Customs, Excise and Gold Tribunal - Tamil Nadu
Ballarpur Industries Ltd. vs Commissioner Of Customs on 9 May, 2000
Equivalent citations: 2000(71)ECC178, 2000(126)ELT965(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. These appeals arise from the same common order passed by the Commissioner (Appeals) Madras Order-in-Appeal No. M.CUS. 205 dated 31.1.97 by which three review applications filed by the Collector of Customs under Section 129D(4) of the Customs Act, 1962 were allowed in respect of three Orders-in-Original by which the refund claim of the parties were set aside and the appellants have been directed to forthwith deposit the duty that had been erroneously refunded in terms of the following three Bill of Entries:
(a)30675
(b)30661
(b)34745 (Annexure A to the paper book) The Stay application for waiver of pre-deposit of the amount and stay of recovery was allowed by the Tribunal by Stay Order No. 528/1197 dated 18.11.97 prima facie the Bench holding that the appellants have made out a very strong case in their favour. Para 6 of the order is reproduced herein below:
6. We have considered the submissions made before us. It is now seen that the appellants have already been given the refund amount of Rs. 2,50,37,145. This is against the claim of Rs. 3,26,78,535 as per the BE No. 30675 dated 8.9.92. The letters which ae produced before us dated 9.6.93 and 1.10.93 prima facie show that this refund application was received on 5.3.93. On a perusal of the stamps on it, prima facie the first endorsement of the appraising (Main) seems to have been put in the first instance. Thereafter only the other two stamps were affixed. This is the result of the prima facie examination of the documents before us. However, this will be subject to expert opinion if any or which may be asked or produced at the time of final hearing of the appeal itself. Therefore. There is prima facie evidence available on record to show the receipt of the application on 5.3.93, and more particularly in view of the pre-audit and post-audit of the refund. Money has also been paid to the appellants. Therefore, the balance of convenience is in favour of the appellants being granted the stay in this matter. We accordingly grant the prayer for stay of the order with respect of this BE alone. With respect to the other two BEs, there is no stay application by the appellants themselves and the appeals will be posted in due course. We make it clear that it is open to the department to file application for early hearing if they so choose. We also make it clear that if fresh evidence are available in the hands of both the sides, they are free to file application for admission of additional evidence.
(Pronounced and dictated in open Court) Sd/- Sd/-
(TP NAMBIAR) (VPGULATI)
MEMBER VICE PRESIDENT
2. The question that arises for consideration in these common appeals wherein the facts and circumstances are same are:
(a) Whether the review application filed by the Collector of Customs under Section 129D of the Customs Act is maintainable in view of the specific provisions for initiation of proceedings for recovery of refund in terms of the provisions of Section 28 of the Customs Act, 1962.
(b) Whether on the above points, the issue is covered in appellants' favour in terms of the large catena of judgments.
(c) If not whether the order is sustainable in view of the fact that the appellants had filed refund application within the stipulated period of six months in terms of Section 27 of the Act and also duty had been paid under protest in terms of their letter dated 12.9.92 addressed to the Assistant Collector of Customs (SIB) Customs House, Madras by which they have stated that the duty will be paid under protest.
(d) Whether the findings of the Collector in terms of the reference application that the refund claim was time barred and that the refund claim was not filed on 5.3.93 in terms of the endorsement and seal on the refund application dated 7.4.93 which seal is superimposed separately on another seal dated 5.3.93 is correct?
3. The facts of the case are as follows. The appellants had been granted import license dated 13.12.91 under EPCG scheme for import of Plants and machinery for their glass manufacturing plant at Pondicherry. These were cleared by the Madras Customs on payment of concessional rate of duty under Customs Notification No. 169/90 available for import under EPCG scheme. At the time of import, they contended that they had not placed any order nor had they imported accessories and spares. Therefore, they subsequently placed orders for supply of accessories and spares for the said Plants from the suppliers. At the time of clearance of the said spares under the three impugned Bills of entry, the proper officer denied them the concessional rate of duty under the said Notification available under the said scheme and assessed the imported goods on higher rate of customs duty. The said assessment was made by the proper officer upon direction of the SIB, Madras who gave specific direction to the concerned group to treat the imported goods as spare parts and are not accessories. The appellants, therefore, paid excess duty of Rs. 2.50,37,145 on 1.10.92 in view of the urgent need for the use in the plants and machinery. While doing so, they had sent a letter of protest dated 12.9.92 to the Assistant Collector (SIB) Customs House, Madras indicating clearly to him that there is an urgent need to clear the goods to meet the export shipment dead line and therefore, they are paying duty at the rate assessed by him under protest. The said letter is extracted herein below:
Subject : Import of Accessories and Spares under EPCG Scheme.
In pursuance of our discussions at your office today, we have to inform that the spares and accessories imported by us are urgently required to commission our Project and to meet export shipment deadline, we are paying duty at the rate assessed by you under protest.
We now request you to release our consignment for assessment, payment of duty and early clearance.
We shall revert to the Customs authorities at a later date to substantiate our claim for concessional rate of duty and refund.
4. Thereafter the appellants filed refund claim for the said sum paid by them vide their refund claim dated 5.3.93 with a covering letter dated 4.3.93 which was well within six months from the date of payment made on 1.10.92. The said refund application was received by the main appraising Section of the Madras Customs by putting their seal. Copy of the said refund claim is annexed below:
To No. GD/1012/RFD/CUS/003
The Assistance Collector of Customs Appraising Refunds/Postal
We wish to lodge this claim for refund of....
Customs duty which have been collected in
excess from us as per details given below:
1. Bill of Entry No./Post Parcel No. 30675/8.9.92
2. Bill of Entry Cash No./Deposit No. with HD-1000073/1.10.92
date/date of purchase invoice Rs. 3,26,78, 535 00
3. Description of goods covered by Bill of (a) Accessories for COM-
entry/Post Parcel/Purchase Invoice SOC 33 Function
Electronic Timing
System
(b) Accessories for
Electronic sweepout
system
(c) Accessories for Micc
(d) Accessories for Cold end
(e) Accessories for CID-III
(f) Accessories for FPHs-
15.....GR28
(g) Accessories for MCD
Pallet strapping M/C
(h) Accessories for Hot End
treatment
4. Name and address of
(a) Importer Ballarpur Industries Ltd.
Thapar House, 124 Janpath, New
Delhi, 110 001
(b) Clearing Agent M/s. G.M. Govias & Sons, 64,
Armenian Street, Madras-600 001
(c) Applicant Ballarpur Industries Ltd.
Thapar house, 124 Janpath, New
Delhi-110 001
5. Indicate whether the claim is covered Covered under Section 27(1)(b)
under Section 27(1)(a) or 27(1)(b)
6. In case of payment of duty under protest Under Protest
details of registration of protest
7. Amount of Modvat credit availed from Not applicable
the additional duty of customs paid and now
covered by the refund claim
8. Ground of claim Import covered under EPCG
import Licence No. (P)/CG/
2128959/S/WP/ 2: CG/91 Dt.
13.12.91, which was ...by Customs
9. Enclosures (No. of sheets should be (a) Importer's Purchase Order
specified against each claim) --GD/1012/HO/200 Dt.
6.6.91 (26 pages)
(b) Supplier's Invoice--A53-
8007 Dt. 8.6.92 (2 pages)
Supplier's Invoice--A53-
8009 Dt. 8.6.92 (2 pages)
(c) Triplicate copy of Bill of
Entry 30675 dated 8.9.92
(d) working sheet for
difference
10. Any further details that are Shall be furnished as and when required
deemed necessary and relevant to the
claim
11. Indicate whether personal hearing Yes, required
is required or not
DECLARATION
I, Yogesh Bakshi, the applicant representing the Importer M/s. Ballarpur Industries Limited, do hereby declare that what is stated above is true to the best of my information and belief. I also declare (a) that the excess duty paid and claimed now for refund has been passed/has not been passed on to other are person by the importer; (b) that the claim pertains to imports made by an individual for his personal uses (c) that the importer duty borne by the buyer of the imported goods at the time of buying from the importer has been passed/has not been passed on to any other person.
Thereafter the refund application was duly acknowledged on behalf of the Assistant Collector (Refunds) dated 9.6.93 which clearly indicated that the claim application was dated 5.3.93. The said acknowldgement is annexed below:
for BALLARPUR INDUSTRIES LIMITED Sd/-
YOGESHBAKHSHI GENERAL MANAGER Place: Pondicherry Date : 4.3.93 'To Ballarpur Industries Ltd.
Thapar House 124 Janpath New Delhi Dear Sirs, Your claim application dated 050393 pertaining to BE No. 030675 dated 080992 SI. No. hd 1000073 dated 011093 amounting to Rs. 27489317.00 has been received by the CUSTOMS HOUSE on 050393 and assigned the No. 75300611, which may please be quoted in all future correspondence in this regard.
Yours faithfully, Sd/.
For ASSISTANT COLLECTOR (Refunds)
5. On 1.10.93 Assistant Collector (Appraising) Refund Section, called for particulars with regard to refund claim dated 5.3.93. It is indicated herein that the appellants filed detailed reply dated 14.1.93 with regard to the details and furnished documentary evidence and write-up of the accessories imported establishing their claim. They also supported their claim with a certificate dated 10.12.93 issued by the Chartered Accountant. The Assistant Collector of Customs granted personal hearing on 20.1.94 and thereafter along with an independent Chartered Engineer visited the factory in Pondicherry to ascertain as to whether the accessories cleared were actually used in the plants and machinery or they were stored as spares. Thereafter, on 11.2.94 he passed a detailed considered Order-in-Original granting refund of the claims setting out the reasons for the same. The order is a detailed one. However, he had in the said order rejected refund claims in respect of some of the items of the value of Rs. 18,74,670 and granted refund in respect of the impugned three Bills of entry. Appellants did not contest this by filing any appeal before the Collector (Appeals) in respect of the rejected claim. Collector of Customs did not file any appeal against the said order passed by the Assistant Collector in terms of Section 128 of the Customs Act, 1962. However, Collector of Customs under Section 129D(2) of the Customs, Act, 1962 called for examination of the proceedings of the Assistant Collector and filed review petition before the Collector (Appeals) for determining the points raised by him against the Order-in-Original of the Assistant Collector under the provisions of Section 28.
6. Grounds raised by the Collector before the Collector (Appeals) were that duty had not been paid under protest in terms of the Bills of entry as there was no endorsement to the effect. As per the procedure for payment of duty under protest, the importers before payment of duty had to seek permission from the Assistant Collector to pay duty under protest giving the reasons thereon. It is stated that the Assistant Collector after examination of the requests for protest permits the protest to be registered. The protest is registered in the register maintained for the purpose in the refund section of the Customs House and a serial number is allotted and the Bill of entry is endorsed with the rubber stamp indicating that the protest has been registered under serial No. corresponding to the entry in the register. It is stated that the Assistant Collector (Refunds) does not seem to have verified this basic requirement before entertaining the refund claim. It is stated that on ascertaining from the Refund Section, it was found that no protest was registered against the Bills of entry under reference. It is stated that the refund claim was received in the refund section on 7.4.93 i.e. only after the time limit of six months was over. The date of receipt of the refund claim itself is shrouded in mistery. There are two rubber stamps showing the date, i.e. one as 5.3.93 and another as 7.4.93 super imposed over the stamp dated 5.3.93. It is stated that the latter is one bearing the rubber stamp of the Assistant Collector (Refund Section). However, it is stated that there is no correspondence in the official register of the Appraising main section. Serial No. 146 found in the Appraising Main section relates to receipt of documents from Assistant Collector, MSIL Building Bangalore and not to the refund Section in question for the refund claims, register is maintained, claims are sent to CPU Section for generating acknowledgment. If the claims had been received on 5.3.93 then this would have been sent immediately thereafter to CPU Section whereas this was sent only on 15.4.93 to CPU and no claim was sent to CPU after 2.4.93 and before 15.4.93. Though on different dates in March 93, claims had been sent to CPU Section, this one does not figure therein thereby implying that the claims had not been filed in March 93. It is stated that as per the rubber stamp of refund section, this was received on 7.4.93 and hence was sent to CPU on 15.4.93 along with the other claims for the first time immediately after receipt of the claim i.e., 15.4.93. Therefore, it was stated that the refund claim was time barred and the Assistant Collector should have rejected it as such. It is stated that instead of examining this basic aspect of establishing the sanction of the refund, therefore, the refund order is erroneous under law. The reference application also raised grounds pertaining to the merits of the case. It is stated that the items were not covered under Notification 160/92 and on merits several grounds have been raised.
7. However, the Collector (Appeals) after due enquiry and carrying out due verification on his own on the basis of some material collected by the Collector (Appeals) came to the conclusion of forgery and held the claims to be time barred. These findings are contested as the appellants challenge the findings of the Collector (Appeals) of forgery in putting the seal of 5.3.93, without disclosing as to how the forgery was committed and without disclosing who had connived with the appellants in committing the forgery and manipulating both the stamps of Appraising refund section over and above the stamp of the Appraising main. The appellants contend that the findings of manipulation with mala fide intention by tampering and forgery were never alleged or stated in the reference claim and the various findings arrived at on that basis is on Collector (Appeals) own enquiry which is not provided in law and the procedure adopted in examining and recording evidence of Dy. Collector C.B. Durgaiya is challenged in this appeal. The procedure adopted by the Collector in straightaway filing the reference application under Section 129D without raising these questions by issue of show cause notice under Section 28 of the Customs Act, 1962 for recovery of erroneous refund is under serious challenge.
8. It is the case of the appellants, that the entire proceeding adopted in filing a reference application is not sustainable as no review application can be filed before the Collector (Appeals) under Section 129D in respect of erroneous refunds. It is stated that resort for recovery of erroneous refunds has to be in terms of Section 28 detailing out all the allegation and only after the appellants put forth their defence, the Assistant Collector of Customs, should adjudicate the issue and pass appropriate Orders-in-Original in terms of Section 28 which has not been done. It is the case of the appellants that the provisions of Section 129D(1) would not be applicable for recovery of erroneous refund and that the issue is well settled in terms of large catena of judgments, which all have been examined by the Tribunal in the case of Collector of Customs v. Ferro Alloys It follows the ruling as laid down in the following judgments:
(1) International Computers Indian Manufacturers Ltd and Anr. v. UOI .
(2) Golak Patel Volkart Ltd. v. CCE (3) CCE v. Universal Radiators (4) Re-rolling Oil Mills (5) ITC Ltd. and Anr. v. UOI (6) Akola Oil Industries v. CCE (7) S.V. v. Nihal Chund Agarwal It is stated that this judgment has been followed over and over again by the Tribunal in a large number of judgments. It has been clearly held in this judgment that in case of erroneous refund recourse for recovery has to be adopted only under Section 28 of the Act and review proceedings under Section 129D of the Customs Act, 1962 is applicable only in other cases other than the ones falling under Section 28 of the Act. The appellants further contend that the Collector (Appeals) has gone beyond the scope of the reference in carrying out enquiry as the original authority for which he has no powers in terms of Section 129D(1) as he is required only to determine the said points raised in the reference application out of the decision or order passed by the Assistant Collector. Therefore, the grounds on which he has held the claim as time barred is not sustainable. Further contention of the party is that the Collector (Appeals) has brushed aside the genuineness of the seal of the Collector of Customs on the refund claim is without bringing out the facts leading to forgery or manipulation. Their further contention is that the protest letter referred to above was never taken into consideration including the two letters received from the Customs House acknowledging the refund claim as having been filed on 5.3.1993 which are referred to above. They contend that they had lodged protest under Section 27 of the Customs Act. There is no procedure prescribed for lodging protest and the Collector (Appeals) reliance upon Public Notice for filing protest letter is not in terms of the law. As regards payment of duty made under protest they relied upon the following judgments wherein such letters were accepted as letters of protest:
(a) Executive Engineer Workshop Division, MP Electricity Board v. CCE as reported .
(b) Mafatlal Industries v. UOI
(c) India Pistons v. CCE
(d) India Cements v. CCE
(e) Roche Products v. UOI
(f) Jay Chemical Industries v. CCE
(g) LML Ltd.
(h) Rotogravurs v. CCE .
(i) Shri Baidyanath Ayurveda Bhavan v. CCE
(j) CCE v. Prestige Engineering India .
(k) Andhra Cements Co. Ltd. v. CCE .
They contend that the Collector (Appeals) relied upon Trade Notice 171/85 for holding that there has to be proper registering of payment of protest is not substantive and mandatory in the light of the above referred judgments. In this regard they rely on the ratio of the judgments laid down in:
Birla Jute Ltd. Industries v. CCE as in .
They contend that the Collector (Appeals) conducting investigation and allowing the Dy. Collector to depose and take his statement and coming to the conclusion of forgery is totally unfounded procedure in law which cannot be the bais for review of the Collector's petition. In this regard they rely on the case of CC, Bombay v. Liwe International as in which lays down that subsequent discovery of forgery alleged to have been committed cannot be taken into consideration for the purpose of exercising power under Section 129-D( 1) of the Customs Act, 1962 under which the reviewing authority is only concerned with finding out whether order suffers from any illegality or impropriety. They contend that the Revenue ought to have carried out investigation with regard to erroneous refunds and those aspects of investigation should have been brought out in the show cause notice to enable the appellants to contest the same and therefore adopting the procedure under Section 129D is neither legal nor proper nor warranted.
9. It is contended that the department has not verified the aspect pertaining to stamp on the refund application through experts and also about super embossing of the stamp of dated 7.4.93 by (Apprg main). They contend that they filed refund application on 5.3.93 within the statutory time limit. The department had not made any contest or challenge to the said filing of the refund application and the Assistant Commissioner had after due proceedings granted the refund. Rest of the allegations brought out in super imposing of the stamp will not take away the filing of the refund application on 5.3.93. It is contended that procedural matters pertaining to sending of the application from one department to another and the stamping by other department is of no consequence so long as the application has been filed within time. They referred to the subsequent acknowledgment dated 9.6.93 received from the department admitting the application dated 5.3.93 for refund. They also referred to another letter dated 1.10.93 from the Assistant Commissioner acknowledging their claim on 5.3.93. Therefore, the review petition stating that refund claim was not filed on 5.3.93 but on subsequent date is totally incorrect.
10. We have heard Shri M. Venkataraman, learned Counsel for the appellants and Shri Madanagopal Sr. Central Govt. Standing Counsel for the Revenue.
11. The learned Counsel for the appellants relied upon the citations and the grounds stated above and sought for allowing the appeal in terms of the submissions noted. The learned Counsel for the department filed his written submission by which he contended that the department has also filed criminal case which is pending in the competent Criminal Court. It is submitted that till such time the criminal proceedings are completed the present appeal is required to be stayed. The following judgments are relied upon:
(a) CCE v. Ferro Alloys as in
(b) Garware Nylons Ltd. v. CCE as in
(c) Kesoram Rayons v. CCE 1986 (86) ELT 464 (SC)
(d) GTC Industries v. CCE as in 1997 (94) ELT 9 (SC)
12. We have carefully considered the submissions and perused the records including the reference application filed by the Collector before the Collector (Appeals) and the grounds raised by the appellants and the application referred to by them. We have also raised questions which are required to be answered in this appeal. Our answer to question raised in Para 2(a) above is as follows:
(a) We are of the considered opinion that as far as the review application filed by the Collector of Customs under Section 129-D is concerned, the same is not maintainable in view of the specific provision for recovery of erroneous refund in terms of the provisions of Section 28 of the Act. In the present case, the appellants had paid duty under protest and the letter of protest having been filed is not disputed by the department. Be that as it may, the appellants had also filed refund application on 5.3.93 in the office of the Assistant Collector (Appg Section) Customs House and the same has been received and seal has been embossed on the application. This application has been produced by the department itself during the course of the proceedings before the Tribunal and the Assistant Collector concerned took up this application and issued a letter acknowledging the same on 9.6.93. The letter is already extracted which clearly refers to the Bill of Entry in question received by the Customs House on 5.3.93 and assigned with number 75300611 which also were directed to be quoted in all the future correspondence in this regard. The Assistant Collector (Appg Refund) again sent a letter dated 1.10.93, acknowledging their claim lodged on 5.10.93. By this letter he called upon the appellants to furnish the following:
(1) EPCG licence (2) Technical write-up and catalogue of parts (3) Documentary evidence to prove that the higher incidence of duty paid by them and claimed as refund had not been passed on to any body else.
Appellants on 1.11.93 replied to this letter. The AC after detailed investigation to their claim and also after visiting the factory along with the Chartered Accountant satisfying himself about the correctness of the claim passed the Order-in-Original on 9.2.94 accepting the claim in the said Order-in-Original. He sanctioned refund claim of the excess customs duty collected on the remaining accessories for which C&F value was Rs. 1.86,35,996 under BE No. 30675 dated 8,9.92. This amount was directed to be debited in the EPCG import license No. P/CG/2128959. However, by the same order he rejected their claim for treating as accessories items of accessories for C&F of Rs. 18,74,670.00. The procedure laid down under law is that when erroneous refunds has been paid, the department is required to take up investigation and issue show cause notice within six months from the date of payment making out grounds for re-calling the amount in terms of Section 28 of the Customs Act, 1962 which is reproduced herein below:
When any duty has been levied or has been short-levied or erroneously refunded or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may:
(a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year;
(b) in any other case, within six months.
13. A perusal of the above section clearly indicates that if any duty has not been levied or has been short levied or erroneously refunded which is within the stipulated period, show cause notice is required to be issued as to why the said amount should not be recovered and in a case where the refund has been done by reason of collusion or any wilful misstatement or suppression, then show cause notice can be issued within six months from the relevant date. This will enable the parties to put forth their case or challenge the evidence that would be put forth against them. The original authority is required to hold detailed proceedings before an adjudication order is passed and after giving an opportunity of hearing in the adjudication proceedings.
14. On the refund application having been entertained under Section 27, refund having been granted, the Revenue does not get a right to file a review application under Section 129-D for the simple reason that Section 129-D is restrictive Section inasmuch as the power granted to the Collector of Customs is only to call for and examine the record of any proceedings and after satisfying about the legality or propriety of any such a decision or order, may direct the said authority to apply to the Collector (Appeals) for determination of the such points arising out of the decision or order as may be specified by the Collector of Customs in his order. In terms of this Section 129-D, Collector of Customs has got restrictive power inasmuch as he has only to determine the points to be raised before the Collector (Appeals) in terms of the order passed by the adjudicating officer challenging the legality or propriety of the order based on the facts already on record and also determined by the authority and there will be no scope for the Collector of Customs for taking into consideration fresh facts or fresh evidence for reviewing the order as Section 129-D does not provide for such scope for enquiry or rely upon other material evidence which was not before the original authority. Therefore, in the present case, as the Collector has raised questions as to the correctness of the seal on the refund application. The procedure in such a case to be adopted was to hold a detailed enquiry by investigating authority under the provisions of Section 28 and thereafter issue show cause notice bringing out the evidence against the appellants pertaining to any ingredients of the provisions of Section 28 i.e., fact of erroneous refund by reason of collusion or any wilful misstatement or suppression by the importer or exporter or agent or employee of the importer or exporter. The parties will have to be given suficient opportunity to reply and controvert or rebut to the detailed investigation or evidence relied upon in the show cause notice that would be issued under Section 28 for recovery of erroneous refund. In the present case, the Collector of Customs had only doubt in the form of certain suspicion in questioning the legality and propriety of the Assistant Collector in granting refund. In the authorisation letter in terms of Section 129-D(4) the Collector of Customs has merely directed the AC of Customs. Review Cell, Customs House, Madras to file appeal on his behalf before the Collector (Appeals), Madras. It is our considered opinion that Collector of Customs was not justified in exercising the power vested in him under Section 129-D(4) to direct the Assistant Collector to file appeal, as Section 129 cannot be invoked in such circumstances.
15. The Collector has also not determined the points required for determination arising out of the decision or order in terms of Section 129D(2) of the Act. The said exercise has to be performed only by the Collector and Assistant Collector cannot take the powers of the Collector of Customs to raise grounds of appeal under Section 129-D(2) of the Act. The Section 129(D) reads as below:
The Commissioner of Customs may, on his own motion or on the application of any aggrieved person or otherwise call for any examine the record of any proceedings in which an adjudicating authority subordinate to him has passed any decision or order of the nature referred to in Sub-section (5) of Section 129-D for the purpose of satisfying himself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as he thinks fit A perusal of the above provisions clearly shows that the Collector of Customs should satisfy regarding the legality or propriety and he shall determine the points arising out of the decision or order for applying to the Collector (Appeals) for such determination. Such satisfaction is to be borne out by grounds to be taken up in terms of the order passed by the subordinate adjudicating authority. The Collector of Customs has not chosen to express the points for determination or grounds on which the adjudicating authority's order is challenged. But the Assistant Collector has drawn the grounds. Even in the grounds, the Assistant Collector merely stated that the date of receipt of the refund claim itself is "shrouded in mystery". It is further stated that there are two rubber stamps; one 5.3.93 and the other 7.3.93 super imposed on the other one. The later one is bearing the rubber stamp of AC (Refunds). However it is stated that there is no corresponding entry in the inward register of (Appg Main Section). SI. No. 146 found in the Appg Main Section relates to receipt of documents from AC MSIL. Building Bangalore and not to the Refund Section in question. It is stated that in the refund section though inward register is maintained, the claim later is sent to CPU section for generating acknowledgement. It is stated that if the claims has been received on 5.3.93 then it should have been sent immediately thereafter to CPU section whereas this was sent only on 15.4.93 to CPU Section. It is stated that no claims were sent to CPU section after 2.4.93 and before 15.4.93. The Assistant Collector has only stated the manner in which his understanding arose in respect of the refund claim processed. He has not unravelled the mystery about the genuineness of the seal or why it was received on 5.3.93 and did not process it to the CPU Section before 15.4.93 as no inward register is maintained. These are administrative matters or administrative lapses for which appellants cannot be blamed. So long as the seal on the refund application is genuine and that has not been challenged in the reference application filed by the Collector of Customs, before the Collector (Appeals), it cannot be held that there was a forgery committed by the appellants as held by Collector (Appeals). Pleas raised by appellants that the proceedings are not sustainable under Section 129-D is fully justified in terms of citations referred to.
16. The points or grounds raised by Assistant Collector has not been perused by the Collector of Customs and it cannot be said that the Collector of Customs had applied his mind to the conclusion that adjudication order is not proper and legal on the grounds subsequently raised by the Assistant Commissioner while filing the same before the Commissioner (Appeals). The Assistant Commissioner has raised several pleas and thrown aspersions on the bona fide action of the adjudicating authority, subsequently leading to the adjudicating authority being booked by CBI under criminal laws, including the appellants. This appears to be completely flouting the provisions of Section 129-D(2) even if we take it to be a proper section for filing a review petition before the Collector (Appeals). Such flouting of legal provisions may result in serious prejudices to the rights of the parties, which indeed has happened in this case as can be seen in the manner in which the Collector (Appeals) proceeded to hold enquiry and investigation on the referral application and basing his findings on such evidence which is totally illegal and unsustainable in law. Therefore, we clearly hold that invocation of Section 129-D(2) is not correct. The proper course of action was to invoke the provisions of Section 28 of the Customs Act, for recovery of the erroneous refund. This is the view expressed by the Tribunal in case of CCE v. Universal Radiators Ltd. as in . The Tribunal while analysing similar case held that there is no proceedings pertaining to recovery or erroneous refund initiated under Section 129-D of the Customs Act, 1962. The Tribunal has taken the view that the only way by which an erroneously refunded money can be recovered is notice under Section 11-A of the CE Act, which is pari materia to Section 28 of the Customs Act, 1962 and application and proceedings under Section 35E are not a step in that direction. It has been held that if it were then the department can by reason of this section recover the erroneously refunded duty or short levied duty for which no notice was issued within time specified under Section 11-A of the CE Act. The primary and fundamental section and the fountain head of the power for recovery of any money erroneously refunded, it has been held is by resorting to Section 35E. The department cannot recover the erroneous refund that have become barred by limitation under Section 11A of the CE Act. Therefore, the Tribunal held that all such notice will be out of tune legally. In the same context the Tribunal went on to observe this aspect of the matter in paras 5 to 17 as follows:
5. The Central Excise and Salt Act, 1944, has one section which authorises recoveries of duty erroneously refunded and this is Section 11 A, it provides that (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded a Central Excise Officer, may within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.
This is the fundamental and only authority in the law that permits the Central Excise Department to recover erroneously refunded duty, if any duty is refunded, and it is discovered that the refund was an error, the only procedure for recovering that duty is under Section 11 A. The procedure in the section prescribes a notice to be issued to the person chargeable with the duty calling upon him to show cause why he should not pay the amount specified in the notice, the Assistant Collector, after considering the representation, will determine the amount of duty due from such person and, thereupon, such person shall pay the amount so determined, it is also prohibited in the law to recover any money in excess of the amount specified in the notice.
6. The Act has another section provides show claims for refund of duty can be made upon the Central Excise Department by a person claiming refund, making an application to the Assistant Collector of Central Excise within a period stipulated in the law, and how the Assistant Collector of Central Excise must satisfy himself that the whole or any part of the duty should be refunded to the claimant; and how he should make an order accordingly. Note very carefully that a refund, if it is to be made, must be under the orders of an Assistant Collector of Central Excise. This fact is at the root of this problem.
7.The refund claim in this case originated as a refund claim made by the assesees M/s. Universal Radiators and in pursuance of that refund claim, the Assistant Collector sanctioned an amount of Rs. 28,861.27, this was the only way that the refund could have been paid and it is this amount that later formed the bone of contention between the two sides when the Collector of Central Excise came to the conclusion that the refund was erroneous and he set about taking steps to recover it. For this purpose, in exercise of the powers given to him under Section 35-E(2) of the Act, he directed the Assistant Collector to make an application to the Collector of Central Excise (Appeals), Madras, which was duly carried out by the Assistant Collector. That application was heard and adjudicated upon by the Collector (Appeals).
8. When the Collector (Appeals) heard the matter, he came to the conclusion that the notice he served on the assessee-respondents was barred under Section 11-A and, therefore, he could not issue an order directing them to repay the duty erroneously refunded. But the reasoning was somewhat awry.
9. The only way by which an erroneously refunded duty can be recovered is a notice under Section 11-A; an application and proceedings under Section 35-E are not a step in that direction. If it were then the department can, by using this section, recover errenously refunded duty or short levied duty for which no notice was issued within the time specified under Section 11-A.the primary and fundamental section, and the fountain head of all the powers for recovery of any money erroneously refunded. Thus, by resort to Section 35-E. the department can recover erroneously refunds that have long become barred by limitation under Section 11-A, to say nothing of the fact that it is almost inconceivable that any notice issued by the Collector (Appeals) under Section 35-E, as he did in this case, could ever reach the assessee in time. All of them would be out of time and illegal. To argue that, because Section 35-E allows this procedure of application and determination by the Collector (Appeals), the department can recover such duties, is to enlarge the powers of the department in a way that sets Section 11 -A at naught, it defeats the right process laid out in the Act.
10. The proper route of the right process laid out in the Act is only the one written in Section 11-A. This section prominently gives leave to the Assistant Collector to issue notices if any money representing duty is found to have been lost by mistaken refund. There is no other course for the authorities to the recovery of such duty.
11. I can see an objection coming forward to this, that the Assistant Collector would be seeking to review his own order if he seeks to recover erroneously refunded duty. After all, Section 11-B allows only the Assistant Collector to make refunds and, therefore, when he himself issues notice under Section 11 -A for return of the erroneous refund, he is sitting in judgment over his own action. This is a difficulty that I see no means of surmounting--but that is how the law frames it. If the objection prevails, then obviously no erroneously refunded duty can be recovered, because only the Assistant Collector can make refund. In the rare cases when the erroneous refund was a result of fraud or collusion or any other criminal reason, the Collector would be the notice given. But the objection will appear in the form of questioning the authority of the Collector himself to review the Assistant Collector's order. For he has none.
12. The Collector of Central Excise, Coimbatore, says in his authorisation dated 27.9.1984 to file this appeal before the Tribunal that the notice of appeal has been filed within the time-limit of Sub-section (4) of Section 35-E and hence it was not correct to hold that the time-limit of Section 11-A would apply in this case also. He does not say why it is incorrect. There is nothing any where in any part of the Act that can counteract Section 11 A, or that can look it out, it enters where it must; its power is inexorable; it sinews remorseless; Section 35-E has nothing to offer to fight, or even to shield anyone from, its puissance.
13. The Collector understands the words of Sub-section (4) about the provisions relating to appeals being applied to the application under Section 35-E as meaning that the legislature did not want the time-limit of Section 11-A to apply; otherwise, he holds, Section 35-E would be nullified. But he does not see that his own interpretation nullifies Section 11-A, because its protection to the assessee can then be pierced and destroyed by a simple tool--a Section 35-E application, and that the time-limit will virtually come to mean one year or more.
14. The protective time-limit of Section 11-A cannot be surprised from the rear or taken from the flanks, because it runs all round, a secure and sure guard--It is a wall of defence. We must not breach it or attempt to scale it--It provides invaluable services, often in ways we do not always appreciate.
15. Section 35-A second proviso in fact is designed to protect the assessee from just such exactions as may be made when the department finds its demands under Section 11-A barred by time. It prohibits the Collector (Appeals) from passing an order requiring a person to pay any duty which he (Collector) may discover, during the appeal proceedings before him, has been short levied or erroneously refunded, unless a notice of demand to pay is issued to that person within the time-limit of 11-A. The time-limit of Section 11-A runs on a tight Schedule--its starting point to its finishing post is rigidly controlled. It must set out from the "relevant date" - no other date is permissible, whether it runs for six months or for five years. The time-limit "specified in Section 11-A" is not six months; it is "six months from the relevant date". A time-limit counted any other way would not be a "time-limit specified in Section 11-A".
16. May be we have here a stand-off; a stalemate; and I can see no way round it.
17. However, as no notice was given to M/s. Universal Radiators within the time-limit specified in Section 11-A of the Central Excises and Salt Act, the refund said to have been erroneously made to them cannot be recovered.
The same view reiterated in the case of Re-Rolling Mills v. CCE as in paras 5 to 9 which are extracted herein below:
5. It may be true that the appeal was filed to the Collector (Appeals) on 10.3.1983, but that will not save the demand from becoming time barred. To be in time, demand for the recovery of the money refunded on 12.10.1981 should have been made by the department within 6 months of the date of refund. There is no evidence that this was done. Instead an application was filed by the Assistant Collector in accordance with Section 35-E(4) to the Collector (Appeals). This application is dated 5.3.1983. The Collector (Appeals) mentions party's application dated 10.3.1983 but this is not available. Then the Collector issued a notice dated 5.5.1983 (though he makes no mention of this in his order) calling upon M/s. Re-Rolling Mills to show cause why the refund order dated 12.10.1981 should not be set aside and necessary orders as deemed fit passed. Not only did this notice contain no demand, but it is about one year and seven months after the date of the Assistant Collector's order of refund. Nor does the notice allege any malpractice, fraudulence and suppression etc. The Collector (Appeals) thinks that because the review was "done before expiry of two years under Section 35-E" it would enable recovery of the sum erroneously refunded. But he also says that appeal had been filed within 5 years from 12.10.1981 and therefore, it would not be time barred because of the proviso to Section 11-A.
6. The five-year time limit is not available for the purpose of turning an appeal or an application into a demand contemplated by Section 11-A, nor can it insulate the application/appeal from time bar. When any excise duty has been erroneously refunded, Section 11-A requires that the Central Excise Officer should within six months from the relevant date, serve a notice on the person to whom the refund was erroneously made requiring him to show cause why he should not pay the amount specified in the notice. In case of erroneous refund, the relevant date has been defined as the date of refund. The Section has a time limit of five years if the erroneous refund was caused by fraud, collusion or any wilful misstatement or suppression or facts or contravention of any of the provisions of the Act and rules made thereunder with intent to evade payment of duty. The Collector (Appeals) misunderstood the function of the time limit of Section 11-A and thought it could be used in proceedings under Section 35-E for counting the time limit within which the application should be filed. Filing of the appeal or the application within years does not safeguard the demand from the time bar if a time bar has arisen, and an order passed by the Appellate Collector under Section 35-E cannot have the effect of nullifying Section 11-A and its time limit.
7. The time limit of Section 11-A governs the issue of the demand under that section and that section alone. It follows that if no demand has been issued in accordance with Section 11-A, nothing else can take its place. There is no evidence on record that demands were issued for erroneously refunded money within the time limit prescribed by Section 11-A. Therefore the order of the Appellate Collector dated 22.9.1983 on the application of the Assistant Collector is invalid and cannot serve as a means for recovering the money.
8. The department should have issued a demand under Section 11-A, and if they thought wilful misstatement, suppression and fraud had caused the refund to be made erroneously on 12.10.1981, they should have issued a notice within the five-year time limit permitted by Section 11-A for such cases. If there was such suppression, there was time till October 1986 for the departmental authorities to issue a notice using the five-years limit of Section 11-A, and, of course, in so doing they should have charged the factory with fraud, suppression etc. They did not do so and evidently they did not have anything to support a charge of suppression and fraud. They chose to follow another route but that route cannot take them to the desired goal.
9. The action of the Appellate Collector was wrong and must be set aside. His order is accordingly set aside.
17. The Tribunal again re-considered the issue in the light of several judgments and the above two judgments and also in the case of Collector of Customs v. Ferro Alloys Corporation Ltd. as and has reiterated the same view in great length and the findings arrived at in paras 13, 14 and 20 are re-produced below.
13. The question now is as to whether after the order of finalisation of the bill of entry has become final under the Customs Act can the Collector of Customs within his powers on his own motion could call for, and examine the records of the proceedings of the Asstt. Collector to satisfy himself as to the legality or propriety of such finalisation. If so, could he direct such authority namely Assistant Collector either to Collector (Appeals) for determination of such points arising out of the decision or the said order of the Assistant Collector. The further question is as to whether Section 129D restricts the type of cases falling under Section 28 of the Customs Act as in the present case. It is now well settled that finalisation of bill of entry is an order and a decision passed by the authority lower to the Collector and therefore, the Collector is perfectly within his right to call for and examine the legality of such an order. But now which of the provisions the Collector should apply? Is it the proviso of appeal under Section 129D or Section 128 of the Act or invoke larger period of Section 28 by issuing show cause notice for short levy, for recovery of the duty. On examination of these provisions, it is seen that the aspect pertaining to non-levy, short levy and erroneous refund has been made an exclusive provision under Section 28 of the Act. All other aspects other than this, could be said to be covered by the provisions under Section 128 wherein the limitation is to an extent of a period of 3 months and the Collector (Appeals) having further period to allow another 3 months. Independently, the Collector can invoke Section 129D where a period of one year is available to the Collector to appeal to the Tribunal. Under Sections 128 and 129D, the legislature has not restricted to any particular subject. It has given wide power to the Collector under Section 129-D to call for and examine any decision or order passed by his subordinate adjudicating authority. But the provisions of Section 28 of the Act which restricts to only two matters pertaining to non-levy, short levy and erroneous refunded. However, the Collector has even more powers under the proviso to Section 28 to extend the recovery for five years under the stated conditions. Therefore, it can be safely presumed that the legislature has made an independent provision for non-levy, short levy fund for erroneous refund under Section 28 of the Act and the provisions granted under Section 28 should be independently restricted to this section alone. The limitation under Section 128 and Section 129D has to be held to be independent of Section 28 of the Act. The reason for so excluding provision of Section 28 from the ambit of Sections 128 and 129D of the Act appears to be to satisfy the principles of natural justice by making mandatory provisions for issue of show cause notice and to allow the party to have a full hearing on the charges that would be made against them. This proceedings under Section 28 are of exclusive nature, inasmuch as, an independent proceedings are held by issue of show cause notice by the Department by which it sets out the reason for claiming non-levy, short levy relying on its evidence or gives the reasons for rejecting the refund claims again relying on its evidence. If an extended period is invoked, then the entire evidence on which the Department relies is stated in unambiguous terms so as to make out a case for recovery beyond the period of 5 years. In case if this procedure is not followed, the proceedings get vitiated and the recovery would be bad in law. The assessee gets full opportunity to know the charges levelled by the Revenue as well as the evidence on which the charges are levelled. The assessee also can in turn, place their case with supporting evidence in defence. The case arising other than in non-levy, short levy and erroneous refund under the Act may not have this feature of issue of show cause notice and disclosing the evidence to the assessee and giving opportunity to defend themselves by defence evidence. In respect of other orders under the Act, the Collector of Customs can call for records to examine its legality and recommend for filing an appeal before the Collector (Appeals) under Section 129D of the Act, for which there is a period of one year available to the Collector. Therefore, for cases arising under Section 28, the limitation available for both the parties to file an appeal under Section 128 of the Act is 6 months only. The Revenue cannot have better advantage over assessee in respect of limitation. Both should have equal treatement and hence Section 28 cannot be equated to the other provisions and it is to be considered as an independent of the other provisions of the Act.
14. The analogous provisions in the Central Excises and Salt Act, 1944, are Section 11A, 11B, Sections 35, 35E, 35EE of the Act, Section 28 of the Customs Act is analogous to Section 11A of the Act as has been held in the case of International Computers Manufacturers Ltd. and Anr. v. Union of India . It has been held in this case by the Delhi High Court that if the show cause notice is not issued under Section 28 of the Customs Act, in absence of provisional assessment, within the stipulated time, then any demand raised would not be enforceable. The Supreme Court in the case of Gokak Patel Volkart Ltd. v. Collector of Central Excise, Belgaum while examining the provisions of Section 11A of the Central Excises and Salt Act, observed in Para 9 as follows:
No notice seems to have been issued in this case in regard to the period in question. Instead thereof an outright demand had been served. The provisions of Section 11A(1) and (2) make it clear that the statutory scheme is that in the situations covered by the Sub-section (1), a notice of show cause has tobe issued and Sub-section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made before making the order thereof. Notice is thus a condition precedent to a demand under Sub-section (2). In the instant case, compliance with this statutory requirement has not been made and therefore, the demand is in contravention of the statutory provisions. Certain other authorities have been cited at the hearing by counsel for both sides. Reference to them, we consider, is not necessary.
From the above reading, it becomes very clear that the issue of show cause notice under Section 11A is mandatory and it is a statutory provision under the requirement. Thus it can be clearly said that the provisions of Section 28 of the Customs Act and Section 11A of the Act are exclusive in nature on account of special feature of issuance of show cause notice. This feature cannot be circumvented. In a similar situation under Excise Act, where classification list had not been challenged by the Revenue by filing appeal under Section 35 of the Excise Act but preferred to have the matter reviewed under Section 35E of the Act, after the expiry of statutory period under Section 11A of the Act, the Tribunal has held that by following such a procedure, would make Section 11A nugatory. This view has been expressed in the case of Collector of Central Excise v. Universal Radiators Ltd. in paras 9,10 which is noted below:
The only way by which an erroneously refunded duty can be recovered is a notice under Section 11 A; an application and proceedings under Section 35E are not a step in that direction. If it were then the Department can by using this section recover erroneously refunded duty or short levied duty for which no notice was issued within the time specified under Section 11A, the primary and fundamental section and the fountain-head of all the powers for recovery of any money erroneously refunded. Thus, by resort to Section 35E the department can recover erroneous refunds that have long become barred by limitation under Section 11A to say nothing of the fact that it is almost inconceivable that any notice issued by the Collector (Appeals) under Section 35E as he did in this case could ever reach the assessee in time. All of them would be out of time and illegal. To argue that because Section 35E allows this procedure of application and determination by the Collector (Appeals), the department can recover such duties, is to enlarge the powers of the department in a way that sets Section 11A at naught. It defeats the right process laid out in the Act.
The proper route of the right process laid out in the Act is only the one written in Section 11 A. This section prominently gives leave (sic) to the Assistant Collector to issue notices if any money representing duty is found to have been lost by mistaken refund. There is no other course for the authorities to the recovery of such duty.
20. In this case, the Department has not reopened the assessment under Section 28 nor filed an appeal after final assessment under Section 128 of the Customs Act, therefore, the Department cannot resort to Section 129D of the Act by preferring the review after the period of expiry as stipulated under Sections 28 and 128 of the Customs Act. The provisions of Customs Act being analogous to the Central Excises and Salt Act and the law having been clearly stated by the highest court and the Tribunal as noted above, therefore, the same analogy would apply with the provisions of Customs Act also. In view of this, it has to be held that Section 28 of the Customs Act is independent of Section 129D of the Customs Act and the Revenue cannot take advantage of the limitation available under Section 129D of the Act on failure to comply with the provisions of Section 28 of the Act. The law laid down by the Supreme Court with regard to the issue of show cause notice under Section 11A of the Act as stated in Gokak Patel Volkart Ltd. (supra) and the ruling laid down in the case of Kosan Metal Products Ltd. would apply to the Customs Act also.
Therefore, applying the ratio of the above citations, it is clear the Collector of Customs, had no jurisdiction to file a review application before the Collector (Appeals) under Section 129D of the Customs Act, 1962 and he was required to have issued notice under Section 28 of the Customs Act, 1962 for recovery of erroneous refund and the same had not been done. Therefore, the review petition filed by the Collector of Customs was required to have been rejected by the Collector (Appeals). On this point alone we set aside the impugned order by answering the question raised in Paras 2 (a) and (b) above:
18. As regards question in para 2(c) above, it is seen that as already discussed the refund petition was filed within the stipulated period of six months and it was in time. There was a clear rubber stamp of dated 5.3.93 of the Assistant Collector of Customs House Madras (Appraising Main Section) which sent it to another section which embossed another seal dated 7.4.93 over the seal dated 5.3.93 adjacent to the seal dated 5.3.93. There is no allegation that seal of dated 5.3.93 was not genuine and the seal had come to be affixed by the appellants on their own. There was no enquiry concerning the same and at the time of granting refund nor was there any enquiry thereafter for issue of notice alleging forgery as concluded by the Collector (Appeals) on his understanding of the enquiry which we have already held to be not proper in law.
19. The Collector of Customs in his review petition has not challenged the authenticity of this seal nor has he expressed his ground to hold that the order of review to be not legal and proper. It is the Assistant Collector who has merely observed that it surrounds with a ring of mystery which the Collector of Customs has not unraveled. The same was required to have been done by a detailed enquiry and the result of investigation brought out in the notice by citing evidence. There is no doubt about the seal on the refund claim being 5.3.93 and affixed by the office of the Assistant Collector, Customs House, Madras. This is also supported by the Assistant Collector (Appg Refund Section) dated 1.10.93 calling upon the appellants to produce documents in which the claim has been referred to as 5.3.93. The further letter dated 9.6.93 of the AC (Refund) also referred to this claim application dated 5.3.93. In this view of the matter, and after going through the evidence, the pleas raised by the appellants that they had claimed the refund within the stipulated time of six months from the date of payment of duty in terms of Section 27 of the Customs Act, 1962 is required to be upheld. Further we notice that duty had been paid under protest in terms of letter dated 12.9.92 addressed to the Assistant Collector, SIB, Customs House, Madras. There is no challenge to this letter having not been filed and the circumstances leading to the payment which clearly indicates that there was no willingness on the part of the appellants-importer to pay duty volunatarily as they were fully aware that the goods were exempted and they were paying duty under constraints and hence letter of protest was lodged by them on 12.9.92 which has to be accepted as payment made under protest. Appellants plea that the payment has been made under protest is supported by a number of judgments of the Hon'ble Supreme Court which has accepted similar letters of protest as payment under protest as in the case of India Pistons v. CCE , Executive Engineer Workshop Division, MP Electricity Board v. CCE as , India Cements v. CCE as reported in 1981 (41) ELT 358 and that of Shree Baidyanatha Ayurveda Bhavan as in .
20. As regards question raised in Para 2(d) above is concerned, we are of the considered opinion that the findings arrived at by Collector (Appeals) in terms of the reference application that the refund application was time barred, was not correct. Duty was paid under protest and the refund claim had been lodged within time and there was no forgery or super embossing of seal by the appellants.
21. The Central Govt. Standing Counsel pleaded for keeping the case in abeyance till such time as the criminal proceeding against the appellants in the Magistrate Court is decided. We are of the considered opinion that the proceedings under the criminal law are independent of the proceedings arising under the Customs Act, 1962 and therefore, the plea raised by the learned CGSC is rejected and so also the other pleas raised by him including the plea for remand of the case for de novo consideration for following the procedure of issuing show cause notice and re-adjudicating the matter. As there is clear merit in the appellants case as discussed above, the impugned order is set aside and the appeal allowed.