Customs, Excise and Gold Tribunal - Tamil Nadu
Mettur Chemical And Industrial ... vs Collector Of Central Excise on 1 November, 1985
Equivalent citations: 1987(11)ECR231(TRI.-CHENNAI), 1986(26)ELT756(TRI-CHENNAI)
ORDER C.T.A. Piliai, Member (T)
1. The brief facts of the case are that on 23-11-1982 the appellant applied to the Assistant Collector of Central Excise, Erode Dn. for refund of Rs. 57,941.56 being the duty paid on burnt lime and cyclone dust cleared during the period 5-3-1982 to 26-5-1982, The Assistant Collector issued a notice to the appellants asking them to show cause why in terms of Section 11B of the Central Excises & Salt Act, 1944 the refund should not be limited to the payments made from 24-5-1982 to 26-5-1982, the rest of the amount having been paid beyond six months from the date of making of the claim. The appellant explained that the delay of over six months was due to enormous clerical work involved in getting ready documents, such as gate passes, abstract/extracts from P.L.A. etc. and requested for condonation. The Assistant Collector held that whatever be the reasons for the delay the provisions of Section 11B are specific in respect of time limit. Accordingly, he rejected the claim to the extent of Rs. 55,315.64 as barred by limitation under Section 11B of the Act. When the matter was agitated in appeal before the Collector of Central Excise (Appeals) he held that the relevant date for purposes of computing the time limit is the date of payment of duty; there was therefore no scope for computing the time limit with reference to the date completion of the assessment memo in the monthly R.T. 12 return, in which the clearances in respect of the period were entered. He accordingly rejected the appeal.
2. Before us the advocate for the appellant urged that Government have accepted in principle that excise duty should not be levied on goods leviable to duty under Tariff Item 68 if transferred from one factory to another of the same manufacturer; hence the appellants are not liable to pay the duty on such transferred goods falling under Item 68 of the Tariff. Without prejudice to this contention it was also urged that payment of duty at the time of removal of goods is provisional till, the R.T. 12 is approved and finalised. In support of the above two points the advocate for the appellant referred to Section 3 of the Act which provides for the levy and collection of duties of excise in such manner as may be prescribed. Section 11A of the Act which deals with recovery of duties not levied or not paid or short levied or short paid etc. also defines relevant date for purposes of making a claim on the assessee. Explanations under Section 11A 3(ii)(a)(A) and (B) specifically provide for the calculation of the levy from the date of filing of the R.T. 12 return or the due date of such filing. However, in defining the 'relevant date' in the Explanation B(c) to Section 11B it is specifically provided, "in a case where duty of excise is paid provisionally under this Act or the Rules made thereunder, the date of adjustment of duty after the final assessment thereof."
It was the advocate's claim that payments under the Self Removal Procedure made by a manufacturer at the time of removal of the goods are all provisional. Rule 2(ia) of the C.E. Rules, 19M (hereinafter referred to as the Rules) provides that assessment is that made by the proper officer. Hence any determination of duty made by the assessee is not an assessment as envisaged under Rule 2(ia), Rule 2(v) defines 'duty' as the duty payable under Section 3 of the Act. This duty, the advocate urged, is the one found payable as a result of assessment by a proper officer. Rule 173F provides that the assessee himself shall determine the duty due; Rule 173G (1) states that he shall pay the duty determined by him. However Rule 173-1(1) reads inter alia, "The proper officer shall on the basis of the information contained in the return filed by the assessee under Sub-rule (3) of rule 173G and after such further inquiry as he may consider necessary, assess the duty due on the goods removed and complete the assessment memorandum on the return. A copy of the return so completed shall be sent to the assessee".
Rule 173-1 (2) provides that "the duty determined and paid by the assessee under Rule 173F shall be adjusted against the duty assessed by the proper officer under Sub-rule (1)" and proceeds to indicate that where the duty so assessed is short the assessee shall pay the deficiency and where it is more, the assessee shall take credit in the account current. Thus the duty paid by the assessee in terms of Rule 173F, if as a result of his own determination, is only a provisional one.
3. The Advocate referred to the case of 'Collector of Central Excise, Bangalore v. Karnataka Scooters Ltd.' (1983 ECR 745D-Cegat, Madras: paras 5, 7 and 8). In that case this Bench of the Tribunal has referred to the decision of the Madras High Court in the case of 'Binny Ltd. Madras v. Superintendent of Central Excise, Guindy XIV wherein it has been held by His Lordship of the Madras High Court that "any payment or collection of tax made on the basis of returns submitted under the self-removing procedure cannot be construed as a complete assessment and, as long as a completed assessment has not taken place there is no necessity for the department to resort to its powers under Rule 10 for recovery of short-levied duty surcharges".
Per contra the duty paid would impliedly be a provisional payment. Next he referred to the case of 'Bawa Batteries v. Union of India' - 1981 ELT 114 (para 12) --wherein Their Lordships of the Delhi High Court observed, "It is quite clear that there could have been no non-levy or short-levy except by a process of assessment; likewise a refund could have been directed only after making a like determination of a quasi-judicial nature."
Next -he referred to the decision of the Calcutta High Court in the case of 'K.L. Thirani and Co. Ltd. v. Collector of Central Excise and Ors.' (1978 ELT 568 - para 9). In dealing with a claim for refund, Their Lordships have observed, "Thus the application for refund of excess duty can only be made after the final order of assessment is made. The payment or the adjustment that was earlier made was done not under any final order of assessment...."
Next he referred to the case of 'Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd.' - 1978 ELT 416 (paras 21 & 22). In para 22 of the Judgment the Supreme Court has observed, "But we could not equate such an adjustment with an assessment, a quasi-judicial process which involves due application of mind to the facts as well as to the requirements of law, unless we were bound by law give -such an unusual interpretation to the term "assessment". Here we do not find any such definition of assessment or any compelling reason to hold that what could at most be a mechanical provisional collection, which would become a "levy" in the eye of law only after an "assessment", was itself a levy or an assessment."
He referred to the framing of Section 11B as compared with the wording of Rule 11 which deal with claims for refund prior to 17-11-1980. In the explanation to Rule 11 it was provided "Where any duty is paid provisionally under these rules on the basis of the value or the rate of duty"
the period of limitation will run from the date of final adjustment of the value or the rate of duty. However, Section 11B refers to cases where duty is paid provisionally under the Act or the Rules made thereunder; the difference in wording is purposive and indicates that there could be provisionality of payment for reasons other than determination of rate of duty or value of the goods.
4. The S.D.R., on the other hand, drew our attention to Rule 9B of Rules, which provides in terms for provisional assessment. In the nature of things there could be no provisional assessment except under the conditions set out in Rule 9B(1). Detailed procedure has been prescribed under Rule 9B for a provisional assessment. This is a far cry from the determination of duty by an assessee under the S.R.P. The payment made in terms of that procedure is not provisional but final, though it is subjected to the corrective factors referred to in Rule 173-1. Rule 173F itself states that the duty shall be determined and paid by the assessee. The duty is actually paid on the basis of a determination based on an approved price list and an approved classification list. Except for arithmetical error or factual mistake regarding the quanta of goods cleared, or in rare instances of suppression of information, the amount determined by the assessee would also be the amount finally 'assessed' by the officer. He therefore urged that the provisional assessment referred to in Rule 9B does not encompass the payment under the S.R.P. 5. We have considered the arguments of both sides. To enable one to appreciate the scope of duties collected under the Self Removal Procedure (SRP) in terms of Chapter VII-A of the Rules, it would be desirable to recapitulate the principal provisions of that Chapter.
6. According to Rule 173A in respect of goods to which the provisions are applied by a notification of the Central Government - in the present case the goods are so notified - the special provisions of that Chapter will apply. In essence, these provisions enable the removal of notified, excisable goods by a manufacturer thereof, on payment of a sum determined as duty on the basis of broad decisions given to him by approved officers of the Department. When he has effected the payment of such duty in the manner prescribed, the manufacturer is free to remove the goods under a gate-pass issued by himself but without the counter-signature of the proper officer, normally an Inspector of Central Excise having jurisdiction over the factory of the manufacturer, in terms of Rule 52A. The procedure has come to be known as Self Removal Procedure, though in effect it is really a self-assessment procedure as well, as can be seen from the details set out below.
7. To avail of the procedure under Chapter VII-A, an assessee has to file the list of goods proposed to be manufactured by him giving the description thereof, the item number and sub-item, if any, of the First Schedule to the Act under which each such goods fall, the rate of duty leviable on each such goods, and such other particulars as may be prescribed by the Collector vide Rule 173B. The proper officer shall approve the price list with such modifications as are considered necessary, after such enquiry as he deem fit; he returns one copy of the approved list to the assessee and the assessee is required to determine the duty payable on the goods intended to be removed only in accordance with such an approved list showing the rates of duty - this list is usually referred to as the Classification list. Rule 173C requires an assessee who produces goods which are chargeable with duty at a rate dependent on the value of the goods - goods assessed on ad valorem basis - to file a price list in the prescribed form giving details of the price, trade discount etc; the proper _officer is to approve the price list filed by the assessee after making such modifications as he may consider necessary so as to bring the value shown in the price lists submitted to the correct value for purposes of assessment as provided in Section 4 of the Act; a copy of the approved price list is to be returned to the assessee. Here again, at the time of clearance of the goods the assessee shall determine the quantum of duty payable on the goods intended to be removed only in accordance with such approved price list. The Rule further provides that where the price list filed by an assessee is not acceptable to the proper officer, the assessee shall be given an opportunity to put forward his view of the matter and be heard in person, if so desired, before the price list is modified by the proper officer. The Rule also provides for calling for documents, examination of persons etc. in coming to a finding as to correct value to the approved in the price list. Rule 173F provides that where the assessee has complied with the provisions of Rules 173B and 173C "he shall himself determine his liability for the duty due on the excisable goods intended to be removed" he shall not otherwise remove such goods and that too, until after he has paid the duty so determined. To facilitate the clearance of goods on payament of duty calculated by the assessee on the basis of classification list (Rule 173B) and the price list (Rule 173CL the assessee. has to maintain an account current with the Collector. This is referred to as the Personal Ledger Account (PLA). As and when removals of goods take place, after determination of the duty as detailed above, the quantum of duty determined has to be debited to the PLA. At the end of the month the assessee is required to file a return (RT 12) giving details of the clearance made by him enclosing along with the return, copies of documents such as gate pass, invoice, extracts from the PLA etc. in terms of Rule 173G.
8. From the above it will be seen that what is being done is really determination of the quantum of duty by the assessee, guided as he is by proper officers who have already examined and decided the unit value applicable to the goods to be cleared and the rate of duty thereof, or where the duty is at a specific rate, the quantum of duty per unit.
9. We have taken a similar view in dealing with a claim for refund of duty of Customs wherein the assessing officer had merely indicated the rates of duty and the values against various entries in the relevant bill of entry and the comptist of the Custom House, while working out the quantum of duty, adopted a wrong, and higher, rate of duty. We held in that case that an error which occurred in calculating and totalling the amount of duty could be rectified in terms of Section 154 of the Customs Act, 1962 vide appeal C. No. 252/84(MAS) in the case of Collector of Customs, Madras v. Southern Sulphates and Chemicals (P) Ltd. (yet to be reported).
10. To complete the recital, we would also refer to the provisions of Rule 173-1 which require that on the basis of the information contained in the return filed by the assessee under Rule 173G(3) and after such further enquiry as he may consider necessary, the proper officer shall assess the duty due on the goods removed; if he finds that there is a short debit to the PLA, he shall call upon the assessee to make good the deficiency; if there is an excess debit, he will allow the assessee to take credit of the excess amount in the PLA.
11. The contention of the advocate for the appellant is that because of the provisions of Rule 173-1, assessment by the proper officer is made only on the RT 12 return. Rule 2(ia) defines assessment as "assessment of duty made by the proper officer". Hence any amount paid until an assessment is made by the proper officer on the RT 12, there is no assessment under the Act and the Rules. All that precedes it is a provisional payment of duty. Hence a claim for refund of duty can be filed within six months from the date of completion of assessment in the RT 12 return by the proper officer in terms of Rule 173-1.
12. Ordinarily, in the scheme of the Act and the Rules, an assessment by a proper officer precedes the removal of manufactrured goods from the place of manufacture - something expressly provided for under Rule 9. Can it be said that the provisions of Chapter VII-A have modified that general directive under Rule 9? An assessment requires a determination of the quantum of duty due on an excisable product in accordance with the rates prescribed in. the First Schedule to the Act. In the scheme of Self Assessment what has been done is to initiate the process of assessment by proper officer; approve the classification and price lists and leave it to the assessee to do the mechanical or clerical job of calculating the quantum of duty. It has been held that where an assessee does not agree with the classification approved by the proper officer, he has a right of appeal. A similar position applies in respect of valuation list approved by the proper officer. Hence approval of classification list and price list are formal decisions made under the Act and are crucial ones in the process of assessment of manufactured goods. When in accordance with the formal rates of duty and unit values approved by the Department, a certain sum is debited to the PLA and goods removed, the process of assessment and levy is complete. What follows by way of submission of a monthly return and its verification by officers of the Department is a second check on the act of assessment already made by the officers of the Department with the help of assessees themselves.
13. Such a view does not militate against the provision in Rule 173-1 which enables the proper officer to demand payments which according to the calculations, or even on the basis of further enquiries made by him, indicate shortfalls, or authorise credit of excess payments. In the case of "Bawa Potteries, Mehrauli v. Union of India and Anr.", 1981 E.L.T. 114, a Division Bench of the Delhi High Court while dealing with Rule 10 relating to recovery of duties or charges short-levied, or erroneously refunded, has observed:
"Nevertheless, the legislature has considered it expedient to confer on the assessing authority itself a limited power of review where, according to him or his successor, the earlier order is erroneous. The language of the rule clearly postulates the existence of a prior quasi-judicial determination by way of levy of duty or grant of refund or a decision not to levy duty and confers on the same authority a power of review of the earlier decision, subject to the fulfilment of the conditions mentioned in the rule and subject to action for review being taken within the prescribed period of limitation".
Thus, limited power of review could exist in the Act and the Ryles despite the fact that a formal decision is given by an officer of the Department; the assessee and the Department have a right of appeal to various forums. We would consider that the provisions of Rule 173-1 provide for a limited review of the assessment already done by the officers of the Department taking the help of the assessee merely for purposes of calculating the quantum of duty, a clerical job, both because of the simple nature of the operation involved and the practical necessity of leaving it to the assessee to determine the quantum as he alone will know at any point of clearance the quantum (and hence the value) of the goods cleared at any one time.
14. The recent history of Rules 173B and 173C' also indicates that the intention of the Rule making authority is not to treat an approved classification list or a price list as provisional. Prior to 7-2-1981 both the Rules provided for two courses of action as open to an assessee who disagrees with a decision of the proper officer in respect of the rate of duty or valuation; payment of duty under protest or by having the goods assessed provisionally in terms of Rule 9B. The latter choice was omitted from that date thus indicating a deliberate action on the part of the Rule making authority that the decisions under Rules 173B and 173C are final and if the assessee so wished, he will have to resort to the procedures of payment of duty under protest or filling a refund claim (or going in appeal against the decisions given under the Rules, if so desired).
15. In the above view of the matter we consider that collection of duty under the Self Assessment Procedure under Chapter VII-A is not by way of provisional assessment nor is the payment made provisional.
16. If one were to look at the provisions of Rule 173C(8), the above view would get further strengthened. Where an assessee disputes the price list approved by a proper officer, he is required to pay duty under protest on the basis of the price list approved by the officer. In a similar way, Rule 173B provides that where the assessee disputes the rate of duty approved by a proper officer, he may pay duty under protest. If payment of duty by an assessee in terms of approved price list and classification list is provisional, there will be no need to provide that the assessee should resort to the procedure of payment of duty under protest and follow up the matter as prescribed in Rule 233B.
17. Reference was made to the case of the decision of the Tribunal in the Karnataka Scooters case which in turn extracted the observations of his Lordship of the Madras High Court in the case of Binny Ltd. Madras v. Superintendent of Central Excise, Group XIV, Guindy and Anr., reported in 1979 Cencus (Madras) 107D). In that case his Lordship was pleased to observe:
"Any payment or collection of tax made on the basis of return submitted under the self-removing procedure cannot be construed as a completed assessment and, as long as a completed assessment has not taken place, there is no necessity for the Department to resort to its powers under Rule 10 for recovery of short-levied duty surcharge".
For one thing, in that case the issue had not been posed before His Lordship as to the nature and scope of a payment under the Self Assessment Procedure. The question before His Lordship was whether a demand for duty is necessary under Rule 12 or whether the provisions of Rule 173-1 would be sufficient for raising a demand. For another, that decision was rendered before that in the case of Bawa Potteries where their Lordships of the Delhi High Court have held that a limited power of review can co-exist with procedure for appeal and review in terms of the Act and Rules.
18. The quotation from the Bawa Potteries case itself made on behalf of the appellant only states that a process of assessment is necessary before a short levy or a refund can arise. The procedures for fixing unit value for assessment or the rate per unit or value of excisable goods are determined by proper officers after observing a quasi-judicial procedure are as set out earlier, part of the process of assessment itself.
19. The observations of the Calcutta High Court in the case of Krishna Lal Thirani &. Company Ltd. and Anr. v. Collector of Central Excise and Ors., reported in 1978 E.L.T. (568), are also distinguishable on the above lines.
20. The observations of the Supreme Court in the case of Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd." 1978 ELT 416, referred to by the advocate for the appellant deals with an entirely different situation. That was a case where a debit was made to the PLA without any assessment and the question was whether such a debit which was a mechanical process would constitute a levy. As we have observed in the preceding paragraphs the debit made to the PLA in the present case is the result of a deliberate act on the part of the assessee after conforming to the provisions of Chapter VII-A in the course of which formal and quasi-judicial determinations have been made by proper officers, both in respect of the rate of duty applicable and the unit value of the excisable goods.
21. In the result, we hold that the provisions of Rule 11B' have been correctly applied to the claim for refund made by the appellant. Accordingly we dismiss the appeal.