ORDER
I.J. Rao, Member (T)
1. When this matter was taken up it was seen that the appellants made a miscellaneous application dated 27-5-1985 by which they sought admission of five more grounds. After hearing both sides we order as follows :
(i) Ground No. (i) seeks to bring in another set of proceedings wherein the Assistant Collector passed the order on 11-1-1979 and the order-in-appeal was passed by the Collector (Appeals) on 14-3-1983. In our view considering such a ground as part of the present proceedings would not be legal and correct. We, therefore, reject the admission of this ground.
(ii) Ground No. (ii) For the same reasons we also reject the admission of ground No. (ii) noting that the basic submission made in this ground is already a ground of appeal as filed.
(iii) & (iv) Ground No. (iii) & (iv): Considering that grounds (iii) & (iv) are only rewording of the basic stand of the appellants as contained in the appeal we do not find it necessary, in the interests of justice to allow addition of these grounds. We also note that in ground No.
(iv) the appellants say that the Madhya Pradesh High Court set aside the original assessment made for the period 1970-74, but a perusal of the photostat copy of the order filed by the appellants shows that the High Court set aside the assessments from 1-3-1970 to 31-1-1972 only.
(v) Ground No. (v): We however, allow ground No. (v) to be added as it is a general plea.
2. We further observe that on 9-3-1990 when the matter was heard the Bench directed the appellants to file a copy of the order dated 30-10-1975 in appeal dated 28-10-1975 and documents D-1, D-2 and D-3 referred to in para 22 of the order dated 30-7-1976 of the Madhya Pradesh High Court in the miscellaneous application No. 126/72. The appellants while complying with the direction by filing the appellate order dated 30-10-1975 and price lists dated 14-4-1971, 3-7-1971 and October 71 also filed a letter dated 29-7-1972 from their Advocate. The filing of the last document at this stage is quite irregular and we are ignoring it.
3. Briefly stated the facts of the matter are that the appellants manufacture aerated waters and upto 29-12-1970 they were filing price lists in which ex-factory value was shown in which freight and delivery charges were, according to the appellants, included. After this date they started showing ex-factory price and the freight and delivery charges separately in their price lists. While approving the price lists the Department was adding freight and delivery charges to the ex-factory price lists for determining the assessable value. On 2-2-1972 the Company filed a writ petition before the Madhya Pradesh High Court challenging the inclusion of freight and delivery charges in the assessable value. During the pendency of the writ petition (Miscellaneous Application No. 126/72) the Appellate Collector gave the appellants partial relief by allowing exclusion of freight and delivery charges for returning of empty containers only and the appellants got consequential relief to that extent. On 30-7-1976 the Madhya Pradesh High Court passed orders on the writ petition setting aside the assessments made by the Department from 1-3-1970 till the date of filing the writ petition i.e. 31-1-1972 and quashed the price lists and directed the Department to make fresh assessments in the light of the principles laid down by the Supreme Court (presumably those judgments mentioned in para 22 of the High Court’s order). In October 1976 the High Court of Bombay passed orders (in respect of M/s. Duke & Sons) to the effect that Coca Cola and Fanta Orange did not contain blended flavouring concencrates, making them eligible to a lower rate of central excise duty. On 17-8-1977 the appellants filed revised classification lists which the Assistant Collector rejected by an order dated 11-1-1979. The appellants succeeded in appeal (order dated 14-3-1983) (This part of the happening is not before us).
4. On 31-12-1979, the Assistant Collector of Central Excise passed an order in respect of the appellants by which refund application filed by the appellants in pursuance of the Madhya Pradesh High Court’s judgment was granted; but an amount of Rs. 1,79,760.96 was reduced from the claim on account of redetermination of the assessable value.
5. It is the claim made by the appellants that on 16-8-1977 they wrote to the Assistant Collector of Central Excise saying that Coca Cola and Fanta Orange were eligible for assessment at a lower rate of excise duty as they did not contain blended flavouring concentrates and seeking consequential refund. They say that on 5-12-1979 they reminded the Assistant Collector to finalise the pending assessments. However, the Asstt. Collector’s order dated 31-12-1979 does not contain any reference to this aspect (of reclassification) as per the copy of a letter dated 2-2-1980 (filed by the appellants in the paper book, page 99). The Assistant Collector informed the appellants that the appellants’ letter dated 5-12-1979 was not available at the time of adjudication and saying that “as the order passed is appealable you may please adduce your evidence at the appeal stage.”
6. On 20-7-1984 (9-8-1984) the Collector (Appeals) passed the impugned order upholding the redetermination of the value and, while observing that the claim for reclassification was an extraneous matter, holding that the refund claim was filed beyond the period of limitation. Hence this appeal.
7. Shri Narasimhan, the learned Advocate for the appellants argued that
(i) as the Madhya Pradesh High Court quashed the assessments the Assistant Collector had to take into consideration not only the question of valuation but also the question of the rate of duty in the light of the Bombay High Court judgment in Duke and Sons. The Assistant Collector was wrong in confining his order to valuation only without going into the rate of duty. The learned Advocate argued that assessment was not just working out the value and duty but includes a decision on the question of correct rate also;
(ii) The letter dated 5-12-1979 in which the appellants raised the question of rate of duty should be taken as a continuation (of the proceedings);
(iii) The appellants made a request for refund on 16-8-1977 to which their letter dated 5-12-1979 would be a continuation;
(iv) While granting the refund on the limited aspect of valuation the Assistant Collector recalculated the assessable value indicating that the entire assessment was opened and there was fresh assessment. Therefore, the Assistant Collector was duty bound to consider the submissions made by the appellants on 5-12-1979 with regard to rate of duty.
(v) Though the High Court ordered reassessment from 1-3-1970 to 31-1-1972 the Assistant Collector passed orders for the period 1-3-1970 to 31-12-1974. Therefore, the refund must be granted for the entire period.
On the question of valuation he made the following submissions
(vi) The Appellate Collector disallowed part of the transport charges also wrongly;
(vii) The amount of Rs. 1,79,760.96 was wrongly disallowed by the Central Excise authorities as there was no law according to which the amount of refund could be added to the assessable value;
(viii) There was a calculation error of Rs. 73,560.06 as explained in Ground No. VII of the appeal read with Annexure 7 page 98 of the paper book;
(ix) In support of his contentions the learned Advocate cited case law as follows :
(a) A.K. Roy and Anr. v. Voltas Limited -1977 (1) ELT (J 177) (Para 20)
(b) Union of India v. Bombay Tyres International – 1983 (14) ELT 1896 (paragraphs 49 & 50)
(c) Electric Lamp Manufacturers (India) P. Ltd. v. Collector of Central Excise, Calcutta & Orissa -1981 (8) ELT 37 (Cal.)
8. Smt. Zutshi, the learned Jt. CDR opposed the arguments and submitted that the Madhya Pradesh High Court ordered reassessment only in respect of valuation and referred to paragraph 22 where certain judgments of the Supreme Court were referred. She submitted that the Assistant Collector should not have gone beyond the period of 1972 as ordered by the High Court and in having considered the period 1972 to 1974 the said Officer was already in error. She justified the recalculation of assessable value submitting that as the amount of refund was an extra accrual it no more represented the excise duty paid by the appellants.
9. In his rejoinder Shri Narasimhan reiterated that the assessment had to be composite even though the High Court remanded the matter with directions. He pointed out that the Assistant Collector already went beyond the High Court’s directions.
10. We have considered the submissions of both sides. One of the submissions made by the learned Advocate, that the Assistant Collector did not pass any orders on merits in so far as the question of classification was concerned, is correct. The Appellate Collector also disposed of the question by first observing that it was an extraneous matter and then giving a finding that the refund application was in any event time barred. However, it was not the plea of the appellants that the matter should go back for consideration on merits. Besides, the necessary facts are before us. Therefore, we go into the merits desisting from remanding the matter to the lower authorities.
11. The first question, therefore, to be decided is whether the grant of refund for the period 1-3-1970 to 31-12-1974 should be considered. The appellants’ argument that as the assessments were set aside and fresh assessment was made under the orders of the Madhya Pradesh High Court was sought to be reinforced with reference to the case law cited by them. Before examining the arguments we had respectfully perused the order of the Madhya Pradesh High Court passed on 30-7-1976. Paragraph 2 of the said order is as follows :
“At the time of the hearing of this petition, learned counsel for the petitioner confined his challenge only to the inclusion of transportation charges in the assessable value of these items and abandoned other grounds of challenge. We would, therefore, deal only with that question.”
12. Paragraph 22, the concluding one, inter alia directed that:
“Consequently, this petition is partly allowed. The assessments for the period in question, i.e. from 1-3-1970 to 31-1-1972, including the orders of respondent No. 1 on Annexures D-1, D-2 and D-3 are quashed. The respondent No. 1 shall proceed to make fresh assessments and determine the petitioner’s liability about the excise duty in the light of the principles laid down by their Lordships of the Supreme Court in the aforesaid two decisions and the observations made by us above. The amount so determined shall be adjusted out of the amount that the petitioner might have paid as duty for the period in question; and if thereafter any balance, is found to be due in favour of the petitioner, the same shall be refunded.”
13. The intervening paragraphs of the High Court’s order make it quite clear that it is only transport charges that were being considered by the Court. The judgments of the Supreme Court referred to in paragraph 20 had nothing to do with the classification of the products manufactured by the appellants. The contents of para 2 (supra) are quite clear that the challenge by the appellants before the Supreme Court was only to the inclusion of transport charges in the assessable value of the items and that “other grounds challenged were abandoned.” Therefore, it is quite clear that what was before the High Court was only the question of freight and the matter had nothing to do with classification.
14. The appellants referred to Supreme Court’s judgment in A.K. Roy and Anr. (supra, paragraph 20). We have carefully perused this judgment and the particular paragraph. The substance of this paragraph is that the price has to be fixed for delivery at the factory gate thereby eliminating the interest, freight, octroi and other charges. It does not support the appellants’ pleas.
15. In Bombay Tyres International (supra) in paragraph 49 and 50 the Supreme Court was examining the question of deductions in respect of sale of goods at a place other than factory gate. This judgment does not in any way advance the arguments of the appellants.
16. In Electric Lamp Manufacturers (India) P. Ltd. (supra, also cited by the appellants) the Calcutta High Court, inter alia, noted that the Supreme Court was pleased to hold that even though there may be a single order of assessment, the assessments can be split up and dissected and the items of sale separated and taxed for different periods severing illegal part of the assessments. We reproduce paragraphs 38, 39 and 40 of the judgment to make this record complete.
“It was held by the Privy Council in Bennet & White (Calgory) Limited and Municipal District of Sugar City – 1951 App. Case 786 that when an assessment was for a lumpsum and included sums not assessable, the entire assessment was bad in toto.
The ratio in the said case came up for consideration in the case of Kurapati Venkatasatyanarayan & Brothers v. The State of Andhra Pradesh – (1970) 25 Sales Tax Cases 202. But in the said case the Supreme Court was pleased to hold that even though there was a single order of assessment for the period from April 1, 1949 to March 31, 1950 in the said case, the assessments could be split up and dissected and the items of sale separated and taxed for different periods and it was open to the court to sever the illegal part of the assessment and give a declaration with regard to that part alone instead of declaring the entire assessment void. In the instant case, the assessments cannot be split up or dissected.
From what has been stated hereinabove, it appears to us that none of the points urged by Mr. Mukherjee can be sustained and although this court in exercising its discretionary powers in the writ constitutional jurisdiction does not sit in appeal over the impugned orders of assessments, this court can in our opinion, quash the impugned assessments made in violation of law as laid down in the Voltas case and Atic’s case. In our opinion, the impugned decisions or orders of assessments made between 1961 and the date of application were nullities and not real determination because in making the said impugned orders the respondent took into consideration the factors, that is to say, the sums in excess of manufacturing cost and manufacturing profit which the deciding officer had no jurisdiction to do.”
17. The result of our discussions is to find that the Madhya Pradesh High Court quashed the assessments from 1-3-1970 to 31-1-1972 only in respect of freight charges and nothing more. The judgment itself makes this position clear. The question of classification was never before the High Court. Besides paragraph 30 of the Calcutta High Court judgment in Electric Lamp Manufacturers (supra) makes it clear that the High Court can sever assessments.
18. In this light, the argument that the appellants’ letter dated 5-12-1979 should be taken as a continuation of the proceedings fails. We reject the submission that the appellants had to be given the refund on account of classification for the period 1-3-1970 to 31-12-1974:
19. The next question to be decided is whether the Assistant Collector was correct in granting a reduced amount of refund as a consequence of adding the refunded duty to the assessable value. In the impugned order the Collector (Appeals) disposed of this ground as follows :
“As regards the issue in hand, in view of the ‘Explanation’ appended below sub-clause (d)(ii) of Clause 4 of Section 4 of the Central Excises and Salt Act, 1944, the deduction on account of duty is permissible only to the extent of the effective duty of excise payable and nothing more than that. The said “Explanation” was specifically made effective retrospectively. The period of assessment in question in this case is 1-3-1970 to 31-12-1974. The said “Explanation” was inserted with the saving clause, which protects: “Any action taken or done … at any time during the period commencing on the 1st day of October 1975 and ending with the 27th day of February, 1982….” Now, in this case the re-determination of assessable value was done in 1979, that is, during the period which falls within the said savings clause even though it was in respect of a period prior to 1-10-1975. As such, the act of redetermination of the assessable value in the impugned order be protected and is, therefore, correct.”
In our view the Collector’s reasoning is sustainable. Once duty has been held as not payable and is to be refunded it becomes part of the sale proceeds and such proceeds have to be taken into consideration when arriving at the assessable value. Therefore, on this ground also we find against the appellants.
20. The other ground of the appellants that having reopened the assessments upto 31-12-1974 refund should be granted upto that date also becomes ineffective in view of this finding.
21. The argument of the appellants pertaining to valuation were also examined by us. It was not clarified before us as to which part of the transport charges were wrongly disallowed by the Assistant Collector. Therefore, this plea remains unsubstantiated. We have already held that the reduction in the refund amount on account of recalculation of assessable value was correct.
22. The appellants’ plea is that there was a calculation error of Rs. 73,560.06 paise. The Collector (Appeals) has not dealt with this point. We examined the memorandum of appeal filed before the Collector (Appeals) (page 100 of the paper book) and do not find a mention of this ground before him either. The appellants cannot, at this stage, bring in a new ground which was not agitated before the lower authorities. We, therefore, reject it.
23. We had allowed one additional ground to the effect that there has been grave miscarriage of justice and that it is the substance of the matter which has to be looked into for the purpose of assessment and the State should not restrict it on a technicality. We have considered this ground. In this matter the appellants recovered all the amounts now sought as refund from their customers. What they are now seeking is only what was already recovered by them. The refunds the appellants obtained were because of the legal provisions only and it is only other legal provisions like limitation, etc. which stood in the way of the appellants getting the other parts of the refund. Therefore, we see no grave injustice done to the appellants nor is there any justification or authority for ignoring legal provisions contained in the Central Excise Act and Rules.
24. We dismiss the appeal.