Customs, Excise and Gold Tribunal - Delhi
Hyderabad Plywood Ltd. vs Collector Of Central Excise on 4 March, 1991
Equivalent citations: 1991(55)ELT62(TRI-DEL)
ORDER N.K. Bajpai, Member (T)
1. The appellants have been manufacturing plywood and plywood products including Block Boards and Flush Doors classifiable under Item 16B of the erstwhile Central Excise Tariff. They had been declaring Flush Doors in their classification lists as chargeable to duty under the aforesaid tariff item and these lists were approved from time to time by the jurisdictional Assistant Collector of Central Excise. The appellants continued to pay duty under Tariff Item 16B until sometimes in September 1980 when they filed Writ Petition No. 4826 of 1980 in the Andhra Pradesh High Court challenging the levy of duty on Flush Doors and praying for refund of Rs. 10,93,969.32 which they claimed to be the duty which they had paid during the period 1972-73 to 30th September, 1980 on flush doors. By an interim order in Miscellaneous Petition No. 7262 of 1980, the High Court directed on 30th September, 1980, the respondents not to collect the excise duty provided the petitioner furnishes bank guarantee for the amount of duty before clearing the goods.
2. In the counter affidavit .filed by the respondent - Collector, on 20th September, 1983 in the High Court, the petitioners averment that the respondents had been demanding and collecting excise duty on flush doors under Tariff Item 16B was denied and it was stated that it was the petitioners who had been categorically indicating in their classification lists from time to time that the flush doors fall under Tariff Item 16B(ii) and these classification lists were approved by the Assistant Collector. The petitioners contentions that they had been paying duty on flush doors under compulsion and duress were also denied by the respondent-Collector. It was also stated in this affidavit that the Delhi High Court had decided in the Civil Writ Petition 939 of 1977 filed by M/s. Woodcraft Products Limited, Calcutta-1980 (6) ELT 684 (Del.) on 17-3-1980 that flush doors did not fall under Tariff Item 16B but under the residuary Item 68. The Union of India had accepted this judgment. It was in the Union Budget for 1982-83 that flush doors were brought under purview of Tariff Item 16B effective from 27-2-1982/1-3-1982. The petitioners' claim for refund of Rs. 10,93,696.32 at that stage was also disputed.
The counter affidavit contains the following-further averment :-
"5. The petitioners cannot also urge that they are entitled to the refund of an amount of Rs. 10,93,969.32 at this stage. On the other hand, they have to pay the duty under Tariff Item 68 from 28-2-1973 to 27-2-1982 and from 28-2-1982 under Tariff Item 16B. If, in the process of reclassifying the flush doors as falling under Tariff Item 68 and their duty liability under the said Tariff Item 68, the petitioners are eligible to refund of duty already paid under Tariff Item 16B, the issue would be examined in the light of the provisions of Section 11B of the Central Excises and Salt Act, 1944 and necessary orders would be issued. It is, therefore, premature to accept the petitioners' contention that they are entitled to a refund of an amount of Rs. 10,93,969.32 at this stage. Their claim in this regard would be subject to verification of various documents connected with the issue vis-a-vis the provisions of Section 11B of the Central Excises and Salt Act, 1944 and then only it would be possible to take a decision in the matter.
6. In the circumstances stated above, the petitioners cannot agitate the issue before this Hon'ble Court for a direction, as prayed for. Their action in approaching this Hon'ble Court straight without first exhausting the remedies open to them departmentally by way of appeal etc., is not correct and their writ petition is liable to be dismissed on this short ground alone. Thus, it may be appreciated that the petitioners have not made out any case for the issue of a writ as prayed for. In the circumstances, it is prayed that this Hon'ble Court may be pleased to dismiss this writ petition with costs and pass such other order or orders as it deems fit and proper in the circumstances of the case."
3. Based on this affidavit, the High Court .passed the following order on 22nd June, 1984 on the writ petition and disposed it of :-
"In the instant case, in para 6 of the counter it is stated that the petitioner has got alternative remedy by way of an appeal and a further appeal under the Central Excise Act of 1944 and without exhausting those remedies the petitioner has approached this Court. Therefore, we direct the writ petitioner to avail the alternative remedy of filing an appeal within two months from today, and the appropriate authority before whom such appeal is filed, may consider the same on merits and pass orders in accordance with law."
4. The appellants do not appear to have taken note of the averment made in para 5 of the counter affidavit of the Collector explaining the legal position about their claim for refund of Rs. 10,93,969.32. After the High Court disposed of their writ petition, they filed an appeal to the Collector of Central Excise (Appeals), Madras which was dismissed on 14-12-1984 as not maintainable under Section 35 in terms of the following order :-
"I have considered the appeal. I find an appeal could lie to this Authority under Section 35 of the Central Excises and Salt Act, 1944, as amended, when a person is aggrieved by any decision, or order passed under the Central Excises and Salt Act, 1944, by an officer lower in rank than a Collector of Central Excise. In this case, appellants argue that they are aggrieved by the approval given to the classification lists filed by them, wherein they had classified flush doors under T.I. 16B. It is conceded that the classification lists were not modified to their disadvantage by the Assistant Collector. The Assistant Collector had merely approved the classification of flush doors, as sought by appellants in the list filed under Rule 173B. Therefore, it cannot be held that appellants were aggrieved by the orders of the Assistant Collector approving the classification lists filed by them, without any modification, whatsoever. This is a case where appellants having classified the flush doors under Tariff Item 16B from the year 1972, came to realise after the Delhi High Court judgment, that this classification was erroneous. Therefore, there ought to have been a claim for refund of duty paid under the appropriate provisions of Central Excise law as it existed at the relevant time. There could be no appeal against the orders approving the classification lists filed by appellants from time to time without any modification, since it could not be held that appellants were aggrieved by such orders since they themselves had classified flush doors under T.I. 16B. As regards the allegation that classification was done under verbal direction, appellants are not able to substantiate this allegation and therefore, this allegation has no force."
5. The impugned order has been assailed on the ground that the "Classification Lists" in pursuance of which assessment and demand of excise duty was made and collected were nothing but orders of assessment and demand. Since the said orders contained products not covered by any of the tariff items in the First Schedule of the Central Excises and Salt Act, 1944, the collection, or demand of either of them are wholly illegal and the appeal ought to have been allowed.
6. The following reliefs have been claimed in the appeal:
"(a) To direct the Assistant Collector, Central Excise, Hyderabad to refund the whole amount of duty collected on the product of the Appellants, namely "Flush Doors" from the financial year 1972-73 to 25-2-1975.
(b) To direct the Assistant Collector, Central Excise, Hyderabad to refund the difference of duty on the same product between the Tariff Item 16B and 68 from 25-2-1975 to the end of September, 1980.
(c) To declare that the product "Flush Doors" is liable for the excise duty only under T.I. 68 of Schedule-I till 27-2-1982 and direct the Assistant Collector, Central Excise, Hyderabad to demand and collect the duty accordingly from the appellant from October, 1980 to 27-2-1982 and by according other relief or reliefs which are just and proper in the circumstances of the case."
7. Shri V. Sridharan, the learned advocate for the appellants, stated that even if the direction of the High Court was found to be incorrect by the Collector (Appeals), he was bound to carry out the direction of the High Court and grant relief to the appellants. He contended that when the Court directs the case to be disposed of on merits, it has to be disposed of on merits. He placed reliance on the following decisions:
(a) Oswal Spinning and Weaving Mills v. Collector of Customs - 1989 (14) ETR 106.
(b) KM. Salgaonkar v. Collector of Customs -1984 (18) ELT 602,
(c) The Honorary Secretary, Kaniyara Seva Samaj v. State of Mysore -1969 (23) STC 155,
(d) Chhat Mull Aggarwal v. Commissioner of Income Tax -1979 (116) ITR 694,
(e) Pt. Sheo Nath Prasad Shanna v. Commissioner of Income Tax - 1967 (66) ITR 646, and
(f) Gauri Sahai Ghisa Ram v. Commissioner of Income Tax - 1971 (120) ITR 338.
He stated that Collector (Appeals) had to grant relief and could not take shelter on the ground that there was no cause for the appellants to be aggrieved with the acceptance of the classification lists because the classification claimed by them had been accepted by the Assistant Collector.
8. Shri Jayanarayan Nair, the learned JDR invited our attention to paragraph 5 of the counter affidavit of the respondent - Collector reproduced above and stated that the direction of the High Court should be seen against the back drop of the averments in this paragraph. He placed reliance on the judgment of the Bombay High Court in the case of Leukoplast (India) Limited v. Union of India and Ors., reported in 1983 (14) ELT 2106 (Bombay), in which it was held that in case of a claim for refund of duty paid under mistake of law, appeal to Collector (Appeals) and the Appellate Tribunal is an exercise in futility. Shri Nair's point was that the appellate authorities, being creatures of the statute, cannot go beyond the statute. Since the High Court did not pass any order on the writ petition, the departmental authorities had to act within the four corners of the statute.
9. We now proceed to consider the cases cited before us. In the case of Oswal Spinning & Weaving Mills v. Collector of Cus. (supra), the question for consideration was whether the Tribunal was competent to examine and decided the question of compensation in lieu of goods on a direction from the Supreme Court and it was held that this was not a case of per incuriam. In any case, such a question could only be decided by the Court which gives the direction. In the present case, as we know, the direction merely was for the writ petitioner to avail of the alternative remedy of filing an appeal within 2 months. The appropriate authority before whom such an appeal was to be filed was required to consider it on merits and pass orders in accordance with law. It cannot be said that the Collector (Appeals), has not considered the appeal or not decided it on merits.
10. In Salgoankar's case (supra), it was held by the Tribunal that it could not sit in judgment over the decision of the Supreme Court before which the Government agreed to waive the time limit and examine appellant's claim for refund on merits. We notice that no such agreement or undertaking was given by the respondent-Collector before the High Court and, therefore, the ratio of this judgment could not apply to the present case. In fact, the Collector in paragraph 5 of his affidavit had clearly taken the stand that any claim for refund because of reclassification of the goods would have to be considered in terms of the provisions of Section 11B only. In spite of this averment, the appellants were not able to persuade the High Court in exercise of its extraordinary writ jurisdiction to waive the time limits. Having failed to do so they are trying to put an interpretation on the High Court's order which is not permissible under the law.
11. It appears that the decision of the Mysore High Court in the case of the Honorary Secretary, Kaniyara Seva Samaj v. Stale of Mysore (supra) is not applicable because, in that case, although the assessment under the Mysore Sales Tax Act was made by consent, there was no specific provision in the law barring appeal from a consent order. The facts of the present case show that it was the appellants who, from the very beginning till 1980 when they became aware of the Delhi High Court judgment, went on filing classification lists claiming classification of flush doors under Item 16B which the Asstt. Collector accepted all through. Although the right of appeal is not denied under the law, there ought to be a decision or order from which the appellant could claim to be aggrieved before the Collector (Appeals) could exercise his jurisdiction. In the absence of such an order, Collector (Appeals) has rightly held the appeal to be not maintainable.
12. In the case of Chhat Mull Aggarwal v. Commissioner of Income Tax, Patiala (supra), the question before the High Court was whether the assessment order passed on the admission of the assessee was appealable. It was decided by the High Court that the right of appeal was not barred and the assessee need not resort to rectification proceedings in certain circumstances. The facts of the present case, as will be seen, are very different and the decision of the High Court has no application to the present case.
13. In the case of Pt. Sheo Nath Prasad Sharma v. Commissioner of I.T., Lucknow (supra), the question about the nature of jurisdiction in a case of revision by the Commissioner and the order of the Commissioner rejecting the application on the ground that the petitioner himself had shown the amount as his income was erroneous as the Commissioner was bound to apply his mind to the question whether the petitioner was taxable on that income. The facts of the present case are very different and, at no stage till the judgment of the Delhi High Court was delivered in March 1980, was the question of classification of flush doors in dispute. In fact, so far as the present case is concerned, the dispute for the past period has arisen only after the appellant filed his writ petition in the Andhra Pradesh High Court in September 1980. The appellant could have claimed refund of the differential duty payable under Item 16B & 68 and such a claim for refund would have been governed by the time limit of six months prescribed under Section 11B.
14. In the case of Gauri Sahai Ghisa Ram v. Commissioner of Income Tax, Allahabad, (supra) which was again a case under the Income Tax Act, the contention of the authorities that no appeal lay to the Assistant Commissioner against the ITOs assessment order because it was based on the concession made by the assessee's counsel was not accepted by the High Court. Here the assessee was taken to be an aggrieved person because the assessment was framed by the ITO on a concession wrongly made on a question of law. The facts of the present case show that the appellant could not be considered to be aggrieved with the order approving the classification of flush doors under Item 16B because that was what the appellants had themselves claimed before the Assistant Collector. It was not a case of denial of any concession but one of declaration and the appellant's declaration was accepted by the Assistant Collector and the classification approved. The appellant could not, in these circumstances, turn round and say that because of the approval accorded by the Assistant Collector, he felt aggrieved. The term 'aggrieved', as we commonly understand, could be applied to a situation in which an order adverse to his claim or declaration is passed by a competent authority. To cite an example, the case would have been different if the appellant had claimed classification under Item 68 and the Assistant Collector had approved it under Item 16B. Such is not the case, and, therefore, the ratio of this decision is not applicable.
15. We have considered the submissions and have also perused the records. Looking to the facts of the case, it appears that the appellants have been trying to get maximum advantage of the Delhi High Court's judgment in the case of M/s. Woodcraft Products Limited, decided on 17th March, 1980. They could have filed a claim for refund or for reclassification of their goods as soon as they came to know about this judgment. Any of these courses of action would have restricted their claim by the time limits prescribed under the Central Excise Law. It appears that in order to beat the time limit, they chose to take recourse to the proceedings before the Andhra Pradesh High Court by filing a petition on 30th September, 1980. It will appear from the extracts of the counter affidavit of the Collector, quoted above, that it was made amply clear by the Collector that any claim for refund of duty already paid on Tariff Item 16B would have to be examined in the light of the provisions of Section 11B and the Collector was willing to examine such a claim even at that time, but, it appears that since the appellants would have been entitled to refund only for a part of the period they have chosen to rely on paragraph '6' of the affidavit.
16. The entire effort in the appeal before the Collector (Appeals), has been to persuade him to reopen the classification of flush doors in the classification lists filed from 1972 onwards which Collector (Appeals) has refused to do. Collector (Appeals) acquires jurisdiction under Section 35 to hear an appeal by any person aggrieved by any decision or order passed under the Act by a Central Excise Officer lower in rank than a Collector of Central Excise. The view taken in the impugned order that there was no cause for the appellant to feel aggrieved with the approval accorded to a particular classification claimed by the appellant in the classification list is quite correct. Before approaching the Appellate Authority, the appellant must show that he is aggrieved with an order which adversely affects his interests and gives rise to the cause for feeling aggrieved with that order. Since the classification claimed by the appellant was consistently accepted by the Assistant Collector, there could be no cause for feeling aggrieved and if he felt aggrieved with that order, the appellant could have filed an appeal within the prescribed time limits. Such a claim could have been filed either for refund of duty or for revision of the classification lists soon after the appellant came to know that the Delhi High Court had decided in March, 1980 that flush doors are not covered under Item 16B. Apparently, the appellant did not choose to take recourse to this remedy, because in that case, he would have been bound by the time limits prescribed under the law. It, thus, appears that the appellant's primary objective is to press his claim for refund of duty of Rs. 10,93,969.32 by referring to the orders of the Andhra Pradesh High Court. The further effort seems to be to interpret this order to mean that the Appellate Authority was duty bound to grant relief to the appellant and that this could be the only consequence of considering his appeal on merits. If the appellant had taken note of the averments of the Collector about the claim for refund, which could be considered by the authorities under Section 11B any refund would have been restricted to the period of six months. It is interesting that even though Collector (Appeals) had himself recorded, while disposing of the appeal as not maintainable, the appellant could lodge a claim for refund of duty before the appropriate authority. This appears to have been the second advice to the appellant of which he has taken no notice. During the reply, Shri Sridharan stated that the rejection of the averments in para 5 of the counter affidavit by the High Court, meant that the High Court had apparently considered it and decided that an appeal should be filed to the appropriate Appellate Authority. Carefully looking into paragraph 6 of the counter affidavit, we find that the relevant sentence is as under :
"Their action in approaching this Hon'ble Court, without first exhausing the remedies open to them departmentally by way of appeal etc., is not correct and the writ petition is liable to be dismissed on this short ground alone."
17. It is significant that after pointing out in paragraph 5 that the petitioner's claim for refund of duty already paid under Tariff Item 16B could be examined in the light of the provisions of Section 11B, the respondent-Collector referred to departmental remedies by way of appeal etc, (emphasis supplied). It is not that the provisions relating to refund were not brought to the notice of the Court or that any undue emphasis was made about the provisions relating to appeals. In fact, in the writ petition, the appellants specifically sought direction for refund of duty and it is only appropriate that they should have filed claim for refund in conformity with their prayer in the petition rather than have taken recourse, to file an appeal. This, as we have explained, did not suit the appellants who wanted to beat the time limit which would have operated against them, if they had filed a claim for refund. In fact, they could have pressed their point about refund during the hearing in the High Court which apparently, they do not seem to have done, thinking that in the event of getting the opportunity to file an appeal before Collector (Appeals), they would be able to call into question all the classification lists from 1972 onwards and become entitled to a larger sum of money as refund.
18. We do not, therefore, think that the appellant is entitled to interpret the orders of the High Court in such a way as to disregard the various provisions of the law and seek any direction from us to authorities to grant him refund of duty paid from 1972 onwards. Thus, having examined all the arguments and the case laws cited before us at considerable length, we are of the view that the order passed by the (Collector (Appeals) was correct and the present appeal merits rejection. We accordingly dismiss it.