Customs, Excise and Gold Tribunal - Delhi
Hindustan Fertilizer Corporation Ltd. vs Collector Of Central Excise on 30 March, 1987
Equivalent citations: 1987(12)ECR403(TRI.-DELHI)
ORDER D.C. Mandal, Member (T)
1. The point for determination in both these appeals is whether the appellants were entitled to the refund of Central Excise duty claimed by them in terms of Notification No. 198/76-CE dated 16.6.1976.
2. The Government of India, Ministry of Finance (Department of Revenue) introduced a production incentive scheme by Notification No. 198/76-CE dated 16.6.1976 in terms of which the goods specified therein cleared in excess of base clearances were exempted from so much of the duty of Excise leviable thereon as was in excess of 75% of such duty subject to fulfilment of the conditions laid down therein. Detailed procedure was prescribed in working instructions regarding determination of the base clearance figures. According to these instructions, a manufacturer who had more than one unit situated under the jurisdiction of different Assistant Collectors of Central Excise was required to submit a consolidated declaration in respect of clearances of all the units to the co-ordinating Assistant Collector of Central Excise. M/s. Hindustan Fertilizer Corporation Ltd. have seven units at Sindri in Bihar, Naya Nangal in Punjab, Trombay in Bombay, Namrup at Dibrugarh in Assam, Gorakhpur in Uttar Pradesh, Durgapur in West Bengal and Barauni in Bihar. The co-ordinating Assistant Collector of Central Excise for all these seven units was the Assistant Collector of Central Excise, Chandigarh. The appellants submitted a declaration with necessary data on 16.2.1979 for the purpose of Notification No. 198/76-CE in respect of fertilizer cleared by their seven units. In his letter No. V(14HH)30/B/Tech-II/79/7647-58 dated 7.6.1979 addressed to the Assistant Collectors of Central Excise, Dhanbad, Bihar; Dadar, Bombay; Gorakhpur, UP; Dibrugarh, Assam; Patna, Bihar; Durgapur, West Bengal; and Naya Nangal, Punjab. The Assistant Collr. of Central Excise, Chandigarh intimated the approval of the base clearances in respect of those seven units for the period from 1.4.977 to 31.3.1978 with the stipulation that those units would avail of the benefit of the production incentive scheme under Notification No. 198/76-CE with effect from 31.1.1978. On 16.7.1979, the appellants submitted a claim for refund of duty amounting to Rs. 12,10,249.10 claiming refund of Central Excise duty in excess of 75% of the duty paid during the period from 31.1.1978 to 31.3.1978, under Notification No. 198/76-CE dated 16.6.1976. This refund claim was in respect of fertilizer cleared from the appellants' Namrup unit. Thereafter, as required by the Superintendent Customs and Central Excise, RBC Range II, Digboi, the appellants furnished additional information and documents. The refund claim was rejected by the Assistant Collector of Central Excise, Digboi as barred by limitation on the ground that the refund claim was not submitted within six months from the date of payment of duty as provided in the Rule 11 of the Central Excise Rules, 1944. The appellants filed an appeal against this order before the Appellate Collector of Central Excise, Calcutta, but the same was rejected by the Appellate Collector holding that the appellants' claim for refund of duty was barred by limitation and as such they were not entitled to get the refund.
3. Against the said order-in-appeal No. 29/ASM/82 dated 27.2.1982, the appellants have submitted the present appeal, viz., Appeal No. ED/SB/ 361/82-C, which is before us for consideration. The grounds of the appeal, may be briefly stated as follows:
(i) The Appellate Collector has mis-interpreted the provisions of Rule 11 of the Central Excise Rules, 1944.
(ii) The payment of duty was provisional. There has been no final determination of the value and rate of duty. As a result, no time limit prescribed under Rule 11 read with Rule 173-J of the Central Excise Rules is applicable in this case.
(iii) Even assuming that the Assistant Collector of Central Excise, Chandigarh determined the rate of duty on 7.6.1979, i.e., the date on which he approved the base clearance, the time limit will count from that date.
(iv) The excess realisation of duty was not in conformity with the Notification No. 198/76-CE dated 16.6.1976, and hence the provisions of Rule 11 will not apply, but the general law of limitation will apply.
4. Similarly, on the basis of approved base clearance, the appellants submitted a refund claim on 26.10.1977 in respect of the fertilizer cleared from the said Namrup (Assam) unit claiming refund of duty paid during the period 30.12.1976 to 31.3.1977 for Rs. 24,20,230/-. This claim as well as the claim for refund for the period 31.1.78 to 31.3.78 were calculated by the appellants at the rate of 22.472% of the duty originally paid and they submitted the refund claims accordingly. The claim preferred on 26.10.1977 for the period from 31.12.1976 to 31.3.1977 was settled on 31.3.1981. On 20.8.1981 the appellants submitted supplementary claim for Rs. 2,68,905.63 for the period from 31.12.1976 to 31.3.1977 and for Rs. 1,36,147.64 for the period from 31.1.1978 to 31.3.1978 on the ground that the original claim was wrongly preferred at the rate of 22.472% of the duty paid on the basis of Pune Central Excise Collectorate's Trade Notice No. 41/77 dated 8.3.1977 whereas the appellants subsequently came to know that the benefit of reduced rate of duty could be retained by them and it was not required to be passed on to the consumers. In the supplementary refund claim dated 20.8.1981, the appellants quoted one order-in-appeal No. 29/BR/81 dated 24.2.1981 in respect of the supplementary claim. This supplementary refund claim was rejected by the Assistant Collector of Central Excise as time-barred and the order of the Assistant Collector was upheld by the Appellate Collector of Central Excise on an appeal filed before him by the appellants. Against this order-in-appeal No. 66/ASM/82 dated 30.4.1982, the appellants have filed the present appeal, viz. Appeal No. ED/SB/415/82-C, which is before us for consideration. The main grounds of this appeal are as follows:
(i) Assessment was not finalised and hence the time-limit prescribed under Rule 11 of the Central Excise Rules, 1944 is not applicable.
(ii) The duty realised in excess of that prescribed under Notification No. 198/76-CE dated 16.6.1976 is not in conofrmity with the notification and hence the provisions of Rule 11 of Central Excise Rules will not apply, but the general law of limitation will apply.
5. Arguing for the appellants in Appeal No. ED/SB/361/82-C the learned Advocate has stated that the RT-12 Returns do not show that provisional assessment was done, but the background of the case will show that the assessment was provisional. He has stated that in their letter No. A/VI/14A/2277-78 dated 6.8.1976 addressed to the Superintendent of Central Excise, Naharkatia Range, Assam, the appellants staked their claim. For quantifying their claim for 1977-78, they submitted declaration on 16.2.1979, which was approved by the Assistant Collector of Central Excise, Chandigarh on 7.6.1979 the approval being effective from 31.1.1978. They preferred actual claim on 167.1979. The right to claim exemption and consequential refund accrued at the commencement of the year 1977-78, i.e., from 1.4.1977 as the right flows from the notification. Rule 11 of the Central Excise Rules was amended from 6,8.1977. Before amendment of that rule, the time-limit prescribed under the old Rule 11 read with Rule 173-J for filing refund claim was one year. Under the amended Rule 11, effective from 6.8.1977, the time-limit for preferring refund claim was six months from the date of payment of duty. As in this case, the appellants' right to claim refund accrued from 1.4.1977, the time-limit of one year under the old Rule 11 as it existed prior to 6.8.1977 read with Rule 173J will apply. All assessments made were subject to any right and as such the assessments were to be treated provisional. In support of his arguments, the learned Advocate has relied upon this Tribunal's decisions reported in 1986 (9) ECR 209 and 1985 (21) ELT 854 : 1985 ECR 1968.
6. Arguing for the respondent in this appeal No. 361/82-C, the learned JDR has stated that the refund claim should be filed within limitation period. Letter dated 6.8.1976 relied upon by the learned Advocate cannot be said to have staked the claim for 1977-78. It should be relatable to 1976-77 only.
7. Arguing in Appeal No. ED/SB/415/82-C, the learned Advocate has stated that the refund claims as originally submitted by the appellants were based on calculations made following the formula laid down in Trade Notice No. 41/77 dated 8.3.1977 issued by the Collectorate of Central Excise, Pune. That formula was on the basis that the benefit of the Notification No. 198/76-CE dated 16.6.1976 was not passed on to the consumers and hence the full benefit of 25% of duty under the notification would not be admissible. The learned Advocate has further stated that the appellants subsequently came to know that in the case of Modi Rubber Ltd. v. Union of India and Ors. 1978 Cen-Cus 48D, Delhi High Court held that the exemption notification did not contain a condition that this benefit should be passed on to the consumers and hence the manufacturer could retain the benefit of exemption notification. The High Court granted relief to the extent of 25% of duty. In view of this, the appellants were entitled to refund of 25% of duty under the said notification. As they originally claimed refund of duty to the extent of 22.472%, the differential duty of 2.528% was admissible to them under the notification. The supplementary claim was rejected by the lower authorities as time barred. The decision of the lower authorities is not, therefore, according to the provisions of this notification.
8. Arguing in this Appeal No. ED/SB/415/82-C, the learned JDR has stated that the differential claim is time-barred. The normal period of limitation should apply. This appeal is fully covered by this Tribunal's Order No. C-339/85 dated 29.4.1985 in the case of Hindustan Fertilizer Corporation Ltd., Durgapur v. Collector of Central Excise Calcutta 1985 ECR 153 Cegat.
9. We have considered the records of the cases and the arguments of both sides. The contention of the appellants in the appeal memoranda as well as the argument of the learned Advocate during the hearing before us that the assessments were provisional and no final determination of value and rate of duty has taken place and, therefore, the time-limit prescribed in Rule 11 of the Central Excise Rules will not apply, are not tenable. He has conceded that RT-12 Returns do not show that provisional assessments were done. The appellants have also not produced any documents to show that the assessments were provisional. The orders of the lower authorities do not indicate that this ground was advanced before the Assistant Collector and the Appellate Collector. In the circumstances, the appellants' contention that the assessment was provisional and therefore, time-limit prescribed in Rule 11 will not apply is rejected.
10. As regards the learned Advocate's argument that the appellants staked their claim for refund in their letter dated 6.8.1976, we observe that the contents of the said letter were as follows:
Our expansion plant has gone into steam in April 1976 for trial-run till 30th September, 1976. If everything goes alright, we shall start commercial production from 1st October, 1976. The production during April and remaining period would be sold away to the consumers as per rules and regulations laid down for the purpose. Accordingly, we are clearing the product on payment of full excise duty and FPEC. But as per para 2(2)(aa) of above notification, we are allowed reduction in excise duty rate by 25%. Kindly confirm the same immediately so as to enable us to clear the Expansion product.
This letter seeks to elicit certain information regarding the exemption notification and we are unable to agree with the learned Advocate that a claim for refund was staked in this letter. Further, we are also unable to agree with this argument that a right to claim refund in respect of duty paid from 31.1.1978 to 31.3.1978 accrued with effect from 1.4.1977. The right to refund of excise duty paid, can arise only from the date of payment of duty and not prior to that date. In this case, such right accrued from 31.1.1978.
11. In the appeal memoranda the appellants have contended that the excess realisation of the duty not being in conformity with the Notification No. 198/76-CE dated 16.6.1976, general law of limitation will apply and not the limitation prescribed in the Rule 11 of the Central Excise Rules. This contention is not acceptable to us in view of the ratio laid down by the Hon'ble Supreme Court in the case of Sakuru v. Tanaji , in which the Hon'ble Supreme Court held that the limitation Act applied only to proceedings before Courts and not to proceedings before quasi-judicial Tribunals or executive authorities. In the case of Miles India Limited, Baroda v. Appellate Collector of Customs Bombay 1983 ELT 1026 : 1983 ECR 242D this Tribunal held that the general law of limitation was not applicable in the case of refund under Section 27 of the Customs Act, 1962. In paragraph 13 of the said decision, this Tribunal held as follows:
It is a settled proposition of law that once a party places reliance upon a statutory right and makes a claim with reference to a particular statute, then it is not open to that party to urge that the restrictions imposed by such statute on the exercise of that right as to the entertainability of the claim, are to be ignored. This proposition was enunciated in very unequivocal terms by their Lordships of the Supreme Court, in a case reported as Banna Construction Co. v. State of Orissa . This case finds reference in the authority of Calcutta High Court relied upon by the learned DR., namely, Inchek Tyres Ltd. v. Asstt. Collector of Customs and Ors. 1979 Cen-Cus 36OD.
Following the aforesaid judgment, we also hold that the provisions of Limitation Act will not cover the refund claim in question, but the provisions of Rule 11 of the Central Excise Rules will apply.
12. Rule 11 of the Central Excise Rules was amended with effect from 6.8.1977. Before the amendment of this Rule, the time-limit for preferring appeal was one year under Rule 11 read with Rule 173-J. After amendment of the Rule 11, the new Rule, effective from 6.8.1977, prescribed the time-limit of six months from the date of payment of duty for preferring claim for refund. Rule 173-J was also amended from that date and according to the amendment Rule 173-J, the provision of Rule 11 was applicable to the assessee under self-removal procedure. In Nagarjuna Steel Ltd. v. Collector of Central Excise Hyderabad , this Tribunal, following the judgment of Bombay High Court in the case of Universal Drinks Pvt. Ltd., Nagpur v. Union of India and Anr. , held that "it is only with reference to payment of duty made before 6.8.1977 that the appellants could claim benefit of old Rule 11 and maintain the claim for refund within one year after the payment. In respect of duties paid subsequent to 6.8.1977, their claim would be governed by the new Rule 11 under which the period of limitation is six months only. In the result, in respect of payment of duty subsequent to 6.8.1977 the claim will have to be restricted to a period of six months before the date of claim as has been done by the lower authorities. But in respect of payments made before 6.8.1977 the claim will have to be allowed in respect of payments within one year from the date of refund claim....In the case relied upon by the Tribunal, Bombay High Court in paragraphs 12 & 13 of the judgment (supra), held that the provisions of new Rule 11 as substituted from 6.8.1977 are not retrospective so as to affect the existing or the vested right which has accrued prior to the substitution of Rule 11. The time-limit for filing refund claim was reduced from one year to six months with effect from 6.8.1977. Refund of payments made prior to such change is to be governed under the old rules even though refund claim is lodged subsequently.
13. In the case (supra), the refund claim filed under the same Notification No. 198/76-CE dated 16.6.1976 based on the approved base clearance was involved. Similar claim under the said notification came up for consideration before this Tribunal in another case, viz. Collector of Central Excise, Patna v. Hindustan Fertilizer Corporation reported in 1986 (9) ECR 209 (CEGAT). In that case, one of the refund claims related to the duty paid during the period from 31.1.1978 to 31.3.1978 consequent on the approval of the base clearance effective from 31.1.1978. In that case the refund application was filed on 8.5.1979. It was held by the Tribunal in paragraph 7 of the order that "claim presented on 8.5.1979 relates to duty paid between the period 31.1.1978 to 31.3.1978, i.e., after Rule 11 had been amended on 6.8.1977. Filing of declaration on 16.2.1979 after six months' limitation under the amended rule had expired could not help the respondent and the claim for refund made on 8.5.1979 must be held to be time-barred." It was observed in that case by this Tribunal that filing of a declaration that the base clearances had been exceeded constituted staking of a refund claim, and the date of a declaration is the relevant date for determining whether the claim is within time, even if actual claim is filed later.
14. In the present case, covered by Appeal No. 361/82-C, duty was paid during the period from 31.1.1978 to 31.3.1978. The time-limit of six months prescribed in new Rule 11 of Central Excise Rules effective from 6.8.1977, is, therefore, applicable. The refund claim was filed by the appellants on 16.7.1979. Counting from the date of filing, the claim is certainly barred by limitation under that Rule. Even following the Tribunal's earlier order reported in 1986 (9) ECR 209 (supra) that the claim was staked on 16.2.1979 by filing the declaration for the purpose of availing of the concessional rate of duty under Notification No. 198/76-CE dated 16.6.1976, their claim is barred by limitation as the period of payment of duty, namely, 31.1.1978 to 31.3.1978, was beyond the period of six months prior to the date of filing the declaration on 16.2.1979.
15. In view of the foregoing discussions, we hold that the appellants' claim for refund of duty for the above period was barred by limitation under Rule 11 of the Central Excise Rules and they were not entitled to get the refund. We do not, therefore, find any infirmity in the orders of the lower authorities, which were based on sound legal footing. In the result, the appeal No. ED/SB/361/82-C filed by the appellants is to be dismissed as untenable. We order accordingly.
15A. As regards the supplementary claims filed on 20.8.1981, which is the subject-matter of Appeal No. 415/82-C, it is certainly barred by limitation under Rule 11 of the Central Excise Rules for the reasons already discussed earlier. Even on merit, this appeal does not stand. On merit, the present case is fully covered by the decision vide Order No. C-339/85-C dated 29.4.1985 of this Tribunal in Appeal No. ED/SB/T/243/82-C M/s. Hindustan Fertilizer Corporation Ltd. Durgapur v. Collector of Central Excise, Calcutta. The said case also related to Notification No. 198/76-CE dated 16.6.1976. Following the earlier decisions of the Tribunal in Southern Petrochemical Industries Corporation Ltd. v. Collector of Central Excise Madras , and Polyformalin (P) Ltd. Cochin v. Collector of Central Excise, Cochin 1985 ECR 35, this Tribunal, in paragraph 5 of the Order No. C/339/85, held as follows:
5. We have carefully considered the submissions of both sides. It is true, as Shri Sil contends, that Notification No. 198/76-CE does not lay down any condition that the benefit of the duty concession should be passed on to the customers. But that is not the real issue. It is whether in a case where the manufacturer charges and collects from the customer an amount purporting to be full duty, but pays to the exchequer only duty computed at the concessional rate, the assessable value has to be recalculated and, consequently, the manufacturer's duty liability has to be re-computed. This very issue has engaged our attention in , and 1985 ECR-35. There we have considered the effect of the retrospective amendment of Section 4 of the Central Excises and Salt Act by Clause 47 of the Finance Bill, 1982. We said that only the amount actually paid to the Department as duty could be regarded as duty paid under the Act. Any money recovered by the manufacturer ostensibly as duty from the customer but which was not paid to the Department as excise duty under the Act is not acceptable as part of the duty. This element in excess of the effective duty must form part of the assessable value unless it is shown to be admissible for deduction on some other valid count. This position does not change, in our view, whether part of the amount ostensibly collected as duty is retained by the manufacturer or, after depositing the full amount collected from the customers, a part of it is sought to be recovered from the Department in the form of refund. Viewed from this angle, Shri Sil's arguments about notification No. 198/76-CE not reducing the rate of duty but the quantum of duty leviable whereas the explanation to Section 4 talks of the rate of duty, have no force. Nor, do we find the method adopted by the Department to be unwarranted. It only follows from the requirement of Section 4 that the duty element to be deducted from the normal sale price is that calculated at the effective rate, i.e. in the case of an exemption notification, the concessional rate of duty and not the statutory rate without taking into account the exemption.
16. In the decision reported in 1985 ECR 35 (supra) this Tribunal considered the judgment of Delhi High Court in the case of Modi kubbers Limited v. U.O.I. and Ors. 1978 ELT J 127 : 1978 Cen-Cus 480. However, in view of the fact that Delhi High Court did not have the occasion of considering the amendment to Section 4 of the Central Excises and Salt Act, 1944 brought by the Finance Act, 1982 retrospectively with effect from 1.10.1975 and also in view of the latest judgment of the Hon'ble Supreme Court in the case of Union of India and Ors. v. Bombay Tyre International Ltd. etc. 1983 ELT (8) 1896 : 1983 ECR 1627D SC, this Tribunal did not follow the judgment of Delhi High Court. In this connection, paragraph] 8(a) of the Tribunal's decision reported in 1985 ECR 35 is reproduced' below, which is self-explanatory:
If the duty payable on the goods is only that calculated at the rate of 75% ad valorem, then any amount included in the selling price purported to be duty calculated at the rate of 100% ad valorem, would not represent the correct amount of duty payable on the goods. The difference between the two amounts would not be duty and unless this difference is shown to be on account of some element which is, by law, required to be excluded from the computation of the assessable value, it should form part of the assessable value. The Supreme Court in its recent judgment in the Union of India and Ors. v. Bombay Tyre International Ltd. etc. 1983 ELT 1896 : 1983 ECR 1627D SC, considered at length the question whether any post-manufacturing expenses are deductible from the price when determining the "value" of excisable goods. The Court held that the expenses incurred on account of the different factors which have contributed to its value up to the date of sale, which apparently would be the date of delivery, are liable to be included. The Court further held that where the sale is effected at the factory gate the expenses incurred by the assessee up to the date of delivery on account of storage charges, outward handling charges, interest on inventory (stocks carried by the manufacturers after clearances), charges for other services after delivery to the buyer, namely, after-sale service and marketing and selling organisation expenses, including advertisement expenses, cannot be deducted. Reading the Supreme Court's judgment as a whole, it is clear that the assessable value has to be arrived at from the selling price at the factory gate (in case where sales are effected at the factory gate) and apart from duty other taxes and freight and cost of packing under certain circumstances are the other deductible elements. The selling price, whatever be the method in which the contract of sale is drawn up, is the price at which goods change hands and no element comprised in this price would be deductible for arriving at the assessable value unless it is shown to be a deductible element. The selling price would naturally, include the duty element which is a deductible element. However, what is deductible under this head is, by virtue of the explanation to Section 4(4)(d)(ii) of the Act inserted by the Finance Bill, 1982, only the amount of duty calculated with reference to 75% ad valorem in the example given earlier and not 100% ad valorem. This is in fact what has happened in the present case. The decisions of the Delhi High Court and the Andhra Pradesh High Court relied upon by the Counsel for the appellants were given before the 1982 amendment of Section 4 and, with great respect, we have to consider the present matter in the light of Section 4 as it stands today and as it deemed to have stood from 1.10.1975 by virtue of the retrospective amendment and in the light of the latest decision of the Supreme Court. Viewed in the light, we have, no doubt, that the method adopted by the Revenue for arriving at the assessable value and the liability to duty and the consequent denial of a portion of the amount claimed as refund was correct and in accordance with law. The argument that the appellants' prices were ex-duty prices, is of no avail because according to Section 4(1) of the Act, the basis for arriving at the assessable value is the normal price, that is, the price at which the goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. Evidently, the normal price contemplated is the price at which the goods change hands and not some of the components thereof. The selling price in the present case is admittedly comprised of ex-duty price, an amount towards duty worked out at 100% ad valorem and the sales tax. This is the normal price from which the assessable value has to be worked out in accordance with the principles laid down in the Section and in the light of the Supreme Court judgment. If this were not so, the difference between 100% ad valorem and 75% ad valorem which is neither the duty payable nor is shown to be a deductible element would escape charge to duty despite its being part of the normal price.
17. In the light of the above discussions, even on merits the appellants' supplementary claim has no legs to stand. Consequently, appeal No. ED/SB/415/82-C is to be dismissed as untenable. We order accordingly.
18. Both the appeals are dismissed.