Customs, Excise and Gold Tribunal - Tamil Nadu
Andhra Pradesh Paper Mills Ltd. vs Cce on 23 April, 2002
Equivalent citations: 2002(82)ECC381, 2002(148)ELT285(TRI-CHENNAI)
ORDER S.L Peeran, Member (J)
1. This appeal arises from Order-in-Appeal No. 57/96(G) CE dated 6.6.96 by which the appellant claim for refund of Rs. 29,80,997 as time bar out of the total claim of Rs. 36,90,335 being the excess Central Excise duty and Cess paid by them on sub-standard kraft paper consumed captively in the manufacture of reel core which in turn is used in the manufacture of final product, paper and paper board. The appellant had paid duty on sub-standard kraft paper captively consumed without availing of the benefit of Notification No. 217/86during the period 7.3.87 to 17.1.1992. The Assistant Commissioner sanctioned Rs. 7,05,812.57 out of the claim holding that the rest of the claim is hit by time bar. The refund application was received in the office of the Assistant Commissioner on 14.2.1992 stating that their claim is not hit by bar of limitation as they all along paid duty under protest. However, the Assistant Commissioner did not sanction the claim for Rs. 29,80,997.
2. Both the authorities did not dispute the above fact about protest have been filed by the appellant vide their letter dated 9.7.85. However, the revenue has taken a stand that the said letter of protest was to inform the Department that they would be paying the duty of sub-standard kraft paper under protest, adopting the approved value. The Revenue has taken a stand that the protest under Rule 233(B) is regarding to valuation of sub-standard kraft paper and not with regard to captive consumption claim and benefit of Notification No. 217/86. The finding recorded by the Commissioner in paras 6 to 8 is reproduced:
It has to be examined whether the refund claim is time-barred in the light of the above background. The protest made under 233B of CE Rules is with reference to valuation of the goods. The question of dutiability of sub-standard kraft paper captively consumed was never a subject matter of protest. In the case of CCE v. Chennai Bottling Co. Madras the Hon'ble High Court of Madras held that a protest regarding inclusion of freight charges cannot be treated as equivalent to a protest in regard to classification. Thus, duty should be paid under protest with reference to each of the dispute. In the present case the appellant paid duty under protest only in respect of value approved by the Department. There was no dispute at that time regarding the applicability of Notification 217/86 to the said goods. The appellants therefore, cannot claim that they paid duty under protest in so far as the applicability of the said Notification 217/86. Following the ratio of the Hon'ble High Court's judgment cited above, I hold that the claim is time barred as there was no protest valid under Rule 233B of CE Rules.
The applicants have also raised the point that the Assistant Commissioner has erred in computing the period of six months from the date of submission of the claim. I observe that the claim was received in the office of the Assistant Commissioner on 14.2.92. The period of six months, therefore, should be computed from that date. Thus the excess duty paid on 14.8.91 falls within six months. The duty paid on 14.8.91 is Rs. 40,279.41 according to the appellants. I hold that the appellant's contention in this regard is correct. The exact duty paid on 14.8.91 be verified and the amount be refunded.
In conclusion, I observe that the Assistant Commissioner was correct in holding that the refund claim is admissible only in respect of the duty paid during the six months prior to the receipt of refund claim in his office. The duty paid earlier to that period is hit by bar of limitation. The Assistant Commissioner was also correct in holding that the protest letter dated 9.7.85 is not valid.
3. Ld. Counsel Shri Saravanan submitted that the citation of Hon'ble Madras High Court is no longer a good law in view of the Apex Court judgment rendered in the case of Mafatlal Industries v. CCE and that of the judgment of the Apex Court rendered in the case of M.P. Electricity Board v. CCE . He also relied on the judgment of the Apex Court rendered in Samrat International as . He submitted that the claim is not hit by time bar as there is no dispute about the letter of protest and show cause notice also clearly admits about the letter of the protest alleged by them which is withdrawn in time. He also relied on the judgment of the Tribunal in CCE v. TVS Suzuki 1999 (34) RLT668 to buttress his argument that the claim is not hit by unjust enrichment.
4. Ld. SDR reiterated the Departmental view as per the order given by the Commissioner (Appeals) which is extracted (supra).
5. On a careful consideration of the submissions and perusal of the record, it is seen from the show cause notice dated 8.10.1993 that the Department has not challenged the letter of protest filed by the appellant. The charge made out in paras 2 to 4 of the show cause notice is reproduced:-
On the perusal of the refund claim and the correspondence furnished so far, it is observed that the assessee has indicated that from the year 1987 onwards he had paid the Central Excise duty under protest as contemplated under Rule 233B of the CE Rules, 1944. But as per the letter No. V/pg/84-85/30 dated 9.7.85 of the assessee, purported to be an indication of payment of duty under protest, it is observed that they have protest against the Department's order in holding that the price of sub-standard (Second Grade) kraft paper is to be on par with the prices of goods quality kraft paper. This has got a bearing on order-in-original of Collector of Central Excise, Guntur vide adjudication Order No. 9/84 dated 31.10.84 dealt in C. No. V/17/15/10/82 Adj. 3. Thus it appears that the issue of payment of duty on sub-standard kraft paper is not the issue of making the assessee to pay duty under protest and as such it is no relevant and connected with the present refund claim.
It is also observed that the classification list No. 6/91-92, was finally approved by the Assistant Collector of Central Excise, Rajamundry vide Adjudication order No. 22/92, dated 24.12.92 dealt in file C. No. V/Ch.48/17/44/92 Val, holding that the assessee are eligible to avail exemption under Notification No. 217/86, dated 2.4.86 w.e.f. 12.2.92 only. It is also indicated that the exemption claimed is not eligible for collection of cess on such captive consumption, whereas the period covered by the instant refund claim is payments made from 7.3.97 to 31.1.92 and thus it appears that the refund claim is liable for rejection in toto. Now therefore, M/s. A.P.P. Mills Ltd., Rajamundry is required to show-cause to the Assistant Collector of Central Excise, Rajamundry as to why the refund claim of Rs. 36,90,335-01 should not be rejected as per Section 11-B of Central Excises and Salt Act, 1944 as not maintainable.
6. The question that arises for consideration is as to whether the protest letter dated 9.5.1985 can be taken as protest for the payment of duty for which refund claim has been allowed.
7. In terms of the Apex Court judgment rendered in the case of MP Electricity Board (supra) letter of protest for taking out licence was considered as a letter of protest even for payment of duty. The ruling of the Apex Court rendered in the case of Mafatlal Industries (supra) on the aspect of protest is also applicable to the facts of the case. Both these judgment including the judgment of the Apex Court rendered in the case of Samrat International (supra) would also be applicable to the case. In the Samrat International case, the Apex Court held that once on issue an assessment is held to be provisional it is provisional for all purposes. Therefore, the cumulative effect of these 3 judgments is that whether the protest has been alleged which will have an overall effect and the payment of duty is deemed under protest and is not hit by the time bar in terms of Section 11(B) of CE Act. Therefore, the finding recorded by both the authorities that the claim is hit by time is not correct and requires to be set aside. Ordered accordingly.
8. Insofar as the plea of unjust enrichment is concerned, we are of the considered opinion that the matter has to go back to the original authority for considering this aspect in the light of the judgment of Mafatlal Industries case. The appellants shall be heard and if they have any evidence to show that the duty element has not been passed on to the consumer, then the same is required to be produced to satisfy that the refund is not hit by unjust enrichment. Thus the appeal is disposed of on the above terms.
Jeet Ram Kait, Member (T)
1. I am not able to persuade myself to agree to the order proposed by my Ld. Brother Shri S.L Peeran, Member (Judicial) for the reasons recorded in the succeeding paragraphs.
2. The question that arises for consideration is as to whether the protest letter dated 9.7.85 in which question of dutiability of Sub-standard kraft paper captively consumed was never a subject matter of protest, can be treated as protest for the payment of duty under Notification No. 217/86 for which refund claim has been filed. The Commissioner of Customs and Central Excise (Appeals) Hyderabad in his Order-in-Appeal No. 57/96(G) CE dated 6.6.96 in paras 6 to 8, which have been reproduced in para 2 of the order recorded by Hon'ble Member (Judicial), the Commissioner (Appeals) has examined the refund claim and found that the same is time barred in the light of the facts as narrated in paras 2 to 5 of his Order which are extracted herein below:
2. I have gone through the records of the case and the submissions made in the appeal memorandum and during the course of personal hearing. The appeal is filed in time. The appeal is against the Order of the Assistant Commissioner rejecting the claim for refund for Rs. 29,80,997 is time barred.
3. The facts are that the appellants filed a refund claim for Rs. 36,90,335 being the excess CE. duty and cess paid by them on sub-standard kraft Paper consumed captively in the manufacture of reel core which in turn is used in the manufacture of final product, paper and paper board. The appellants paid duty on sub-standard kraft paper captively consumed without availing of the benefit of Notfn. 217/86, during the period 7.3.87 to 17.1.92. The Assistant Commissioner sanctioned Rs. 7,05,812.57 out of the claim holding that the rest of the claim is hit by time bar. The refund application was received in the office of the Assistant Commissioner on 14.2.92. The appellants held that their claim is not hit by bar of limitation as they all along paid duty under protest. The Assistant Commissioner ruled that the claim for Rs. 29,80,997 out of the total amount is hit by the bar of limitation as it is made after the expiry of six months from the date of payment of duty. He sanctioned Rs. 7,05,812 being the excess duty paid during the period 15.8.91 to 14.2.92.
4. At this stage it is important to examine whether the appellants paid duty under protest. The background is as follows. The Commissioner of C. Ex., Guntur vide his order Adj. Order No. 9/84 dated 31.10.84 held the assessable value of sub-standard kraft paper should be approved on par with the price of good quality kraft paper. The appellants preferred an appeal against this order. In the meanwhile the Department approved the Price List (PL) filed by the appellant for second grade kraft paper in accordance with the decision of the Commissioner in his order cited above. The approval accorded was final. Under these circumstances the appellants, vide their letter dated 9.7.85, informed the Department that they would be paying the duty on sub-standard kraft paper under protest, adopting the approved value. This protest is under Rule 233B of C.E. Rules and is sent to the Department under Registered post. Thus there appears to be a protest under Rule 233B. The dispute is regarding the valuation of substandard kraft paper. The appellants plead that the refund claim is not time barred as duty was paid under protest, valuation of the goods being the dispute.
5. The present claim is made on a different ground. The appellants claim that they used the sub-standard kraft Paper in the manufacture of final product paper and paper Board; that in terms of Notfn. 217/86 duty on sub-standard kraft paper is not leviable as it is captively consumed; that by inadvertance they failed to claim the benefit of Notfn. 217/86; that no duty is leviable on sub-standard kraft paper captively consumed and therefore, the duty paid on such sub-standard kraft paper should be refunded. The Assistant Commissioner while admitting that the appellants are entitled for the benefit of Notfn. 217/86 held that the claim for refund should be restricted to the duty paid from 15.8.91 to 14.2.92.
3. From the above, It could be seen that the appellants had filed refund claim for Rs. 36,90,335 being the excess duty and Cess paid by them on sub-standard kraft paper consumed captively In the manufacture of reel core which In turn Is used in the manufacture of final product, paper and paper board. The appellants paid duty on sub-standard kraft paper captively consumed without availing of the benefit of Notification No. 217/86 during the period 7.3.87 to 17.1.92 on the ground that they continued to pay duty inadvertently and they contended that benefit of the exemption cannot be denied merely because It was not claimed Inadvertently and due to improper understanding. The Assistant Commissioner sanctioned a sum of Rs. 7,05,812.57 out of the total claim, holding that the rest of the claim is hit by time bar. In other words, the Assistant Commissioner accepted that they had not claimed the benefit of exemption inadvertently and the same was available to them for a certain period only where the claim was filed by them within a period of 6 months from the date of payment of duty. The refund application was received in the office of the Assistant Commissioner on 14.2.92 and he ruled that the claim for Rs. 29,80,997 out of the total amount of Rs. 36,90,335 is hit by the bar of limitation as it is made after the expiry of 6 months from the date of payment of duty. He sanctioned a sum of Rs. 7,05,812.57 being the excess duty paid during the period 15.8.91 to 14.2.92. The Commissioner (Appeals), however, accepted the plea raised by the appellants that the Assistant Commissioner had erred in computing the period of 6 months from the date of submission of the claims. He observed that the claim was received in the office of the Assistant Commissioner on 14.2.92 and, therefore, the period of 6 months should be computed from that date. Thus, the excess duty paid on 14.8.91 fell within 6 months and, therefore, he held that the duty paid on 14.8.91 to the tune of Rs. 40,279.41P as contended by the appellant is also payable to the appellants, being within time. However, he directed the exact duty paid on 14.8.91 be verified and the amount be refunded. He, therefore, observed that the Assistant Commissioner was correct in holding that the refund claim was admissible only in respect of duty paid during the 6 months prior to the receipt of the refund claim in his office and the duty paid earlier to that was hit by bar of limitation. He also held that the Assistant Commissioner was also correct in holding that protest letter dated was not valid since the protest was not with regard to claiming exemption and applicability on Notification No. 217/86 in respect of sub-standard kraft paper which was captively used in the manufacture of final product. The appellants have also admitted that by inadvertence, they failed to claim the benefit of Notification 217/86 and continued paying duty though they were entitled for exemption under Notification No. 217/86, which was claimed by them later by filing a classification list on 12.2.92 for claiming the benefit of exemption under Notification No. 217/86 dated in respect of the said sub-standard kraft paper after realising their mistake and the Assistant Commissioner approved the said classification list w.e.f. 12.2.92 allowing them the benefit under Notification No. 217/86.
4. The appellant assessee in their reply dated 10.11.93 to the Assistant Commissioner, in reply to the show-cause notice dated 8.10.93 wherein it was proposed to reject their refund claim of Rs. 36,90,395.01 under Section 11B of the Central Excises & Salt Act, 1944, as the same was hit by limitation of time since the exemption under Notification No. 217/86 dated 2.4.86 was allowed to them w.e.f. 12.2.92 only and also that the payment of duty under protest was only In respect of the value of the said paper and was not relevant and connected with the present refund claim which has arisen as a result of excess payment of duty inadvertently paid by them. The appellant's reply to the Assistant Commissioner of Central Excise, Rajahmundry Division as recorded by him In para 3 Is extracted herein below for the purpose of correct appreciation of the facts of the matter:
3. The assessee in their reply dated 10.11.93 has stated that:
(i) Due to inadvertance, while filing a Classification List, they erroneously did not claim the benefit of the Notfn. No. 217/86, dated 2.4.86, in respect of the sub-standard kraft paper utilised within the factory for the manufacture of the reel core which in turn is an input in the manufacture of other varieties of paper and paper board;
(ii) They filed a classification list with the Assistant Commissioner of Central Excise, Rajahmundry, on 12.2.92, claiming the benefit of exemption under the Notfn. No. 217/86, dt. 2.4.86, in respect of the said sub-standard kraft paper after realising their mistake and the Assistant Commissioner approved the said classification list with effect from 12.2.92, allowing the benefit under Notfn. No. 217/86;
(iii) They should not suffer due to inadvertance or mistake committed in not claiming the exemption at proper time and they should review their assessment and the excess amount of duty paid is to be refunded to them; the time limit of 6 months as provided in the Act will be inapplicable in the instant case where the assessee was not aware of the existing notification when the duty was worked out and paid, as the recovery of excise duty was clearly recovered in contravention of the notification and also without jurisdiction; also quoted/cited certain case laws;
(iv) The benefit of exemption under Notfn. No. 217/86 cannot be denied to them even if not claimed in the classification list, as Section 11B confers an independent right and a substantial right on the assessee to claim refund if it is otherwise permissible in law and the assessee cannot be estopped from claiming the refund merely on the ground that they do not claim the benefit of notification in the classification list; any denial of exemption from duty under exemption notification is to be imposed larger levy on the manufacturer which constitutes a violation of fundamental right of the assessee to carry on trade which is guranteed to them under Article 19(1)(g) of the Constitution; cited certain case laws;
(v) In respect of the period earlier to 1987, they were likewise eligible for exemption from payment of duty under Notftn. No. 16/82CE, dt. 28.2.82 as amended, which was in force upto 24.2.87, though the same was not claimed by them due to inadvertance while filing the classification lists for approval and they are also eligibly for the refund of excise duty paid for this period; a separate claim is being preferred for refund of excise duty paid for this period;
(vi) They have paid the excise duty initially on the sub-standard kraft paper before utilising the same in the manufacture of reel core and subsequently paid duty and the weight of such reel core and the content value and the rate of duty applicable to content paper depending upon the variety of paper wound on such reel cores and thus subject paper has suffered duty twice; Section 11B is inapplicable for claiming refund as held in the Bombay Court in the case of Escort Tractors v. Union of India in the instances where a double payment is made and the Department is well aware of the double payment of duty in the said paper as intimated by them from time to time;
(vii) The duty of substandard paper was paid under protest and the reason for payment of duty under protest was on the question of value of substandard paper the compared to the value of kraft paper and this issue is still pending in CEGAT where they have gone in appeal on the Order-in-Original of the Commissioner of Central Excise, Guntur; the assessment is to be kept alive when the duty is paid under protest till such time the issue is settled (Cited case law in Indian Tool Manufacturers v. Collector CEGAT;
(viii) As long as the assessment is alive during the period when the payment of duty is in protest and until such time the issue is pending, the assessee has a right to claim any refund of duty outside the provisions of Section 11B of Central Excise and Salt Act, 1944, and the question of limitation of time under the said Section is not attracted and the payment of duty under protest on the substandard kraft paper has bearing on the value of paper and also the amount of duty involved and thereby the limitation under Section 11B is inapplicable for their refund;
(ix) The monthly RT 12s have been assessed by the Range Superintendent under the provisions of Rule 9(B) of Central Excise Rules, 1944, and the entire period covered by the refund claim the Range Superintendent has endorsed in the RT 12 returns that the assessment is done as per the provisions of Rule 9B of Central Excise Rules, 1944; so when the assessments are done under Rule 9B, the question of limitation of time will not arise and they have not received any intimation to the effect that the RT 12s have been finally assessed.
5. In the show cause notice dated 8.10.93, it was proposed to reject the refund claim of Rs. 36,90,335.01. The appellants in their reply dated 10.11.93 have very categorically stated that it was due to inadvertence while filing a classification list, they erroneously did not claim the benefit of the Notification No. 217/86 dated 2.4.86, in respect of the sub-standard kraft paper utilised within the factory in the manufacture of their reel core which in turn is an input in the manufacture of other varieties of paper and paper board. They also submitted that they have filed the classification list with the Assistant Commissioner of Central Excise, Rajahmundry on 12.2.92, claiming the benefit of exemption under the Notification No. 217/86 dated 2.4.86 in respect of said sub-standard kraft paper after realising their mistake and the Assistant Commissioner approved the said classification list w.e.f. 12.2.92 allowing them the benefit under Notification No. 217/86. They have also pleaded before the Assistant Commissioner that they should not suffer due to inadvertence or mistake committed in not claiming the exemption at proper time and they should review their assessment and the excess amount of duty paid should be refunded to them. They had also pleaded before the Assistant Commissioner that the time limit of 6 months as provided in the Act would be inapplicable in the instant case, as the recovery of excise duty was clearly in contravention of the notification and also without jurisdiction and they also quoted certain case laws. They had also submitted before the lower adjudicating authority that benefit of exemption under Notification No. 217/86 cannot be denied to them even if not claimed in the classification list, as Section 11B confers an independent right and a substantial right on the assessee to claim refund, if it is otherwise permissible in law and the assessee cannot be stopped from claiming the refund merely on the ground that they did not claim the benefit of Notification in the classification list and that the excess duty has been collected by them in violation of fundamental right of the assessee to carry on trade which is guaranteed to them under Article 19(1)(g) of the Constitution. They also submitted before the Assistant Commissioner that the duty on sub-standard paper was paid under protest and the reason for payment of duty under protest was on the question of value of sub-standard paper as compared to the value of kraft paper and this issue is still pending in CEGAT, where they have gone in appeal on the Order-in-Original of the Commissioner of Central Excise Guntur; the assessment is to be kept alive when the duty is paid under protest till such time the issue is settled, the duty on sub-standard paper should be treated as paid under protest for the purpose of claiming exemption from payment of duty. They also submitted that since the payment of duty, though in respect of value of the kraft paper, the assessee has right to claim any refund of duty outside the provisions of Section 11B of the Central Excises and Salt Act, 1944, and the question of limitation of time under the said Section is not attracted and the payment of duty under protest on the sub standard kraft paper has bearing on the value of paper and also the amount of duty involved and thereby the limitation under Section 11B is inapplicable. They had also submitted that monthly RT-12S have been assessed by the Range Superintendent under the provisions of Rule 9(B) of CE Rules, 1944 and as the entire period is covered by the refund claim, the Range Supdt. has endorsed in the RT 12 returns that the assessment is done as per the provisions of Rule 9B of CE Rules, 1944; and when the assessments are done under Rule 9B, the question of limitation of time will not arise and they have not received any intimation to the effect that the RT-12s have been finally assessed.
6. The Commissioner of Customs & Central Excise, Hyderabad in para 4 of his order has discussed the background of the whole matter. The background is that the Commissioner of Central Excise, Guntur vide his Adjudication Order No. 9/84 dated 31.10.84 held the assessable value of sub-standard kraft paper should be approved on par with the price of good quality kraft paper. The appellants preferred an appeal against this order. In the meanwhile, the department approved the Price List filed by the appellant for second grade kraft paper in accordance with the decision of the Commissioner in his order cited above. The approval accorded was final. Under these circumstances, the appellants, vide their letter dated 9.7.85, informed the Department that they would be paying the duty on sub-standard kraft paper under protest, adopting the approved value. This protest was under Rule 233B of CE Rules and was sent to the department under Registered post. Thus, there was a protest under Rule 233B, but this protest was for dispute with regard to valuation of sub-standard kraft paper.
7. It could, therefore, be seen that the protest was regarding the valuation of the sub-standard kraft paper on par with the price of good quality kraft paper and there was never a protest regarding payment of duty on the sub-standard kraft paper used captively in the manufacture of final product namely paper and paper board. Therefore, the Original authority and the lower Appellate authority found that the refund claim was barred by limitation. It has been mentioned by both the lower authorities that the question of dutiability of the sub-standard kraft paper captively consumed was never a subject matter of protest. The Ld. Commissioner had also cited the judgment rendered by Hon'ble High Court of Madras in the case of CCE v. Chennai Bottling Co., Madras in which the Hon'ble High Court of Madras has held that a protest regarding inclusion of freight charges cannot be treated as equivalent to a protest in regard to classification.
8. In the present case the appellants paid duty under protest only in respect of value approved by the department and there was no dispute at that time regarding payment of duty on sub-standard kraft paper captively consumed without availing the exemption under Notification No. 217/86 during the period 7.3.87 to 17.1.92. The appellants, therefore, cannot claim that they had paid duty under protest in so far as the applicability of the said Notification No. 217/86 is concerned. Following the ratio of the Hon'ble Madras High Court judgment cited above, the Ld. Commissioner had held that the claim is time barred as there was no valid protest under Rule 233B of Central Excise Rules and the department had never ordered them to pay duty. The duty was paid by them voluntarily in respect of the sub-standard kraft paper used captively in the manufacture of their final product, namely paper and paper board, on the mistaken belief that duty was required to be paid by them. Therefore, the provisions of Section 11B of the Central Excise Act, 1944 are fully applicable and the refund is time barred as claimed after 6 months.
9. My Ld. Brother Shri S.L. Peeran, Hon'ble Member (J) in para 6 of the order recorded by him has held that the ruling of the Apex Court rendered in the case of Mafatlal Industries Ltd. v. UOI on the aspect of protest is also applicable to the facts of the case, however without recording as to how the ruling of the Apex Court is applicable to the facts of this case. To appreciate the ratio of the judgment rendered by the Hon'ble Apex Court in the case of Mafatlal Industries Ltd. (supra), para 85 of the above judgment is relevant where duty has been paid under protest within the scope of Rule 233B of the Central Excise Rule, 1944. The Hon'ble Apex Court in para 85 of the above judgment has held that the Rule no doubt requires the assessee to mention the "grounds for payment of the duty under protest" but it does not empower the proper officer, to whom the letter of protest is given, to sit in judgment over the grounds. The Hon'ble Apex Court has also held that the assessee need not particularise the grounds of protest and it is open to him to say that, according to him, the duty was not exigible according to law. All that the proper officer is empowered to do is to acknowledge the letter of protest when delivered to him and that the acknowledgement shall be the proof that the duty has been paid under protest. The Apex Court observed that a reading of the rule shows that the procedure prescribed therein is evolved only with a view to keep a record of the payments of duty under protest and it is meant to obviate any dispute whether the payment is made under protest or not. It further observed that any person paying the duty under protest has to follow the procedure prescribed by the Rule and once he does so, it shall be taken that he has paid the duty under protest. The period of limitation of six months will then have no application to him.
10. The above judgment of the Hon'ble Supreme Court is applicable to cases where the assessee has categorically stated that according to him, the duty was not exigible according to law and therefore, they are paying that duty under protest. Whereas in the present case, the appellants had paid duty on sub-standard kraft paper which was captively consumed without availing of the benefit of Notification No. 217/86 during the period 1.3.87 to 17.1.92. This duty was paid by them inadvertently due to improper understanding. The appellants claimed the exemption of duty under Notification No. 217/86 for the first time when they filed the classification list on 12.2.92 for claiming exemption under Notification No. 217/86 dated 2.4.86 by filing the classification list No. 12.2.92 and after realising their mistake. The said classification list was approved by the Assistant Commissioner w.e.f. 12.2.92 allowing them the benefit of exemption under Notification No. 217/86 in respect of sub-standard kraft paper which was captively consumed in the manufacture of their final product. In other words, they had never lodged any protest about the payment of duty on sub-standard kraft paper which was captively used in the manufacture of final product. The appellants has lodged protest only when they were asked to pay duty on sub-standard kraft paper at par with the value of the standard kraft paper. Therefore, the protest was in respect of valuation where the department sought to levy duty on the value of standard kraft paper with the sub-standard kraft paper which they were captively consuming. Therefore, the judgment of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. (supra) is clearly distinguishable and is not applicable to the facts of this case. Similarly, the judgment rendered by the Apex Court in the case of Executive Engineer, Workshop Division, M.P. Electricity Board v. CCE, Raipur is also not applicable because in the case of M.P. Electricity Board they were informed by the Inspector of Central Excise that on introduction of items No. 68 of the erstwhile CE Tariff, duty @ 1% ad valorem had been imposed on the goods manufactured by the said workshop and the workshop was required to take on L4 licence. They were also asked for particulars of the goods produced and cleared since 1.3.1975 with the object of raising duty demand. In reply, the workshop disputed the duty liability on the grounds that it was fabricating transmission line towers etc. in connection with the power supply in the State of Madhya Pradesh. However, they submitted an application for licence under protest. It is on this protest the Hon'ble Supreme Court held that the Inspector's letter and workshop's reply ought to be read together and not in isolation. So read, the workshop's letter must be construed to mean that protest was lodged therein both against obtaining the licence as well as against liability to payment of excise duty. It was in this background that the appeal was allowed by setting aside the CEGAT's order. Whereas, in the present case, there was no whisper of any protest when the appellants paid duty on the sub-standard paper used captively and they never claimed any exemption under Notification No. 217/86. Whereas in the case of Divisional Engineer, Central Workshop of the Electricity Board, they sent a letter dated 30.11.1997 in which they had stated that they were not required to take out any licence and to pay duty and this fact they had stated very categorically by their letter dated 30.11.1976 that they are obtaining Central Excise Licence and paying duty under protest. They had also made it very clear that the provisions of Central Excise Rules regarding obtaining licence and payment of Excise duty are not applicable to the Central Workshop. In other words, the Divisional Engineer had taken the stand that Excise duty was not payable on the goods that were being manufactured in the workshop. In the said letter, the Divisional Engineer had further stated that having regard to the fact that the Inspector of Central Excise had emphasised the necessity of obtaining the licence and that the Divisional Engineer was submitting an application in Form AL-4 issuing a licence, under protest. It was in this background that the said letter had to be read as a whole in the context in which the requirement of obtaining licence was being insisted namely that the goods manufactured on the Central Workshop were leviable to excise duty under Tariff Item 68 and the liability was disputed by the Divisional Engineer. The letter of the Divisional Engineer dated 30.11.1976 was, therefore, construed to mean that protest was lodged in the said letter both against obtaining the licence as well as against liability to payment of excise duty. In view of the above position, the facts in the case of M.P. Electricity Board are that right from the beginning when they were asked to take out Central Excise licence, they had protested the levy of Central Excise duty on the goods manufactured in their Central Workshop. Similarly, the Apex Court in the matter of Samrat International Ltd. v. CCE has held that if the classification or the price list submitted by the assessee were approved by the Assistant Collector after some time, the clearances made in the meantime are to be deemed provisional even it B13 bond not executed but personal ledger account maintained. Whereas, in the present case, the time bar has been made applicable one by for the period prior to the date of filing of the classification list which was received in the Office of the Assistant Collector on 14.2.92 and the period of 6 months was computed from that date. Therefore, both the lower authorities have followed the judgment rendered by the Apex Court in the case of Samrat International supra. I have also to observe that CEGAT's judgment rendered in the case of CCE, Chennai v. TVS Suzuki Ltd. is also not applicable to the facts of this case because this duty was not as a result of adjustment under Rule 9B(5) of the Central Excise Rules, 1944, where the provisions of unjust enrichment contained in Section 11B of the Central Excise Act, 1944 are not to apply. Whereas in this present, the duty has been paid by them erroneously under the mistaken notion of law that they were required to pay duty. Therefore, the appellant's contention that the judgment rendered by CEGAT in the matter of CCE, Chennai v. TVS Suzuki Ltd. is applicable cannot also accepted in view of the facts and circumstances narrated above.
11. The Ld. Commissioner (Appeals) in paras 6 to 8 which have been reproduced in para 2 of the order recorded by my Ld. Brother Shri S.L Peeran, Hon'ble Member (J), has correctly held that the question of dutiability of sub-standard kraft paper captively consumed was never a subject matter of protest. In this connection he has also relied on the judgment of the Hon'ble Madras High Court in the case of CCE v. Chennai Bottling Co., Madras in which the Hon'ble High Court has held that a protest regarding inclusion of freight charges cannot be treated as equivalent to a protest in regard to classification. Therefore, the duty paid under protest for taking higher value cannot be treated as duty paid under protest under Notification No. 217/86 in as much as the duty on sub-standard kraft paper was paid inadvertently in respect of captively consumed goods and the appellants never claimed exemption under Notification No. 217/86. The appellants, therefore, cannot claim that they had paid duty under protest in so far as the applicability of the said Notification No. 217/86 is concerned. Following the ratio of the Hon'ble High Court judgment cited above, the Ld. Commissioner (Appeals) had held that the claim was time barred as there was no protest followed under Rule 233B of the Central Excise Rules.
12. I, therefore, do not find any infirmity in the orders passed by both the original authority and the lower appellate authority. The appeal is, therefore, rejected. Ordered accordingly.
POINTS OF DIFFERENCE Whether in the facts and circumstances of the case, the appeal is required to be disposed of on the terms set out by Member (Judicial) for the reasons recorded by him.
OR Whether in the facts and circumstances of the case, the appeal is required to be rejected, as held by Member (Technical) for the reasons recorded by him. The Registry is directed to place the papers before the Hon'ble President for referring the matter to 3rd Member.
P.G. Chacko
1.This matter has come up for resolving a difference of opinion between Ld. Member (Judicial) and Ld. Member (Technical) noted in Miscellaneous Order No. 1/2002 dated 3.1.2002 in Appeal No. E/1213/96.
2. The facts of the case have been noted by Ld. Brothers in their respective orders. However, for my purpose, I shall pen down the relevant facts minimally. The appellants, engaged in the manufacture of paper and paper board, had paid duty of excise on certain quantity of sub-standard kraft paper consumed captively in the manufacture of their final products, during the period 7.3.87 to 17.1.92. They had done so because they were, allegedly, unaware of the fact that the goods so captively consumed were eligible for exemption under Notification No. 217/86-CE. On 12.2.92, the appellants filed a classification list with the proper officer of the department claiming the benefit of the Notification in respect of the said goods, and that classification list was approved by the Assistant Collector. On 13.2.92, the party filed a claim for refund of Rs. 36,90,335 (duty paid on the goods in question, for the aforesaid period). The department, by show cause-notice dated 8.10.93, proposed to reject the claim on the ground of time-bar. In their reply to the show-cause notice, the party contested the proposal on the ground that the time-bar provisions of Section 11B of the Central Excise Act were not applicable to their claim inasmuch as the duty had been paid on the basis of a provisional assessment as well as under protest. The Assistant Commissioner allowed refund to the extent of Rs. 7,09,338.20 being the duties of excise paid for the period 15.8.91 to 14.2.92, after holding that the claim to this extent was within the normal period of 6 months. He rejected the rest of the claim on the ground of time-bar. The order of the adjudicating authority was taken in appeal before the Commissioner (Appeals) by the assessee. The Commissioner (Appeals) found that the party was eligible for refund of the duty paid on 14.8.91 also in addition to the aforesaid amount allowed by the lower authority. With this modification, the appellate authority upheld the order of the Assistant Commissioner. Hence the present appeal.
3. Examined the records and heard both sides. It appears from the record that the proposal in the show-cause notice was to reject the refund claim solely on the ground of limitation. Both the authorities below accepted the fact that the appellants had filed a letter of protest under Rule 233B of Central Excise Rules 1944 as early as on 9.7.85. They have, however, taken the view that the protest being in relation to valuation of the goods could not be treated as a protest based on the exemption Notification. For taking such a view, they have relied on the Madras High Court's decision in CCE v. Chennai Bottling Co., Madras Ld. Member (Judicial) has found that the High Court's view does not hold good after the Supreme Court's rulings in the cases of Mafatlal Industries Ltd. v. UOI , Samrat International Pvt. Ltd. v. CCE and M.P. Electricity Board v. CCE . On the other hand, Ld. Member (Technical) has sought to distinguish the case on hand from the cases considered by the Apex Court.
4. Before me today, Ld. Counsel for the appellants and Ld. JDR for the respondent have endeavoured to support the decisions rendered by Ld. Member (Judicial) and Ld. Member (Technical) respectively.
5. Ld. counsel has submitted that, as the jurisdictional Superintendent of Central Excise had made endorsements on the appellants' RT-12 returns for the relevant period to the effect that the assessments were provisional under Rule 9B of the Central Excise Rules, 1944 fluid as there has never been any finalisation of the assessments under Sub-rule (5) of Rule 9B, the assessments have ever remained provisional and consequently the time-bar provisions of Section 11B were not applicable to the refund claim in question. Counsel has pointed out that this plea, raised in the reply to the show-cause notice, has not been touched by the adjudicating and first appellate authorities. It has been further submitted by Ld. Counsel that the departmental officers were not expected to inquire into the grounds of the protest under Rule 2338. The factum of protest, regardless of its character, was enough to exclude the applicability of the limitation provisions of Section 11B. She has drawn support to this argument from the Supreme Court's ruling contained in para 85 of the judgment in Mafatlal industries case (supra). It has been further argued that the decision of the Madras High Court stands impliedly overruled by the Apex Court's ruling in the case of Mafatlal Industries (supra).
6. Ld. DR, on the other hand, has attempted to distinguish the case law cited by the counsel. His argument is to the effect that, in order that a protest registered under Rule 233B on a certain ground can be treated as having been made on a different ground, there has to be a nexus between the two grounds. The DR submits that, in the case of MP, Electricity Board (supra), the protest was against the department's insistence on taking out licence for manufacture and the Apex Court after noting the nexus between manufacture and dutiability held that the protest as to licence was a valid protest as to dutiability as well. In the instant case, the protest was in relation to valuation of the goods which, according to the DR, had no direct nexus to the basic question of dutiability. The DR seeks to elaborate the point by submitting that, for the period of dispute, the assessee had not claimed any exemption under the Notification and was, in principle, prepared to pay duty on the kraft paper. Their only objection was against the assessable value adopted by the department. Therefore, apparently, the assessee's protest was too limited in its operation to be treated as a comprehensive protest covering all conceivable situations. The D.R., therefore, prays for treating the appellants' protest as one which is not based on the applicability of the exemption notification and, for that matter as one which is not a valid protest against payment of duty on the goods. He urges to hold that the refund claim is hit by the limitation under Section 11B.
7. I have examined the submissions. I note that, admittedly, there is a protest having been filed by the assessee as early as in 1985 under Rule 233B. There is no dispute of the fact that the protest was in relation to the value of the goods. It is also an admitted fact that it was only on 12.2.92 that the assessee, for the first time, claimed the benefit of Nil rate of duty under Notification No. 217/86. The classification list filed on that day incorporating such a claim was approved w.e.f. that date. However, it is pertinent to note that the benefit of the exemption notification has been granted to the assessee by both the lower authorities by allowing refund of duty to the extent of over Rupees seven lacs for the period 1 5.8.91 to 14.2.92, which means that the department has acquiesced in the factual position that the party was entitled to the exemption under the Notification even for a period prior to 12.2.92. The Revenue is estopped from contending that the assossee was not entitled to the benefit of the exemption notification for any period prior to 12.2.92. If such exemption can be granted for the aforesaid period' (15.8.91 to 14.2.92) without insisting on specific claim therefor, it could very well be granted for any prior period, subject to statutory limitation, if any. The only surviving issue arising for consideration is whether the protest registered by the assessee under Rule 233B in 1985 in relation to valuation of the goods can be treated as a protest based on the ground of exemption from duty. This question is squarely covered by the Apex Court's ruling contained in para 85 of the judgment in Mafatlal Industries, wherein it has been categorically held that the proper officer of the department is not to sit in judgment over the grounds of protest under Rules 233B and that the assessee is not liable under that rule to particularise the grounds of protest. It would follow from this ruling of the Apex Court that a protest with particular reference to valuation as in the appellants' letter dated 9.7.85 is essentially a protest against payment of duty only and the reference to valuation is of no consequence. Had it been a blanket protest without reference to anything, even then, it would have served the purpose of a valid protest for all purposes of Rule 233B. I am, therefore, not inclined to accept the Revenue's arguments on the point. The appellants had paid the duty under valid protest under Rule 233B and, therefore, their refund claim was not hit by the limitation under Section 11B. The issue stands squarely covered in favour of the assessee by the Supreme Court's decision in Mafatlal Industries (supra).
8. The assessee had categorically raised a plea that the payment of duty was based on provisional assessment under Rule 9B, in their reply to the show-cause notice. This plea of fact has not been rebutted by the authorities below. Therefore, the Revenue cannot be heard to say that the assessment was not provisional. Since the assessment was provisional, again, the time bar provision under Section 11B will not operate against the refund claim in the light of the case law already discussed.
9. Ld. Member (Judicial) has remanded the matter to the adjudicating authority to examine the question whether the refund claim is hit by unjust enrichment or not. I have to respectfully disagree with this part of his order as I note that there was no proposal in the show-cause notice to reject the refund claim on the ground of unjust enrichment. However, I know, I am constrained not to take any view at variance with those taken by Ld. Brothers.
10. For the reasons already recorded, I respectfully disagree with the view taken by Ld. Member (Technical) and agree with that recorded by Ld. Member (Judicial). The Registry shall take appropriate steps to formalise the decision of the bench.
MAJORITY ORDER S.L. Peeran (J) and Jeet Ram Kait (T), Members
11. In terms of majority order, it is held that-
(i) That payment of duty was based on provisional assessment under Rule 9B of Central Excise Rules and that since assessment was provisional, the time bar provision under Section 11B will not operate against the refund in the light of case-law cited by the majority.
(ii) The matter is remanded back to the original authority for considering the aspect of unjust enrichment in the light of judgment of Mafatlal Industries case rendered by the Apex Court. The appellants shall be heard and if they have any evidence to show that duty element has not been passed on to the consumer, then the same is required to be produced to satisfy that the refund is not hit by unjust enrichment.
Thus, the appeal is disposed of on the above terms.