ORDER
Gowri Shankar, Member (T)
1. Tata Chemicals Ltd., respondent to this appeal located in Uttar Pradesh at Babrala is engaged in the manufacture of fertilisers. It purchased naphtha manufactured by Indian Oil Corporation and Oil and Natural Gas Commission at Hajira in Gujarat. These two companies cleared the product at a concessional rate of duty of Rs. 5.50 per kilo litre in terms of notification 75/84. This notification provides for partial exemption from duty to naphtha used in the manufacture of ammonia and fertilisers and contains a condition that where the use of naphtha is in a factory other than the factory of manufacture, the procedure contained in Chapter X shall be followed. This procedure requires issue of a certificate in the factory of use of the exempted material, referred to as CT-2 certificate that it required for use in the manufacture of final product specified in the notification, which is the condition to the notification. The officers having jurisdiction over the respondent’s factory, were of the opinion that it was using the naphtha not in the use of fertilisers but as feedstock in generation of steam and power and as fuel in its burner. After issue of notice in 1996, the Superintendent stopped issuing in 1997 the CT-2 certificates with the result that the respondent could no longer receive the naphtha cleared by the manufacturer at a concessional rate of duty.
2. Subsequently in its order dated 14-8-98 on the appeal filed by the respondent the Tribunal held that naphtha used as feedstock or as fuel in the manufacture of ammonia was in fact naphtha within the meaning of Notification 75/84 and thus entitled to the exemption that it provided. The respondent filed on 23-10-98, an application for refund of the duty, the incidence of which had been borne by it. After initial refusal by the Asst. Commissioner at Surat to accept the refund claim, it was later accepted by him. That authority
issued a notice proposing to reject the claim on the ground that it should have been filed before the Asst. Commissioner at Bareli, having jurisdiction over the respondent’s factory at Babrala. It said that the Tribunal’s order dated 7-8-98 had settled the issue and remanded the matter to the jurisdic-tional Commissioner to pass appropriate orders to confirm the duty amount of naphtha used in generation of electricity which has not been used directly or indirectly in the production of urea. Since that had not been done, the claim was also premature. It was time barred as it related to March and May, 1998. After considering the reply to the notice, the Asst. Commissioner passed orders dismissing the claim. He said that he had no jurisdiction to decide it. He further found that the matter was premature. By following the Tribunal’s decision the amount of naphtha which was entitled to refund would have to be determined and this would have to be done by the Asst. Commissioner having jurisdiction over the factory. He also found the claim to be barred by limitation since the invoice and RT 12 returns did not bear the endorsement duty paid under protest as required under the Rule. He therefore dismissed the claim.
3. The respondent appealed this order. In his order disposing of the appeal, the Commissioner (Appeals) said that a valid protest by the assessee (which was filed on 17-4-97 by the assessee i.e. the respondent before us) existed as provided in paragraph 85 of the Supreme Court judgment in Mafatlal Industries Ltd. v. UOI – 1997 (89) E.L.T. 247. He said further that the Asst. Commissioner having jurisdiction over the place of payment of duty was competent to decide the claim and hence the Asst. Commissioner of Surat had jurisdiction. He noted that the Supreme Court in its judgment in Indian Farmers Fertilisers Coop. Ltd. v. CCE – 1996 (86) E.L.T. 177 had held that naphtha used in generation of power and steam was entitled to exemption. There was therefore no need to await quantification of duty from the Commissioner of Kanpur. He therefore allowed the appeal and remanded the matter for de novo adjudication. The appeal by the Commissioner is against this order.
4. The appeal does not question the finding of the Commissioner (Appeals) that the Asst. Commissioner at Surat had jurisdiction to decide the claim or his finding in the light of the Supreme Court in IFFCO v. CCE that the quantification as to the amount of naphtha used in the manufacture of fertiliser is not necessary. There is a single ground in the appeal. This is that since the letter of protest had not been filed with the “Jurisdictional Asst. Commissioner with the incharge Range Superintendent discharging the duty liability” the Commissioner (Appeals) reliance upon paragraphs 85 and 86 of the Mafatlal judgment is misplaced. Endorsements have not been made on the invoice or RT 12 returns as required in Rule 233B. Therefore it is not correct to say that the duty has been paid under protest. Therefore, the claim which is filed beyond the period of six months from the relevant date is not saved from the bar of limitation.
5. The departmental representative reiterates what the appeal contends. The counsel for the respondent contends that it has been held by the Tribunal in its decision in D.C.M. Data Products v. CCE – 1993 (66) E.L.T. 635 that the requirement in Rule 233B that RT 12 returns and invoice showing payment of duty which bear an endorsement that duty has been paid under protest is procedural and that the failure to do so does not render the protest
invalid. He further contends that sub-section (2) of Section 11B, as it stood amended from September, 1991 contemplates that duty is payable by a person other than a manufacturer of excisable goods and that person can claim refund of that duty. Therefore the protest filed by Tata Chemicals was valid, notwithstanding that it was not filed before the authority having jurisdiction over the factory in which the excisable goods were manufactured and duty was paid. He contends that even when there is no provision in the statute for payment of duty under protest, the Tribunal has held that where a person signifies his intention to contest the levy of duty, the bar of limitation is not applied in deciding the refund due to such manufacture. He cites the decision of the Tribunal in Phosphate Company Ltd. v. CCE – 1987 (31) E.L.T. 599 in support. He further adds that it was as a result of the department’s failure to recognise the naphtha for generation of power and steam as having been used in the manufacture of fertilisers that the respondent was compelled in filing for refund. The department cannot now fall back on its illegal actions to defeat that claim under Section 11B of the Act.
6. Sub-section (1) of Section 11B of the Act provides that any person claiming refund of any duty of excise may make an application for duty “before the expiry of six months from the relevant date”. Sub-section (2) provides that if the Asst. Commissioner specified that the whole or any part of the duty, “duty of excise paid by the applicant” as refundable he may make an order accordingly. First the proviso to this sub-section enumerates the case in which the duty shall be paid to the applicant, instead of being credited to the Consumer Welfare Fund. Clause (e) under this proviso refers to the duty of excise borne by the buyer if he had not passed on the incidence of duty to any other person. It is clear from this that claim for refund under Section 11B can be made not only by the manufacturer who initially passed the duty but by the buyer of the excisable goods on whom the incidence of duty payable on the goods falls by being included in the price of such goods. No other meaning is possible; any such interpretation would result in clause (e) being rendered redundant. The difficulty that arises is that, strictly speaking the excise duty is paid by the manufacturer of the goods or any other person to whom the goods move in bond without payment of duty as provided in the rules. There thus appears to be a conflict in the provisions. By strictly construing the provisions of Rule 9 buyer of the excisable goods cannot claim refund of any duty in terms of sub-section (2) of Section 11B because he has not paid that duty. Yet the buyer is specifically entitled to file for refund in terms of Clause (e) of the proviso. The only possible way of harmonising the apparent conflict between these provisions is to say that the term “paid by applicant” occurring in sub-section (2) of Section 11B refers to reimbursement that he makes to the manufacturer or any other person from whom he buys the goods of the duty.
7. We are not really concerned with this issue directly. It comes into focus because of the words of Rule 233B. It contains the procedures to be followed when duty is paid under protest. Sub-rule (1) provides that where an assessee desires to pay the “duty under protest” he shall deliver a letter to the proper officer giving grounds. This is the clause that the department relies upon in its appeal. Rule 2(l)(b) defines “assessee” as meaning any person who is liable for payment of duty assessed and also includes any producer or
manufacturer of excisable goods or a licencee of a private warehouse in which excisable goods are stored. Now, where goods are manufactured and cleared on payment of duty, the “assessee” referred to in the Rule would be a manufacturer on whom the primary liability of payment of duty falls. In such case, therefore, any person who buys the goods from such manufacturer would not be an assessee. By strict interpretation of Rule 233 he will not be entitled to file a protest.
8. As we have noticed in the case before us Indian Oil Corporation, the assessee was liable to pay duty on the goods. It did not file a letter of protest while paying the duty, consequent upon the departmental officers refusing to issue a CT 2 certificate which would permit the respondent to receive oil manufactured by IOC without payment of duty. It is in such circumstances that the respondent filed a letter of protest.
9. One of the consequences of the drastic amendment made to the Act and to Section 11B is in order to give effect to the doctrine of unjust enrichment was to permit the buyer of excisable goods to claim refund. Rule 233B which required an assessee to filed a protest was not amended so as to permit a buyer also to file a protest. The question before the larger bench in National Winder v. CCE – 2000 (118) E.L.T. 236 was whether the protest filed by a manufacturer against payment of duty would conform upon the purchaser a right to claim refund beyond the period of six months specified in the Rules. Relying upon the Larger Bench on the judgment of Mafatlal Inds., the larger bench said that the purchaser was bound to file a claim for refund within six months from the date of purchase of the goods from the manufacturer. It said that the purchaser has to “fight his own battle” and cannot take shelter of the protest filed by the manufacturer. The larger bench was not concerned with a situation in which a purchaser filed a protest without the manufacturer doing so. It would be reasonable to say the right to file protest is incidental to the right to claim refund. The entire object of filing a protest is to save a claim for refund from limitation. Hence if a buyer is entitled to claim refund he is entitled to file a protest.
10. We have already noted the definition of the term “assessee” occurring in the Rules which covers any person liable to pay duty. In the case before us, it cannot be denied that the respondent was liable to pay duty with regard to quantities of naphtha that it received free of duty in terms of the notification and did not utilise for the purpose specified therein. The benefit of the exemption contained in the notification subject to the procedure of Chapter X being followed Rule 196 in this chapter provides for recovery of duty from the applicant i.e. the person who wishes to avail of the Chapter X procedure in respect of goods obtained under Rule 192 i.e. without payment of duty and not utilised. In fact, the order of the Commissioner of 11-3-97 demanded duty on the quantities of naphtha that the appellant received and used towards the generation of electricity and steam purpose of demanding duty from the respondent. It could therefore be legitimately construed that the respondent was the assessee with regard to goods covered by the notification. It could therefore file a protest with regard to the liability of duty in terms of the notification.
11. We also note the decision of the Tribunal in Phosphate Company Ltd. v. CCE – 1987 (31) E.L.T. 599 relying upon the judgment of the Supreme
Court in Patel India (P) Ltd. v. UOI -1983 (13) E.L.T. 1495 holding that even in a situation where there was no provision of filing a protest, an assessee who has protested against this liability to duty can claim immunity from the operation of limitation in filing its claim for refund when he has lodged his protest against liability to duty. The only ground in the department’s appeal is without merit.
12. We therefore find no reason to interfere with the impugned order and dismiss the appeal.