Customs, Excise and Gold Tribunal - Calcutta
Union Carbide (India) Ltd. vs Collector Of C. Ex. on 24 July, 1989
Equivalent citations: 1989(44)ELT712(TRI-KOLKATA)
ORDER K. Sankararaman, Member (T)
1. Heard Shri N. Mukherjee, learned Advocate appearing on behalf of the appellants and Shri M.N. Biswas, learned SDR appearing on behalf of the department.
2. Shri Mukherjee cited an order of the East Regional Bench of the Tribunal No. 129/Cal/83-1020 dated 20-5-1983 in the case of Deputy Collector of Central Excise, Calcutta v. Indian Aluminium Co. Ltd., Howrah. He contended that the East Regional Bench in the above cited order had decided an identical issue. The said order touched the question of refund of duty on goods returned to the factory which is admissible subject to the prescribed conditions being followed. The mere fact that the goods were received in opened condition was held to be not militating against the grant of refund because the prohibition in respect of refund is not for opened package as such but in respect of opened package containing goods with concessional rate of duty or partial exemption by a notification issued under Rule 8. The point decided in the said case was whether the goods can be said to have been cleared initially at a concessional rate of duty or under partial exemption by a notification issed under Rule 8. It was contended by the Counsel in that case that the notifications in question were applicable to all aluminium producers in respect of non-levy aluminium and, therefore, the said notifications could be said to have prescribed only an effective rate of duty and not concessional rate of duty. The department has sought to rebut this argument on the ground that the notifications were issued in pursuance of Rule 8. The appellants' contentions that if the notifications were taken to fix a concessional rate of duty, the result would be that all aluminium producers would be debarred from availing themselves of the benefit of Rule 173L found acceptance by the Tribunal. In fact, they had admitted the possibility of such a situation arising in respect of other goods falling under other items of Tariff. An interpretation of the expression concessional rate of duty appearing in Rule 173L(3) leading to the effect that the producers of goods of particular description are debarred as a class from availing themselves of the benefit of Rule 173L, did not find favour with them. The notifications had the effect of lowering the rate of duty in respect of non-levy aluminium uniformly for all producers though the Tariff schedule prescribed a higher rate of duty. The Tribunal held that a concessional rate of duty would be one which lowers the uniformly applicable rate of duty in specified circumstances and, therefore, the notification in question was held as not fixing any concessional rate of duty. In the circumstances, they upheld the relief granted by the Collector (Appeals) and rejected the appeals filed by the department.
3. Shri Biswas, learned SDR appearing on behalf of the department, stressed the point that the case is hit by the restrictions contained in Rule 173L(3)(l)(i). According to this provision no refund shall be admissible in respect of the duty paid in respect of opened packages containing goods with concessional rates of duty or partial exemption for the small or cottage sector as set forth in the First Schedule to the Act or by a Notification issued under Rule 8. He argued that this would imply that refund would not be admissible in respect of the opened packages containing goods covered by the situations laid down in Sub-rule 3(l)(i). These are that the goods should not have been charged to (i) Concessional rate of duty; and (ii) Partial exemption for the small or cottage sector.
According to him, the reference to the words "as set forth in the First Schedule to the Act or by a Notification issued under Rule 8" will not be restricted to only to the partial exemption granted to small or cottage sector. It will apply to any exemption issued under Rule 8.
4. Shri Biswas also referred to observations contained in the Order-in-Appeal where the Collector (Appeals) had analysed the issue and held that irrespective of whether the appellant falling under the category of small or cottage sector or not, when the duty had been paid at a concessional rate by a notification issued under Rule 8 and the goods had been removed and received back in opened packages, they are not entitled to the benefit of Rule 173L and, therefore, no refund was admissible.
5. Shri Biswas also mentioned that out of the five appeals there are two appeals where the intimation within 24 hours of receipt of the returned goods had not been furnished to the department which is an essential condition for fulfilling the terms of Rule 173L. He felt that subject to the overall orders being passed by me in the present case on the merits of the issue, the question of satisfaction of the terms of Rule 173L may be looked into by the lower authorities.
6. On this point, Shri Mukherjee, the learned Advocate pointed out that there are a number of decisions of the Tribunal where the procedural requirements not having been fulfilled has been held to be not disqualification if there is substantive compliance with the same.
7. I have given careful consideration to the arguments advanced by both sides, I am in respectful agreement with the decision taken by this Bench of the Tribunal in the case of Deputy Collector of Central Excise, Calcutta v. Indian Aluminium Co. Ltd., Howrah vide order No. 129/Cal./83-1020 dated 20-5-1983 - 1984 (16) E.L.T. 246 (Tribunal). However, I would like to develop the decision taken therein further in the light of arguments in opposition tendered by the learned SDR. It was his contention that Sub-rule (3)(l)(i) of Rule 173L covers a number of situations. The first one is the concessional rate of duty which according to him applies to all manufacturers - whether small, cottage or others. The second situation relates to partial exemption which is only applicable for small or cottage sector. The third situation is the reference to the First Schedule to the Act or notification issued under Rule 8. According to him the third type of cases will not be restricted only to small or cottage sector but will apply to all manufacturers.
8. I am unable to accept this argument. According to me the words "As set forth in the First Schedule to the Act or by a notification issued under Rule 8" cannot be read in isolation. They cannot stand alone. They have to be read in continuation of what have appeared or been expressed before them, viz., the concessional rate of duty or partial exemption for the small or cottage sector. Such concessional rate of duty or partial exemption for the small or cottage sector can be available by two means - one as laid down in the First Schedule to the Act itself; the other by virtue of a notification issued under Rule 8. In any case, both these alternatives, first schedule to the Act; or by a notification under Rule 8 have got to be read as applicable to the concessional rate of duty or partial exemption. A distinction was also sought to be made between the first two limbs of this Sub-rule 3(l)(i). It has been argued that the first description "concessional rate of duty" is not qualified by small or cottage sector and that the qualification of small or cottage sector is applicable only to the words partial exemption. No doubt, this view would apparently be in conformity with the theory of "last antecedent". But in the present context I feel we cannot give a restricted meaning to the subject expression and limit the application of small or cottage sector criterion to only partial exemption and not to concessional rate of duty. In the present case, the rate of duty applicable for Zinc Calots and other products is the effective rate of duty admissible under the relevant exemption notification. That exemption notification is not one laid down for small or cottage sector units only but applicable to other manufacturers as well. In that view of the matter this case is squarely covered by the ratio of the order passed by this Bench in the case cited supra.
9. The view I am taking that the exclusion of cases for the purpose of refund under sub-rule (3) of Rule 173L is only in respect of opened packages containing goods with concessional rate of duty or partial exemption both applicable for small or cottage sector only is fortified by the fact that any other interpretation would not advance the . purpose of 173L. Where the goods are received in opened packages, problem of identification may arise. If the goods attract two rates of duty, one applicable for small or cottage sector units and the other for other units the problem would arise whether the goods returned are actually goods which had been originally cleared on payment of nor' mal duty applicable to that unit or other goods of similar nature which had been cleared by a small-scale unit which has availed of concessional rate of duty applicable to it. In the circumstances, I allow the appeals and set aside the orders appealed against.
10. As far as Appeal No. E-175/86-Cal. relating to the Order-in-Appeal No. 38-38A/Cal-l/86, dated 20-2-1986 passed by Collector of Central Excise (Appeals) and Order-in-original No. 1(26B) (18) 81/34-AC/Cal-F/85 dated 13-9-1986 is concerned, the question of submission of D-3 intimation as required under Rule 173L has to be decided afresh by the Collector (Appeals).
I accordingly remand the above case viz. A.No. F-175/86-Cal. back to Collector of Central Excise (Appeals), Calcutta for deciding the limited issue of receipt of intimation of the returned goods.
11. In the light of the above discussions, Appeal Nos. E-173/86, E-174/86, E-176/86 and E-177/86 are allowed. Appeal No. E-175/86 is remanded to Collector (Appeals) as mentioned above.
12. Finally, as these appeals relate to transactions during 1981 and as considerable time has passed, I direct that the lower authorities may grant the refund due to the appellants expeditiously.