PETITIONER:
SAMRAT INTERNATIONAL (P) LTD.
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE HYDERABAD
DATE OF JUDGMENT21/09/1990
BENCH:
FATHIMA BEEVI, M. (J)
BENCH:
FATHIMA BEEVI, M. (J)
RANGNATHAN, S.
CITATION:
1991 AIR 369 1990 SCR Supl. (2) 1
1992 SCC Supl. (1) 293 JT 1991 (1) 181
1990 SCALE (2)747
ACT:
Central Excises and Salt Act, 1944: Section 11-B Central
Excise and Salt Rules, 1944: Rules 173 B, C, CC, D and
I--Assessee clearing goods under 'Self Removal'
procedure--Application claiming refund of excess
duty--Starting point for period of limitation-- What is.
HEADNOTE:
The appellant was manufacturing Hacksaw blades and
Bandsaw falling under Tariff Item No. 51-A(iv) of the Cen-
tral Excise Tariff. On 26.3.1985 they filed a classification
list as per Rule 173 B of the Central Excise Rules, 1944 in
respect of their products furnishing the tariff rate of 15%
Ad valorem by mistake instead of furnishing the effective
rates of duty as per Notification No.85/85 CE dated
17.3.1985. The Assistant Collector of Central Excise ap-
proved the classification list on 3.6.1985. On 31.10.1985
the appellant filed a revised classification list with the
effective rates of its products with retrospective effect
from 26.3.1985 which was also approved by the Assistant
Collector of Central Excise. On 30.10.1985 the appellant
made an application under section 11B of the Central Excises
and Salt Act, 1944 for refund of excise duty claiming that
they had paid excess excise duty from 1.4.1985 to 31.8.1985.
By its order dated 13.12.1985 the Assistant Collector of
Central Excise allowed the claim only partly but rejected
the claim for the period from 1.4.1985 to 27.4.1985 on the
ground that the claim was barred under section 11B of the
Act because the 'relevant date' for preferring the claim for
the appellant was the date of payment of duty and the duty
had been paid by adjustment in the personal ledger account
as and when goods were removed;
The order of the Assistant Collector was confirmed in
the appeal by the Collector of Central Excise (Appeals).
Appellant's further appeal to the Customs Excise and
Gold (Control) Appellate Tribunal was also unsuccessful.
In appeal to this Court under section 35L of the Central
Excises and Salt Act, 1944 it was contended on behalf of the
appellant (i) that mere debiting in the personal ledger
account should not be taken as the
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starting point for limitation and the, relevant date should
be the date on which ART-12 Returns, which were filed on a
monthly basis, were assessed: and (ii) that clause (e) of
Explanation to Section 11 (B) was applicable to the case.
Allowing the appeal, this Court,
HELD: 1. The scheme for payment of duty of goods under
which the appellant was clearing his goods is known as
'self-removal' procedure. There will be no time bar for
refund if the duty is paid under protest. The period of 6
months is prescribed in other cases. [6H; 7A]
2. In the instant case, the classification list filed by
the appellant for the period 1.4.1985 to 27.4.1985 was not
approved till 3.6.85. From provisions of Rules 173B, 173C
and 173CC of the Central Excise Rules, 1944 it is clear that
clearances can be made only after the approval of the list
by the particular officer. However, if there is likely to be
delay in accordance with the approval the officer can allow
the assessee to avail himself of the procedure prescribed
under Rule 9B for provisional assessment of goods. Between
1st April, 1975 when the classification list was filed and
3rd June, 1985 when the list was approved, the assessee was
clearing the goods by determining the duty himself and
debiting the amount of duty in his personal ledger account.
The amount of duty paid by him was obviously provisional and
subject to the result of the final approval by the officer
concerned. In these circumstances, the clearance of goods
made by the appellant between 1st April and 3rd of June,
1985 were in accordance with the procedure for provisional
assessment. In such a situation clause (e) of para (B) of
the Explanation under section 11 B will be attracted. The
RT-12 Return for the month of April, 1985 was filed on
8.5.1985 and the same was assessed on 29.10.1985. It is,
therefore, only from the date of this assessment that time
bar in section 11 B will operate. The refund application
having been filed on 30th October, 1985 cannot, therefore,
said to be time barred. [7B-D; E-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4460 Of
1988.
From the Order dated 15.4. 1988 of the Customs Excise
and Gold (Control) Appellate Tribunal New Delhi in Appeal
No. E/Appeal No. 2225 of 1986-A.
3
V. Sreedharan, V.J. Francis and N.M. Popli for the Appel-
lant.
Ashok H. Desai, Solicitor General, Dalip Tandon and P.
Parmeshwaran for the Respondent.
The Judgment of the Court was delivered by
FATHIMA BEEVI, J. This is an appeal under section 35L of
the Central Excises and Salt Act, 1944. The appeal is di-
rected against the order dated 15.4.1988 of the Customs
Excise and Gold (Control) Appellate Tribunal, New Delhi. The
appellant is the manufacturer of Hacksaw blades and Bandsaw
Blades failing under Tariff Item No. 51-A(iv) of the Central
Excise Tariff. The appellant filed a classification list as
per Rule 173B of the Central Excise Rules 1944 on 26.3.1985
in respect of their products furnishing the tariff rate of
15% Ad valorem by mistake instead of furnishing the effec-
tive rates of duty as per Notification No.85/85 CE dated
17.3.1985. The aggregate value of the clearance in the
preceding year i.e. 1984-85 did not exceed Rs.75 lakhs. In
the case of first clearance upto an aggregate value not
exceeding Rs.7.5 lakhs, the effective rates of duty is nil
and in the case of next clearance of Rs.7.5 lakhs, the duty
is 3.75% Ad valorem. The Assistant Collector of Central
Excise, Hyderabad, approved the Tariff rate 15% Ad valorem
on 3.6.1985 instead of the above effective rates as the
appellant did not claim the exemption as per Notification
No.85/85 CE dated 17.3.1985 due to ignorance. A revised
classification list with the effective rates in respect of
the products with retrospective effect from 26.3.1985 was
filed on 31.10.1985. The revised classification list was
approved. The appellant claimed that they had paid excess
Rs.2,55,172.55 from 1.4.1985 to 31.8.1985 as excise duty.
They made an application for refund as per rule under sec-
tion 11B of the Central Excises and Salt Act, 1944 on
30.10.1985.
The Assistant Collector of Central Excise by his order
dated 13.12.1985 sanctioned the refund claim only partly.
For the period from 1.4.1985 to 27.4.1985, the refund claim
was rejected on the ground that the same was time barred.
The Assistant Collector held that the refund claim for the
period 1.4.1985 to 27.4.1985 was time barred for the reason
that under section 11B, the ‘relevant date’ for preferring
the claim for a case such as that of the appellant was the
date of payment of duty and, according to him, the duty had
been paid by adjustment in the personal ledger account as
and when goods were removed. The plea of the appellant is
that mere debiting in the personal ledger account should not
be taken as the starting point for
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limitation and the relevant date should be the date on which
RT-12 Returns which are filed on a monthly basis are as-
sessed. The order of the Assistant Collector was confirmed
in the appeal by the Collector of Central Excise (Appeals).
The further appeal to the Tribunal was also unsuccessful.
The question that arises for decision in the appeal is
as to the starting point of limitation for filing an appli-
cation under section 11B of the Central Excises and Salt
Act, 1944. Section 11B so far as it is material reads as
under:
“11B. Claim for refund of duty–(1) Any person claiming
refund of any duty of excise may make an application for
refund of such duty to the Assistant Collector of Central
Excise before the expiry of six months from the relevant
date.
Provided that the limitation of six months shall
not apply where any duty has been paid under protest.
Explanation–For the purposes of this section
(B) “relevant date” means,–
(a) to (d) …………………………………….
(e) in a case where duty of excise is paid provisionally
under this Act or the rules made thereunder, the date of
adjustment of duty after the final assessment thereof;
(f) in any other case, the date of payment of duty.”
The appellant’s contention before the authorities was
that the date of assessment would be the date-of payment of
duty within the meaning of clause (f) above. We agree with
the learned Solicitor General that this argument is not
tenable. Where an assessee maintains a personal ledger
account, duty is paid by way of debit therein and goes to
reduce the amount of deposit paid by the assessee. It is
5
not a mere adjustment entry; it is effective payment.
Before us, however, learned counsel for the assessee has
raised an alternative contention. According to the appellant
it is clause (e) which is applicable in the case whereas the
contention of the respondent is that clause (f) is attract-
ed. To understand this argument, it is necessary to refer to
‘Self-removal’ procedure under which the appellant cleared
the goods.
Chapter VII-A of the Rules relates to removal of excise
goods on determination of duty by producers, manufacturers
of private warehouse licensees. Under Rule 173B, every
assessee shall file with the Proper Officer for approval a
list in prescribed form showing full description of all
excisable goods or products manufactured, the rate of duty
leviable on such goods and such other particulars as the
Collector may direct. The Proper Officer shall, after such
enquiry as he deems fit, approve the list with such modifi-
cations as are considered necessary and return one copy of
the approved list to the assessee who shall unless otherwise
directed by the Proper Officer determine the duty payable on
the goods intended to be removed in accordance with such
list. All clearance shall be made only after the approval of
the list by the Proper Officer. Sub-rule (2-A) of Rule 173B
provides as under:
“(2-A) All clearances shall, subject to the provisions of
rule 173CC, be made only after the approval of the list by
the proper officer. If the proper officer is of the opinion
that on account of any inquiry to be made in the matter or
for any other reason to be recorded in writing there is
likely to be delay in according the approval, he shall,
either on a written request made by the assessee or on his
own accord, allow such assessee to avail himself of the
procedure prescribed under rule 9B for provisional assess-
ment of the goods.”
Where the assessee disputes rate of duty approved by
the Proper Officer in respect of goods, he may have to give
an intimation to that effect to such officer and to pay duty
under protest at the rate approved by such officer. When the
dispute about the rate of duty has been finalised or for any
other reason affecting rates of duty, a modification of the
rate or rates of duty is necessitated, the Proper Officer
shall make such modification and inform the assessee accord-
ingly. Under Rule 173C, the assessee shall file with the
Proper Officer a price list in prescribed form. Prior ap-
proval of the price list by the
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Proper Officer is necessary in the specified cases. Here
also, sub-rule (5) of rule 173C provides:
“(5) Subject to the provisions of rule 173CC, an assessee
specified in sub-rule (2) shall not clear any goods from a
factory, warehouse or other approved place of storage unless
the price list has been approved by the proper officer. In
case the proper officer is of the opinion that on account of
any enquiry to be made in the matter or for any other rea-
sons to be recorded in writing, there is likely to be delay
in according approval, he shall either on a written request
made by the assessee or of his own accord allow such asses-
see to avail himself of the procedure prescribed under rule
9B for provisional assessment of the goods.”
Under Rule 173CC, assessee may remove goods in certain
cases pending approval by the Proper Officer of the classi-
fication or price list. Rule 173F provides that where the
assessee has complied with the provisions of Rules 173B,
173D, and where applicable 173C, 173CC, he shall himself
determine his liability for the duty due on the excisable
goods intended to be removed and shall not, except as other-
wise expressly provided, remove such goods unless he has
paid the duty as determined. Under Rule 173G, every assessee
shall keep an account current with the Collector. This rule
lays down the procedure which is to be followed by the
assessee for payment of duty. According to sub-rule (3) of
Rule 173G, within five days after the close of each month
every assessee shall file with the Proper Officer a monthly
return in the prescribed form showing the quantity of the
excisable goods manufactured, duty paid on such quantity and
other particulars. The Proper Officer makes an assessment as
provided under Rule 1731 on the basis of the information
contained in the return and after such further enquiry as he
may consider necessary assess the duty due on the goods
removed and the assessment is completed. The duty determined
and paid by the assessee under Rule 173F shall be adjusted
against the duty assessed and where the duty so assessed is
more than the duty determined and paid, the assessee shall
pay the deficiency by making a debit in the current account
within 10 days of the receipt of copy of the return and
where such duty is less, the assessee shall take credit in
the account current for the excess.
This is the scheme for the payment of duty for clearance
of goods by the manufacturers. This procedure is known as
self-removal procedure. There will be no time bar for refund
if the duty is paid under
7
protest. The period of 6 months is prescribed in other
cases. As we have already seen, section 1 1B says that the
period of 6 months “in a case where duty of excise is paid
provisionally under this Act or the rules made thereunder,
the date of adjustment of duty after the final assessment
thereof”. In this case, the classification list filed by the
appellant for the period 1.4.1985 to 27.4.1985 was not
approved till 3.6.1985. From the provisions of Rules 173B,
173C and 173CC, which we have set out earlier, it will be
seen that clearances can be made only after the approval of
the list by the particular officer. However, if there is
likely to be delay in according the approval the officer can
allow the assessee to avail himself of the procedure pre-
scribed under Rule 9B for provisional assessment of the
goods. In the present case between 1st April, 1975 when the
classification list was filed and 3rd June, 1985 when the
list was approved, the assessee was clearing the goods by
determining the duty himself and debiting the amount of duty
in his personal ledger account. The amount of duty paid by
him was obviously provisional and subject to the result of
the final approval by the officer concerned. This is the
procedure prescribed under Rule 9B except for the circum-
stance that no bond as provided in Rule 9B is required in a
case where the personal ledger account is maintained for the
clearance of the goods, since there is always a balance in
the account current sufficient to cover the duty that may be
demanded on the goods intended to be removed at any time. In
these circumstances, the clearances of goods made by the
appellant between 1st April and 3rd of June, 1985 were in
accordance with the procedure for provisional assessment. In
such a situation clause (e) of para (B) of the Explanation
under section 11B will be attracted. In this case the RT- 12
Returns for the month of April, 1985 was filed on 8.5.1985
and the same was assessed on 29.10.1985. It is, therefore,
only from the date of this assessment that time bar in
section 11B will operate. In the present case the refund
application had been filed on the 30th of October, 1985. It
cannot, therefore, said to be time barred.
We, therefore, accept this contention of the appellant.
The appeal has therefore to be allowed holding the appellant
is entitled to the full amount and there is no bar of limi-
tation as found by the Tribunal. We, therefore, allow the
appeal. In the facts and circumstances of the case there
will be no order as to costs.
T.N.A. Appeal allowed.
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