Customs, Excise and Gold Tribunal - Delhi
Mohan Steels Limited vs Collector Of Central Excise on 9 July, 1987
Equivalent citations: 1987(14)ECC249
ORDER
G.P. Agarwal, Member
1. The only short question involved in this appeal for consideration is whether the provisions of the Limitation Act could be invoked before the authorities constituted under the Central Excises and Salt Act, 1944, in the insant case.
2. Factual backdrops: The appellants who are manufacturers of, among others, steel ingots were exempted from payment of duty on steel ingots manufactured with the aid of electric arc furnace in terms of Notification No. 237/75 dated 9-12-1975 as amended by notification no. 235/77 dated 15-7-1977. This position continued till notification no. 156/79 dated 9-4-1979 was issued by imposing duty on the above items. The appellants had on the night of 8/9-4-1979 a certain quantity of steel ingots. This was cleared by them between 9-4-1979 to 15-5-1979 on payment of duty amounting to Rs. 98,208.81. But it appears that the appellants subsequently felt that the recovery of duty on the said items was not correct as at the time of its manufacture steel ingots manufactured on electric arc furnace were totally exempted from duty and therefore the appellants filed their claim for refund on 9-6-1981 which was received in the office of Assistant Collector on 15-6-1981. It appears that the Assistant Collector rejected the same holding it as time barred in terms of Rule 11 of Central Excise Rules, 1944 in force at the relevant time as the refund claim was admittedly filed after the expiry of six months from the relevant date. While holding so learned Assistant Collector held that a larger period of limitation prescribed under the Limitation Act cannot be invoked on the ground that the duty was paid either on account of mistake of law or it was illegally recovered. Against this order the appellants preferred their appeal before the Collector, Central Excise (Appeals), New Delhi but without success. Hence the present appeal.
3. Shri U.K. Pandey, learned consultant for the appellants while reiterating the said contention contended that since the duty was paid on account of the mistake of law, the period of limitation of six months prescribed under the erstwhile Rule 11, ibid does not apply. To substantiate his arguments he cited the following cases:--
1. Commissioner of Sales Tax, U.P. v. Auriaya Chamber of Commerce (1986) 25 ELT 867 (SC).
2. Calcutta Paper Mills Manufacturing Co. v. CEGAT .
3. Soft Beverages Pvt. Ltd. v. Union of India (1982) ELT 119 (Madras).
4. Re: Heilgers Limited (1982) ELT 792 (GOI).
In reply, Shri A.K. Jain, learned SDR contended that since the appellants had not paid the amount under protest, the period of six months provided under Rule 11, ibid, was applicable and the issue involved in the instant case is fully covered by the decision of this Tribunal rendered in the case of Miles India v. Appellate Collector of Customs, Bombay, (1983) ELT 1026 which was confirmed by the Hon'ble Supreme Court oh appeal as reported in (1985) ECR 289.
4. Before we proceed to consider the arguments so advanced by the parties, it would be useful to reproduce Rule 11 of the Central Excise Rules, 1944, as it stood at that time. The said rule funs thus:--
Rule 11. Claim for refund of duty.--Any person claiming refund of any duty paid by him may make an application, for refund of such duty, to the Assistant Collector of Central Excise before the expiry of six months from the date of payment of duty:
Provided, that the limitation of six months shall not apply where any duty has been paid under protest.
Explanation.--(1)* * * * * (2) * * * * * * * (3) * * * * * * * (4) * * * * * * * Explanation.-- * * * * *
From the plain reading of the said rule it is obvious that the application for refund has to be filed before the expiry of six months from the date of payment of duty and the only exception is that if the duty has been paid under protest the lirnitatioa of six months provided under this rule shall not apply. Admittedly in the instant case,--
(i) the appellants did not pay the duty under protest; and
(ii) the application for refund was made after the expiry of six months from the date of payment of duty.
5. Thus the question arises as to whether the larger period of three years provided under the common law, that is to say, the Limitation Act, 1963 would be applicable to such a claim which was admittedly filed after the expiry of six months from the date of payment of duty as provided for under Rule 11, ibid.
6. In the case of Miles India v. Appellate Collector of Customs, Bombay (supra) it was held by this Tribunal that the claim for refund of duty paid under the mistake of law is governed by the time limit prescribed under Section 27 of the Customs Act, 1962 and general law of limitation is inapplicable to such a claim. Relying upon the proposition of law laid down by the Hon'ble Supreme Court in the case of Burmah Construction Co. v. State of Orissa, AIR 1962 SC 1320, and Commissioner of Sales Tax, U.P. v. Parson Tools and Plants, Kanpur this Tribunal ultimately held in that case in para. 18 that it is not open particularly to a Tribunal, functioning within the confines of the same Act to induct provisions of general law of limitation into the statute and relax the time limit provided therein. Against this decision of the Tribunal an appeal was filed before the Hon'ble Supreme Court by Miles India Ltd. which was dismissed on 6-4-1984 as reported in (1985) ECR 289 (SC). While dismissing the appeal their Lorships held as follows:--
After the matter was heard for some time and it was indicated 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 therefor under Section 27(1) of the Customs Act, 1962, learned Counsel for the appellant sought leave to withdraw the appeal. We accord their leave to withdraw the appeal but make it clear that the order of the Customs, Excise & Gold (Control) Appellate Tribunal suffers from no infirmity. If really the payment of the duty was under a mistake of law, the appellant may seek recourse to such alternative remedy as it may be advised.
7. In the case of Madras Rubber Factory Ltd. v. Union of India, , the Hon'ble Supreme Court again refused to interfere with the orders of the customs authorities made under Section 27 of the Customs Act, 1962 rejecting the application for refund which was filed beyond six months.
8. Thus, from the said authoritative pronouncement of the highest Court of the land, it stands settled that the authorities under the Act have to act in accordance with the law which constitutes it. Because of Rule 11 of the Central Excise Rules, 1944, as it stood at that time, an authority constituted under that Act, shall have to decide the case before it in accordance with the said provisions. Rule 11, as far as the authorities constituted under the Act are concerned, provides a period of limitation for six months where duty is not paid under protest. Thus no claim for refund can be made under that provision unless the claim is made within six months.
9. Although the question in hand stands decided as aforesaid, the learned consultant Shri U.K. Pandey vehemently contended that the concept of mistake of law is fast developing and therefore the question of applicability of common law, that is to say, the Limitation Act should also be considered in the light of the case law cited by him as above.
10. In the case of Commissioner of Sales Tax, U.P. v. Auriaya Chamber of Commerce , the assessee had paid the sales tax in respect of a forward contract for the assessment year 1949-50 under the provisions of the U.P. Sales Tax Act, 1948, which was declared to be ultra vires by the Hon'ble Supreme Court. The assessee after coming to know of the said decision filed a revision in 1955 for quashing the assessment order in question. But the said revision was dismissed in September 1958 on the ground that it was filed after a long delay and was barred by limitation. The assessee subsequently filed an application before the Sales Tax Officer for refund of the amount which was deposited in accordance with the assessment order for the year and the subsequent orders under mistake. This claim of refund was again made on 24th May, 1959 which was dismissed as barred by limitation under Article 96 of the old Limitation Act, 1908. The assessee thereafter filed revision to the Court of Sales Tax, U.P. (Revision). The Addl. Sessions Judge (Revision) allowed the claim holding that at the time when the taxes were paid and the assessment was made there was no section in the U.P. Sales Tax Act, 1948 dealing with any period of limitation for refund. Against this order the Commissioner of Sales Tax went in appeal before the Hon'ble Supreme Court. While dismissing the appeal the Hon'ble Supreme Court held that the direction of the Addl. Sessions Judge (Revision), Sales Tax for refund of the amount to the dealer was proper and valid; that there was no section dealing with any period of limitation for refund at that time; and the application was within two years as provided under the proviso of newly added Section 29 which came into force with effect from 1st April, 1959. Thus it is clear that the ratio of ,the said decision is not applicable to the case in hand as in the instant case a specific period of six months for claiming the refund was provided in the said Rule 11 in question.
11. In the case of Calcutta Paper Mills Manufacturing Co. v. CEGAT , a writ petition was filed and in that writ petition it was held that where a suit lies to recover moneys paid under the mistake of law a writ petition for refund of tax within the period of limitation prescribed, that is to say, within three years of the knowledge of mistake would lie and therefore their Lordships of the Calcutta High Court entertained the writ and while exercising the writ jurisdiction held that duty paid under mistake of law or collected without the authority of law [had] to be refunded and the date of discovery of mistake is the starting point of limitation. Likewise in the case of Soft Beverages Pvt. Ltd. v. Union of India 1982 ELT 119, a learned single Judge of the Madras High Court in the writ petition held that the period of limitation prescribed for recovery for moneys paid under the mistake of law is three years from the date when the mistake is known and that period may ordinarily be taken to be a reasonable standard for which delay in seeking remedy under Article 226 of the Constitution of India can be measured. Thus, it is clear that these decisions were with reference to rejection of claim of refund challenged by way of writ and therefore these decisions have no bearing to the present case.
12. The decision of the Government of India rendered in the case of Heilgers Limited reported in (1982) ELT 792, besides having no binding effect and being in direct conflict with the judgment of the Hon'ble Supreme Court rendered in the case of Miles India Ltd., (supra), is also distinguishable on the facts of the case. In that case it was held that if the goods were not classifiable under any item of central excise tariff at the material time, the refund of duty was claimable within the time limit prescribed under the Limitation Act and not under Rule 11 of the Central Excise Rules, 1944. In the instant case there is no dispute regarding classification. It is significant to note that in that case itself in para. 5 the limitation prescribed under Rule 11 was found to be applicable with respect to a part of the claim, that is to say, for the period 1-3-1976 to 1-11-1975 holding that the goods were classifiable under the central excise tariff and therefore the refund claim filed on 28-12-1976 for the period 1-3-1975 to 3-11-1975 was held to be time barred.
13. Moreover, this Tribunal in a series of judgments have taken a consistent view that for refund claim filed before the authorities under the Central Excises and Salt Act, general law of limitation is not applicable. In Collector of Central Excise v. Sarangpur Cotton Manufacturing Co. (1987) 10 ECR 78, following the decision rendered in the Miles India Ltd., it was held that for 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 will not be attracted. Same view was taken in Collector of Central Excise v. Ramnath Ram Kumar ; TI Diamond Chain Ltd. v. Collector ; Kerala Electric Lamp Works Ltd. v. Collector of Central Excise .
14. It deserves to be mentioned here that the decisions holding that the general law of limitation apply to the refund of tax illegally collected or duty paid under mistake of law were cases where the relief was granted by the Hon'ble Supreme Court or the Hon'ble High Courts while exercising powers under their writ jurisdiction or dealing with the appeals arising out of civil suits filed for the recovery of amount without reference to the statutory provisions contained in the special Act like Customs Act or Excise Act, etc., regarding limitation. In the case of Indo-Japan Industries v. Collector , this Tribunal while dealing with the same question had occasion to consider the decision rendered by the Bombay High Court in the case of Shalimar Textile Manufacturing Pvt. Ltd. v. Union of India and held as follows:--
8. So far as decision of the Bombay High Court cited supra we may note that the said decision also dealt with the powers of a High Court exercising powers under its writ jurisdiction to grant relief without reference to the statutory provision regarding limitation. As mentioned earlier the powers of the lower authorities in the appeals before us as well as our own powers are derived under the Customs Act and the claims of the appellants have to be disposed of with reference to the provisions of that Act. We are therefore of the view that the orders of the lower authorities rejecting the refund claims of the appellants as barred by limitation under Section 27 of the Customs Act were correct.
The said view of the Tribunal finds tacit approval of the Hon'ble Calcutta and Delhi High Courts. In Incheck Tyres Ltd. v. Assistant Collector decided on 9-1-1986 and , a division Bench of the Calcutta High Court held that undoubtedly, the bar of limitation of six months laid down by Section 27 of the Customs Act would not apply in case the High Court in its discretion makes an order for refund under Article 226 of the Constitution. But in exercising its power under Article 226 of the Constitution the Court is always guided by well settled principles of law. When a party has chosen to avail of ordinary remedy provided in the Customs Act for obtaining refund of duty paid by them but the said claim is rejected on the ground of limitation, the Court by invoking its power under Article 226 of the Constitution may choose not to lift the said bar of limitation and order refund of the duty and concluded as follows:--
In ordering or refusing the prayer for refund in exercise of its writ jurisdiction, the Court may decline to make an order for payment of money for which there may be other appropriate and adequate remedies and by the party's own laches the remedy had become time barred.
And ultimately, dismissed the appeal observing as follows:--
For the foregoing reasons we hold that in the instant case when the appellant Company's right to obtain refund had been already extinguished it would be sound exercise of discretion to refuse its prayer for issue of mandate upon the respondents to refund duty in question.
In Auto Meters Ltd. v. Union of India , the Delhi High Court unmistakingly held that so far as the authorities under the Customs Act are concerned, they have to act strictly in accordance with law which constitutes it and therefore no claim for refund can be made under Rule [section] 27(1) of the Customs Act unless the claim is made within six months. The said weighty observations of the Hon'ble Delhi High Court may be extracted as below:--
14. It is settled law that the authorities under the Act have to act in accordance with law which constitutes it. Because of Section 27(1) of the Customs Act, an authority constituted under that Act, shall have to decide the case before it in accordance with the said provisions. Section 27(1), as far as the authority constituted under the Act is concerned, provides a period of limitation of six months. No claim for refund can be made under that provision unless the claim is made within six months.
And made it clear that the said rider would not apply where the extraordinary jurisdiction of the High Court under Article 226 of the Constitution is invoked by the assessee for protection of their constitutional rights and enforcing constitutional obligations of the States. Thus we hold that the provisions of the general law of limitation would not apply to the application filed for refund of duty said to have been collected on account of the mistake of law in the instant case.
15. Before we part with the case it deserves to be mentioned here in all fairness to the appellants that in the case of Beverages and Food Products v. Collector (which was not cited by the appellants), the East Regional Bench of this Tribunal has held that where duty is paid under mistake of law the provisions of general law of limitation can be invoked and the application for refund can be filed within three years from the date of the discovery of mistake as in such cases Rule 11 of the Central Excise Rules, 1944 would be inapplicable. But in the case of Kerala Electric Lamp Works v. Collector of Central Excise, Cochin, supra, a two Members Bench of this Tribunal differed with that view because it was found that the judgments rendered in the case of Miles India Ltd., supra and Sakuru v. Tanaji were not noticed by the East Regional Bench of this Tribunal while rendering the judgment in the case of Beverages and Food Products, supra.
16. Thus, a resume of the aforesaid discussion would show:--
(i) that whatever may be the powers of the High Court while dealing with the writ under Article 226 of the Constitution or the civil appeals this Tribunal has no power to relax the period of limitation provided under Section 27 of the Customs Act.
(ii) that even the High Court by invoking its power under Article 226 of the Constitution may choose not to lift the bar of limitation and order refund of duty as held by the Division Bench of the Calcutta High Court in the case of Incheck Tyres Ltd. v. Assistant Collector, supra.
17. In the result appeal fails.