Customs, Excise and Gold Tribunal - Mumbai
Collector Of Central Excise vs Sarangpur Cotton Mfg. Co. Ltd. on 27 May, 1986
Equivalent citations: 1987(10)ECR78(TRI.-MUMBAI), 1986(26)ELT830(TRI-MUMBAI)
ORDER K.S. Dilipsinhji, Member (T)
1. This is an appeal under Section 35-B of the Central Excises and Salt Act, 1944 filed by the Collector of Central Excise, Baroda, against the Order No. V-2(22) 8/80/1190, dated 27-1-1983 of the Collector of Central Excise (Appeals), Bombay, under which he allowed the first appeal of the Respondents herein in part and granted refund of handloom cess paid by the respondents for the period upto 5-8-1977. The amount involved is Rs. 2,061.32 ps. It has been contended in the appeal of the Collector of Central Excise, Baroda, that since the cause for refund arose on 13-10-1978 through the issue of the Govt. of India's Notification No. SO 3108, dated 13-10-1978 the claim for refund filed by the Respondents on 10-7-1979 was received after a period of six months from the date of the Govt. of India's Notification and hence it was correctly rejected as time barred. It has accordingly been prayed on behalf of the Collector of Central Excise, Baroda, that the order of the Appellate Collector should be set aside and the order of the Assistant Collector of Central Excise, Division I, Ahmedabad, dated 28-9-1979 be restored under which she rejected the entire claim of the Respondents as hit by the limitation under Rule 11 of the Central Excise Rules, 1944.
2. Appearing on behalf of the Collector, Shri Senthivel argued that the Respondents' claim for refund arose on account of the Notification dated 13-10-1978 being given retrospective effect upto two years before the date of publication of this Notification. Shri Senthivel submitted that the Collector's appeal raised two questions. One was whether the handloom cess was a duty and therefore the appeals should be heard by the Special Bench and the other was whether handloom cess could be collected under the provisions of the Central Excises & Salt Act, 1944 and therefore the time limit under that Act would apply to the refund of the duty claimed. So far as the first aspect was concerned Shri Senthivel submitted that the rate of duty was not involved and therefore the Regional Bench was competent to hear the Collector's appeal. On the second aspect Shri Senthivel submitted that the time limit prescribed under Rule 11 would apply to the refund. He argued that cause of action arose on 13-10-78 and therefore the time limit of six months under Rule 11 went in favour of the Respondents. The correct interpretation of Rule 11 would have been to count the time limit from the date of payment of the handloom cess and not the date of issue of the Notification. On the other hand, the Collector (Appeals) order split up the period into two, namely, from January 1977 to 5-8-1977 and from 6-8-77 to December, 1978. The dividing line was the amendment to Rules 10 & 11 carried out on 6-8-77. Shri Senthivel contended that the Collector (Appeals) order to split up this period was not correct. The claim for refund had been filedon 10-7-79. Rule 11 in force on that day stipulated filing of the refund claim within six months from the date of payment of duty. The Cause for refund arose on the date of issue of the Notification on 13-10-78 when Rule 11 was in force. Rule 11 was applicable to the refund claim as on that day. The Collector (Appeals) held that general law of limitation would apply, prior to the issue of the date of Notification. This was a wrong finding. Shri Senthivel relied in this behalf on the Supreme Court's decision in the case of Miles India Limited 1983 (13) ELT page 1579 Supreme Court. He also relied on the Supreme Court's decision in the case of Madras Rubber Factory which also laid down the same ratio. Accordingly he submitted that the appeal of the Collector of Central Excise, Baroda, should be allowed and the order of the Collector of Central Excise (Appeals), Bombay should be set aside.
3. The respondents were not represented though there is proof of the notice of hearing having been served on them. I therefore take it that they are not interested in this matter.
4. The learned SDR has attacked the order of the Collector of Central Excise (Appeals), Bombay on the ground that the same is illegal. In this behalf, the learned SDR has vehemently contended that Rule 11 was applicable to the refund of Handloom Cess claimed' by the respondents. On the other hand, the Collector (Appeals) held that Rule 11 was not applicable for the Refund for the period prior to 6-8-1977 and that it was applicable for the period commencing from that date. The reason for the Collector to arrive at the aforesaid decision is perhaps the instructions contained in the letter No. 201/6/73-CX.VI dated 21-6-1974 from the Central Board of Excise & Customs. In this letter, perhaps the Board clarified that the general law of limitation would apply for refunds claimed prior to 6-8-1977 and that Rule 11 would apply to such refunds from 6-8-1977. Possibly the reason for the aforesaid instructions of the Board was that Rule 11 as it stood before its amendment on 6-8-1977 governed refund of duties paid through inadvertence, error or misconstruction. Since in the present case the refund arose on account of retrospective effect having been given to the Government of India's Notification No. SO 3108 dated 13-10-1978 the Collector came to the aforesaid conclusion that the handloom cess paid prior to 6-8-1977 was not paid through inadvertence, error or misconstruction. Hence he concluded that the refund of this amount was governed under the Limitation Act and directed its refund, as the claim was in time. The learned SDR has contended that this position has been changed with the decision of the Supreme Court in the case of Miles India Ltd. and the Madras Rubber Factory. I find there is a great deal of force in this contention. The Tribunal's decision in the case of Miles India Ltd. sets out the various judgments and holds that for the refund of any duty of excise paid by the assessee the time-limit under the Excise Law will prevail and that the general law of limitation would not be attracted. In coming to the aforesaid conclusion, the Tribunal discussed the various authorities as contained in their order. This order was taken up in appeal by M/s. Miles India Ltd. with the Supreme Court and while discussing this appeal, the Supreme Court held that the Tribunal's order was valid. Therefore, in view of this judgement of the Supreme Court, it cannot be contended that the handloom cess paid by the respondents prior to 6-8-1977 was governed by the General Law of Limitation. While making further submissions, the learned SDR urged that the time limit should be computed from 13-10-1978 which was the date of issue of the exemption Notification by the government of India. This contention cannot be accepted as it would give a different interpretation for counting the limitation period than the one laid down by the Supreme Court in the case of Miles India Ltd. The correct interpretation for reckoning the limitation period would be the date of payment of the handloom cess. In that case also the application for refund of the respondents is hit by the limitation under old Rule 11. Therefore, in effect, there is no change in the order passed by the Asstt. Collector of Central Excise, Division I, Ahmedabad. From this point of view, it is immaterial when the cause for refund arose. In such cases, the Government give directions for the refund of the duties suo moto. Perhaps such directions were not issued in the present instant and hence the refunds were not granted suo moto. This is perhaps the reason why the respondents urged that the refund should have been given without their having to file an application for the refund. Besides it is seen that under Section 3 of the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953 (ACT No. 12 of 1953), which is the charging section for the levy of the handloom cess, it is termed as a duty of excise. It has been laid down specifically by Sub-Section (2) that the duty of excise specified in Sub-section (1) should be levied and collected in the same manner as the duty of excise on cloth levied under the Central Excises and Salt Act, 1944. Section 3(2) of the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953 thus makes it amply clear that the manner of levy and collection of this duty of excise has to be the same as the manner prescribed for the levy and collection of the basic duty of excise on cloth in Schedule 1 to the Central Excises and Salt Act, 1944. Therefore, all the machinery provisions would apply mutatis mutandis to the levy of this duty including its refund. Rule 11 is one such provision and in view of the aforesaid requirements of law the same cannot be kept out of reckoning in dealing with the claim of the respondents for the refund of the handloom cess. Similarly the provisions of Chapter VI-A of the Central Excises and Salt Act, 1944 are also made applicable by the aforesaid Section 3(2) and it is only in this way that this Tribunal has the jurisdiction to deal with the appeal relating to the refund of the Handloom cess. In this view, I find that the refund claim of the respondents was hit by the limitation under old Rule 11 of the Central Excise Rules, 1944. Therefore, the order of the Collector of Central Excise (Appeal) Bombay in setting aside the Asstt. Collector's order in part is not correct. Accordingly, I find that the order of the Collector of Customs (Appeals) is not legal and the same is set aside. The appeal of the Collector of Central Excise, Baroda is thus allowed. The result is that in the end the refund claim of the respondent is time barred and it cannot be sanctioned.