Customs, Excise and Gold Tribunal - Tamil Nadu
Praga Tools Ltd. vs Collector Of Central Excise on 8 March, 1991
Equivalent citations: 1991(56)ELT154(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal is against the order of the Collector of Central Excise (Appeals), Madras. The appellants' claim for refund has been rejected on the ground of limitation. Brief facts are that the appellants opted for clearance of their goods under Notification 120/75 and they were paying duty based on the invoice value without presentation of their price list in terms of this Notification. In the invoice they were allowing discount to their distributors and the concerned Superintendent assessed the RT-12 returns and demanded duty on the quantum of discount allowed holding that discount was not admissible. The appellants, as seen from the records, paid this additional demand under protest. In the meantime the appellants addressed letters to the Central Excise authorities pleading for allowing the discount. They also filed a Writ Petition in the High Court of Andhra Pradesh in Writ Petition No. 5602/83 against the denial of the abatement of the discount allowed by the appellants. The Hon'ble High Court of Andhra Pradesh vide their order dated 10th November, 1987 on the prayer of the appellants for restraining the authorities from levying excise duty on the discount allowed to the distributors passed the following order :
"Having regard to the facts and circumstances we think it appropriate to remit this matter back for appropriate consideration by the 2nd respondent taking into consideration the decision of the Supreme Court in Union of India v. Bombay Tyre International Ltd. - (1) AIR 1984 SC 420 and further clarifications given by the Supreme Court from time to time. The petitioner shall be given an opportunity of being heard in the matter before any order is passed."
In the meantime the jurisdictional Assistant Collector vide his order dated 4-7-1986 held that discounts were permissible and allowed the appellants to clear the machine tools after allowing the discounts. Appellants in the meantime had filed refund claim as seen from the records, which were returned to the appellants as the matter was pending before the High Court at that time. These refunds were filed as seen from the letter of the Assistant Collector dated 13-11-1984 from file No. C.No.V/58/16/84 MP 2. After issue of the Assistant Collector's order allowing the benefit of discounts the appellants approached the authorities and requested for payment of refund of duty vide their letter dated 2-8-1986 claiming refund for the period January 1981 to Feb. 1983 and March 1983 to February 1984 total aggregating to Rs. 2,74,549.29. After brief exchange of correspondence regarding documents required for decision in the case, the appellants were issued with a show cause notice dated 7-7-1987. In the show cause notice, after briefly setting out the facts stated by the appellants, the appellants have been put on notice as to why their claims should not be rejected on the grounds as under:
"According to Rule 233B of Central Excise Rules, 1944, any assessee desiring to pay the duty under protest have to deliver a letter to the proper officer stating the grounds for payment of duty under protest. After obtaining acknowledgement from the proper officer the assessee can pay the duty under protest from the date of acknowledgement given by the proper officer. In the absence of the above letter the claim is hit by limitations of time under Section 11B of the Central Excises and Salt Act, 1944.
On a scrutiny of the above two claims it appears that the assessee has not filed any letter as stipulated in Rule 233B of Central Excise Rules, 1944."
The appellants' refund claim was rejected by the Assistant Collector holding that the appellants had not followed the procedure under Rule 233B and in the absence of that claim was hit by limitation under Section 11B of the Central Excises & Salt Act, 1944. The Original authority also stated that the Assistant Collector's earlier Order C.No. V/68/30/38/83 MP 5 dated 4-7-1986 dealt with only that allowability of the discounts and not the issue of refund of duty as per the demand of the Supdt. on the RT-12 returns. The learned Collector (Appeals) while rejecting the appellants' appeal observed as under:
"However, there is no other legal protest under the Central Excises and Salt Act, and the rules framed thereunder, except as per provisions of Rule 233B of Central Excise Rules. Therefore, unless the duties have been paid, on which refund is claimed, under protest, the same will be time-barred. I may mention here that time-bar is relevant only when refund is permissible on merits, where refund is not permissible on merits, the question of time-bar is redundant or irrelevant. In the present case, there is dispute that refund is admissible on merits, in view of the Asst. Collector's order in 1986. However, since the claim has been made only in January 1986 and refund claim is for the period 1981 to 1984 and in the absence of any valid protest, under Rule 233B, the claim is necessarily time-barred. Shri Sharma Advocate pointed out that they had earlier filed refund application also which was returned and they were directed to file only after decision on merit is taken by the Hon'ble High Court of Andhra Pradesh. Such application for refund was prematured, because by that time, neither the Hon'ble High Court passed any order in favour of the appellants, nor the appellants had challenged the assessment orders in RT-12, in appeal before the proper appellate authority, i.e. Collector of Central Excise (Appeals), Madras. Their representation made to the Collector of Central Excise, Hyderabad which was not attended to according to them, is not relevant because the Collector of Central Excise, Hyderabad, ceased to be an appellate authority, during the period 1981 to 1984 or thereafter. Therefore, the duties having been paid in pursuance of RT-12 assessment orders which were not appealed against, and the claim for refund having been made after a period of six months, from the date of such payment, when provisions of Rule 233B are not applicable, the refund claims, though admissible on merits are time-barred and time-barred amounts cannot be sanctioned by Assistant Collector. As such, the order of the Assistant Collector is correct and confirmed."
2. Shri Jogayya Sharma, the learned Counsel for the appellants pleaded that the Supdt. has started raising the demands from January 1981 on the RT-12 returns and the appellants had also replied to him on 9-12-1981 and since the amounts were to be debited in the PLA based on the assessment done, they had debited the amount in the PLA with an endorsement "Paid under protest". Traversing to the various stages of the proceedings before the lower authorities, he has stated that the appellants had filed Writ Petition before the Hon'ble High Court of Andhra Pradesh and that before final orders were passed on their writ petition, the Assistant Collector had ruled in their favour as to the admissibility of the discounts. He has pleaded that the Writ Petition filed before the Hon'ble High Court should be taken to have been not only on the principle of allowability of the discounts but also in respect of the demands. He has pleaded that in the correspondence filed with the authorities and also the specific endorsement made regarding payment under protest, the payment should be taken to have been made under protest in terms of Rule 233B of the Central Excise Rules, 1944. In this connection he cited the judgement of the Hon'ble Supreme Court in the case of Indian Pistons Ltd. v. Collector of Central Excise - reported in 1990 (46) ELT 3 (SC) and 1989 (41) ELT 358 (SC) in the case of India Cements Ltd. v. Collector of Central Excise. He has further pleaded that the Assistant Collector's final order in favour of the appellants should have been allowed to apply and another Assistant Collector could not have passed an order disallowing the refund. In this connection he cited the decision of this Tribunal in the case reported in 1985 (21) ELT 182 and 1987 (31) ELT 238.
3. Shri P. Sundararaju, the learned SDR pleaded that the issue before the Hon'ble High Court was different from that before the Tribunal. He has pleaded that before the Hon'ble High Court the issue was regarding admissibility of the discounts while the issue in the proceedings before the Tribunal relates to refund of duty already paid. He has pleaded that the appellants had not followed the procedure for payment under protest as envisaged in Rule 233B of the Central Excise Rules. In view of this, the refund claimed has been rightly rejected on the ground of limitation.
4. The learned Counsel for the appellants in reply pleaded that the matter has to be viewed from another angle as to whether in the case of the appellants Rule 233B could at all have come into picture in the context of the demand made through RT-12 returns. He has pleaded that the appellants had filed a letter dated 23-9-1981 protesting against the demand made on the RT-12 returns for January 1981 to August 1981. He has pleaded that in any case the order of the Hon'ble High Court can be taken to have given quietus to the question of limitation as the Hon'ble High Court directed the authorities to consider the matter and pass appropriate orders and it should be taken to be that the authorities were to consider the question of duty and the discounts with reference to the payment made.
5. The short point that falls for consideration is whether the appellants by virtue of their endorsement at the time of payment that they have made the payment under protest, the payment can be taken to have been made under protest and for that reason whether the claim of the appellants would be hit by limitation. While considering this issue, the matter will have to be seen from another angle i.e. the status of their refund claims filed and which were returned to them. We observe that as soon as the demand was raised on the RT-12 returns, the appellants had gone before the authorities protesting against the demand and stated their reasons as to why discounts have to be allowed. It is pertinent to note that the appellants made pointed plea for advice as to the procedure to be followed by them for debiting the duty demanded under protest. This was as far back as September 1981. The Assistant Collector thereafter has issued the order dated 4-7-1986. Among the facts set out in this order, the Assistant Collector has inter alia observed as under :
"As it was felt that the sale of machine tool accessories to their distributors amounts to sale of goods to or through related persons, the Superintendent of Central Excise, Kavadiguda Range started demanding duty on that part of the value comprising of discounts while assessing the RT-12s from January, 1981 onwards. M/s. Praga Tools honoured these demands for some time under protest".
and has given reasons for taking up the matter for issue of the order as under :
"As the demands have been honoured for a certain period under protest by M/s. Praga Tools, the issue is being taken up for consideration by me."
In the operative portion of the order, the Assistant Collector has stated as under :
"In view of this, the discounts passed on by M/s. Praga Tools to their distributors in the invoices is held to be correct. Having regard to the fact the discounts are permissible even in the case of assessment in terms of Notification No. 120/75,1 allow M/s. Praga Tools Limited to clear the machine tool accessories under invoice price after allowing the discounts."
6. This order of the Assistant Collector has not been taken up in appeal by the Department. The first question that falls for consideration therefore is on reading this order whether the payments made earlier in the context of RT-12s can be taken to have been made under protest. It is observed from the order of the Assistant Collector that he has held that these payments have been made under protest and has issued the order as he felt that he was required to pass an order in the context of the protest made under law. At this stage it is necessary to refer to the provisions of of Rule 233B which for convenience of reference is reproduced below:
"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-pass, the application for removal and Form RT-12 (or Form RT-13, as the case may be).
(5) In case 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 Collector 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 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 desposit 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.
7. We observe from the above that the Assistant Collector has taken note of the appellants' representation against the levy of duty on the discounts portion and has issued order in terms of Rule 233B (5) read with Rule 233B (7). In this context, therefore, it has to be seen whether once the appellants' payment of duty has been taken to have been made under protest, whether another Assistant Collector before whom the matter for the refund came can hold that the duty was not paid under protest, in terms of Rule 233B. We observe that the order dated 4-7-1986 of the Assistant Collector was in the nature of a decision under the law and the same has acquired finality inasmuch as it was not taken up for review in appeal as provided under law by the authorities. This order of the Assistant Collector has to be taken to apply to the payments which on record were made under protest and in respect of which there is evidence on record. The Assistant Collector has very clearly spelt out in the operative portion of his order that the "discount passed by M/s. Praga Tools to their distributors in the invoices is held to be correct".
This to us appears to mean that the order refers to the past clearances, since subsequent portion of the AC's order has referred the clearances in future after allowing discounts. We observe that the appellants right from the beginning have been agitating before the authorities vide their letter dated 23 September, 1981 that demand was not maintainable and had even asked for the procedure to be followed for payment of duty under protest. While the authorities continued to raise the demand, while paying duty the appellants continued to endorse the payment "under protest". It cannot be said that the authorities were not aware of this payment of duty under protest. In fact this position has been admitted by the order of the Assistant Collector dated 4-7-1986 referred to supra. The appellants' refund claims which were filed earlier for refund of the amount were also returned since the matter was stated to be pending before the Hon'ble High Court of Andhra Pradesh. Before the Hon'ble High Court also, the appellants agitated the same point. We further observe that Rule 233B envisages that where duty is stated to be paid under protest, letter of protest is required to be sent to the authorities giving the grounds thereon. The letter of the appellants dated 23-9-1981 can be taken to be such letter. The said letter is required to be acknowledged. It is on record that the authorities acknowledged the receipt of this letter as seen from the order of the Assistant Collector referred to supra. As per sub-rule (4) of Rule 233B an endorsement to the effect that duty paid under protest has to be made on all copies of the gate pass and the application for removal and on RT-12 returns. It is seen that in the present case goods had been cleared and gate pass had also been issued and the appellants had been removing the goods and also filing the RT-12 returns.
Therefore, the question as to whether necessary endorsement to the effect that duty has been paid under protest, has been made, on gate passes and RT-12 in term of Rule 233B does not arise as duty was demanded after removal of the goods filing of RT-12. The Assistant Collector has taken note of the provisions of Rule 233B and after considering the representation of the appellants in regard to the payment under protest by them, has issued an order. In view of this, it can be said that the requirements of Rule 233B of the Central Excise Rules, 1944 have been complied with so far as the appellants are concerned. The Hon'ble Supreme Court in the case reported in 1990 (46) ELT 3 (SC) has held that the burden was on the department to show how the assessee had failed to observe the prescribed procedure. In the present case, there is no doubt that the appellants have made payments under protest as soon as the demands were raised and they have also requested the authorities to intimate them the procedure to be followed under Rule 233B in this regard. From the above discussion, in our view, the appellants have complied with the necessary requirements under the Rules. In view of above, we hold that inasmuch as the Assistant Collector has taken the payments made by the appellants as "under protest" his order had acquired finality and another authority namely another Assistant Collector before whom the refund claim was filed cannot hold otherwise on the same issue. In view of the above we hold that the appellants' case has to be considered on the ground that duty was paid under protest. In view of above, we set aside the order of the lower appellate authority sine the claims are not hit by limitation. However, we remand the case to the original authority for working out the refund after verifying the endorsement in the records to the effect that duty in respect of which refund is claimed had been paid under protest. In view of what we have held above, we have not examined the scope of the terms of the Hon'ble High Court's order. The appeal is thus allowed by remand in the above terms.