Customs, Excise and Gold Tribunal - Mumbai
Shri Digvijay Cement Co. Ltd. vs Collector Of Central Excise on 7 February, 1986
Equivalent citations: 1987(12)ECR1121(TRI.-MUMBAI), 1986(25)ELT994(TRI-MUMBAI)
ORDER K.S. Dilipsinhji, Member (T)
1. M/s Shree Digvijay Cement Co. Ltd., have filed the present appeal to the Tribunal against the Order No. V-2(23C)1063/80 dated 7-2-83 of the Collector of Central Excise (Appeals) Bombay. Under the aforesaid order, the Collector confirmed the Order No. V.23C/18-130/79/1193 dated 27-2-1980 passed by the Asstt. Collector of Central Excise, Division III, Ahrnedabad rejecting the appellant's claim for refund of duty amounting to Rs. 28,903.17 paid in excess during the period 1-12-1978 to 30-12-1978.
2. The facts of the case are that due to slump in the international market in the prices of fibre imported for the manufacture of Asbestos cement products produced by the appellants and classifiable under Tariff Item 23C of the Central Excise Tariff, the appellants wrote a letter dated 18-10-1978 to the Asstt. Collector of Central Excise, Ahmedabad, Division III intimating him of the change in prices of the fibre and stating that since the products of the manufacturer were being supplied to the State Governments under rate contracts they were bound to pass on the reduction in the prices to the State Governments and therefore they would claim refund of duty paid in excess. Thereafter the appellants filed price lists 104/78 and 105/78 for Asbestos pipes and couplings respectively on 1-12-1978 and requested for their approval. The price lists were approved on 11-7-1979 but effective from 1-12-1978. In the meanwhile, the appellants paid duty on the higher prices mentioned for the two products in their respective general price lists 26/78 and 88/78 for the period 1-12-1978 to 30-12-1978. The learned advocate explained that though the price lists were approved with effect from 11-7-1979, the appellants did not pay duty on the basis of the old price list with effect from 31-12-78 onwards. In reply to my question, the learned advocate stated that the appeal did not involve a question relating to the value of the goods for assessment of Central Excise duty. He added that there was no dispute in this behalf as the price lists filed by the manufacturers were accepted by the department. This view was also confirmed by the learned Depttl. representative. My attention was drawn on,the endorsements on the two price lists which bear the fact that these were approved by the Superintendent of Central Excise.
3. Advocate Shri Patel stated that when the appellants received the Superintendent's letter dated 11-7-1979 referring to their price lists dated 1-12-1978 and approving the prices, the appellants wrote a letter dated 16-7-1979 to the Superintendent of Central Excise requesting him to refund the duty of excise on RT 12 paid in excess during December, 1978. But no reply was received to this letter and hence to be on the safe side, the appellants filed a claim for refund on 9-11-1979 along with the prescribed form in Appendix I, The advocate added that the relative RT 12 return for December, 1978 was assessed on 12-10-1979 only. During the course of this assessment, the Superintendent had examined the duty payments on all the gate passes but he allowed credit. of excess duty paid in respect of two gate passes Nos. 7086 and 7087 hath dated 19-12-78. The advocate stated that he was not able to explain as to why the Superintendent took action for refunding the extra duty on two gate passes and ignoring the remaining gate passes. However, the appellant's claim for refund of duty filed in their letter dated 9-11-1979 was rejected by the Asstt. Collector under his order dated 27-2-1980 without issue of a show cause notice and without grant of a personal hearing. The reason for the rejection of the claim was that since refund application was received by the Asstt. Collector on 12-11-1979 and the period for claiming the refund of duty was from 1-12-1978 to 30-12-1978, the refund claim-was barred by limitation under the old Rule 11 of the Central Excise Rules 1944 and hence the claim was rejected. The Asstt. Collector further observed that even if the appellant's letter dated 16-7-1979 to the Superintendent was taken into account as a claim for refund, this claim was also filed after the prescribed time limit of 6 months from the date of clearance of the goods and hence the claim was time barred. The advocate also stated that the appellant's first appeal to the Collector (Appeals) was also rejected on 7-2-1983 on the same ground of time bar. The advocate submitted that the decisions of the Collector and the Asstt. Collector regarding rejection of the claims as time barred were not correct. In support of his contention, he relied on the following decisions:-
(1) 1978 E.L.T. (J.III) Bharat Carpets Ltd. v. Union of India (2) 1978 E.L.T. (J.32) The Appellate Collector Central Excise, New Delhi in Re: Indian Traders (P) Ltd. (3) 1978 E.L.T. (J.643) Inchek Typres Ltd. v. Union of India and Ors. (4) 1981 E.L.T. 304 (G.O.I.) Govt. of India In re: M/s. Mahabir Oil & Flour Mills.
The advocate also drew my attention to the other decisions relied upon in the appeal memo by the appellants. Accordingly, be submitted that the orders of the lower authority of rejection of the refund claims were not correct and that the appellant's request for refund should be granted and their appeal allowed.
4. Shri Pattekar, the learned Departmental representative, contended in reply that the appellants had paid duty of Central Excise on Asbestos products classifiable under Item 23-C under the Central Excise Tariff. The duty was paid finally and not as deposit. Therefore, the time limit under Rule 11 was applicable. Shri Pattekar also pointed out that in case of Madras Rubber Factory, the Supreme Court had also observed that the time limits prescribed by the Act would apply to duties paid under the Act. Hence he contended that the decisions of the Asstt. Collector and the Collector (Appeals) were correct and that therefore the appeal should be rejected. In answer to my query as to whether the provisions of Chapter VIIIA under which duty was paid by the appellants did not envisage provisional assessment first and final assessment only at the time of assessment of the R.T. 12 return Shri Pattekar stated that he would not agree to this point of view. He further observed that provisional assessment was governed under Rule 9B and a request from the manufacturer was necessary before the provisions of Rule 9B could be resorted to. In the present case there was no request from the appellants and therefore the duty paid was not provisional' but final.
5. In reply, advocate Shri Patel stated that he would like to seek adjournment of the hearing to argue on the question as to whether duty was paid provisionally by the appellants. It was pointed out to the advocate that the hearing had been completed and that he had not raised this issue earlier and therefore there was no question of granting adjournmen at that late stage.
6. I have examined the submissions made on both the sides. The first question to be considered is that of jurisdiction. In answer to my question both the appellants and the respondent have agreed that the appeal does not involve a matter relating to value of good for assessing duty. This Bench of the Tribunal therefore has the jurisdiction to hear this appeal and accordingly I am proceeding to deal with the same and to pass the order on the appeal of M/s. Shree Digvijay Cement Co. Ltd.
7. Another important issue involved in- this appeal is whether the Tribunal can consider arguments not advanced by either side earlier while arriving at a conclusion in the order on the appeal. In this behalf, it is relevant to observe that the provisions of Section 35C(1) relating to the orders of the Appellate Tribunal are analogous to those of Section 254 of the Income Tax Act. This Tribunal has been in existence for about three years now while the Income Tax Appellate Tribunal has been in existence for a long. time. The wordings of the two Sections being pari materia, the decisions of the judicial authorities with reference to the powers of the Income Tax Appellate Tribunal will apply in the case of the powers of this Tribunal. It is seen that as per Section 35C(1) of the Central Excises & Salt Act, the Appellate Tribunal can pass any order as it thinks fit. This is a very wide power and in my view it would imply that the Tribunal should pass a correct and legal order and in coming to this conclusion it would be immaterial if any grounds are taken into account by the Tribunal which have not been agitated in the earlier proceedings. The only requirement would be that the parties to the appeal should be given an opportunity of being heard in the matter. It is for this purpose that Rule 10 of the CEGAT Procedure Rules has been framed for helping the Tribunal to come to a correct decision. Thus, the Tribunal may grant relief on a ground different from that urged before the lower authorities. There are a spate of authorities on the power of the Income Tax Appellate Tribunal and these would apply mutatis mutandis to the powers of this Tribunal. It was from this point of view that I put the question to the learned Departmental representative as to whether the provisions of Chaptet VIIA of the Central Excise Rules envisage provisional assessment or not. Otherwise, viewed in the light of the arguments adduced by both the sides earlier it is seen that the duty was paid by the appellants M/s. Shri Digvijay Cement Co. Ltd. in December, 1979 and the first letter dated 16-7-1979 addressed to the Superintendent, Central Excise requesting for refund was presented more than six months later than the date of payment of duty and hence the claim of the appellant was time barred as held by the Collector (Appeals). The learned Departmental representative has also relied on the Supreme Court's decision in the case of Madras Rubber Factory v. Union of India and Ors. AIR 1976 Supreme Court 638 and after that on the latest decision in the case of Miles India Ltd. v. The Assistant Collector of Customs 1983 E.L.T. 1026 (CEGAT) in Civil Appeal No. 1633 of 1984 decided on 6-4-1984. The Supreme Court has held that the time limit for claiming refund under Section 27(1) of the Customs Act is binding on the Customs authorities acting under the Act. Therefore, there is no doubt that the time limits prescribed under the Central Excises and Salt Act are binding on the authorities acting thereunder including this Tribunal. But the question which comes up for consideration in this appeal is from which date the limitation period is to be computed. The Asstt. Collector and the Collector (Appeals) have taken into account the date when the debit of duty was raised in the PL account of the appellants relying on the definition of the "relevant date" in Explanation (B) under Section 11B of the Act. In other words, they have relied on definition in sub-Clause (f) of the Explanation defining the relevant date and held that the claim made by the appellant was barred by time under Section 11B. However, I do not agree with their conclusion for the reasons which follow:
8. The appellant's goods, namely, asbestos cement products fall under tariff item 23C of the first schedule to the Central Excise and Salt Act, 1944. The duty of Central Excise is levied under section 3 thereof and as per this charging section, duty is to be levied and collected in the manner as prescribed under the Central Excise Rules, 1944. Section 37(2)(1b) gives power to the Central Government to make Rules for assessment, collection of duty etc; and manner "prescribed" is defined under Section 2(g) as Rules prescribed under the Act. The scheme for collection of duty under the Rules enjoins on the assessee the filing of an application, namely AR 1 under Rule 52, the assessment of duty thereon by the Central Excise Officer and thereafter payment of duty as laid down under this Rule. Therefore, though the duty is leviable on the manufacture of goods under Section 3, the collection is postponed in terms of the prescribed Rules 9 and 49. Thus on presentation of AR 1 application, the proper officer of Central Excise is to assess the duty thereon and the assessee has to pay the amount of duty assessed to the Government before the assessee can remove the goods from factory under Rule 52. The goods have also to be removed from the factory under a Gate Pass issued in terms of Rule 52A. Thereafter, the assessee has to file a monthly return in the Form RT 12 under Rule 54 with the proper officer of Central Excise within seven days after the close of each month.
9. The above procedure was the scheme of the law upto 1969. In 1969 the Government brought in Chapter VII-A additionally in the Central Excise Rules and this was commonly known as "SELF REMOVAL PROCEDURE". Under Notification No. 171/69-CE, dated 21-6-1969 issued under Rule 173A, goods manufactured by the appellant and classifiable under item 23C are covered under the procedure prescribed under Chapter VIIA. The normal procedure as envisaged above has been replaced by the provisions of Chapter VIIA for commodities declared therein. As per these provisions, the assessee was left free to debit a duty of excise in the Personal Deposit Account maintained by him with the department and to clear the goods on the Gate Pass. The application for removal in the Eorm AR, 1 was done away with as also the physical supervision by an Officer of Excise in assessing duty and giving actual permission for delivering the goods from the factory. The manufacturer was to deposit the duty in terms of Rule 173E and he had to follow the further procedure as prescribed in Rule 173G, which inter alia provided that besides maintaining an account current with the Collector of Central Excise, he had to file the RT 12 return within seven days after the close of each month with the proper officer of Central Excise. The Central Excise Officer has thereafter to assess the duty due on the goods on the RT 12 return under Rule 1731 and hand-over one copy of the return back to the assessee.
10. The procedure prescribed under Chapter VIIA thus reverses the procedure prevailing under Chapter V. Whereas in terms of Chapter V, the presentation of application form, the assessment of duty, the payment of the duty and the clearance of the goods from the factory follow in that order, under Chapter VIIA the procedure laid down is debit of duty, clearance of the goods from the factory, filing of return, and then assessment of duty. In other words Chapter VIIA envisages provisional assessment and not final assessment before clearance of the goods from the factory.
In support of this conclusion it is observed that the definition of "assessment" under Rule 2(ia) envisages that the payment of duty finally to the Government account should follow the determination of its quantum through assessing the amount of duty by a proper officer of Central Excise. This would be amply borne out by the fact that Section 3 of the Act talks of assessment and levy of duty. It is further seen that provisos (ii) (iia) to Sub-rule (1) and (vii) to Sub-rule (2) of Rule 173G make this amply clear. The aforesaid provisions require a sufficient balance to be maintained by the assessee in his account current with the Collector so that there is no risk to revenue and also permit the assessee to remove consignments after making a consolidated debit in the current account at the end of each day, if he removed more than 3000 consignments in the previous calender year or if he manufactured one or more declared excisable goods irrespective of consignments removed by him in the previous calender year, and to cancel the Gate Pass if needed and to take credit of the duty in the current account of the amount debited earlier therein. Similarly, under Rule 173-1(2) the duty determined and paid under Rule 173F is to be finally adjusted after assessment under Sub-rule (1) and if there is anv difference in duty deposited earlier, the deficiency is to be paid or the excess is to be credited in the account current within 10 days of the receipt of the assessed RT 12 return from the Superintendent of Central Excise. These requirements of Rule 173-I are mandatory. Therefore;, though the word provisional assessment is not mentioned under Chapter VIIA, the procedure prescribed thereunder is for provisional assessment only which has to be finalised subsequently. The only difference between -rovisional assessment under Rule 9B and that under Chapter VIIA is that no bond is stipulated under the latter. The reasons is obvious as the payment of duty is secured by deposit of duty as determined by the assessee after the Central Excise Officer had approved the classification and the sale price under Rules 173B and 173C. Therefore, for the purposes of Section 11B the relevant date for claiming refund is not the actual date of first debit of duty in the account current, but the date when the assessment is finalised under Rule 173-I and the duty assessed adjusted finally. Therefore, for an assessee working under Chapter VIIA of the Central Excise Rules, 1944 "the relevant date" for purposes of Explanation (B) of Section 11B, is the date of assessment of RT 12 return by the Superintendent of Central Excise under Sub-rule (1) of Rule 173-1 if the amount of duty deposited earlier is found to be correct on assessment, or the date of final adjustment under Sub-rule (2) if there is excess or short deposit made earlier. It may be pointed out that it is only in this context that the provisions of Rule 173-I which statutorily enjoin suo motu recovery or refund of duty, can have proper meaning. The requirements of Rule 173-I(2) in this behalf are identical to those of Rule 9B(5) which give further support to the aforesaid conclusion. In this behalf I would like to rely on the Supreme Court's decision in the case of Assistant Collector, Central Excise v. National Tobacco Co. Ltd. 1972 AIR SC page 2563 to this effect that incomplete assessment is not an assessment in law and though this case was decided under old Rules 10 and 10A its ratio is still valid and provides authoritative interpretation of incomplete and final assessments as also levy, assessment and collection of duty. Similarly, I would also like to rely on the Supreme Court's decision in the case of Sanjana v. Elphinstone Mills Limited 1971 AIR S.C. page 2039 to the same effect. Otherwise suo-motu refund or recovery is not provided under Section 11B or 11A or any other provisions of law and application for refund would have been necessary as also a demand followed by order for recovery of extra duty. It may be further observed that for products classifiable under Item 68 of the Central Excise Tariff, Rule 173 PP has been specially inserted, under Chapter VII-A under which relaxation from the provisions of law have been provided for goods comprised in Item No. 68 of the Central Excise tariff. Sub-Rules (3) and (5) provide for the delayed submission of the RT-12 returns, and adjustment of duty in individual cases later if the duty cannot be determined at the time of removal of goods. This implies provisional assessment. In this behalf it is seen that there is no time limit for finalising the assessments under Rule 173-I and the RT-12 returns remain unassessed with the department for more than six months in a large number of cases. If, therefore, there is no provisional assessment under Chapter VIIA as seen above, the demands for recovery of extra duty and claims for refund of the excess duty would get barred by limitation under Sections 11A and 11B and the provisions of Rule 173-I of suo motu adjustment would become meaningless and non-operative in such cases.
11. Therefore, applying the provisions of law as interpreted above to the appellant's case under consideration, it is seen that the RT 12 return for the month of December 1978 was assessed finally on 12-10-1979. While doing so, it is significant to observe that the excess duty paid in respect of two Gate Passes No. 7086 and 7087 both dated 19-12-1978 was given as credit in the appellant's personal ledger account, after six months from the date of deposit. This would have been illegal if there had been final assessment and no claim for refund of duty. On the other hand, the appellant's claim for refund of duty in their letter dated 9-11-1979 was filed very much within the time limit of Section 11B. The same is therefore not hit by the time limit thereunder. In this view, it is not necessary for me to go into the authorities cited by the learned advocate of the appellants during the course of the personal hearing. These authorities are not applicable to this case as viewed above.
12. In view of these facts and circumstances mentioned above, I set aside the orders of the Assistant Collector of Central Excise, Ahme-dabad and the Collector of Central Excise (Appeals) and allow the appeal of M/s Shree Digvijay Cement Co., Ltd., and direct that the amount of Rs. 28,903.17 recovered as excess duty during the period 1-12-1978 to 30-12-1978 be refunded to the appellants.