Customs, Excise and Gold Tribunal - Delhi
Jay Chemical Industries vs Collector Of C. Ex. on 11 June, 1997
Equivalent citations: 1997(93)ELT698(TRI-DEL)
ORDER
U.L. Bhat, J. (President)
1. The common appellant is absent in spite of notice of hearing but has sent a request for decision of the appeals on merits. We have heard Shri K. Srivastava, SDR and perused the papers.
2. The dispute arises on account of refund claims put forward by the common appellant on the ground that interest on receivables had been included in the assessable value and duty paid on that basis and the Supreme Court had held in MRF Limited 1987 (27) E.L.T. 553 (S.C.) case that interest on receivables would not be part of the assessable value. There are three refund claims. In respect of the earlier claim, there is no protest letter submitted and in respect of the remaining two claims, protest letter had been submitted to the Superintendent of Central Excise on 31-7-1987. Assistant Collector rejected the claims on various grounds, namely, there is no evidence that the invoice price (appellant was availing benefit of Invoice Price Procedure) included interest during the period of 60 days, that there is no evidence that any discount was given to customers for prompt payment, that decision in MRF case reported in 1987 (27) E.L.T. 553 (S.C.) was under review by the Supreme Court, and that the protest had not been submitted to the proper officer, namely, Assistant Collector and was, therefore, not valid. In appeal, the Collector (Appeals) did not go into the first two aspects raised by the Assistant Collector but held that procedure prescribed under Rule 223B of Central Excise Rules was not followed inasmuch as the protest letter was not followed by detailed representation to the Assistant Collector and no order had been obtained in appeal or in revision filed against any order. He also indicated that on account of the pending review of the MRF case judgment, even in respect of claims not barred by limitation there could be no refund "at this stage". Both the authorities agreed that on account of non-confirmity with Rule 233B of the Rules, refund claim in respect of duty paid prior to the date prescribed for filing refund claims could be barred by time.
3. The dispute on merits is covered by the decision of the Supreme Court in MRF Limited case 1995 (77) E.L.T. 433 Paragraph 65. Interest on receivables would not be part of the assessable value. If the contention of the appellant is factually correct, they were charging interest at 21% per annum where price was not paid within 60 days of the clearance and interest for the period of 60 days was included in the price. In other words, according to the appellant, the price shown in the invoice was credit price and not cash price and since duty was to be paid only on cash price, credit price should be converted into cash price by deduction of the interest element.
4. We are not in a position to record any finding on the factual situation so as to render a decision on the merits. Assistant Collector held that there are no documents to show that the invoice price was credit price and not cash price. If there were any customers who had made cash purchases, and the price was credit price, they would have been granted prompt payment discount corresponding to the interest element, if any included in the invoice price. This is a matter capable of verification. We are inclined to give an opportunity to the appellant to produce necessary material before the adjudicating authority to substantiate the contention that the invoice price was credit price.
5. The other question which arises for consideration relates to the protest letter having been delivered to the Superintendent and not to the Assistant Collector and the absence of detailed representation.
6. Section 11B of the Central Excise Act, 1944 requires refund claim to be made before the expiry of six months from the relevant date. The relevant date as indicated in the explanation to the provision and applicable to the facts of the present case would be the date of payment of duty. The second proviso to Section 11B(1) of the Act states that the -limitation of six months shall not apply where any duty has been paid under protest.
7. Rule 233B prescribes the procedure to be followed in cases where duty is paid under protest. Where an assessee desires to pay duty under protest he shall deliver a letter to this effect to the Proper Officer and state grounds for payment of the duty under protest. The Proper Officer shall give an acknowledgement of the receipt of the letter. The acknowledgement shall be taken to be proof that assessee had paid the duty under protest from the date of the delivery of the protest letter to the Proper Officer. Sub-rule (4) requires the assessee to make an endorsement "Duty paid under protest" on all copies of gate pass, application for removal and Form R.T. 12 or Form R.T. 13 as the case may be. Where the deposit of duty was necessitated by a preceding order or decision and remedy by way of an appeal or revision is not available against such decision, the assessee may within three months of the date of the delivery of the letter of protest give a detailed representation to the Assistant Collector. Where there was such preceding order or decision and the remedy of an appeal or revision is available, assessee may file an appeal or revision, as the case may be. When representation, appeal or revision is decided and the decision is served on him, the assessee shall have no right to deposit the duty under protest, except during the period available for filing an appeal or revision.
8. There can be no doubt that Rule 233B is procedural, as is made clear by the heading and contents of the Rule. The Rule being procedural cannot be regarded as mandatory and can only be regarded as directory and substantial compliance would be adequate. This has been held by the Tribunal in DCM Data Products v. Collector of Central Excise 1993 (66) E.L.T. 635 (Tribunal), Andhra Cement Co. Ltd. v. CCE, Gunfur 1985 (26) E.L.T. 553 (Tribunal), Icon Engineering Co. P. Ltd. v. CCE 1989 (44) E.L.T. 744 (Tribunal), Paper & Pulp Conversions Ltd. v. CCE, Bombay-Ill 1995 {77) E.L.T. 390 (Tribunal), CCE, New Delhi v. Unik Springs (I) 1995 (77) E.L.T. 407 and Guest Keen Williams Ltd. v. CCE, Bangalore 1997 (89) E.L.T. 209. In two decisions, the High Court of Bombay has held that the Rule is directory and not mandatory and substantial compliance would be sufficient, Roche Products Ltd. v. Union of India 1991 (51) E.L.T. 238 (Bom.) and Rotogravurs v. Union of India 1992 (57) E.L.T. 407 (Tribunal). This view is strengthened by the observations of the Supreme Court in Mafatlal Industries Limited v. Union of India 1997 (89) E.L.T. 247 (S.C.)" to the effect that the procedure prescribed in the Rule is only to keep a record of the payment of duty under protest and meant to obviate any dispute whether the payment is made under protest or not.
9. In the light of the above decisions, we hold that the Rule is directory and substantial compliance is sufficient.
10. The protest letter in this case was delivered to the Superintendent of Central Excise. The Department has no case that though the Superintendent had no authority to deal with the protest letter, he dealt with it and rejected it. In the ordinary course, the letter would have been or should have been placed before the Assistant Collector under whom the Superintendent in question was functioning. That being so, there is no difficulty in treating the protest letter as having been ultimately delivered to the Assistant Collector. Even if the Superintendent fails to transmit the letter of protest, that cannot be any reason to hold that there is no valid delivery of letter of protest since the failure would be on account of the Superintendent in not transmitting the letter to the Assistant Collector. We, therefore, hold that there was substantial compliance of requirement of Rule in this regard. Collector (Appeals) proceeded on the basis detailed representation should have been filed as contemplated under Sub-rule (5) of Rule 233B. The Tribunal has considered this question in Guest Keen Williams Limited v. Collector of Central Excise, Bangalore 1997 (89) E.L.T. 209 Tribunal. The Tribunal held mat a detailed representation would be naturally required where the earlier protest was a mere protest without giving reasons, but the letter of protest contained detailed reason in support of the protest and, therefore, rejection of protest on account of absence of detailed representation was not sustainable. The Collector (Appeals) did not indicate that the letter of protest in the instant case did not furnish detailed reasons in support of the protest. Therefore, the rejection of the protest on account of absence of detailed representation is not sustainable.
11. We hold that there was substantial compliance of the requirements of Rule 233B. That being so, the limitation prescribed in Section 11B(1) of the Act was not be attracted to two of three refund claims but the factual aspects as we indicate earlier require consideration with an opportunity to the appellant to produce relevant materials before the adjudicating authority. In this view, we set aside the impugned orders and remand the cases to the jurisdictional adjudicating authority to pass orders afresh on the refund claims after giving a reasonable opportunity to the appellant to produce necessary materials as indicated above and of personal hearing. Appeals are allowed as indicated above.