Customs, Excise and Gold Tribunal - Delhi
Triveni Engineering Works Ltd. vs Collector Of Central Excise on 7 August, 1986
Equivalent citations: 1991ECR575(TRI.-DELHI), 1986(26)ELT583(TRI-DEL)
ORDER
1. This is an appeal against the order dated 31.5.83 passed by the Collector (Appeals) New Delhi. The appellants were allowed incentive rebate on excess production of sugar of 1977-78 sugar season; but subsequently the department found that the appellants had paid less duty amounting to Rs. 4,52,017.30 as compared to the rebate which was allowed to them. Therefore, there was an excess rebate as pointed out above availed of by the appellants. A Show Cause Notice was issued on 6.11.79 as to why they should not be required to pay back the aforesaid amount of excess rebate. In defence, the appellants contended that the demand was time-barred under Rule 10 of the Central Excise Rules because it was beyond six months since the credit of the amount was taken on 25.11.78 whereas the Show Cause Notice was issued on 6.11.79. In his adjudication order, the Assistant Collector held that this was a case of erroneous credit/ adjustment which actually gave rise to the Government to ask for refund and that as such the case was not covered under Rule 10 and hence, in the absence of any rule governing such cases, it could be dealt with under the General Law of Limitation and since the demand was issued within three years time, the Assistant Collector held further that the demand was not time-barred. The appeal against the Assistant Collector's order was rejected by the Collector (Appeals) who held that there could be no subsidy of excess payment more than what the exemption Notification envisaged and that the amount of rebate has to be limited to the extent of the total amount of duty payable by the appellants on per quintal of sugar at the relavant time. He also held that since no cash is refunded to the appellant, the limitation period prescribed under Rule 10 would not apply. Appearing for the appellant, the learned Counsel M.D. Chaudhary stated that while admittedly the period of limitation under Rule 10 was not applicable, then there could be no recourse to the General Law of Limitation. Therefore, the demand was totally time-barred and is bad in law. He relied upon the decision in the case of Jagatjit Sugar Mills Ltd. v. Collector, Central Excise, Chandigarh, 1985 (21) ELT 289. The Tribunal considered the applicability of time-barred demand under Section 11-A of the Central Excises and Salt Act (Ibid Rule JO). The Tribunal held that the authority and the procedure for recovering excess payment by the Department are laid down under Section 11-A of the Central Excise Act and if the Department chose to issue demand for such recovery under that section it cannot at the same time say that it is not bound by the time limit laid down in that section. Arguing for the Department, the learned SDR Shri Rakesh Bhatia pointed out that exemption allowed under Rule 8(1) of the Central Excise Rules is necessarily restricted to the amount of duty payable under such rules and can never go beyond that and if a rebate higher than the duty is granted, it will be a subsidy by the Government to the assessee and there are no provisions or authority for the grant of such subsidy. The demand is also not hit by time-bar because it is not given in cash but the factory was permitted to take credit of such amount in their Personal Ledger Account (PLA).
2. The submission of the learned Counsel and the learned SDR have been carefully considered. It is seen that the case cited by the appellants squarely applies to this case. In that case also payment of excess rebate was made under the same notification and sought to be recovered by demand notice issued 2-1/2 years later under Section 11-A on the ground that the excess payment was not refund of duty but a deposit. The Tribunal held that there is no provision for any advance deposits or credit in the Notification. It is an exemption notification issued under Rule 8(1) to allow a duty reduction in respect of sugar produced in excess over the past period. If the department happened to allow the greater amount of reduction in duty than what it thought was warranted, the excess payment is, in law, to be treated as nothing else but an erroneous refund of duty. The authority and the procedure for recovering such excess payment by the Department are laid down in Section 11-A of the Act. If the Department had issued demand notice under that Section it will be bound by the time limit therein. If, on the contrary, the Department's stand is that Section 11-A did not apply, and the limitation under the common law applied, the Tribunal observed that then the officers of the Department may have no jurisdiction to decide the matter and the only course open to them would be to file a civil suit for recovery of the excess payment. The above observation of the Tribunal is applicable to the facts of the present case. In fact, the Assistant Collector himself, after issuing the Show Cause Notice under Rule 10, had observed in the adjudication order that the case was not covered by Rule 10 and had to be dealt with under the General Law of Limitation wherein the demand was not time-barred. As has been made clear in the Tribunal's decision cited above, if the excess payment has to be recovered under the General Law of Limitation, it can be done only by filing a suit, and in any case, the order passed by the Collector (Appeals) will not be correct in law under the Central Excise Rules. As has been held by the Tribunal, in the case of Miles India Limited v. The Assistant Collector of Customs which had been upheld by the Supreme Court (1985 ECR 289), the quasi judicial authorities are bound to act within the provisions of the Act itself and the remedy in such case which fall outside the Act will have to be sought elsewhere. 'In the result, the appeal is allowed.