Customs, Excise and Gold Tribunal - Delhi
National Winder vs Commissioner Of Central Excise on 4 April, 2000
Equivalent citations: 2000ECR937(TRI.-DELHI), 2001(135)ELT1277(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. The issue which requires adjudication by this Larger Bench is -
"Whether the refund claim filed by the purchaser after six months of the date of purchase would be hit by the bar of limitation under Section 11B(1) of the Central Excise Act, even if the payment of duty by the manufacturer was made under protest."
The reference of this issue has been made by the Single Member Bench of the Tribunal in Appeal No. E/199/95-B and E/CO/233/95-NB, National Winder v. C.C.E., Ahmedabad vide order dated 15-4-1998 in the face of the divergent views expressed by two Benches of the Tribunal in two different cases. In National Winder v. C.C.E., Ahmedabad (decided vide Order No. 38/94-NRB) the Single Member while sitting on the Northern Bench (Single) had taken the view that the bar of limitation of six months as embodied in Section 11B(1) of the Central Excise Act, would be attracted if the claim is not filed by the purchaser within six months from the date of purchase and that the benefit of the second proviso to the said Section, which enacts that the period of limitation of six months will not be applicable where payment of any duty had been made under protest, is not applicable to his case. But the Double Member Bench of the Tribunal in Super Cassette Ltd. v. C.C.E., Meerut, 1999 (30) RLT 655 had taken the contrary view by holding that the refund claim filed by the purchaser after six months of the purchase of the goods, would not be hit by the bar of limitation under Section 11B(1) and the benefit of the second proviso to this section when the duty had been paid under protest, would be available to him.
2. The adjudication of the issue referred to the Larger Bench, depends on the interpretation of the provisions of Section 11B, as amended in 1991. Therefore, it would be convenient and beneficial to set out the same. The relevant provisions of this Section reads as under :-
"SECTION 11B. Claim for refund of duty. - (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Commissioner of Central Excise before the expiry of six months from the relevant date. In such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person."
What is the relevant date within which the claim for refund has to be preferred by the party, has been defined in Clause (b) of the Explanation, appended to this Section. The relevant portion of this clause with which we are concerned in this reference, runs as under : "(B)" relevant date means, -
(a)...
(b)...
(c)...
(d)...
(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person."
This Sub-clause (e) had been substituted after amendment in the year 1991 vide Notification No. 30/91-C.E., dated 19-9-1991 when the provisions of Section 11B were also amended in order to incorporate the concept of unjust enrichment. Prior to the amendment and substitution of Sub-clause (e) referred to above it was not specifically provided in Section 11B or under the Explanation appended to it that the relevant date for computing the period of six months in case of a purchaser of the goods for lodging claim for the refund of the duty would be the date of the purchase.
3. If we go by the bare and plain reading of Sub-clause (e), co-jointly with the provisions of the main Section 11B, there exists scope for doubt that the purchaser has to prefer his claim for refund of duty within six months from the date of purchase. But in face of the divergent views expressed by the two Benches of the Tribunal in the cases referred to above/ the second look to the interpretation of provisions of Section 11B and its second proviso with reference to Sub-clause (e) of Clause (B) of the Explanation defining the relevant date, appended to it, is required.
4. The learned Counsel for the assessee has contended that the purchaser is also entitled to take the benefit of the second proviso appended to Section 11B, which enacts that the limitation of six months shall not apply where any duty has been paid under protest, and he is not under legal obligation to submit his claim for refund of the duty within six months, from the date of purchase. To substantiate his contention, the learned counsel has put forth three grounds. Firstly, after the purchase of the goods, the purchaser steps into the shoes of the manufacturer and is entitled to avail of the benefit of the limitation which was earlier available to the manufacturer before the sale of goods to him. Secondly, the refund claim of the purchaser, when filed within six months from the date of purchase would be thrown away summarily by the proper officer if by that time the protest lodged by the manufacturer while paying the duty remains undecided. Thirdly, the provisions of Sub-clause (e) conferring right on the purchaser to claim refund of duty for having borne the burden of duty by virtue of purchase of the goods, would become redundant and the Government would be able to withhold the duty amount collected illegally if he is not allowed to take the benefit of the protest lodged by the manufacturer and bar of limitation of six months is invoked against him for rejecting his refund claim.
5. On the other hand, the learned DR has refuted all these grounds raised by the counsel by contending that the benefit of second proviso appended to Section 11B regarding non-applicability of period of six months cannot be availed by the purchaser as he has to stand on his own legs and to substantiate his claim for refund of the duty before the proper officer independently to the right of the manufacturer as has also to establish that he had also not passed on in his turn the incidence of duty to any other person. Therefore, he must apply for the refund of the duty amount within the specific period of six months from the date of purchase of the goods by him, as required under Sub-clause (e) of Clause (B) of the Explanation appended to Section 11B of the Act.
6. The procedure to be followed in cases where duty is intended to be paid under protest is embodied in Rule 233B of the Central Excise Rules. The said Rule enacts as under :-
"RULE 233B. Procedure to be followed in cases where duty is paid under protest. - (1) Where an assessee desires to pay duty under protest he shall deliver to the proper officer a letter to this effect and give grounds for payment of the duty under protest.
(2) On receipt of the said letter, the proper officer shall give an acknowledgement to it.
(3) The acknowledgement so given shall, subject to the provisions of Sub-rule (4), be the proof that the assessee has paid the duty under protest from the day on which the letter of protest was delivered to the proper officer.
(4) An endorsement "Duty paid under protest" shall be made on all copies of the gate-passes, the Application for Removal and Form R.T. 12 or Form R.T. 13, as the case may be.
(5) In cases where the remedy of an appeal or revision is not available to the assessee against an order or decision which necessitated him to deposit the duty under protest, he may, within three months of the date of delivery of the letter of protest, give a detailed representation to the Assistant Commissioner of Central Excise.
(6) In cases where the remedy of an appeal or revision is available to the assessee against an order or decision which necessitated him to deposit the duty under protest, he may file an appeal or revision within the period of specified for filing such appeal or revision, as the case may be.
(7) On service of the decision on the representation referred to in Sub-rule (5) or of the appeal or revision referred to in Sub-rule (6) the assessee shall have no right to deposit the duty under protest.
Provided that an assessee shall be allowed to deposit the duty under protest during the period available to him for filing an appeal or revision, as the case may be, and during the pendency of such appeal or revision, as the case may be.
(8) If any of the provisions of this rule has not been observed, it shall be deemed that the assessee has paid the duty without protest.
The procedure laid down in this rule is meant for the manufacturer which he is required to observe if he intends to pay duty at the time of clearing the goods from the factory, under protest. The duty is never paid by the purchases under protest as he purchases the goods from the manufacturer on a price settled between the two and that price may be inclusive or exclusive of the duty paid by the manufacturer on the goods. Where the manufacturer makes payment of duty under protest being dissatisfied with the valuation, classification made by the proper officer of his goods or for any other legitimate ground available to him under the Central Excise Act or the rules framed thereunder. He can claim the refund of the excess amount of duty paid by him if subsequently the ground of his protest is accepted by the officer, provided he had not passed on the incidence of duty to another person. His right to claim the refund is thus neither automatic nor unconditional under Section 11B of the Act. Even after establishing or proving the ground of his protest under which he paid the duty, still he has to cross another hurdle / barrier of proving that he has not passed on the incidence of duty to another person for successfully claiming refund of the duty.
7. The purchaser by substitution of Sub-clause (e) in Clause (B) of the Explanation appended to Section 11B in the year 1991 has been no doubt given the right to claim refund of the duty amount but his right is also neither automatic nor unconditional under the law. He cannot base his claim simply on the ground of being purchaser of the goods from the manufacturer, where the assessment of the levy has come final against the manufacturer, he cannot seek that the same should be reopened and he should be heard as he has purchased the goods from him. He even cannot challenge the order of rejection of the refund claim of the manufacturer on the ground that the same had been wrongly passed. For claiming the refund, he has nothing common with the manufacturer. He has to independently prove and satisfy the competent authority under Section 11B of the Act that he has not only borne the burden of duty but also not passed on in his turn that burden to other any person. He has thus to fight his own battle and has to succeed on his own footings in the refund proceedings.
8. Apprehension as expressed by the counsel that the claim of the purchaser would be summarily rejected if filed within six months from the date of purchase of the goods and before the adjudication of the protest claim of the manufacturer, is wholly misconceived and also does not find corroboration from the unambiguous and plain wording of Section 11B of the Act. The purchaser has been required under the provisions of this Section to lodge his claim within the stipulated period of six months from the date of purchase of the goods by him. If assumingly by that time the protest of the manufacturer remains undecided the claim put forth by the purchaser would only be tagged with that of the manufacturer. While dealing with the claim of the manufacturer if it reveals that he had passed on the incidence of the duty to the purchaser, then the purchaser's claim would be considered at that very time independently and he will be allowed the refund on his satisfying the condition before the competent authority that he had not passed on the burden of duty which he initially bore while purchasing the goods, to a third person. If he fails to prove this condition, his claim would also be hit by the doctrine of unjust enrichment. Therefore, filing of the refund claim by him for which the period has been specified has nothing to do with the final disposal of the protest claim of the manufacturer. If the purchaser was also intended to be given the benefit of the protest of the manufacturer, then the period for him for filing the claim would not have been stipulated from the date of purchase in Sub-clause (e) referred above but from the date of the decision of the protest claim of the manufacturer. Having been not so provided by the Legislature purposely it would not be legally justiciable for the Tribunal to so provide for the purchaser and to direct the proper officer to entertain his refund claim only after the decision of the protest claim of the manufacturer and not to insist on the filing of the claim by him within six months from the date of purchase of the goods, as required by Sub-clause (e) of Clause (B) of the Explanation appended to Section 11B of the Central Excise Act.
9. It is well settled that while construing a fiscal statute plain meaning of the language has to be looked into and there is no room for any fiscal legislation. Unless there is ambiguity, it would not be open to the Court to deviate from the rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous, they could be sought to be examined and construed in the light of surrounding circumstances and constitutional principles and practice. As observed above, the language of Sub-clause (e) of Clause (B) of the Explanation appended to Section 11B, is quite clear and unambiguous. This sub-clause defines the relevant date from which the claim for refund has to be preferred by the purchaser and that date is the date of purchase and not any other date.
10. The purchaser, therefore, is duty bound to file his claim for refund within the period of six months from the date of purchase of the goods from the manufacturer. He cannot wait and see the result of the protest lodged by the manufacturer while paying the duty, for filing his claim for refund of duty. If the levy of the excise duty has been at any stage found to be illegal by the adjudicating authority, the purchaser has to fight for the refund of that duty amount on his own footings and not on the strength of the ground of protest taken by the manufacturer while making payment of the duty initially. He has to prove two things, firstly that she has borne the burden the duty while purchasing the goods and secondly that he too has not passed on in his turn the incidence of duty to any other person. If he fails to prove both these conditions, he will not be entitled to the refund of the duty on the doctrine of unjust enrichment. This doctrine is just and salutary as no person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his own purchaser at one hand and also collect the duty from the Government on the plea that it has been collected from him contrary to law. The power of the Court/Tribunal is not meant to be exercised unjustly and enriching the person. The argument of the learned Counsel that if purchaser is denied the right to claim the refund after rejection of the protest of the manufacturer the Government would be enriched by retaining the money illegally collected and the object with which the Sub-clause (e) in Clause (B) of the Explanation under Section 11B, had been added for giving right to the purchaser to claim the refund of the duty in case the manufacturer was found to be not entitled, would stand defeated is also misconceived and cannot be accepted. In order to even prevent the Government from retaining the duty amount collected contrary to law, Sections 12C and 12D had been brought on the statute of the Excise Law. Section 12C clearly enacts that the Central Government shall establish a fund called the consumer welfare fund, while Section 12D lays down the manner of utilisation of that fund by the Government. Therefore, every care has been taken by the legislature for not allowing either party that is the Government or the assessee/manufacturer or purchaser, to have unwanted advantage over the other.
11. The purchaser simply by virtue of purchase of the goods does not acquirer right to claim the refund of the duty paid by the manufacturer under protest, at any time. He is also bound by the period of limitation prescribed by Section 11B of the Act within which he has to exercise his right for the refund. He has also to pass through the acid test prescribed by the doctrine of unjust enrichment. No capital or benefit of the second proviso of Section 11B on account of payment made under protest by the manufacturer can be taken by him as he has to fight his claim independently of the manufacturer, for the refund of the duty amount within the specified stipulated period of six months to be reckoned from the date of purchase of the goods by him.
12. The constitutional validity, interpretation and applicability of the provisions of Section 11B, as amended came up for consideration before the Apex Court in Mafatlal Industries Ltd. - 1999 (89) E.L.T. 247. In that case, the Apex Court has ruled that, "all claims for refund except where levies have been held to be unconstitutional, have to be preferred and adjudicated upon under Section 11B of the Act and the bar of unjust enrichment would apply even in a case where purchaser puts up his claim for refund under Sub-clause (e) of Clause (B) of the Explanation appended to Section 11B as he has to fight the battle on his own footings". The counsel for the assessee, before us has, no doubt, placed much reliance on para 83 of that judgment for contending that the benefit of the 2nd proviso to Section 11 B of the Act can be taken by the purchaser and that it would not be necessary for him to put up claim for the refund within six months from the date of purchase of the goods, where the duty has been paid by the manufacturer under protest. But the observations of the Apex Court in that para and the context in which these had been made, do not advance his contention at all. The reading of that para shows that a contention was raised by the counsel that in most of the cases the claims for the refund would be time barred if are required to be filed within six months from the relevant date as defined in Clause (B) of the Explanation appended to Sub-section (1) of Section 11B of the Act as the relevant date in all cases other than those falling under clauses (a) to (e) of the said Explanation is the date of payment of duty, while disposal of the matters pending in the Courts take a number of years. The claim of the claimant after he succeeds in his litigation in the Courts if filed would be thrown out on the ground of having not been filed within six months from the date of payment of duty. This argument of the counsel was not accepted by the Apex Court and it was observed as under :-
"We think that the entire edifice of this argument is erected upon an incomplete reading of Section 11B. The second proviso to Section 11B (as amended in 1991) expressly provides that the limitation of six months shall not apply where any duty has been paid under protest. Now where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would naturally pay the duty, whenever he does under protest. If one reads the second proviso to Sub-section (1) of Section 11B along with the definition of relevant date, there is no room for any apprehension of the kind expressed by the learned counsel".
13. The above referred observations of the Apex Court can be read with advantage only where the period of six months for the refund claim has to be reckoned from the date of payment under Sub-clause (f) of Clause (B) of the Explanation appended to Sub-section (1) of Section 11B. The claimant's claim in that case will not be barred even if filed after six months from the date of payment, when payment had been made by him under protest as he will be entitled to the benefit of second proviso to Section 11B. But in a case of purchaser, the relevant date prescribed in Sub-clause (e) is the date of purchase of the goods by him, and not the date of payment under protest which was not even made by him but by the manufacturer. Therefore, he cannot claim the benefit of the second proviso appended to Section 11B which provides that the limitation of six months, will not apply where any duty has been paid under protest. He must apply within a period of six months, as required by the provisions of Section 11B read with Sub-clause (e) of Clause (B) of Explanation appended to this Section from the date of purchase of the goods for claiming refund of the duty. If he fails to do so, his claim will be time barred. The law laid down in Bharat Commerce Industries Ltd. v. Union of India and Ors. -1979 (2) E.L.T. (J 527) by the Delhi High Court referred by the counsel, is also of no avail to him for substantiating his contention. In that case, it has been ruled that time limit to Rule 11 of the Rules is not applicable to cases where duty is paid under protest. But there is no dispute with this proposition of law. However, the purchaser cannot be extended benefit of this law, in the face of facts and circumstances discussed above.
14. In the light what has been discussed above, it must be observed that the statement of law made in Super Cassettes Industries Ltd. and Ors. (supra) that the refund claim filed by the buyer/purchaser after six months of the purchase of the goods will not be hit by limitation when duty had been paid under protest by the manufacturer, is not correct one and the same is not endorsed. Rather the law laid down in M/s. National Winders' case by a Single Member is endorsed being the correct.
14. Consequently the reference is answered accordingly.
A.C.C. Unni, Member (J)
15. I had the benefit of going through the order recorded by ld. Member (Judl.) - Shri P.S. Bajaj. With respect I have to record a separate finding as I am unable to subscribe to the view taken by ld. Member.
16. The question that has been raised is whether the refund claim filed by the buyers/purchasers of goods from a manufacturer who had paid duty under protest was entitled to the claim for refund of duty and whether the time limit of six months for filing the claim in terms of the definition of 'relevant date' in Sub-clause (e) of Clause (B) of Explanation to Section 11B of the Central Excise Act, 1944 applies to such cases.
17. For a proper understanding of the legal position, it would be necessary to examine the provisions of Section 11B.
18. The relevant portions of Section 11B are extracted below :
'SECTION 11B. Claim for refund of duty. - (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of six months from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by him and the incidence of such duty had not been passed on by him to any other person:
Provided that where an application for refund has been made before the commencement of the Central Excise and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of Sub-section (2) substituted by that Act:
Provided further that the limitation of six months shall not apply where any duty has been paid under protest.
(2) and (3) ...
Explanation. - For the purposes of this section, (A) ...
(B) "relevant date" means, -
(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, -
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves Indian, or
(ii) if the goods are exported by land,, the date on which such goods pass the frontier, or
(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;
(b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid;
(c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory;
(d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacture has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction;
(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person; "
(Emphasis added)
19. A careful reading of the opening portion of Sub-section (1) of Section 11B would show that the right given to a person claiming refund of duty is circumscribed by the condition that he makes an application for refund of such duty to the proper officer before the expiry of six months from the relevant date in the manner prescribed and on an application accompanied by documents to show that the applicant has not passed on the incidence of such duty to another person. This is further circumscribed by the two provisos to Sub-section (1). The second proviso which is the relevant proviso for the present discussion carves out an exception to the main opening portion of Section 11B(1), and says that the limitation of six months for claiming refund shall not apply where any duty has been paid under protest. In other words, the second proviso by saying that the limitation of six months will not apply "where any duty has been paid under protest" makes the condition of filing of application within six months as provided in the opening portion of Section 11B(1) inapplicable in cases where the duty has been paid under protest. The principle of non-applicability of the time limit when the payment of duty is made under protest is not reined in by any qualification. The only condition that is required to be shown is the existence of a protest. Since Section 11B(1) also does not specify the status of the person who can claim the refund like 'manufacturer' or 'purchaser', there can be no doubt that a person other than manufacturers also are entitled to claim refund. Now, turning to the Explanation given to 'relevant date' at the end of Section 11B, it will be noted that the condition of making the application before the expiry of six months from the relevant date and the definition of 'relevant date' itself will arise only in situations where there is no protest, for the simple reason that when the payment is under protest, there is no time limit prescribed for making a refund claim. Where the grounds of protest are upheld by a competent judicial or quasi-judicial authority the duty paid under protest becomes due to the manufacturer who paid the duty in the first place. It is only for purposes of reckoning the relevant date in cases where no protest has been registered at the time of payment of duty, the Explanation is attracted. In a situation where the question of time bar itself does not apply, "relevant date" has no relevance. Where duty has been paid under protest, the period of six months for making the application from the relevant date will not therefore arise. In my view, therefore neither the definition of "relevant date" nor the further question of whether the purchaser of the goods has to make an application within the period of six months from the date of purchase will arise in a case where the initial payment of duty is under protest. In a case where a purchaser buys the goods from the manufacturer who has paid the duty under protest, and the protest of the manufacturer is upheld by the adjudicating authority, the duty paid under protest becomes refundable. No limitation of six months would apply to such a case. Since in the meantime the goods have been sold by the manufacturer to the purchaser along with the duty burden, it cannot be said that the purchaser cannot benefit from the decision of the adjudicating authority about the duty liability of the manufacturer just because he is not the manufacturer or for the reason that he has not filed the refund claim within six months of purchase of the goods. Clause (e) of Explanation of relevant date in Section 11B will not therefore came in the way of a purchasers' claim for refund when the initial payment of duty by the manufacturer is under protest. The fact that the claim for refund by the purchaser is subjected to the further condition of his satisfying the proper officer that the incidence of such duty has not been passed on by him to any other person cannot stand in the way of the right per se of the purchaser to make an application for refund in a case where the manufacturer has paid the duty under protest and the grounds of protest are upheld by the adjudicating authority and a refund becomes due to the manufacturer. This does not of course absolve such purchaser from complying with the further condition of satisfying the proper authority that he has not passed on the incidence of duty to the ultimate consumer. It will be wrong to construe that the requirement of satisfying the provision relating to unjust enrichment would deprive the locus standi of the purchaser to claim refund. The fact that the actual grant of refund will be subject to the further satisfaction of the authority concerned about passing on of duty liability to the ultimate consumer is no ground for not entertaining a refund claim even after six months in a case where the duty had been made under protest. This is further made clear in Paragraph 83 of the Apex Court decision in Mafatlal Industries case 1999 (89) E.L.T. 247 which has been extracted in Paragraph 12 of this order.
20. In the above view of the matter I do not find any infirmity in the view taken in Super Cassette Industries case stating that the refund claim filed by the buyers/purchasers after six months of the purchase of the goods will not be hit by limitation when duty has been paid under protest by the manufacturer. I am therefore unable to agree with the view taken in the National Winders' case.
ORDER G.A. Brahma Deva, Member (J) I have gone through the respective orders written by my learned brothers. I agree with the view expressed by Shri A.C.C. Unni, Member (Judicial) in holding that the refund claim filed by the buyers/purchasers after six months of the purchase of the goods will not be hit by limitation when duty has been paid under protest by the manufacturer, since purchaser steps into the shoes of the manufacturer in respect of the goods that he has purchased.
ORDER By majority it is held that the statement of law made in Super Cassettes Industries Ltd. and Ors. (Supra) that the refund claim filed by the buyer/purchaser after six months of the purchase of the goods will not be hit by limitation when duty had been paid under protest by the manufacturer, is not correct one and the same is not endorsed. Rather the law laid down in M/s. National Winders' case by a Single Member is endorsed being the correct.