ORDER
S. Kalyanam, Vice President
1. This appeal is directed against the order of the Collector of Central Excise, Madras, dated 16-7-1993 demanding a sum of Rs. 33,39,754/- under Section 11A(1) of [the] Central Excises & Salt Act, 1944 besides a penalty of Rs. 5.00 lakhs on the appellant company and Rs. 50,000/- each on the other appellants.
2. The appellants are manufacturing bulk drugs for home clearances as well as export. The bulk drug is known as Analgin which is subjected to the provision of the Drug Price Control Order administered by the Department of Fertilisers & Chemicals. In respect of the goods exported, the appellants conform to German pharmacopoeia and used duty paid inputs. In respect of the drug manufactured and cleared for home consumption, they conform to Indian pharmacopoeia. In respect of the goods that were exported for the period April, 1990 to December, 1991, the appellants filed an application for refund to the department in respect of the Modvat credit accrued on inputs used in the manufacture of Analgin exported to foreign countries. The appellants made a claim for refund in terms of Rule 57F(3) read with Notification No. 85/87, dated 1-3-1987 issued under Rule 57F(3) of the Central Excise Rules, 1944 seeking refund of the Modvat credit attributable to the duty paid on inputs utilised in the export of the end product. The authorities scrutinised the refund claim submitted by the appellants with the relevant documents such as RG 23A, Part II register and proof of export evidenced by the necessary shipping bills and other documents and the amount was refunded after thorough scrutiny of all statutory and other records. Subsequently, proceedings were instituted against the appellants by the department by issue of a show cause notice dated 19-1-1993 invoking the longer period of limitation under proviso to Section 11A of the Act inter alia alleging that the appellants had misdeclared and suppressed the actual quantity of input used in the manufacture of Anal-gin and got refund on the basis of such suppression. The proceedings thus instituted eventually culminated in the present impugned order appealed against.
3. Shri Rajagopalan, the learned Counsel submitted that in respect of the duty paid inputs used in the manufacture of exports, the appellants admittedly would become eligible to claim refund in terms of Notification No. 85/87 issued under proviso to Rule 57F(3). Therefore, this being a special notification issued under Rule 57F(3) containing a self-contained procedure with built-in conditions the notification has to be construed independently de hors the applicability of Section 11 A of the Act. It was further urged that Section 11A does not apply to the facts and circumstances of this case, since the notification which is relevant for the grant of refund does not refer to Section 11A at all. The learned Counsel submitted that the said notification issued under Rule 57F, while under Clause 7 makes a special reference to Section 11B of the Act, it is conspicuously silent about making any reference at all to either Section 11A much less to the proviso thereunder. The learned Counsel urged that even assuming for the purpose of argument that Section 11A is applicable, the plea of suppression is not svibstantiated or proved by the department and relied on the ratio of the Supreme Court ruling in the case of Tamil Nadu Housing Board v. CCE, Madras reported in 1994 (74) E.L.T. 9 (SC). The learned Counsel also referred to the case of the Supreme Court in the case of Padmini Products v. Collector reported in 1989 (43) E.L.T. 195 (SC) and submitted that the ratio in the said rulings will be squarely applicable to the facts of the case and urged that all relevant particulars in regard to the quantum of duty paid inputs used in the end product have been furnished to the department and the department on scrutiny of all the statutory records also the shipping bill, AR 3a form and other registers, sanctioned refund. It was urged that the appellants’ accounts were scrutinised by the Range staff, Audit staff and extracts of RG 23A register was submitted to authorities with RT 12 returns every month showing the quantity of inputs used for manufacture of Analgin for export and home consumption. The learned Counsel further submitted that as per the Departmental practice in respect of refund claim of Rs. 5.00 lakhs and above, as per the departmental instructions, deeper scrutiny is made at various levels and it is only after a final administrative scrutiny of the Collector, the refund amount is granted and therefore, after going through all the records and on application of mind when the statutory authorities have granted the refund, the same cannot be reopened on grounds of suppression. It was further urged that goods exported conformed to German pharmacopoeia and the Director General of Technical Division, Madras, in their letter dated 12-4-1991 has clearly specified the quantity of raw materials for 1 kg of Analgin of DAB standard and only on this basis claim of refund was made. The learned Counsel further urged that the notification issued under Rule 57F is binding on the department and therefore, even if Section 11A is held applicable so far as departmental authorities are concerned, the period of six months specified in Clause 4 of the notification would come into operation and this is being a special period of limitation under a special notification issued under Rule 57F governing grant of refund in respect of the duty suffered by inputs used in that manufacture of products exported, by necessary implication Section 11A of the Act would stand excluded.
4. The learned DR submitted that show cause notice has been given only under Section 11A and even though there is a specific notification issued under Rule 57F for grant of refund of the duty paid on inputs vised in the manufacture of the final products which are cleared for export; that notification is applicable only to a situation where there is mere erroneous refund simpliciter. If the refund has been granted by the department not merely erroneously but also by reason of suppression on the part of the appellant, Section 11A proviso will automatically come into force. The learned DR further submitted that the scope of Section 11A is very wide and comprehensive and therefore would take within its ambit erroneous refund granted under the notification issued under Rule 57F(3) since the refund is only duty excise paid on the inputs. The learned DR in continuation of this line of argument urged that Section 11A with a consequential proviso would come into operation in a situation where an appellant is guilty of suppression on the basis of which any duty of excise is refunded. Finally, the learned DR urged that since the notification does not refer to any suppression at all, on a proper interpretation, we should read Section 11A into it alongwith the proviso. Besides, in the absence of non-obstantive clause and proviso under Para 4 of the notification, the proviso to Section 11A will take care of this situation. The learned DR submitted that it would appear that the legislature deliberately excludes the situation that may arise due to suppression, etc., as the same will be taken care of by the proviso to Section 11A of the Act.
5. We have carefully considered the submissions made before us. The fact that the appellant exported goods in question utilising the duty paid inputs as a consequence of which the additional Modvat credit was taken and therefore, the appellant became eligible to the grant of refund does not admit of any controversy. The further fact remains that the appellants’ refund application was granted and proceedings were subsequently instituted for recovery of certain amount on the ground that the same was erroneously granted to the appellant on the basis of the suppression of facts regarding the quantum of the inputs used in the goods exported. Rule 57F, which is relevant in the present context of the case reads as under :-
“Rule 57F. Manner of utilisation of the inputs and the credit allowed in respect of duty paid thereon. – (1) The inputs in respect of which a credit of duty has been allowed under rule 57A may –
(i) be used in, or in relation to, the manufacture of final products for which such inputs have been brought into the factory; or
(ii) be removed, subject to the prior permission of the Collector of Central Excise, from the factory for home consumption or for export on payment of appropriate duty of excise or for export under bond, as if such inputs have been manufactured, in the said factory:
Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such inputs under rule 57A.
(1A) Notwithstanding anything contained in clause (ii) of sub-rule (1), the inputs in respect of which a credit of duty has been restricted in terms of proviso to rule 57A, may be removed subject to prior permission of Collector of Central Excise from the factory for home consumption on payment of duty of excise equivalent to the credit availed on such inputs.
(2) Notwithstanding anything contained in sub-rule (1), manufacturer may, with the permission of the Collector of Central Excise and subject to such terms and conditions and limitations as he may impose, remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products, to a place outside the factory, –
(a) for the purposes of test, repairs, refining, reconditioning or carrying out any other operation necessary for the manufacture of the final products and return the same to his factory for further use in the manufacture of the final product or remove the same without payment of duty under bond for export, provided that the waste, if any, arising in the course of such operation is also returned to the said factory;
(b) for the purpose of manufacture of intermediate products necessary for the manufacture of the final products and return the said intermediate products to his factory for further use in the manufacture of the final product or remove the same without payment of duty under bond for export, provided that the waste, if any, arising in the course of manufacture of such intermediate products is also returned to the said factory :
Provided that the said waste need not be returned to the said factory if the appropriate duty of excise leviable thereon has been paid.
(3) Credit of specified duty allowed in respect of any inputs may be utilised towards payment of duty of excise, –
(i) on any of the final products in or, in relation to the manufacture of which such inputs are intended to be used in accordance with the declaration filed under sub-rule (1) of rule 57G; or
(ii) on the waste, if any, arising in the course of manufacture of the final products; or
(iii) on the inputs themselves if such inputs have been permitted to be cleared under sub-rule (1):
Provided that the credit of specified duty in respect of inputs used in the final products cleared for export under bond or used in the intermediate products cleared for export in accordance with sub-rule (2), shall be allowed to be utilised towards payment of duty of excise on similar final products cleared for home consumption or for export] on payment of duty and, where for any reason, such adjustment is not possible, by refund to the manufacturer subject to such safeguards, conditions and limitations as may be specified by the Central Government in the Official Gazette :
Provided further that no such refund of credit of duty shall be allowed if the manufacturer avails of drawback allowed under the Customs and Central Excise Duties (Drawback) Rules, 1971, or claims rebate of duty under rule 12 A, in respect of such duty.
Provided also that the credit of specified duty in respect of inputs used in the final products cleared either to a unit in a Free Trade Zone or to a hundred per cent Export Oriented Unit under bond shall be allowed to be utilised towards payment of duty of excise on similar final products cleared for home consumption on payment of duty.
(4) Any waste, arising from the processing of inputs, in respect of which credit has been taken may –
(a) be removed on payment of duty as if such waste is manufactured in the factory; or
(b) be removed without payment of duty, where it belongs to such class or category of waste as the Central Government may from time to time by order specify for the purpose for being used in the manufacture of the class or categories of goods as may be specified in the said order, subject to the procedure under Chapter X being followed; or
(c) be destroyed in the presence of proper officer on the application by the manufacturer, and if found unfit for further use, or not worth the duty payable thereon, the duty payable thereon being remitted :
Provided that such waste may be destroyed by the manufacturer governed by Chapter VIIA after informing the proper officer in writing regarding the quantity of such waste and the date on which he proposes to destroy, at least seven days in advance and after observing all such conditions as may be prescribed by the Collector of Central Excise by a general or special order with regard to the manner of disposal of such waste.
(5) No part of the credit of duty allowed shall be utilised save as provided in sub-rule (3).
(6) On an application made by a manufacturer, the Collector may, subject to such conditions and limitations as he may impose, permit a manufacturer having credit in his account in form RG 23A and lying unutilised on account of shifting of the plant or factory, belonging to the manufacturer, to another site, to transfer the credit in the account aforesaid to such factory of the same manufacturer. -”
Under Rule 57F(3) Notification No. 85/87 has been issued and the same is reproduced as under :-
“Export under bond. – In exercise of the powers conferred by sub-rule (3) of rule 57F of the Central Excise Rules, 1944, the Central Government hereby directs that refund of credit of specified duty allowed in respect of inputs used in or in relation to the manufacture of final products which are cleared for export under bond may be allowed subject to the safeguard conditions and limitations, set out in the Appendix to this notification.
APPENDIX
1. The goods are exported in accordance with the procedure specified in Chapter IX of the Central Excise Rules, 1944, as modified, wherever applicable, by Rule 173-O of the said rules.
2. The claims for such refund are submitted not more than once in any quarter in a calendar year.
3. No refund shall be allowed in respect of final products exported to Nepal.
4. The manufacturer undertakes to refund to the Assistant Collector of Central Excise, on demand being made, within six months of the date of payment, any refund erroneously paid to him.
5. The manufacturer shall prepare an application in Form A below and present to the Assistant Collector of Central Excise in whose jurisdiction the factory from which the goods are exported is situated together with the Bill of Lading or Shipping Bill or Export Application duly certified by the Customs Authorities to the effect that goods have in fact been exported.
6. The refund shall be allowed only in those circumstances where a manufacturer is not in a position to utilise the credit of the duty allowed under rule 57A against goods exported during the quarter to which the claim relates.
7. The application for refund together with the proof of due exportation and the relevant extracts of form RG 23A in original are lodged with the Assistant Collector of Central Excise before the expiry of the period specified in Section 11B of the Central Excises and Salt Act, 1944 (1 of 1944).
8. The refund of excise duty shall be allowed by the said Assistant Collector of Central Excise.”
Form A specified under Rule 57F, are also extracted hereunder :
FORM ‘A’
(See para 5 of Appendix)
Application for refund of duty under rule 57F of the Excise Rules, 1944 (Refund relating to quarter)
To,
The Assistant Collector of Central Excise,
Sir,
I/We have exported undermentioned quantity and variety of the goods to_____. A copy of the relevant Bill of Lading/Shipping Bill/Export Application is also attached. I/We am/are not in a position to utilise the credit of duty paid on inputs allowed under rule 57A of the Central Excise Rules, 1944, in respect of final products exported under bond during the quarter _____. I/We request that refund of this credit to me/us may be granted.
I. Particulars of the goods exported :
(i) Full description of the goods.
(ii) Full description of the inputs going into such exported products and credit availed of in respect of such inputs under Rule 57A.
II. Relevant extracts (in original) of RG 23A in respect of such input duty credit.
III. No. and date of Bill of Lading/Shipping Bill/Export Application.
IV. Amount of refund claimed.
I/We certify that the aforesaid particulars are correct and 1/We am/are the rightful claimant(s) to the refund of excise duty due thereon which may be allowed in my/our favour.
I/We undertake to refund, on demand being made, within six months of the date of payment any refund erroneously paid to me/us.
I/We declare that no separate claim for rebate of duties in respect of excisable materials used in the manufacture of the goods covered by this application has been or will be made under the Customs and Central Excise Duties Drawback Rules, 1971 or under claim for rebate under rule 12A of the Central Excise Rules, 1944.
I/We declare that we have not filed/will not file any other claim for refund under rule 57F for the same quarter to which this claim relates.
Signature and full address of the claimant(s).
Refund Order No. _____________
Dated_____________
The claim of Shri/Messrs__________has been scrutinised
with the relevant Bill of Lading/Shipping Bill/Export Application and refund of Rs.___________(Rs.__________) is sanctioned.
Date_________
Assistant Collector of Central Excise______
Forwarded to –
(1) The Chief Accounts Officer, Central Excise, for information and necessary action.
(2) The Collector of Central Excise__________Assistant Collector of Central
Excise___________
Dated__________
Passed for payment of Rs.________(Rs._______).
The amount is adjustable under Head “038 Union Excise Duties-Deduct Refunds”.
Date_____ Chief Accounts Officer
Cheque No._____________, dated___________ issued in favour of
_________________________ Shri/Messrs_______________for (Rs.
________). Rs._________.
Chief Accounts Officer.
Received___________Cheque No.__________dated___________for
Rs._________(Rs._________).
Dated:___________ Signature of claimant
6. The notification issued under Rule 57F extracted above would make it clear that the refund claims have to be submitted by the exporter not more than once in any quarter in a calendar year. Thus, it would be seen that this is a special condition which normally does not apply to other refunds under the Act. We further note that Clause 4 of the notification makes it clear that the manufacturer should undertake to refund to the Assistant Collector of Central Excise on demand being made within six months from the date of the payment any refund erroneously paid to him. It would be seen that the legislature in its wisdom in a statutory notification issued in exercise of a statutory power under Rule 57F has also incorporated a built-in period of limitation of six months in respect of refund erroneously paid. Therefore, the Tribunal being a creature of statute has no jurisdiction to traverse beyond the confines of law and read into it something which is not there. As rightly contended by the learned Counsel, it would also be seen that the application for refund in terms of Clause 7 of the notification should be made with proof of due exportation with relevant documents and relevant extracts of RG 23A register in original to the appropriate authority before the expiry of the period specified in Section 11B of the Act. While a reference is made to Section 11B with a built-in period of six months for recovery of the refund erroneously made, we do not find any reference at all being made to Section 11A in the notification. So far as Section 11A is concerned, even though the submissions of the learned DR are seemingly attractive, we find it difficult to accede to the same because Section 11A deals with the refund of duty under the Act and rebate eligible under Rule 12 and 12A of the Central Excise Rules. It does not deal with any provision relating to the Modvat scheme. It would be seen that so far as Modvat is concerned, it is a self contained scheme with built-in procedure and as a matter of fact, Rule 57-I which deals with the situation enabling the department to recover erroneous Modvat credit availed did not at the initial stage prescribe any period of limitation. General period of limitation could not be read into it when the statute expressly excluded the application of any period of limitation. It would also be seen that it is only subsequently the legislature by amendment broadly incorporated the period of limitation as in Section 11 A. At this stage, the Learned DR submitted that the Supreme Court in the case of GOI v. Citadel Fine Pharmaceuticals reported in 1989 (42) E.L.T. 515 (SC) has made it clear that even when a statute does not prescribe any period of limitation, a reasonable period of limitation should be read into it. The learned DR submitted that on the same principle even when the notification does not prescribe any special period of limitation covering a case of suppression, we should read the period of limitation incorporated in Section 11A proviso relating to suppression. He referred to the ruling of the Madras High Court in the case of Gem Cables & Conductors. Ltd. v. CCE, Hyderabad in W.A. Nos. 177 & 178 of 1994, decided on 17-2-1994 [reported in 1994 (72) E.L.T. 848 (Mad.)] in support of his plea and submitted that for the collection of excise duty from the buyers in respect of Section 11D where no time-limit is prescribed, Section 11A should be applied and therefore on the same analogy in the present case also the extended time-limit should be held applicable. We are not in a position to accede to the above plea of the learned DR because the Modvat credit cannot be considered as an excise duty as such and apart from it the ruling of the Madras High Court deals with a different situation with reference to the applicability of the doctrine of unjust enrichment, in the context of enforcing Section 11D where no time-limit is prescribed and in the present case when there is a specific rule and a specific notification issued under that rule prescribing a built-in specific period of limitation excluding Section HA and its application; the Tribunal being a creature of the statute cannot traverse out of the statutory provisions and incorporate and read it into the notification something which is not there. From a plain and literal interpretation of the notification in question particularly with reference to the period of limitation of six months, we hold that in the facts and circumstances for recovery of the refund allegedly refunded erroneously during the period April, 1990 to December, 1991, the show cause notice issued on 19-1-1993 is barred by limitation. In the light of the view we have taken on the plea of limitation, in terms of the notification in question, we do not feel called upon to pronounce on the other pleas of the appellants canvassed before us set out above. In the result, for the reasons stated above, the impugned order is set aside and the appeals allowed.
