Customs, Excise and Gold Tribunal - Delhi
Goodlass Nerolac Paints Limited vs Collector Of Central Excise on 20 May, 1989
Equivalent citations: 1989(24)ECR296(TRI.-DELHI)
ORDER Harish Chander, Member (J)
1. M/s. Goodlass Nerolac Paints Limited, Bombay have tiled an appeal being aggrieved from order-in-appeal No. PPN-660/B-1-379/86 dated 17th February, 1987 passed by the Collector of Central Excise (Appeals), Bombay.
2. Briefly the facts of the case are that M/s. Goodlass Nerolac Paints Ltd had filed the claim for refund of Rs. 52,519.89 being the amount of duty paid by them on the portion of various types of discounts which were allowed by them on their products falling under Tariff Item 14 and cleared during the month of June, 1977. The refund claim was filed on 21st July, 84. The duty was paid by them during the month of June, 1977 and the duty was also not paid under protest. A Show Cause Notice was issued to them on 13th August 1984 asking them to show cause as to why their claim for refund should not be rejected as time barred under Section 11B of the Central Excises and Salt Act, 1944. In reply to the said show cause notice vide their letter dt. 21st Sept., 1984 the appellants stated that in view of the Hon'ble Supreme Court's judgment in the case of Union of India v. Bombay Tyre International Ltd. reported in 1983 ELT 1896 1983 ECR 2233D SC the discount by whatever name called should be allowed as a deduction from the assessable value so long as it is known prior to the removal of goods and as such they were entitled to the refund claim as they had actually passed on the discount to their customers but due to mistake of Law they had paid the duty on the assessable value without taking any abatement in respect of these discounts. It was further contended that where the duty was paid by mistake of law the period of limitation for claiming the refund was under the general law of limitation viz. 3 years. The Assistant Collector did not accept the contention of the appellants and had held that the refund was barred by limitation and rejected the appeal Being aggrieved from the aforesaid order hey had filed an appeal before the Collector of Central Excise (Appeals). The learned Collector of Central Excise (Appeals) had confirmed the findings of the Assistant Collector and had rejected the appeal. Being aggrieved from the aforesaid order the appellants have come in appeal before the Tribunal.
3. Shri V. Lakshmikumaran, the learned advocate has appeared on behalf of the appellants. He has argued that the refund claim pertains to the period from 1st June, 977 and the refund claim was filed on 21st July, 1984. Shri Lakshmikumaran has urged that the cause of action arose as soon as the appellants learnt about the judgment of the Union of India v. Bombay Tyre International Ltd. reported in 1983 ELT 1896 : 1983 ECR 2233D SC and as such the three years limitation will run from the date of knowledge of the Bombay Tyre International Ltd's judgment In support of his arguments he has referred to the following' judgments.
(i) Andhra Pradesh U. Foam Pvt. Ltd.
(ii) Cegat Beverages and Food Products v. C.C.E., Calcutta.
He has argued that in view of these judgments the appellants the appellants are entitled to refund. He has further argued that during the period June 1977 old Rule 11 was in force. He has pleaded for the acceptance of the appeal.
4. Shri G.V. Naik, the learned Jt. C.D.R, who has appeared on be-half the respondent states that the referred claim was filed on 21st July 1984 and the duty was paid during the period June 1977. In support of his argument he has referred to a judgment of the Hon'ble Supreme Court in the case of Miles India Ltd. v. Union of India reported in 1983 ECR 289. He has pleaded that m view of the Supreme Court's judgment the appeal filed by the appellants should be rejected.
5. Shri Lakshmikumaran, the learned advocate of the appellants stated that during the period in dispute i.e. 1st June, 1977 to 30th June, 1977 old Rule 11 was in force. He has also referred to a judgment in the case of Collector of Central Excise v. Pen Workers, Bom. ] where the Tribunal has held that where the payment of duty was made before 6th August, 1977 it would be governed by he provisions of Rule 11 as it stood prior to its amendment on 6th August, 1977 even it refund was launched subsequent to amendment.
6. We have heard both the sides and have gone through the facts and circumstances of the case. We have also considered the judgments cited by both the sides. The learned advocate for the appellants had urged that the starting point of limitation for the filing of the refund claim had to be reckoned from the date of knowledge of the judgment in the case of Union of India v. Bombay Tyre International Ltd. reported in 1983 ELT 1896 : 1983 ECR 2233D. We do not find any force in the contention of the learned advocate. Andhra Pradesh High Court in the case of Tungabhadra Machinery and Tools Ltd. v. Union of India had held that the appellant cannot treat the knowledge to a particular judgment as starting point for limitation for claiming the refund. Duty was paid in 1977 and refund application was filed on 21st July, 1984. There is a gap of almost seven years. The appellants had paid duty unquestionably and without any protest and they had practically abandoned their claim as stale one. Hon'ble Supreme Court in the case of CCE, Chandigarh v. Doaba Sugar Mills had held that in making claim for refund before the departmental authority an assessee is bound within four corners of the statute and the period of limitation prescribed in the Central Excise Act and Rules framed therein must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department the provisions of limitation prescribed under the Act will prevail. Para No. 6 of the said judgment is reproduced below:
It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light. But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to initiate proceedings in the Civil Court for recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund. This was the view taken by the Tribunal in a previous decision in the case of Miles India Ltd. v. The Assistant Collector of Customs but it was assailed before this Court. The appeal was withdrawn. This Court observed that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided thereforein the relevant provisions of the Customs Act, 1962. If really the payment of the duty was under a mistake of law the party might seek recourse to such alternative remedy as it might be advised.
7. In view of the judgment of the Hon'ble Supreme Court we hold that the refund application was hit by limitation. The appeal is dismissed.
Sd/- (P.C. Jain) Sd/- (S.K. Bhatnagar) Sd/- (Harish Chander) Member (T) Member (T) Member (J) P.C. Jain, Member (T)
8. While concurring with the order of my learned brother Shri Harish Chander, Judicial Member, I would like to add a few words as follows:
9. One of the contentions of learned advocate is that the duty was paid under mistake of law and this mistake was discovered after the pronouncement of the decision of the Supreme Court in the case of Bombay Tyre International Limited in 1983 ELT 1896 : 1983 ECR 2233D SC. The appellants have claimed refund of duty in respect of the following discounts allowed by it during the period June, 1977:
(a) Annual Turnover Rebate
(b) Trade discount,
(c) Product Rebate and Additional Product Rebate including incentives, etc.,
(d) Cash Discount,
(e) Regular Payment Performance Discount (R.P.P.D.).
10. The Supreme Court, inter alia, has pronounced in the aforesaid case of Bombay Tyre International Ltd. (as further clarified by its order dated 14th Nov. 1986) that all discounts by whatever name called are to be allowed as deductions so long as they were known at the time of clearance The lower authorities do not appear to have examined the contention of the appellant herein that the duty was paid under mistake of law. In these circumstances, it cannot be held that the claim of the appellants that duty was paid under mistake of law is correct or not. On the basis of evidence brought on record by them, we find that when the law clearly provided that trade discount was to be allowed by way of abatement in determining the value under Section 4 of the Central Excises & Salt Act, 1944, there is no indication whatsoever that the appellants at any time raised the question of non-payment of duty on deductions now claimed by them. There is not even a whisper that they laid any such claim at the time of paying the duty and that the departmental authorities refused to accept their claim at the time of such payment of duty. Facts and circumstances of the instant case are totally different from the facts and circumstances of the case of U. Foam Pvt. Ltd so much relied upon by the learned advocate for the appellants. In that case of U. Foam Pvt. Ltd. the assessee there had been continuously contesting his claim for exemption from duty based on two notifications and he pursued the matter right up to the revision application stage when the question was decided in his favour. No such contest appears to have been made at all by the assessee-appellant in the instant case. I am therefore, of the view that it would be difficult to accept the contention of the learned advocate for the appellants that duty in the instant case was paid 'under mistake of law.
11. Next contention of the learned advocate for the appellants is assuming that the duty was paid under mistake of law, the departmental authorities need not confine themselves to the limitation prescribed under the provisions of the said Act i.e. Section 11B. This has been clearly spelt out according to the learned advocate, in mentioned supra For a proper appreciation of this contention para 20 of the said report from the judgment of the Hon'ble High Court of Andhra Pradesh is reproduced below:
The assessee in this case claimed that duty was illegally and unauthorisedly collected in respect of the goods manufactured from out of the scrap of waste of polyurethane foam. The assessee's case was that pursuant to the notifications above referred, the articles which fell under Tariff Item 15A(4) earned exemption. There was continuing correspondence between 1971 and 1978 when eventually an application was made for refund. The application for the refund was rejected by the Assistant Collector on the ground that it was barred by limitation Obviously the order passed by the Assistant Collector was appealable and the assessee carried the matter in appeal to Appellate Collector as well as the Tribunal, availing the statutory remedies. The contention urged was that the time limit specified in Rule 11 was not applicable and the application filed for refund in October, 1978 was perfectly valid and the Assistant Collector of Central Excise was under an obligation to allow the refund pursuant to the application made. The question considered by the Appellate authorities was whether the time limit specified in Rule 11 was or was not applicable in the facts and circumstances of the case. If the settled legal principle is that when money is paid by an assessee under a mistake of law the limitation according to the general law is applicable, we do not see how that legal principle undergoes a change if the matter fell to be considered in the course of statutory remedies availed by the assessee. We are unable to accept the proposition that the legal principles could differ with reference to the nature of proceedings, learned Standing Counsel for the Central Government does not deny that if a writ petition is filed invoking Article 226 of the Constitution, then, the period of limitation could be determined in accordance with the settled judicial pronouncements without reference to Rule 11. We do not see how that principle undergoes a change because the matter happens to he considered and decided during the course of statutory remedies availed by the assessee. It should be clearly borne in mind that the assessee never purported to make an application for refund under Rule 11 of the rules. Indeed, the assessee's case was that the application for refund was filed without reference to Rule 11 and it was filed before the limitation had run out under general law. No authority has been cited before us by the learned Standing Counsel for the Central Government in respect of the plea that legal principles to be applied vary with reference to the nature of the proceedings. In our opinion, whether the assessee was pursuing the remedy by filing a writ petition under Article 226 or was availing the statutory remedies available under the Act by way of appeal and reference to the High Court, the same legal principles would govern the matter. Just because the present proceeding is a reference proceeding, we are unable to state that the assessee is fixed to Rule 11 and Rule 11 alone and the various judicial pronouncements which fairly settled the issue should be ignored, because those pronouncements are made in exercise of the jurisdiction under Article 226 of the Constitution. In our opinion, the period of limitation will have to be determined on the basis of the settled principles, whether those principles are settled under statutory remedies availed by the assessee or in the course of writ jurisdiction of the courts invoked. We are therefore unable to accept the first contention of the learned Standing Counsel for the Central Government.
[Emphasis supplied by me.
12. It is, therefore, apparent from the aforesaid principle laid by the Hon'ble High Court that it has been rendered in the absence of any authority from the learned Standing Counsel for the Central Government. The fact that the Customs and Excise authorities are governed by the limitation prescribed under the Statutes i.e. Customs Act, 1962 or the Central Excises & Salt Act, 1944 now stands settled by the Supreme Court's "decision in the case of Miles India Ltd. 1985 ECR 289 SC. This has been further reiterated by the Hon'ble Supreme Court in the case of CCE, Chandigarh v. Doaba Sugar Mills referred to in the judgment of my learned brother Shri Harish Chander, Judicial Member.
13. In the result, the appeal is rejected.
Sd/- (P.C. Jain) Technical Member S.K. Bhatnagar, Member (T)
14. With due respect to the views expressed by my learned Brothers, I would like to observe as under:
15. One of the contentions of the learned Advocate is that the amount was paid under mistake of law and this mistake was discovered after the pronouncement of the decision of the Supreme Court in the case of Union of India v. Bombay Tyres International Ltd. reported in 1983 ELT 1896 1983 ECR 1627 D SC.
16. The learned Counsel has pleaded that in these circumstances, three years time from the date of discovery was available to him for claiming refund. He has cited two judgments (1) The judgment of the Honble High Court of Andhra Pradesh in the case of U. Foam Pvt. Ltd. v. Collector of Central Excise ;
(2) Order of the Tribunal in the case of Beverages & Food Products v. Collector of Central Excise, Calcutta . in support of his contentions.
17. The learned Departmental Representative and both the learned Brothers have in this connection, referred to the order of the Tribunal in the case of Miles India Ltd., Baroda v. Appellate Collector of Customs, Bombay 1983 ELT 1026 CEGAT : 1983 ECR 242D-Cegat and the order in the same case passed by the Hon'ble Supreme Court (1985 ECR 289 SC), as also the order of the Tribunal and the judgment of the Hon'ble Supreme Court in the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills .
18. However, in my opinion, both these cases are distinguishable.
19. I would like to point out in this respect that the order of the Tribunal in the case of Miles India was passed with reference to Section 27 of Customs Act and not with reference to Section 11B of the Central Excises & Salt Act, 1944 and these two provisions do not seem to be para materia.
20. It is indeed noteworthy that there is nothing comparable to or equivalent to Clause 5 of Section 11B in Section-27 of the Customs Act, 1962. As such, the orders and judgments passed by the Tribunal or the Courts with reference to Section-27 of the Customs Act do not become automatically applicable to cases arising under Section-11B of the Central Excises & Salt Act, 1944 and we have to tread with caution in applying the ratio of the former to the latter.
21. Again, the order of the Tribunal and the judgment of the Hon'ble Supreme Court in the case of Doaba Co-operative Sugar Mills have been passed with reference to a demand case in terms of Section-11A of the Central Excises & Salt Act, (which provides for recovery of sums due to the Government) and not with reference to Section-11B' (which deals with refunds of duty which may be due to the manufacturers/assessees) and these two distinct provisions are not comparable, (and any clause comparable to Clause 5 of Section-11B is conspicuous by its absence in'Section-11A).
22. On the contrary, the view expressed in the Tribunal's order in Beverages and Food Products v. Collector of Central Excise, Calcutta (cited by the learned Counsel) is practically the same which has been expressed by the Hon'ble Andhra Pradesh High Court in the case of U. Foam Pvt. Ltd. (also cited by the learned Counsel). Since this judgment of the Hon'ble Andhra Pradesh High Court has been passed in a case of mistake of law specifically with reference to Section 11B of the Central Excises & Salt Act, 1944 and rules made thereunder it is pat on the point and holds the field as far as 1 know.
23. In fact, even in the Doaba Co-operative Sugar Mill's case, the operative part of the judgment of the Hon'ble Supreme Court v/z. Para-6 includes a finding that It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light.
24. It is virtually the same view which was taken by East Regional Bench in the Beverages and Food Products case and the Hon'ble Andhra Pradesh High Court in the U. Foam Pvt. Ltd. case and wholly confirms and upholds the view points expressed therein.
25. The Andhra Pradesh High Court, however, goes further and tackles the question whether such a contention could be raised before the statutory authorities and the principles of law which are applicable to proceedings in Courts could be applied to proceedings before these statutory authorities and gives the answer to this question in the affirmative.
26. In this connection, however, the Hon'ble Supreme Court appears to have distinguished between the departmental authorities and other authorities. The portion of the Hon'ble Supreme Court's judgment in Doaba Cooperative Sugar Mill relied upon by my learned Brothers is as follows:
But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail.
[Emphasis supplied]
27. It is significant that the Hon'ble Supreme Court has referred to the proceedings before the departmental authorities and the limitations of such authorities (and rot judicial Tribunals).
28. Evidently, this Tribunal is neither a departmental authority nor a quasi-judicial authority of the type referred to in the above case or the case of Sakuru v. Tanaji reported in 1985 (22) ELT 137 : 1985 ECR 2597 SCJ (cited by my learned Brothers). On the contrary, it is an independent judicial authority in its own right.
29. In other words, the observations of the Hon'ble Supreme Court in Doaba Sugar Mill's case or Sakuru v. Tanaji's ease do not operate as a bar to the consideration of cases of illegal exercise of authority in terms of the well-known principles of law by this Tribunal.
30. Further, in the case of Tribunal's order in Doaba Sugar Mill's case, the following words occur-
It may be open to the Deptt. to initiate proceedings in the Civil Court for recovery of the amount due to the Department in cases where such a remedy is open on the ground that the money received by the assessee was not in the nature of refund of duty.
31. The reference to Civil Court in this Para is significant because in Section-11A with reference to which these observations have been made, there is no bar on the jurisdiction of Civil Courts. On the contrary, under Section 11B(5), there is a specific bar on the jurisdiction of Courts. And it is no less significant that while Clause(.5) expressly bars the jurisdiction of the Courts in the types of cases covered by it, this Clause does not so bar the jurisdiction of this Tribunal.
32. In other words, in my opinion, the types of cases referred to in Clause 5 could be dealt with and duly considered by the Tribunals but not by Civil Courts. This observation is buttressed by the observation of the SC in the case of Union of India v. A.V. Narasimhalu ECR C 328 SC to the effect that "Where a statute re-enacts a right or a liability existing at common law, and the statute provides a special form of remedy, exclusion of the jurisdiction, will not be readily inferred. Where, however, a statute creates a new right or liability and it provides complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the civil court to grant relief is barred." And further, "The act in terms creates a special liability and provides for determination of the right of the State to recover duty and the liability of the importer to pay duty and by the clearest implication it is provided that it shall be determined by the Tribunal so constituted." [Emphasis supplied].
33. Hence, in my opinion, in cases covered by Section-11B, it will not be appropriate to plead or hold that the assessee could take recourse to civil law courts under the common law.
34. Thus, both in view of the express provisions of Section-11B and the observation of the Hon'ble Supreme Court in the aforesaid case, it is not for the Courts but/or the Tribunals to take cognizance of such cases of erroneous exercise of authority by the administrative or executive officers and other authorities.
35. This view is also buttressed by the following observations of the Hon'ble Andhra Pradesh High Court in the case of V. Foam Pvt. Ltd. (referred by the S.R.B.)"If the settled legal principle is that when money is paid by an assessee wider a mistake, the limitation according to the general law is applicable, it is not understood how that legal principle undergoes a change if the matter fell to be considered in the course of statutory remedies availed by the assessee. It is not possible to accept the proposition that the legal principles could differ with reference to the nature of proceedings. It is not denied on behalf of the respondent that if a writ petition is filed invoking Article 226 of the Constitution, then the period of limitation could be determined in accordance with the settled judicial pronouncements without reference to Rule 11. It is not seen how that principle undergoes a change because the matter happens to be considered and decided during the course of statutory remedies availed by the assessee. Therefore, whether the assessee was pursuing the remedy by filing a writ petition under Article 226 or was availing the statutory remedies available under the Act by way of appeal and reference to the High Court, the same legal principles would govern the matter."
36. In other words, this Tribunal could take cognizance of the case of mistake of law and apply the principles of common law in dealing with such cases and grant consequential relief, if any, due.
37. I may further mention that if a contrary view is taken and it is held that this Tribunal could not take cognizance of such cases then the jurisdiction of the civil courts being barred, the net result would be that an aggrieved citizen would be left without a remedy in the normal course and this could hardly be the intention of the legislature (I am conscious that in terms of the Supreme Court judgment in the case of A.B. Narsimalu cited above the exclusion of jurisdiction of civil Court does not exclude the jurisdiction of the High Court to issue Writs, but then, as observed by the Hon'ble Supreme Court itself such writs are in the nature of high prerogative writs under the Constitution and in my opinion, it could not be the intention of the legislature that in every case of errroneous exercise of authority a citizen should run upto Hon'ble High Courts and seek remedy by way of Writs inspite of a hierarchy of authorities created by the statute for the very purpose of correcting such errors or mistakes and judging the correctness of the order. After all, such mistakes and errors arise only during the use of or purported use of authority under the Central Excises & Salt Act, 1944 (or the Customs 1962 and the allied laws) and it has been provided in these statute appeals against the decisions or orders passed under these Acts lie wit Tribunal. Therefore, in my opinion, this Tribunal was competent to pass orders in cases arising out of mistake of fact(s) or mistake of law and apply the well-established principles of law If only it could be shown that such principles were relevant and applicable to a given case.
38. However, insofar as the present case is concerned, reverting to the submission of the learned Counsel that the ratio of the order passed in the case of Beverages and Food Products may be applied I may take this opportunity to mention that the order of the Tribunal in his case has since been stayed by the Hon'ble Supreme Court (upon the condition that the Government implements the order and the respondent gives an undertaking); As such, we are at the moment not bound by the said order.
39. It is also noteworthy that in the case of Beverages and Food Products there was no dispute that the payment had been made (and the amount had been levied and collected) under a mistake of law and both the sides agreed that if the claim could be considered in time, the amount would be payable and the question of jurisdiction etc. did not arise at all.
40. In the instant case, on the other hand, although the learned Advocate has claimed that it is a case of mistake of law, sufficient material has not been placed before us to show that it was in fact such a case rightly observed by learned Brother Shri Jain with whom I agree in this respect.
41. I also agree with learned Member (J) Shri Harish Chander to the extent of observing that the period to which the claim belongs is 1st June, 1977 to 30th June, 1977 and the refund application was filed on 24th June, 1984, i.e. after a lapse of almost seven years; And it appears that the appellants "had practically abandoned their claim as stale one," as observed by my learned Brother.
42. In view of the above discussion, I agree with the operative part of the order of my learned Brothers that the refund application was hit by the limitation provided in the Central Excise law.
43. In the result, the Appeal is rejected.
Calcutta, Sd/- (S.K. Bhatnagar) The 29th May, 1989, Member (T) POSTSCRIPT Before parting 1 may mention en passant:
(1) that cases are coming before the Tribunal time and again where the attention of the Bench has been drawn to the Nationalisation Acts in which the Parliament specifically provides that provisions of those Acts will have precedence over other Acts of Parliament; And there is a. specific provision regarding liability to taxes and duties (and a schedule of priorities is also indicated).
In my opinion, this Tribunal cannot but take cognizance of 1 such provisions and act accordingly.
(2) We are almost, daily applying (consciously or unconsciously) the principles derived from the natural law, the common law and the jurisprudence such as the principles of natural justice, the principles of evidence, the principles of criminal jurisprudence, the principles of Interpretation of' statutes and the provisions of General Clauses Act as also the legal concepts regarding the rights (and wrongs), ownership, possession, persons, titles, liability, property and obligations etc. where needs be. So, why not the principles and concepts derived from the Contract Act and the Limitation Act ? Further, when we apply ratios derived from the judgments passed under other Acts or enactments aren't we applying the principles derived therefrom?
1. Then why only the Contract Act and Limitation Act should be an anethema? In my opinion, in an integrated lego-judicial system such as ours, the Tribunal could hardly hope to function in isolation and must of necessity interpret and apply the statutes within the broader framework of the established concepts of law and justice, in public interest.
2. It may also be mentioned that our predecessor authority, viz. the Government of India in Revision, was also applying such principles and concepts to the cases arising under the same statutes with which we are concerned.
3(i) It is well-known that the departmental authorities not only function under -the general superintendence and administrative control of the Board (CBEC) but the procedure, which is followed by them is rather simple summary procedure, so to say; And the cases are usually disposed of in camera without recourse to adversory proceedings or cross-examination in the normal course. In other words, the proceedings before the departmental authorities are not judicial -proceedings as Commonly understood. The adjudicating officers indeed perform dual functions and in practice the line between their executive role and their quasi-judicial function often gets blurred, or is evident from the order of the Hon'ble Supreme Court in the case of Orient Paper Mills 1978 ELT J-345 : 1974 (02) Cen-Cus 1 SC wherein it has been mentioned that "In this case both the Collector as well as the Central Government have ignored the line that demarcates their administrative duties and their judicial functions."
(ii) Moreover, they were practically guided by Board's Tariff Advises and directions etc. (and this has also attracted the notice of the Supreme Court in the aforesaid case).
(iii) Furthermore, their orders were subject to suo moto review/revision by their administrative superiors (Collectors/CBEC). It is, therefore, natural that the High Courts and the Hon'ble Supreme Court have found various points of distinction between them and judicial bodies like Courts and brought out the limitations under which the Departmental authorities function or ought to function but neither the aforesaid factors nor corresponding observations apply to this Tribunal which is an autonomous body under his own President and has a different type of organisational structure and method of functioning. Here, the Benches publicly hear the cases in advisory proceedings in an open Court and decide the matter independently as-per their own nest judgment in accordance with the law. The procedure followed is basically a judicial procedure and the actions and orders are unfettered by administrative direction or control; And the orders passed by this Tribunal are final in terms of Section 129B(4).
(iv) [As a matter of fact, the distinction between quasi-judicial (executive) authorities and this Tribunal has since further crystallised in view of the interpretation of Section 151A under which al I executive officers of Customs shall observe and follow such orders, instructions arid directions of the Board" as are issued in terms of Section-151 A.]
(v) It is necessary to keep this distinction-between departmental authorities and this Tribunalin mind because even before this Tribunal cam,. into existence, there was a hierarchy of quasi-judicial ' Tribunals in the department consisting of administrative / executive officers exercising quasi-judicial functions while acting as adjudicating or appellate authorities (as noted by the Hon'ble Supreme Court in the case of A. V. Narsimallu) and various High Courts and the Hon'ble Supreme Court in the judgments have referred to those departmental authorities (and not to judicial Tribunals) and indicated the limitations under which they function or the manner in which they ought to function and distinguished them from the common law courts.
4. It appears that the Beverage & Food Products case and the U. foam Pvt. Ltd case were perhaps not brought to the notice of the Special Bench during the hearing of the Doaba Co-operative Sugar Mills case
5. It is noteworthy that the department itself has been following a long established practice-of granting suo moto refunds. This would be evident from the fact that in the compilation of the Rulings under the Sea Customs Act of 1878, there is an instruction circulated vide Ind. Fin. (Cus) Letter No. 389 dated 8th June, 1923 and also letter R. Dis. No. 303(1)-Cus 1/30 dated 24th April, 1930 the relevant part of which reads as Para 11. Suo Moto refunds.
(i) GENERAL
(a) Refunds of Customs duties or charges erroneously levied in excess whose existence is discovered as a result of audit or otherwise, and in respect of which no claims have ben preferred, fall outside the scope of Section-40 Sea Customs Act and can be made suo moto at any time regardless of the time-limit imposed by that section.
In practice, such refunds will only be allowed when the excess, recovery is discivered within three months and when the amounts exceeds Rs. 5.
In other words, the principle that in case of excess recovery by mistake refund could be granted regardless of time limit imposed by this Act was accepted and honoured by the department in practice.
(ii) It is equally important that this could be allowed even if the assessee himself was not conscious of the mistake and/or had not filed a claim for whatever reasons. In actual practice, even an Assistant Collector could grant such refund within the period prescribed by the Board but for granting similar benefit beyond the normal period orders of higher authorities were called for.
(iii) In fact, there was a well known system in existence in which the suo moto refund and voluntary demands formed a complimentary arrangement (and the assessee used to readily honour the time barred demands voluntarily when requested to do so and the department used to grant time barred refund in case of bona fide mistakes).
(iv) This practice was based on the same principle which the High Courts and Hon'ble Supreme Court itself had encouraged and exhorted by their famous observations in the following cases:
(i) U.O.I. v. A.V. Narsimallu : ECR C 328 SC We trust that the administrative authority will act in a manner consistent, not with the technicalities, but with a broader concept of justice if a feeling is to be entered in the minds of the citizen with the Government is by and for the people.
(ii) Sivsankar Dal Mills Whether public bodies under cover of public laws recover people's more, later discover to the erroneous levies, the dharma of the situation demands equification. There is no law of limitation, specially for the public bodies, on the virtue of returning whatever wrongly recovered to whom it was belonged.
(iii) Aluminium Corporation of India Ltd. (1978 ELT J-452) : 1975 Cen-Cus 111 SC).
To return what has been taken wrongly is as much a duty and grace of government as to levy relentlessly and fully what is due. Default in either, not altogether unfamiliar, brings down the confidence of the community in the Administration. That a party should have been put to two expensive and elongated litigations to recover a relatively small sum is regrettable.
6. Furthermore, it is also apparent from the finding of the executive Collector himself in the case of Doaba Cooperative Sugar Mills case that appellate, review and revisionary authorities were themselves following the principles of the common law (derived, inter alia, from the Limitation Act read with the Contract Act) that a refund could be paid (by the departmental authorities themselves) in case of mistake of law within three years from the date of discovery of mistake rand the Collector simply applied this analogy on the demand side to recover the sum erroneously paid.
7. The date of the Collector's order is 5.5.1983. The date of the Board's ruling is 8.6.1923. The above developments show that for nearly half a century (if not more) a good practice, consistent with the conduct of civilised societies and the principles of law on which the attention of the authorities has been focused by various High Courts and the Hon'ble Supreme Court from time to time had been followed by and large. I am, therefore, only left to wonder as to why such a good old practice, exorted by the Supreme Court itself is sought to be given a go by and replaced by a narrow technical approach critisized and discouraged by the Courts including the Hon'ble Supreme Court time and again.
8. In fact, even in such a case like the present one, although in view of the legal position outlined above, the appeal stands rejected nothing prevents the appellant from moving executive authorities and nothing prevents the administrative authorities from considering the matter on merits and if convinced that there has indeed been an excess recovery, to consider grant of suo moto refund in terms of the Board's Circular quoted above and the aforesaid observations of the Hon'ble Supreme Court.
9. I am making these observations as a part of the post script and have not incorporated them in the main body of the order as I consider that grant otherwise of the suo moto refund is purely a discretionary matter which the Courts and Tribunals may not compel but which the executive authorities at higher levels may choose to consider on their own in suitable cases.
Sd/- (S.K. Bhatnagar) Member (T)