Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Lohia Machines Ltd. on 31 July, 1987
Equivalent citations: 1987(32)ELT182(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. Being dis-satisfied with the impugned order passed by the Collector, Central Excise (Appeals), New Delhi, the Department has filed the present appeal.
2. Factual backdrops : The respondents M/s. Lohia Machines Ltd., Kanpur submitted an application on 5.11.1981 claiming refund of duty amounting to Rs. 16,504.01 paid by them on repaired/re-conditioned Machines during the period from 6.4.1981 to 10.8.1981 on the ground that the respondents had been receiving for repairs damaged components of the Machines which they had supplied to their customers, and that they had been repairing them and charging their cost of repairs under erroneous notion that it was job work, and consequently they had been paying duty on the job charges although they were exempted from paying such duty in terms of Rule 173H of Central Excise Rules, 1944. The Assistant Collector, Central Excise after the usual adjudication proceedings rejected the claim of the respondents holding that the respondents are not entitled for the refund as they had not fulfilled the requirements laid down in Rule 173H read with those specified in the Notification No. 5/70, dated 7.3.1970 of the Collector of Central Excise, Kanpur issued under the said Rule and also on the ground that the claim was time barred according to provisions of Section 11B of Central Excises and Salt Act, 1944. Against this order the respondents filed their appeal before the Collector (Appeals), who vide his impugned order allowed the appeal holding -
(i) that the Collector's Notification No. 5/70 has a statutory backing, yet the respondents seem to have complied with the substantive provisions of the Rule and therefore rejection of their claim on non-compliance of certain procedural formalities would be rather harsh; and
(ii) that the time bar of six months provided under Section 11B of the Central Excises and Salt Act, would be applicable only for the part of the claim, and therefore, the refund claim should be considered taking the date of receipt as 5.11.1981 and applying the six months limitation period from that date.
Hence the present appeal.
3. Shri S. Krishnamurthy, learned SDR for the appellants vehemently submitted that it was obligatory on the part of the respondent to fulfil the conditions laid down by the Collector in his Notification No. 5/70, dated 7.3.1970 which was issued in exercise of the powers conferred on him under Rule 173H of the Central Excise Rules, 1944. He submitted that the learned Collector (Appeals) erred in holding that there was a substantial compliance of the said Notification and therefore the respondents were entitled for exemption. In his written submissions, the authorised representative of the respondents submitted that the Notification issued by the Collector under Rule 173H, ibid, was not binding on the respondents as such Notification has no force of law. In support of the contention he cited the following case law :
(1) Union of India v. Shri Shadilal Sugar & General Mills Ltd., [1981 (8) ELT 210 (All.)].
(2) Nav Gujarat Paper Industries v. Superintendent of Central Excise & Others [1977 ELT (Guj.) 67].
(3) Royala Seema Cable Corporation v. Collector of Central Excise, [1983 ELT 2358 CEGAT].
(4) Mahindra & Mahindra v. Union of India, (1983) 13 ELT 904.
4. In order to appreciate the controversy in hand it would be useful to refer the relevant Rule 173H of the Central Excise Rules, 1944. The said Rule so far as relevant lays down that (1) "the assessee may, subject to such conditions as may be specified by the Collector, retain in, or bring into, his factory or warehouse the goods on which duty has been paid if such goods -
(b) need to be re-made, refined, reconditioned, repaired or subjected to any similar process in the factory"; or...."
In terms of this Rule, the Collector of Central Excise, Kanpur has specified certain conditions vide his Notification No. 5/70, dated 7.3.1970. Some of the conditions as specified by the Collector in his said Notification are as follows:
"2.(A)(i) The assessee shall notify to the Superintendent, Central Excise I/c of the Range in writing atleast 24 hours before the goods are intended to be received into the factory, giving full particulars of the goods intended to be received."
"(v) The assessee shall maintain a detailed account of the returned goods and the process to which they are subjected after their return to the factory, as well as of their subsequent removal in proper form (Appendix II) enclosed".
In the instant case it was found as a fact that in respect of the goods relating to the refund the respondents have not filed any intimation in writing. In the Register maintained by them under Rule 173H of Central Excise Rules, 1944, no account of the goods has been made. G.P.Is and invoices pertaining to the goods and issued by the respondents were clearly marked with the remark 'job work'. Besides, no record was maintained or declared by the respondents under Central Excise Rule showing the exact nature of repairing done with the goods by them. As such, admittedly, the said conditions were not fulfilled by the respondents and therefore, the claim for refund was not found admissible by the Assistant Collector. To argue that the said conditions specified by the Collector in terms of Rule 17^H in his notification were having no legal backing is without any substance.
From a plain reading of Rule 173H as extracted above, it can be seen that the assessee may, subject to such conditions as may be specified by the Collector, retain in or bring into his factory or warehouse the goods on which duty has been paid subject to such conditions as may be specified by the Collector. The Collector .has therefore, powers to impose such conditions as he may specify. It is not for the Court to consider the wisdom or otherwise of the authorities in imposing such conditions as done by the Collector in the instant case by issuing the Notification No. 5/70, dated 7.3.1970. All that the Court is concerned is to see whether the Rule authorises the concerned authorities to impose the conditions. The expression "subject to such conditions as may be specified by the Collector" in Rule 173H is wide enough to empower him to specify the conditions as stated above. Consequently, in my considered opinion the conditions so specified in the said Notification No. 5/70, dated 7.3.1970 were binding upon the appellants if at ail they wanted to take the advantage of 173H, ibid. In this view of the matter, I am supported by the judgment of the Hon'ble High Court rendered in the case of Ramakrishna Trading Co. v. Collector, 1987 (28) ELT 324 wherein their Lordships while dealing with the question relating to the validity of the conditions such as requiring a trader applying for a licence to be solvent under Notification dated 21.3.1973 issued by the Collector under Rule 10 of the Central Excise Rules, 1944 held that the Collector was entitled to impose such conditions and the issuance of said Notification containing the said condition was not in excess of the powers conferred on him under Rule 140. The cases cited by the learned counsel for the appellants are not applicable to the instant case. In the case of Union of India v. Shadilal Sugar & General Mills Ltd., supra, the question of maintainability of the Civil Suit was in issue and it was with reference to this question that it was held that if the Appellate Authority constituted under the Central Excise Act comes to the conclusion that the Trade Notice destroyed the effect of Notification it can set aside the Trade Notice and the Civil Suit was not maintainable. It was further held that if the Trade Notice only explains the procedure for the enforcement of the Notification, the question of quashing it did not arise. In the case of Royala Seema Cable Corporation v. Collector of Central Excise, supra, this Tribunal while dealing with the question of binding nature of the Tariff Advice held that though the Tariff Advice need not be binding on the Tribunal, yet it would certainly be binding on the respondent and the Department. In the case of Mahindra and Mahindra Ltd., supra, it was held that the Public Notice issued by the Collector cannot override or add the conditions not stated in Notification No. 2/63 which has the force of law and authority. The case of Nav Gujarat Paper Industries, supra, also does not help the appellant. In that case it was held that even a Trade Notice amounts not more than executive instructions. It would be binding on the Department and the Department would be estopped from contending that what was mentioned in the Notice should not be adhered to. Thus, I hold that the conditions specified by the Collector in Notification No. 5/70, dated 7.3.1970 have the force of law and were therefore binding upon the appellants.
5. The other contention of Shri Krishnamurthy, learned SDR for the appellant that the Collector of Customs & Central Excise (Appeals) erred in holding that the respondents seem to have complied with {he substantive compliance with the Rule has also some substance. From the Notification No. 5/70 it is clear that the Collector has prescribed number of conditions and a close reading of the said conditions would show that condition Nos. 2(A)(i) & (v) as extracted above are of substantial nature inasmuch as the said condition provides that assesee shall notify to the Superintendent in writing atleast 24 hours before the goods are intended to be received into the factory, giving full particulars of the goods intended to be received and the assessee shall maintain a detailed account of the returned goods and the process to which they are subjected after their return to the factory in proper form. These conditions provide a check and counter-check when the assessee claims refund under Rule 173H, ibid. In other words, in the absence of the fulfilment of the said conditions, the Department will not be in a position to check or verify the claim of the assessee for refund if made under Rule 173H, ibid. Since, admittedly in the instant case the respondents have not complied with the said conditions, the respondents, in my opinion, were rightly held not to be entitled for any refund by the Assistant Collector.
6. As regards the contention of the learned counsel for the respondents that the- claim of the respondent cannot be rejected on the plea of limitation by applying the period of 6 months as laid down under Section 11B of the Central Excises and Salt Act, 19H, it would suffice to say that this point stands concluded by the case of Miles India v. Appellate Collector of Customs, Bombay, 1985 ECR 289 and Order No. 485/87-BI dated 9.7.1987 of this Tribunal passed in the case of M/s. Mohan Steels Ltd. v. Collector of Central Excise, Kanpur, wherein this Tribunal summarised the entire case law and concluded as follows :
(i) that whatever may be the powers of the High Court while dealing with the Writ under Article 226 of the Constitution or the Civil appeals this Tribunal has no power to relax the period of limitation provided under Section 27 of the Customs Act.
(ii) that even the High Court by invoking its power under Article 226 of the Constitution may choose not to lift the bar of limitation and order refund of duty as held by the Division Bench of the Calcutta High Court in the case of Incheck Tyres Ltd. v. Assistant Collector, 1987 (27) ELT.
7. Before I part with the case, it deserves to be mentioned here in all fairness to the appellants that the case of Beverages and Food Products v. Collector, 1986 (26) ELT 1001, decided by the East Regional Bench of this Tribunal taking the contrary view was not followed by this Tribunal in the case of Kerala Electric Lamp Works v. Collector of Central Excise, Cochin, 1987 (29) ELT 264, and M/s. Mohan Steels Ltd. v. Collector of Central Excise, Kanpur, supra, for the reasons mentioned therein.
8. In the result, the appeal is allowed. The order of the Collector (Appeals) is set aside and that of the Assistant Collector is restored.