CASE NO.: Appeal (civil) 2552 of 1989 PETITIONER: COLLECTOR OF CENTRAL EXCISE,KANPUR Vs. RESPONDENT: FLOCK (INDIA) PVT. LTD. C-7, PANKI INDUSTRIAL AREA, KANPUR DATE OF JUDGMENT: 04/08/2000 BENCH: D.P.Mohapatro, B.N.Kirpal JUDGMENT:
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D.P.MOHAPATRA,J.
The consequence of non-challenge of an appealable
order passed under the Central Excise and Salt Act, 1944
(hereinafter referred to as ‘the Act’) arises for
determination in this appeal. To be more specific the
question is, in a case where the Assistant Collector of
Central Excise passes an order classifying a product under a
particular tariff item and the said order, though appealable
is not challenged by the assessee in appeal whether in the
application for refund of the duty paid the assessee is
entitled to question the order of the Assistant Collector as
erroneous ?
The facts relevant for determination of the question
may be stated thus: M/s Flock (India) Pvt. Ltd.-
respondent herein, was manufacturer of jute hessian floked
with nylon flocks under L-4 licence issued under the Act.
The respondent filed a classification list in which it was
claimed that the said product comes under tariff item 22-A.
The Assistant Collector after examining the contents of the
product and the particulars furnished by the respondent
passed an order on 21.1.1978 holding that the product in
question is classifiable under tariff item 22-B and not
under tariff item 22-A and the applicable rate of duty would
be 25% ad valorem. In the said order the Assistant
Collector expressly stated that the assessee may prefer an
appeal against his order to the Collector (Appeals). The
assessee neither challenged the said order by filing any
appeal nor did it pay the duty under protest.
The respondent filed an application on 6.4.1979
claiming refund of duty paid alleging inter alia that the
product in question were wrongly classified under tariff
item No.22-B, instead it ought to have been classified under
tariff item No.22-A and that the differential duty should be
refunded. The Assistant Collector after service of notice
on the respondent passed the order dated 27.8.1980
dismissing the claim for refund on the ground that the order
dated 21.1.1978 classifying the product as falling under
tariff item 22-B had attained finality, and therefore, the
claim for refund was not maintainable.
The respondent filed appeal before the Collector
(Appeals), New Delhi, assailing the said order. The
Collector by order dated 6.1.1984 allowed the appeal, set
aside the order dated 27.8.80 passed by the Assistant
Collector and remanded the matter to him with direction to
reconsider the matter on merits including the question
whether the goods were classifiable under tariff item 22-A
or 22-B. The appellant herein challenged the order of the
Collector (Appeals) by filing an appeal before the Customs,
Excise & Gold (Control) Appellate Tribunal (CEGAT) which was
dismissed by the order passed on 19.9.88. The said order is
under challenge in this appeal filed by the Collector of
Central Excise, Kanpur.
On the facts stated in the foregoing paragraphs the
question formulated earlier arises for determination. The
solution of the point formulated depends on the answer to
the question whether the jurisdiction of the Assistant
Collector while considering an application for refund of
duty paid is independent of the jurisdiction exercised by
him in determining classification of the product in
question. It is the contention of the respondent-assessee
that the jurisdiction to determine the validity and
sustainability of the claim for refund of duty is an
independent jurisdiction and in exercise of that
jurisdiction the Assistant Collector is not fettered by any
order passed by the authority regarding classification of
the product. As such the Assistant Collector could
independently consider the claim for refund of duty on
merits without being fettered by the previous order passed
by him in the matter relating to the question of
classification of the product and failure on the part of the
assessee to challenge the orders of classification of the
product under tariff item 22-B is of no consequence.
At the relevant time the provision for claim for
refund of duty was made in Rule 11. The said Rule reads as
follows:
“Rule 11 Claim for refund of duty :- (1) Any person
claiming refund of any duty paid by him may make an
application for refund of such duty to the Assistant
Collector of Central Excise before the expiry of six months
from the date of payment of duty :
Provided, that the limitation of six months shall not
apply where any duty has been paid under protest.
Explanation : Where any duty is paid provisionally
under these rules on the basis of the value or the rate of
duty, the period of six months shall be computed from the
date on which the duty is adjusted after final determination
of the value or the rate of duty, as the case may be.
(2) If on receipt of any such application the
Assistant Collector of Central Excise is satisfied that the
whole or any part of the duty paid by the applicant should
be refunded to him, he may make an order accordingly.
(3) Where as a result of any order passed in appeal or
revision under the Act, refund of any duty becomes due to an
person, the proper officer may refund the amount to such
person without his having to make any claim in that behalf.
(4) Save as otherwise provided by or under these rules
no claim for refund of any duty shall be entertained.
Explanation : For the purposes of this rule, “refund”
includes rebate referred to in Rules 12 and 12A.”
Section 35 of the Act provides regarding appeals to
Collector (Appeals). In sub-section (1) thereof it is laid
down that any person aggrieved by any decision or order
under the Act by a Central Excise officer lower in rank than
a Collector of Central Excise may appeal to the Collector
(Appeals) within 3 months from the date of communication to
him of such decision or order. In the proviso to
sub-section (1) the power is vested in Collector (Appeals)
to extend the period by further three months if he is
satisfied that the appellant was prevented by sufficient
cause from presenting the appeal aforesaid within the period
of three months prescribed under sub-section. Section 35-A
lays down the procedure to be followed in disposal of the
appeal. In sub-section(3) thereof it is provided that the
Collector (Appeals) may after making such further inquiry as
may be necessary pass such order as he thinks fit
confirming, modifying or annulling the decision or order
appealed against, or may refer the case back to the
adjudicating authority with such directions as he may think
fit for a fresh adjudication or decision, as the case may be
. The proviso to the said sub-section are not relevant for
the purpose of the present case. Section 35B(1)(b) makes an
order passed by the Collector (Appeals) under section 35A
appealable to the appellate tribunal. From the
aforementioned provisions of the Act the position is clear
that any order passed by an authority under the Act is
appealable to the Collector (Appeals) and a further appeal
to the appellate tribunal against the order of the Collector
(Appeals) is also provided in section 35. The hierarchy of
authorities for adjudication and determination of a matter
relevant for charging the excise duty is for a purpose. It
is not an empty formality. Classification of the goods
manufactured by an assessee is important for the purpose of
levy and collection of excise duty. Under Rule 173 B every
assessee is required to file with the proper officer a list
of goods manufactured by him for approval and the proper
officer shall after such inquiry as he deems fit approve the
list with such modifications as are considered necessary and
all clearances are to be made only thereafter.
A right of appeal is a creature of the statute. It is
a substantive right. An order of the appellate authority is
binding on the lower authority who is duty bound to
implement the order of the superior authority. Refusal to
carry out the direction will amount to denial of justice and
destructive of one of the basic principles in the
administration of justice based on hierarchy of authorities.
Coming to the question that is raised there is little
scope for doubt that in a case where an adjudicating
authority has passed an order which is appealable under the
statute and the party aggrieved did not choose to exercise
the statutory right of filing an appeal, it is not open to
the party to question the correctness of the order of the
adjudicating authority subsequently by filing a claim for
refund on the ground that the adjudicating authority had
committed an error in passing his order. If this position
is accepted then the provisions for adjudication in the Act
and the Rules, the provision for appeal in the Act and the
Rules will lose their relevance and the entire exercise will
be rendered redundant. This position, in our view, will run
counter to the scheme of the Act and will introduce an
element of uncertainty in the entire process of levy and
collection of excise duty. Such a position cannot be
countenanced. The view taken by us also gain support from
the provision in sub-rule (3) of Rule 11 wherein it is laid
down that where as a result of any order passed in appeal or
revision under the Act, refund of any duty becomes due to
any person, the proper officer, may refund the amount to
such person without his having to make any claim in that
behalf. The provision indicates the importance attached to
an order of the appellate or revisional authority under the
Act. Therefore, an order which is appealable under the Act
is not challenged then the order is not liable to be
questioned and the matter is not to be reopened in a
proceeding for refund which, if we may term it so, is in the
nature of execution of a decree/order. In the case at hand
it was specifically mentioned in the order of the Assistant
Collector that the assessee may file appeal against the
order before the Collector (Appeals) if so advised.
On the discussions made in the foregoing paragraphs
and for the reasons stated therein the order of the tribunal
is unsustainable. Accordingly the appeal is allowed and the
impugned order is set aside with costs.
