Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Dhampur Sugar Mills Ltd. on 19 April, 1990
Equivalent citations: 1990(30)ECR369(TRI.-DELHI)
ORDER I.J. Rao, Member (T)
1. This appeal which was earlier decided by this Tribunal's Order No. 507/1988-D dated 3.8.1988 was re-opened and to a limited extent, re-heard in accordance with the orders passed by the Hon'ble Supreme Court on 22.9.1989 in Civil Appeal No. 4079(NM) of 1988. The Supreme Court, inter alia ordered as follows:
Para-1: That the findings in Order No. 507/1988-D dated the 3rd August, 1988 of the Customs Excise and Gold (Control), Appellate Tribunal, New Delhi in E/Appeal No. 2088 of 1987(D) so far as the assessment order was not provisional be and is hereby set aside and that the matter be and is hereby remanded to the aforesaid Tribunal with the directions that the said Tribunal Do restore to its file E/Appeal No. 2088 of 1987(D) above mentioned and Do dispose of the same giving afresh findings on that question after taking into account all such evidence as the Tribunal may think fit and submit the findings to this Court within four months of the receipt of this order and the record."
"Para-2: That both the parties herein shall be entitled to produce such admissible and relevant material they consider necessary to decide this question;
And THIS COURT DOTH FURTHER ORDER THAT THIS ORDER be punctually observed and carried into execution by all concerned.;
WITNESS the Hon'ble Shri Engalaguppe Seetharamiah Venkataramiah, Chief Justice of India at the Supreme Court, New Delhi dated this the 22nd day of September, 1989.
2. We heard Shri L. C. Chakraborty, Ld. J.D.R. for the Revenue and Shri Gopal Prasad, Ld. Consultant for the Respondents (M/s. Dhampur Sugar Mills. Ltd.).
3. It will be useful to refer to the sequence of events which culminated in the order of the Tribunal (by majority) and to the present proceedings. The events are best recorded in chronological order as follows:
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Sl. Date Particulars No.
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1. 28.04.1978 By Notification No. 108/78 the Central Government granted production incentive rebate in shape of ex-
emption from duty on sugar produced in excess in season 1977-78. The rate of rebate depended upon whether at the time of clearance of the excesss pro-
duced sugar was 'free sale sugar' or 'levy sugar' as per release order issued under Essential Commodities Act, 1955.
2. 22.07.1978 Manufacture of sugar stopped for the season 1977-78 around this date.
3. August 1978 As per the practice then obtaining a claim for Rs.
15,88,486.08 of rebate based on the assumption that clearance of 'free sale sugar' and 'levy sugar' will be in the ratio of 35% and 65% was filed with the Superintendent of Central Excise.
4. 12.12.1978 The Superintendent of Central Excise exercising juris-
diction over the factory of the respondent sought an undertaking that "you are hereby requested to submit an undertaking about the rebate amount on the entire quantities produced during the months of May 1978 to July 1978 is cleared from the factory and if there is any loss due to any reason the quantity of rebate may be reduced."
5. 14.12.1978 The Respondent replied to the letter and gave an undertaking and stated in categorical terms that the sanction of rebate claim of Rs. 15,88,486.08, to be so allowed be treated as provisional because the policy of the Government for sugar after the time of submis-
sion of the claim had since been changed from 15th August and levy/free sale sugar ratio and rebate claim thereof under the Notification cannot be ascertained at present.
It may be submitted that with effect from 15.8.1978 the Central Government had decontrolled sugar. Con-
sequentaly all clearances subsequent to 15.8.1978 were only of 'Free sale Sugar'.
6. 15.12.1978 The Superintendent Central Excise allowed the rebate of Rs. 15,88,486.08 on the basis of the total excess produce in the ratio of 65% levy sale sugar and 35% 'free sale sugar' and on terms that the amount was subject to reduction under conditions specified.
7. 26.07.1978/ In the aforesaid matter, Poona Collectorate had issued 11.01.1979 a Trade Notice on 26.7.1978 and the Allahabad Co-
llectorate had issued Trade Notice on 11.01.1979 to the effect that rebate granted under the aforemen-
tioned exemption Notification should be treated and sanctioned on provisional basis and the sugar mills in question should be made to give undertaking.
8. 1709.1979 The Superintendent of Central Excise issued Show Cause Notice to the Respondent seeking to recover an amount of Rs. 1,09,795.70 out of Rs. 15,88,486.08 on the assumption that the respondent had been paid a higher rebate than entitled to.
9. 19,09.1979 The Superintendent of Central Excise issued yet ano-
ther show cause notice to the respondent seeking to recover another sum of Rs. 11,261.99 out of Rs.
15,88,486.08 provisionally sanctioned on basis that the amount related to the quantity of sugar lost as a result of reprocessing.
10. 20,09.1979 In reply the Respondent asked for settlement of the claim @ Rs. 25.00 per M.T. on sugar cleared after 15.8.1978.
11. 22.02.1982/ The Assistant Collector Central Excise passed orders 26.02.1982 & asking the respondent to pay both the said amounts, 23.03.1982 the claim of rebate made @ Rs. 25.00 per M.T. on sugar cleared after 15.8.1978 was not accepted.
12. 23.03.1982 & The Respondent while making the appeal to the Col-
17.04.1982 lector (Appeals) made the claim of rebate of Rs.
29,64,442.04 based on the claim staked as far back as on 14.12.1978.
13. 10.03.1983 By his order the Collector Central Excise (Appeals) New Delhi disposed of the appeal made on 17.4.1982 in which claim for rebate was made on the basis of the rate application to free sale sugar cleared after 15.8.1978 and to the rates applicable to free sale sugar and levy sugar cleared up to 15.8.1978. The Collector (Appeals) in his order held "that the rebate on entire excess production cleared after 15.8.1978 irrespective of notional apportionment of excess production into levy and free sale components should be limited to amount of duty paid on it."
14. 17.06.1983 & Accordingly the respondent submitted Supplementary 02.04.1984 rebate claim to the Assistant Collector of Rs.
9,94,225.08 which was further raised to Rs. 13,75,-
984.86,
15. 28.05.1984 By his Memorandum the Assistant Collector of Cen-
tral Excise pursuant to the order of the Collector (Appeals) dated 10th March 1984 proceeded to finalise the rebate claim of the respondent in respect of sugar produced during the sugar season 1977-78 and drop-
ped the recovery of Rs. 1,09,795.70. But while doing so did not take cognisance of the supplementary claim in settling the rebate claim.
16. 05.06.1984 The Superintendent of Central Excise, asked the res-
pondent to submit the supplementary claim in correct proforma to the Assistant Collector of Central Excise.
17. 06.06.1984 The respondent by its letter filed the revised claim in the proper proforma before the Assistant Collector Central Excise as directed by the Superintendent of Central Excise.
18. 11.12.1984 The Assistant Collector of Central Excise issued show cause notice to the respondent asking for reason why the aforesaid supplementary claim of Rs. 13,75,985.86 should not be rejected as time barred under section 11-B of the Act. It is significant that the said show cause notice was issued in spite of the fact that the show cause notice itself recognised that the rebate granted to the respondent was provisional in nature and the RT-l2s in respect of several months during the relevant period had not been finalised.
19. 16.02.1985 The respondent by its letter replied to the show cause notice and contended inter alia, that the claim for re-
bate was not hit by time bar and that it was made pursuant to the order of Collector (Appeals) and the finalisation of rebate claim needed to be settled by the Assistant Collector of Central Excise.
20. 25.08.1986 The Assistant Collector Central Excise confirmed the show cause notice dated 11th December 1984 and re-
jected the supplementary rebate claim as having been hit by time bar.
21. 30.03.1987 By his Order No. 19-CE/MRT/87 the Collector (Appeals) allowed the appeal of the respondent herein and held, inter alia, that the supplementary claim for rebate filed by the respondent herein was not hit by the provisions of Limitation and that accordingly the same ought to have been considered by the Assistant Collector.
22. 31.03.1987 The Respondent herein filed an appeal being Appeal No. E/2088/87-D before the Tribunal against the aforesaid order No. 19-CE/APPL/MRT/87 of the Collector (Appeals).
23. 03.08.1988 The Order of the Tribunal being Order No. 507/88-D based on majority of two Members to one Member allowed the appeal of the Department and held that the supplementary rebate claim filed by the respon-
dent herein was barred by provisions of limitation.
It is this order which has been challenged in the Supreme Court which on examining the contentions put across by the respondent directed that the Tribu-
nal may re-examine the matter afresh.
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4. Shri L.C. Chakraborty, Ld. JDR argued that the assessment was provisional only in relation to the demand raised by the department but was not provisional in relation to the retund claims made by the respondents. In this context the Ld. JDR stating that he was under instructions to say so, submitted that the Revenue's position is as was stated in the counter-affidavit filed of the respondent Collector, signed by Shri Ram Tirath, Under becietary, Ministry of Finance.
5 The Ld J.D.R. Shri Chakraborty specifically pointed out and read out paragraph-25 of the said counter-affidavit which reads as follows:
Para-25: In reply to the contents of para-25, I state that it is incorrect to Sate that in the show cause notice issued by the Assistant Collector on 11.12.1984 in relation to the revised claim of Rs. 13,75,984/- the word 'provisional' was mentioned. In this context the respondent crave leave of this Hon'ble Court to refer to the Annexure 'L' of the appeal paper book at pages 83 to 86. The word 'provisional' was used in relation to the demand of Rs. 7,11,912.65 which was the subject matter of a Writ Petition pending on the file of the High Court of Allahabad. The very next para the said show cause notice which relates to claim of Rs. 9,94,225.08 (basic duty) and Rs. 13,75,984.06 (Basic duty + Additional duty + special duty), the word 'provisional; does not figure at all. Threfore, the contention raided in this para is untenable.
Shri Chakraborty emphasised that for the reasons mentioned in the counter-affidavit, the assessments could not be considered as provisional for the purpose of the refund applications.
6. Shri Gopal Prasad, Ld. Consultant for the respondents submitted that the letter dated 12.12.1978 issued by the Superintendent of Central Excise to the appellants quite clearly implied that the rebate was granted only provisionally. He referred to a Trade Notice dated 26.7.1978 issued by the Pune Collectorate, wherein it was inter alia stated that "as the clearnances of sugar depend on the release orders by Dte. of Sugar and Vanaspait, the rebate sugar depend on the release orders by Dte. of Sugar and Vananspati, the rebate claim filed in advance before actual clearances of excess sugar, when sanctioned, will be treated as provisional, subject to its finalisation when the entire excess sugar so segregated is finally cleared and accounted properly". He submitted that para-4 of this Trade Notice required that sugar factories should given an undertaking to refund excess amount if any paid, on finalising the provisional sanctions. Pleasding that the Trade Notice which is issued under Consultant also made the point that it was in the light of para-4 of this Trade Notice that the Superintendent's letter dated 12.12.1978 was issued. He made a request to treat the rebate claim as provisional stating reasons therefor. He further submitted that paragraphs 2 & 3 of the Superintendent's letter dt. 15.12.78 whereby the original refund was granted, laid-down conditions which clearly indicated that for all purposes the sanction of the refund/rebate was provisional. The Ld. Consultant brought to our notice Trade Notice No. 1/79 dated 11.01.1979, issued by the Central Excise Collectorate, Allahabad, wherein the same kind of provisions as in the Pune Colectorate Trade Notice were incorporate and submitted that this Trade Notice was issued by the jurisdictional Colectorate and was, therefore, fully binding on the Collector. He also referred to the instructions issued by the Ministry of Finance in 1963-64 vide M.F. (DR) F. No. 12/63-CXN dated 21.02.1964 and submitted that the language of these instructions made it quite clear that the grant of refund was only provisional and was subject to adjusting either way at the end of the sugar seizure, depending on actual clearances.
7. Finally, the Ld. Consultant referred to the judgment of the Bombay High Court reported in 1988 (15) ECR 67 in the case of Shri Someshwar Sahakari Sakhar Karkhana Ltd. v. U.O.I. and 4 Ors. and submitted that this judgment was considering the same Notfn. No. 108/78-CE dated 28.4.1978, the same or similar Public Notice and similar circumstances including an undertaking by the assessee sugar mill. He argued that his own case is even stronger because in the case of Shri Someshwar Sahakari Sakhar Karkhana Ltd., the sugar mill protested against the provisional nature of the refund but in spite of it the High Court held as they did, that the demand made by the department was not time-barred, indicating that the rebate granted and assessments madea were provisional. The Ld. Consultant further submitted that the respondents before us not only did not contend that there should not be provisional assessment but actually supported it in their letter dated 14.12.1978. In this context, the Ld. Consultant submitted that the Bombay High Court's judgment in Someshwar Sahakari Sugar Factory was later confirmed by the Supreme Court. He brought to out notice the Supreme Court's judgment in Special Leave to Appeal No. 3242/88 from the judgment and order dated 19.11.1987 of the High Court of Bombay in Writ Petition No. 3597/81.
8. We have considered the submissions made by both sides.
9. We have also perused the copies of the RT-12 Returns (assessment documents) for the months of June, July and August 1978. In all the three returns, para-2 of the assessment memorandum to the effect that the assessment was made provisional has not been cancelled. However, this circumstance alone does not lead to the conclusion that the assessment was provisional. Provisional assessment has to be done, normally, under Rule 9-B of the Central Excise Rules, and the Assistant Collector's order for provisional assessment is a must. Mechanical signatures on RT-12 returns, made without any application of mind, cannot make an otherwise final assessment a 'provisional' one. In this case, there is no such order but we cannot, in view of what follows, base our decision on this circumstance alone.
10. Considering such circumstances, it appears to us that in arguing as was done by the Ld. JDR, that the grant of the refund was provisional for the purpose of demand and was not provisional for the purpose of refund (supplementary), appears to be not consistent with each other. We have perused the various documents to which Shri Gopal Prasad, Ld. Consultant referred during his arguments. These documents included the Trade Notices, the instructions of the Ministry of Finance, the Superintendent's letter and the respondents* letters and also the sanction order for the refund all of which indicated, explicitly in some cases and implicitly in other contexts, (with necessary implications) that both sides considered that the assessments were provisional. Besides, the ratio of the Bombay High Court judgment, wherein the same Notification and similar circumstances were under examination, applies fully to the facts of this appeal. That the Bombay High Court was examining a question of demand raised by Revenue, does not make any difference.
11. For these reasons, we come to the finding, after considering all the evidence including the correspondence placed before us, that in the peculiar circumstance of this matter where both sides from the beginning, proceeded on the basis that the assessment was provisional, the assessment order and the grant of rebate were provisional. We find so, in spite of our observations in para-9 supra, as the documentary evidence available in this case is too strong to be ignored and the Bombay High Court, examining a similar matter came to conclusions which we cannot ignore.
12. These findings are submitted to the Supreme Court as ordered by the Hon'ble Court on 22.9.1989.