got settled under heading 56.06 under a separate proceeding, the history of which is explained in para 1 of the order recorded by my Ld. Brother. But this order can have effect only for the demand in dispute in that proceedings which was for the period 19-12-1990 to 28-02-1994 especially because the classification decided by Commissioner (Appeal) for the subsequent period 01-03-94 to 28-02-95 by order dated 26-02-1996 in a due proceeding is not overturned in appeal. So the argument of the appellant that the classification is settled in heading 56.06 is erroneous.
18. Thus the situation is that the classification decided by order No. 45/96 (MDU) dt. 26-02-1996 is not disturbed. Pleadings of the appellant for changing classification did not weigh with the Honble Madras High Court in W.P. Nos. 32159/94 and 21140/94 decided on 14-02-95 [1996 (82) ELT 449]. Further the time bar issue decided by the Tribunal by order dated 23-02-2000 has been reversed due to the retrospective amendment by Finance Act, 2000. So the Commissioner (Appeal) was wrong in holding that the appellant was eligible for the impugned refund.
19. The finding of the Commissioner (Appeal) that instructions issued by Board vide Circular No. 572/9/2001-CX dated 22-02-01 and M. F. DR. F. No. 275/37/2000-Cx-8A dated 02-01-2002 will apply in the facts of the case is not correct because those instructions are not with reference to a situation where there is a specific Act of the Parliament validating a demand notwithstanding any decision of any Court or Tribunal.
20. The finding of the Commissioner (Appeal) that instructions in Boards Circular 588/25/2001Cx dated 19-09-2001 will apply to this case also is not correct because that instruction is with reference to recovery of duty. In the present case a refund is involved consequent to the decision.
21. So I agree with order as recorded by my Ld. Brother.
(Mathew John) Technical Member
22. The appeal stands allowed.
(Pronounced in court on ______________)
(Mathew John) (P.G. Chacko)
Technical Member Judicial Member
Rex
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