Customs, Excise and Gold Tribunal - Tamil Nadu
E.I.D. Parry (India) Ltd. vs Collector Of C. Ex. on 10 April, 1989
Equivalent citations: 1989(22)ECC195, 1989(25)ECR340(TRI.-CHENNAI), 1989(44)ELT741(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 26-6-1987 confirming the order of the Assistant Collector of Central Excise, Pondicherry, dated 7-1-1987 and rejecting the appellant's refund claim for a sum of Rs. 1,19,611.47.
2. The appellant is manufacturing sugar and during the course of manufacture of sugar the appellant produces Steam & Bagasse, which are captively consumed in the manufacture of Alcohol in the distillery unit which is also situated in the same licensed premises. For the period April, 1982 to Feb. 1983 in respect of the Steam & Bagasse the appellant filed a Classification List claiming exemption under Central Excise Notification No. 118/75, dated 30-4-1975 and the same was duly approved by the Assistant Collector of Central Excise by his order dated 28-3-1981 vide Classification List No. 2670/81. Subsequent to the approval of the Classification by the proper officer, when the appellant submitted the monthly RT 12 returns in accordance therewith, the Superintendent of Central Excise made an endorsement on the RT 12 returns on 26-5-1983 calling upon the appellant to pay the differential duty on the ground that "duty was demanded due to non-observance of the conditions of Notification No. 118/75, dated 30-4-1975". The appellant herein pursuant to the RT12 endorsement of the Superintendent of Central Excise paid the duty on 26-5-1983 and 31-5-1983 and made an endorsement of protest in the challan as follows :
"Excise duty paid under protest for the captive consumption of Steam and Bagasse (Item No. 68) in our own distillery as per the RT 12 endorsements for the period from April '82 to Feb. '83."
The appellant also addressed a letter to the Superintendent of Central Excise on 31-5-1983 itself to the effect that duty had been paid under protest through TR-6 challans for the clearance of Bagasse and Steam towards captive consumption in appellant's own distillery unit. The appellant thereafter by way of abundant caution took out an application for refund on 8-9-1983 and claimed refund of the duty in question on the ground that excise duty had been paid for captive consumption of Steam and Bagasse from February 1982 to February 1983 as per the endorsement made in the monthly RT 12 returns. The appellant further stated that Steam and Bagasse were captively consumed in the appellant's distillery in the course of manufacture of Rectified Spirit and would be eligible for total exemption of duty on those items under Notification 118/75, dated 30-4-1975 and the Superintendent had proceeded on the basis that Rectified Spirit produced in the distillery is not excisable commodity and hence exemption was not applicable to the appellant in terms of the Notification 118/75. The appellant further stated that Notification 118/75 did not prohibit availing of exemption in case of captive consumption viz. Steam or Bagasse in the own distillery and no condition that the end-product in question should not be exempted from payment of duty was enumerated in the said Notification. The Assistant Collector of Central Excise on receipt of the above refund application of the appellant returned it to the appellant on 5-10-1983 directing that "the claim may be submitted to this office after obtaining orders against the payment of duty". The learned Consultant urged that the question with reference to entitlement to the benefit of Notification 118/75 for the earlier period was pending before the Collector of Central Excise (Appeals) and the Assistant Collector by returning the appellant's refund application directed the appellant to re-submit it after orders on the subject are passed by the appellate authority. The Collector of Central Excise (Appeals) by his order dated 5-12-1983 held that the appellant would be entitled to the benefit of Central Excise Notification 118/75 cited supra and the fact that the end-product viz. Rectified Spirit is not excisable item would not disentitle the appellant to the benefit of the said Notification in respect of those items which were captively consumed in the appellant's factory. After the Collector of Central Excise (Appeals) passed this order on 5-12-1983, the appellant re-submitted his refund application on 28-1-1984. After the receipt of this refund application re-submitted by the appellant, the Assistant Collector of Central Excise issued a show cause notice dated 1-12-1986 calling upon the appellant to show cause as to why the part of the claim should not be, rejected as time barred under Section 11B of the Central Excises & Salt Act, 1944 and ultimately passed an order on 7-1-1987 disallowing the amount in question as barred by limitation under the Act. The appellant preferred an appeal against the same, which was dismissed under the impugned order out of which the present appeal arises.
3. Shri Vijayaraghavan, the learned Consultant for the appellant, submitted that the fact that the appellant is entitled to refund of the amount in question does not admit of any controversy and the only ground on which the refund application was rejected by the original authority was that the same was barred by limitation under Section 11B of the Act. The original authority held that the duty was not paid under protest in conformity with Rule 233B of the Central Excise Rules. The learned Consultant submitted that in respect of the duty paid on 26-5-1983 and 31-5-1983 refund application was filed as early as on 8-9-1983 well within the period of 6 months from the date of duty and, therefore, the reason for rejection on grounds of limitation is not correct. The learned Consultant further urged that the question of the appellant making a protest in terms of Rule 233B of the Rules would not arise in the case, because admittedly the appellant's Classification claiming the benefit of Central Excise Notification 118/75 has been duly approved by the Assistant Collector of Central Excise and, therefore, the question of appellant making any protest endorsement in terms of Rule 233B either in the Gate Passes or RT12 returns cannot and would not arise. The learned Consultant also questioned the jurisdiction of the Superintendent of Central Excise to make an endorsement in appellant's RT 12 returns and denying the appellant the benefit of Notification 118/75 against the order of approval of the appellant's Classification with benefits of the said Notification. The learned Consultant also assailed the impugned order on the ground that the lower appellate authority's order is inconsistent and self-contradictory. It was urged that in the impugned order it is found that the Assistant Collector was not competent to sanction refund, because the amounts were paid not under protest but in pursuance of orders passed by the Superintendent on RT 12 returns, which orders were not appealed against and consequently became final. The learned Consultant submitted that in the same breadth the lower appellate authority has also observed that duty was not paid under protest before the Assistant Collector thereby implying that if there was a valid protest the Assistant Collector would be competent to grant the refund.
4. Shri Bhatia, the learned Senior D.R., submitted that protest can only be in terms of Rule 233B of the Rules, since Section 11B of the Act specifically refers to it and no other mode of protest is contemplated under the Act or Rules and, therefore, when there was no protest either in the Gate Passes or in the RT 12 returns, a subsequent protest endorsement in the challan will be of no avail.
5. We have carefully considered the submissions made before us. The fact that the appellant would be entitled to the amount in question under law is not disputed and is indeed admitted before us. The further fact remains that the duty in question was paid on 26-5-1983 and 31-5-1983 and a refund application in regard to the same was preferred on 8-9-1983 well within the period of 6 months in terms of Section 11B of the Act. In such a situation we are at a loss to understand much less appreciate as to how the original authority could reject the appellant's refund claim as time barred. The refund claim is very much within time. The only main ground on which the appellant's claim has been rejected under the impugned order is that the appellant should have preferred independently an appeal against the RT 12 endorsement made by Superintendent of Central Excise. Unfortunately, this is a case where the Superintendent of Central Excise would appear to deny the appellant the benefit of Notification 118/75, which the Assistant Collector has already given to the appellant by according approval of the Classification specifically claiming the benefit of this particular Notification. We are not able to see by what authority the Superintendent could assume jurisdiction and pass an order contrary to a valid order passed by the Assistant Collector of Central Excise on classification issue and render it nugatory as it were and overrule the approval given by the Assistant Collector to the appellant's Classification with benefit of Central Excise Notification 118/75. Apart from it, when the appellant is admittedly entitled to that amount and has taken out an application before the expiry of 6 months from the date of payment, the appellant should-have been granted the refund. The view of the original authority that there was no protest in accordance with Rule 233B of the Central Excise Rules does not appear to be correct. A bare reading of Rule 173B, Sub-Rule (3) would show that only where the assessee disputes the rate of duty approved by the proper officer in respect of any goods, he may, after giving an intimation to that effect to such officer, pay duty under protest at the rate approved by such officer. Rule 233B has got to be construed in the context and setting of Rule 173B and the appellant can make a protest endorsement in Gate Passes and in RT 12 only if his classification had not been approved but not otherwise. Therefore, in our opinion, the reference to Rule 233B and more so alleging nonconformity to the procedural rigour of it would not appear to be of relevance in the facts and circumstances of this case. In this context we may also place reliance on the Special Bench ruling in the case of Modi Rayon and Silk Mills v. Collector of Central Excise, Meerut, reported in 1987 (29) E.L.T. 933 (Tribunal), wherein it is held that a person can have recourse to Section 11B of the Act by claiming refund in a situation where the rate of duty or the value on the basis of which a particular clearance was made was not in accordance with the approved Classification List or price-list. The second circumstance or contingency that is envisaged is "the officer completing the assessment on the RT12 form may have applied a rate of duty or value which is not in accordance with the approved rate of duty or value" and this second instance or illustration highlighted in the said ruling is the one that is arising in the present case. Modi Rayon's case is also referred in another Special Bench ruling in Britannia Industries Ltd. v. Collector of Central Excise, Calcutta, reported in 1987 (31) E.L.T. 985 (Tribunal), and relied upon. The Calcutta High Court has also in the case of I.T.C. Limited and Anr. v. Union of India and Ors., reported in 1988 (34) E.L.T. 473 (Cal.), held that Section 11B of the Act has provided the substantive and the machinery provision for refund of any excess duty paid and Section 11B cannot be interpreted in such a way as to render it nugatory and unworkable. In the present case when the appellant admittedly is entitled to the amount in question and when he has taken out a refund application specifically setting out the grounds for claiming refund well within the prescribed period of limitation and also by way of abundant caution made endorsement of protest in the only document viz. the challan where alone in the circumstances of the case he could have if at all protested and all in the context of a situation where the classification list of the appellant claiming the benefit of Notification 118/75 has also been accorded approval not only by the Assistant Collector of Central Excise but has also received the blessings of the appellate authority for the earlier period, we have no hesitation to hold that the appellant would be entitled to the refund of the amount in question. In this view of the matter we set aside the impugned order appealed against and allow the appeal.