Customs, Excise and Gold Tribunal - Delhi
Rajasthan Worsted Spinning Mills vs Collector Of Central Excise on 30 November, 1989
Equivalent citations: 1990(26)ECC344, 1990ECR228(TRI.-DELHI), 1990(47)ELT483(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. The present Bench of five Members designated as Larger Bench was constituted by the Senior Vice-President to go into the issue posed by the Special Bench 'D' in the following circumstances.
2. The appellants M/s. Rajasthan Worsted Spinning Mills, Ladnu, a Government of Rajasthan concern lodged their refund claim amounting to Rs. 11,048.66 paid on account of yarn falling under T.I. 18B(1) during the period from 30-8-1976 to 20-12-1976. This claim was lodged on 27-8-1977. At the time of adjudication of the said refund claim it was contended by the appellants that they have purchased the Wool Tops after payment of duty of Rs. 55,919.50 from their sister concenvat Churu Unit and utilised the same in the manufacture of worsted woollen hand knitting yarn which was entitled for exemption from duty under Notification No. 238/76-C.E. dated 30-8-1976. But the Assistant Collector who adjudicated the case rejected the said contention of the appellants on merits and also on the ground that it was barred by time observing that "Even the claim was submitted to the Inspector for the first instance by the party on 30-8-1977 whereas the claim pertains to the period from 30-7-1976 to 3-11-1976 i.e. it was submitted to the Inspector after the expiry of six months. Therefore, the claim of the party for Rs. 11,048.66 P is hereby rejected." Against the said order of the Assistant Collector, the appellants filed their appeal before the Collector of Central Excise, New Delhi but without success. Hence the present appeal was filed by the appellants before this Tribunal and the same came up for hearing before the Special Bench 'D'. At the time of hearing of the appeal by the Special Bench 'D', it was contended inter-alia by Shri O.K. Rana, learned counsel for the appellants that Rule 11 as substituted by M.F. (R.D.) Notification No. 267/77-CE, dated 6-8-1977 (hereinafter referred to as "new Rule 11") curtailing the period to claim the refund of duty from one year to six months can only apply to those cases in which the refund had accrued after the insertion of new Rule 11 and cited the following case law -
(1) Universal Drinks (P) Ltd., Nagpur v. Union of India, 1984 (18) ELT 207 (Bombay).
(2) Nagarjuna Steels Ltd. v. Collector of Central Excise, Hyderabad, 1985 (21) ELT 854 (Tribunal) (3) Collector of Central Excise, Bombay v. Pen Workers, 1987 (30) ELT 807 (Tribunal).
(4) Collector of Central Excise, Bombay v. Crystal Paints, 1987 (32) ELT 415 (Tribunal).
(5) Atma Steels Pvt. Ltd. v. Collector of Central Excise, 1984 (17) ELT 331 (Larger Bench - Tribunal).
3. In reply it was contended by the learned JDR that the new Rule 11 was in existence when the refund claim was lodged by the appellants on 27-8-1977 (or on 30-8-1977 as recorded by the Assistant Collector) and therefore the period of six months prescribed under new Rule 11 for claiming the refund would apply and not the period of one year which was available when the alleged duty (excess) was paid and cited the judgment delivered by this Tribunal in the case of Hang India Ltd., Ghaziabad v. Collector of Central Excise, Meerut (Order No. 35 & 36/88-B1 dated 29-1-1988) and also the following case law which was relied upon by the Tribunal in that case -
(1) Collector of Central Excise, Patna v. Cyanides & Pigments Ltd., Jamshedpur, 1986 (6) ECR 241 (Tribunal).
(2) Pyrites Phosphates & Chemicals Ltd. v. Collector Central Excise, Delhi, 1983 ELT 1192.
(3) Rayala Corporation v. Director of Enforcement, AIR 1970 SC 494.
(4) Memon Abdul Karim Haji Tayab v. Deputy Custodian General, New Delhi, AIR 1964 SC 1256.
4. After hearing the parties the Special Bench 'D' came to the conclusion that on the question as to whether the claim for refund made after 6-8-1977 when the right to claim such refund arose before 6-8-1977 would be governed by the old Rule 11 read with Rule 173-J as they stood before 6-8-1977 or by the new Rule 11 read with Rule 173-J as substituted on 6-8-1977, there is an apparent conflict between the decisions rendered by this Tribunal, the matter may be placed before the Hon'ble President for constituting a Larger Bench of Five Members as the question is of frequent occurrence vide its Order dated 27-9-1988. That is how the matter has come up before this Larger Bench.
5. Before the commencement of the hearing notice of hearing was also issued to the Customs, Central Excise & Gold (Control) Bar Association to make the submission on the issue involved in the appeal, if it so wishes.
6. At the time of hearing Shri G. K. Rana, Advocate represented the appellants and Mrs. V. Zutshi, SDR represented the respondent. The Bar Association was represented by its Secretary Shri R.K. Jain.
7. Before we advert ourselves to the arguments advanced by the parties and Shri R.K. Jain, learned Consultant, it would be advantageous to consider the background of the provisions relating to the refund of duty under the Central Excises and Salt Act, 1944 and the rules made thereunder and also to the judgments rendered by this Tribunal. Earlier the matter relating to refund was governed by the Rules framed under the Act. Rule 11 as substituted by M.F. (R.D.) Notification No. 31-C.E., dated 29-9-1951 (hereinafter referred to as "Old Rule 11") reads as under -
"No duties or charges which have been paid or have adjusted in an account-current maintained with the Collector under Rule 9, and of which repayment wholly or in part is claimed in consequence of the same having been paid through in advertance, error or misconstruction, shall be refunded (unless the claimant makes an application for such refund under his signature and lodges it with the proper officer) within three months from the date of such payement or adjustment, as the case may be".
8. Rule 173-J at the relevant time reads as under -
"173-J. Time limit for recovery of short levy of refund of excess levy - The provisions of Rules 10 and 11 shall apply to the assessee as if for the expression 'three months' the expression 'one year' were substituted in those rules".
9. The said rule 11 was thereafter substituted by the new Rule 11 by M.F. (D.R.) Notification No. 267/77-CE, dated 6-8-1977 (hereinafter referred to as "new Rule 11"). The said new Rule 11 reads as under -
"Claim for refund of duty: - (1) Any person claiming refund of any duty paid by him may make *s 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 :- Where any duty is paid provisionally under these rules on the basis of the value or the rate of duty, the period of six months shall be computed from the date on which the duty is adjusted after final determination of the value or the rate of duty, as the case may be.
(2) If on receipt of any such application the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty paid by the applicant should be refunded to him, he may make an order accordingly.
(3) Where, as a result of any order, passed in appeal or revision, under the Act, refund of any duty becomes due to any person, the proper officer may refund the amount to such person without his having to make any claim in that behalf.
(4) Save as otherwise provided by or under these rules, no claim for refund of any duty shall be entertained".
10. Likewise by the said M.F. (D.R.) Notification No. 267/77-CE, dated 6-8-1977 in the said Rule 173-J, the words "as if for the expression 'three months', the expression 'one year'" earlier substituted by M.F. (R.D.) Notification No. 31-CE, dated 29-9-1951 in that Rule were omitted.
11. The said new rule also now stands deleted with effect from 17-11-1980 because the provisions relating to refund of duty were thereafter governed by Section 11-B of the Act itself. However, it is not necessary to reproduce Section 11-B of the Act as it is not relevant for the purpose of this appeal.
12. From a plain reading of the old Rule 11 and new Rule 11, it would be clear that under the old Rule 11 read with erstwhile Rule 173-J the period prescribed for claiming the refund was one year whereas under the new Rule 11 the period for claiming the refund has been reduced to six months.
13. In the case of Nagarjuna Steels Ltd., supra following the decision of a Division Bench of the Bombay High Court in Universal Drinks (P) Ltd. v. Union of India, 1984 (18) ELT 207 the Tribunal held that when the duty was paid before 6-8-1977, that is to say, when the old Rule 11 was in force, the claim for refund thereof though made subsequent to 6-8-1977 would be governed by the provisions of old Rule 11. This Tribunal again following the said Bombay High Court judgment rendered in the case of Universal Drinks, supra and the decision of the Tribunal in the case of Nagarjuna Steels Ltd., supra reiterated the same view in the case of Collector of Central Excise, Bombay v. Pen Workers, Bombay, 1987 (30) ELT 807. Yet in other case of Collector of Central Excise, Bombay v. Crystal Paints, 1987 (32) ELT 415 following the said decision of the Bombay High Court the Tribunal reiterated the same view. As against that this Tribunal in the case of Harig India Ltd., GhaZiabad v. Collector of Central Excise, Meerut (Order No. 35 & 36/88-B1 dated 27-1-1988) had taken a contrary view after explaining the ratio of the judgment rendered in the case of Universal Drinks (P) Ltd. v. Union of India, supra rendered by the Hon'ble Bombay High Court arid also the decision rendered by this Tribunal in the case of Collector of Central Excise, Bombay v. Crystal Paints, supra and in the process relied upon some observations made by the Hon'ble Supreme Court in the case of Rayala Corporation v. Director of Enforcement, AIR 1970 SC 494 and Mcmon Abdul Karim Haji Tayab v. Deputy Custodian General, New Delhi, AIR 1964 SC 1256 and also the observations made by this Tribunal in the case of Collector of Central Excise, Patna v. Cyanides & Pigments Ltd., Jamshedpur, 1986 (6) ECR 241. It is significant to note that while deciding the case of Nagarjuna Steels Ltd., supra this Tribunal relied upon the decision of the Bombay High Court in the case of Universal Drinks (P) Ltd., supra and also noticed the decision rendered by the Larger Bench of this Tribunal in the case of Alma Steels Pvt. Ltd. v. Collector of Central Excise, 1984 (17) ELT 331 but distinguished it. In the recent contrary decision of the Tribunal in the case of Harig India Ltd., supra the Bench after referring the said judgment of the Bombay High Court rendered in the case of Universal Drinks (P) Ltd., supra held that the said judgment did not say so and also relied upon the judgment of the Larger Bench rendered in the case of Atma Steels Pvt. Ltd. supra, to support its conclusion.
14. After stating as above we now proceed to consider the arguments advanced by the parties and also by Shri R.K. Jain, Consultant. Arguing on behalf of the appellants Shri G.K. Rana, learned counsel vehemently contended that a right to claim refund is a vested right which has accrued to the appellants prior to new Rule 11 and it is a settled principle of interpretation of statutes that a vested right or even an existing right, including a right of action is not affected or allowed to be taken away unless it is so affected or taken away by the enactment expressly or by necessary implication. It is only a declaratory or a procedural enactment which is normally held to be retrospective. A remedial Act, on the contrary is not necessarily retrospective, it may be either enlarging or restraining and it takes effect prospectively, unless it has retrospective effect by express terms or necessary intendment. For this submission reliance was placed on the case of The Central Bank of India v. Their Workmen, AIR 1960 SC 12 (para 29) and The Workmen of Firestone Tyres and Rubber Company of India (P) Ltd. v. The Management and Ors., AIR 1973 SC 1227. Elaborating on his arguments he submitted that admittedly while amending the old Rule 11 by Notification dated 6.8.1977 as aforesaid no saving provision was made for the transitional period nor any breathing time was given. Thus, when this is the situation new ule 11 should be interpreted to be prospective and not retrospective and this has had been the consistent view of the Tribunal and the contrary view expressed by the Two Member Bench in the case of Harig India Ltd. v. Collector of Central Excise, Meerut, supra is not sound in law and reliance on the case of Rayala Corporation v. Director of Enforcement, AIR 1970 SC 494; Memon Abdul Karim Haji Tayab v. Deputy Custodian General, New Delhi, AIR 1964 SC 1256; Collector of Central Excise, Patna v. Cyanides & Pigments Ltd., Jamshedpur, 1986 (6) ECR 241 and Atma Steels Pvt. Ltd. v. Collector of Central Excise, 1984 (17) ELT 331 was wrongly placed as the same are not applicable to the controversy in hand. Shri R.K. Jain, learned Consultant and the Secretary of the Bar Association while supporting the contentions raised by the learned counsel for the appellants Shri G.K. Rana submitted that when the direct judgment of the Bombay High Court rendered in the case of Universal Drinks (P) Ltd., Nagpur v. Union of India, supra,is available, it must be applied and the benefit be given to the appellants, as held by this Tribunal in the case of Astra Pharmaceuticals v. Collector, 1987 (32) ELT 720 and further added that when there is no contrary decision of other High Courts the said judgment of the Bombay High Court must be followed as held by this Tribunal in the case of Associated Cement Companies Ltd. v. Collector of Central Excise, 1987 (27) ELT 746. Submitting further it was contended by him that a right to demand the duty and a right to claim refund are two different rights and the rules of interpretation which may apply to the right of demand cannot be applied while considering a right to claim refund and therefore, the case of Harig India Ltd. v. Collector of Central Excise, Meerut, supra, was not rightly decided. Elaborating further he submitted that while deciding the case of Harig India Ltd. reliance on the case of Rayala Corporation v. Director of Enforcement, supra was wrongly placed as the said case relates to the interpretation of certain sections of the Foreign Exchange Regulation Act while the instant case relates to the interpretation of a Rule which was made by the Government under its Rule making powers. To top his arguments he highlighted that although a law of limitation is primarily a law relating to procedure and as such comes into effect right from the moment it has been enacted and governs all proceedings instituted thereafter and thus has retrospective operation, there is overwhelming authority in favour of the principle that where a subsequent law curtails the period of limitation previously allowed and such law comes into force at once, it should not be allowed to have retrospective effect, which it would otherwise have, so as to destroy pre-existing vested rights of suit and to support his contention reliance was placed on a Full Bench judgment rendered by the Rajasthan High Court in the case of Jethmal v. Ambsingh, AIR 1955 Raj 97 and New India Insurance Co. Ltd. v. Shanti Mishra, AIR 1976 SC 237.
15. In reply it was contended by Mrs. V. Zutshi, learned SDR that a right to claim refund is not a vested right but it is a conditioned right and as to what is vested right she drew our attention to the Law Lexicon by T.P. Mukherjee, 1982 Edition page-840 wherein it is stated that "a right is said to be vested when the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest independent of a contingency. It is a right which cannot be taken away without the consent of the owner. Such rights may arise from contracts or statutes and from the operation of law (See Gordhandas Beldev Das v. The Governor General in Council, AIR 1952 Punj. 103). The rights of the parties are normally to be governed by the law as it is in force at the time of the institution of the point. (See Chandulal v. Bhai Kuwarjirao, AIR 1953 Bom 282; Ganpathy Raja v. The Commr. for Hindu Religious and Charitable Endowments, AIR 1955 Mad. 378; Arjuna v. Amrita and Ors., AIR 1936 Nag 281. No person has vested right in any course of procedure. If by any enactment, the mode of procedure is altered, he has no other right than to proceed according to the altered mode. A change in law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective but also retrospective. - Mohammadi Begam v. Abdul Majid, 1963 M.P. L.J. 157 at 161". She also placed reliance on para 73 and 76 of the judgment rendered by a Larger Bench of this Tribunal in the case of Atma Steels Pvt. Ltd. v. Collector of Central Excise, 1984 (17) ELT 331 to show that there can be no concept of vesting of any right until and unless there is an adjudication in favour of the party. In other words her submission was that a right to claim refund is merely inchoate until there is an adjudication in favour of the party claiming the right. She highlighted that the provisions relating to the limitation are the part of procedural law and therefore, such provisions comes into effect right from the moment they are enacted and cover all proceedings instituted thereafter and thus have the retrospective operation and the legislature which seeks to protect the previous law should normally incorporate a saving clause. In a nutshell her submission was that no one has any vested right in any procedure and, therefore, any change in procedural law has a retrospective effect and the rights of the parties are to be governed by the statute as it existed at the time when the suit is instituted unless there is anything to show the contrary in the amending statute and since there is nothing in the instant case to show the contrary in the Notification No. 267/77-CE dated 6-8-1977 whereby the new Rule 11 was substituted, the refund application filed by the appellants should be governed by the new Rule 11. To bolster her submission she cited few authorities (Hoosein Kasam Dada (India) Ltd., v. State ofMadhya Pradesh, AIR 1953 SC 2; M.S. Shivananda v. Tlie Kamataka State Road Transport Corporation, AIR 1980 SC 77; Zohrabi v. Arjuna, AIR 1980 SC 101 and Delhi Cloth and General Mills Co. Ltd. v. Income-tax Commissioner, AIR 1927 P.C. 242. Referring to Section 6 of the General Clauses Act, she emphasised that it has become an established proposition that in the absence of a saving clause, law of limitation would normally operate with retrospective effect. This is in respect of even the enactments, which would have been otherwise entitled to avail of the provisions of Section 6 of the General Clauses Act. She continued and submitted that the position with regard to the change in 'rules', whether by substitution by repeal or abrogation, is still adverse because there is a catena of case law in support of the view that the provisions of Section 6 of the General Clauses Act are not attracted to rules even though they may be statutory rules and in support of her contention reliance was placed upon the decision rendered by a Larger Bench of this Tribunal in the case of Atma Steels Pvt. Ltd., v. Collector of Central Excise, 1984 (17) ELT 331. While concluding she submitted that the case of Harig India Ltd. v. Collector of Central Excise, supra was correctly decided by the Tribunal wherein reliance was placed on the case of Rayala Coloration v. Director of Enforcement, supra and Atma Steels Pvt. Ltd. v. Collector of Central Excise, supra and added that the case of Universal Drinks (P) Ltd., v. Union of India, supra decided by the Bombay High Court was rightly distinguished.
16. We have considered the submissions and the case law cited at the Bar.
17. Before we proceed to decide as to whether the refund claim lodged in the instant case was hit by limitation or not it may be stated that from the various authorities cited at the Bar it is clear that a right to claim refund is a vested right (See Universal Drinks (P) Ltd., v. Union of India, supra decided by the Bombay High Court) but "the vesting of rights" cannot be pleaded by the State (See Atma Steels Pvt. Ltd. v. Collector of Central Excise, supra). On a careful consideration of the case of Rayala Corporation v. Director of Enforcement, supra decided by the Hon'ble Supreme Court we also find that the said case deals with a temporary statute and the question before their Lordships was as to whether the criminal proceedings can be initiated for contravening the provisions of Rule 132A(2) for punishing the accused under Rule 132A(4) of the Defence of India Rules, 1962 when these provisions stand ceased to be in existence as a result of the Defence of India (Amendment) Rules, 1965. From the report we find that in the said Amending Rules, 1965 clause 2 was expressly enacted providing that "In the Defence of India Rules, 1962, Rule 132A (relating to prohibition of dealings in foreign exchange) shall be omitted except as respects things done or omitted to be done under that Rule" and the argument of the accused was that, even if there was a contravention of Rule 132A(2) by them when that Rule was in force, the act of contravention cannot be held to be a "thing done or omitted to be done" under that Rule in terms of the said Clause (2) of the Amendment Rules, so that, after the Rule has been omitted, no prosecution in respect of that contravention can be instituted. Agreeing with the said contention their Lordships observed that the language contained in Clause (2) of the Defence of India (Amendment) Rules, 1965 can only afford protection to action already taken while the rule was in force, but cannot justify initiation of a new proceedings which will not be a "thing done or omitted to be done under the rule". Admittedly in the instant case when the new Rule 11 was substituted by Notification No. 267/77-CE dated 6-8-1977 no such saving clause or any clause on the lines of Clause (2) was incorporated therein therefore, the said case of Rayala Corporation v. Director of Enforcement is distinguishable on the facts of that case. In other words the controversy before us is as to whether in the absence of any saving clause or breathing time can the rule making authorities suddenly extinguish the vested right of action by providing for a shorter period of limitation, even though by and large the law of limitation may be held to be a procedural law. This question in our considered opinion was not considered in the case of Harig India Ltd., v. Collector of Central Excise, supra and Atma Steels Pvt. Ltd. v. Collector of Central Excise, supra. On this point in our considered opinion the law is very clear. In the case of Rajah of Pittapur v. Venkata Subba Row, AIR 1916 Mad 912 it was observed that a statute of limitation ceases to be a statute of more procedure which shortens the period and is sought to be used to defeat cause of action which had accrued earlier than the length of time prescribed in the law. In the case of Jethmal v. Ambsingh, AIR 1955 Raj 97, a Full Bench of the Rajasthan High Court after discussing the entire case law on the point concluded that "although a law of limitation is primarily a law relating to procedure and as such comes into effect right from the moment it has been enacted and governs all proceedings instituted thereafter and thus has retrospective operation, there is overwhelming authority in favour of the principle that where a subsequent law curtails the period of limitation previously allowed, and such law comes into force at once, it should not be allowed to have retrospective effect, which it would otherwise have, so as to destroy pre-existing vested rights of suit, because the giving of such retrospective effect amounts to not merely a change in procedure but a forfeiture of the very right to which the procedure relates". Yet in another judgment rendered in the case of Government of Rajasthan v. Sangram Singh, AIR 1962 Raj 43, a Full Bench of the same High Court reiterated the same view and added that "It has been laid down in a number of cases that the law of limitation is a law relating to procedure and has retrospective effect. Ordinarily when the law repealing the previous law of limitation provides for some breathing time for a litigant to adjust himself in accordance with the provisions of the new law, courts have held that the law of limitation in force at the time of the institution of a suit or a proceeding shall govern it and not the old law. Difficulty arises in a case like the present where no breathing time has been allowed. In such a case it is usual for the Legislature to insert certain provisions which grant some time to a litigant to enforce his existing right by appropriate proceedings. The new law may itself provide that in respect of a suit or a legal proceeding for which cause of action had accrued before the new Act came int operation, the old law shall continue to govern. Such a proposition may be spelt out by virtue of Section 6 of the General Clauses Act when the same is made applicable for the interpretation of the new Act. If all these accepted modes of interpretation fail, a court of law may refuse to give retrospective effect to the law of limitation in respect of a suit or an application on the ground that no remedy is left to a litigant who had a right recognised by law and his right is destroyed by giving retrospective effect".
18. However, this controversy should not detain us further since in our considered opinion the said question stands concluded by the Hon'ble Supreme Court in the case of New India Insurance Co. v. Shanti Misra, AIR 1976 SC 237, wherein after quoting with approval the proposition of law laid down by a Full Bench of the Madras High Court in the case of Rajah of Pittapur v. Venkata Subba Row, supra, their Lordships observed as follows :-
"(2) Even though by and large the law of limitation has been held to be a procedural law, there are exceptions to this principle. Generally the law of limitation which is in vogue on the date of the commencement of the action governs it. But there are certain exceptions to this principle. The new law of limitation providing a longer period cannot revive a dead remedy. Nor can it suddenly extinguish vested right of action by providing for a shorter period of limitation".
19. Thus, we hold that the refund claim lodged by the appellants was not tune barred in view of old Rule 11, which would apply in the instant case.
20. From the record we find that the refund claim was rejected by the Assistant Collector on merits as well as being time barred under new Rule 11. On appeal the Collector (Appeals) also without deciding the refund claim on merits rejected the appeal only on the ground that it was barred by limitation. Since the Collector of Central Excise (Appeals), New Delhi had rejected the appeal filed by the appellants only on the ground that the refund claim was barred by limitation, we remit the case to him to decide the appeal on merits in view of our findings that the claim was not hit by limitation.
21. In the result the appeal is allowed by remand.