ORDER
S.L. Peeran, Member (J)
1. In this appeal, the appellants have sought for setting aside the order-in-appeal dated 9-4-1985 passed by the Collector of Central Excise (Appeals), Calcutta by which he has upheld the order-in-original passed by the Assistant Collector of Central Excise, Calcutta dated 26-12-1984.
2. The facts of the case, as narrated in the order-in-appeal, are that the appellants had submitted a refund claim for Rs. 1,33,879.01 on 13-8-1983 received in the office on 16-8-1983 for the period from 1-3-1975 to 28-2-1978 to the Assistant Collector of Central Excise, Calcutta-XVI Division on the ground that in terms of Collector of Central Excise, Calcutta’s order dated 31-1-1983, their products were Ayurvedic medicines which stood exempted from payment of duty under Tariff Item 68 and as such, they were entitled to refund of duty paid during the period from 1-3-1975 to 28-2-1978 under compulsion and protest.
3. The Assistant Collector rejected the claim by his order-in-original dated 26-12-1984 on the ground of merit as well as on time-bar basing on the reasoning that the Calcutta Collector’s aforesaid order dated 31-1-1983 merely decided that the products (mentioned therein), cleared during the period from 1-3-1978 to 30-6-1982, were Ayurvedic medicines falling under Tariff Item 68 and hence were exempted from central excise duty under Notification No. 62/78 dated 1-3-1978. This order has no relevance to the earlier period (i.e. prior to 1-3-1978) to which the instant refund related. The assessee filed the classification list No. 1/75 and 1/77 declaring their Ayurvedic medicines as falling under Tariff Item 68 which stood as proved by the Assistant Collector. They did not dispute the said classification as well as the excisability of the subject goods during the material time. Even before the incorporation of the explanation to the Tariff description of Tariff Item 68 which stood effected only with Finance Bill, 1980, Ayurvedic medicines stood excluded from Tariff Item 14E by words of exclusion in the description itself. Their letter dated 15-3-1975 could not be deemed to be a letter of protest as the expression ‘protest’ was not mentioned therein or on the relevant RT12/PLA etc. Therefore, the Assistant Collector rejected the refund claim as time-barred under Section 11-B of the Central Excises and Salt Act.
4. The Collector in the order-in-appeal has upheld the order-in-original passed by the Assistant Collector. Before the Collector, the appellants had taken a stand that Ayurvedic medicines manufactured by them were to be deemed as falling under Tariff Item 14E during the period from 1-3-1975 to 28-2-1978 as the incorporation of the explanation to the description of the Tariff Item 68 stood effected only by the Finance Bill 1980. They had submitted that the classification lists were submitted by them on the direction of the Department. In this connection, they had relied upon the decision of Gujarat High Court as reported in Darshan Hosiery Works v. Union of India (1980 (6) E.L.T. 390 (Guj.)) wherein it had been held that once an article or goods, is specified in any of the Tariff items from 1 to 67, irrespective of the purpose for which they are specified, Item 68 does not come into play and does not render such goods liable to duty. They had contended before the authorities that the duty paid by them during the period from 1-3-1975 to 28-2-1978 under Tariff Item 68 was to be deemed as paid under protest in view of their letter dated 15-3-1975 addressed to the Assistant Collector. They had further submitted that they became aware of the ground for the instant refund through the Collector’s order dated 31-1-1983 and that the general limitation of three years from the date of discovery of the mistake on 17-2-1983 i.e. date of receipt of the above order should come into play. They had filed the refund claim on 13-8-1983 received in the office on 16-8-1983. The Collector of Central Excise order had decided two questions viz., Classification and dutiability of Ayurvedic medicines during 1-3-1975 to 28-2-1978 and (2) Time-bar.
5. The Collector held with regard to the first question, that during the material period from 1-3-1975 to 28-2-1978, the appellants had filed two classification lists bearing No. 1/75 and 1/77 declaring the subject goods as Ayurvedic medicines under Tariff Item 68 in terms of Rule 173-B without mention of protest on the body of those documents. The Assistant Collector of Central Excise had approved them. They had paid duty on those goods basing on the said forms during the period from 1-3-1975 to 28-2-1978. The Collector has further observed that the appellants did not file any appeal under Section 35 read with the then Rule 213 before the Appellate Collector of Central Excise within 3 months against the approval of such classification. Therefore, he held that the appellants had accepted the order of approval of classification. Therefore he has observed that the classification of the products under Tariff Item 68 stood valid and final and did not stand revoked at any time by any High Court/Judicial authority and claiming refund of duty paid earlier in pursuance of the said classification order, is not legally correct and permissible. He has observed “as the cause of the disease did not stand eradicated in time, the consequential sufferings are now beyond the scope of any legal remedy”. He has further observed that the appellants continued to pay duty on the instant goods till 28-2-1978 and stopped paying it w.e.f. 1-3-1978 consequent upon Notification No. 62/78 dated 1-3-1978 (under Tariff Item 68) fully exempting all drugs, medicines and drug intermediates, not elsewhere specified. The Collector has held that “by such action, they (the appellants) have once again proved and admitted their act of acceptance of the classifiability of the products under Tariff Item 68. They did not dispute it upto 12-8-1983 (i.e. upto prior to (sic) submissions of the refund claim)”.
6. The Collector has observed that this refund claim of the appellants was as a consequence of the Department’s issue of show cause notice dated 16-10-1982 raising a demand of Rs. 8,45,623.10P. on the appellants for the period from 1-3-1978 to 30-6-1982 on the ground that the aforesaid Tariff Item 68 goods were not medicines, declared as exempted w.e.f. 1-3-1978 under Serial No. 19 by Notification No. 62/78 amending Notification No. 55/75 dated 1-3-1975. However, this show cause notice came to be dropped by the Collector’s order dated 31-1-1983.
7. The Collector in the impugned order has observed “This naturally, logically,legally and obviously means that the said items of ayurvedic medicines were not exempt from duty prior to 1-3-1978. Enjoyment of the blessings of the said order by the appellants tantamounts to acceptance of the classification of the product under Tariff Item 68 once again. Appendix of their refund application reveals that the instant refund claim of Rs. l,33,879.01P. for the period 1-3-1975 to 28-2-1978 was filed on the ground that ayurvedic medicines falling under Tariff Item 68 were exempted from duty as per Collector’s order dated 30-1-1983. Here they again admitted the classification of the product under Tariff Item 68. All that they did not admit in their refund application was that the goods were not exempt from paying duty prior to 1-3-1983 too”. The Collector has further observed that “but during adjudication of the said refund case as well as during the instant appeal proceedings, they have radically denied from their original and injecting new ground which was that their ayurvedic medicines fell under Tariff Item 14E during 1-3-1975 to 28-4-1978 and Tariff Item 68 thereafter”. The Collector has therefore, rejected their claim on the ground that the ayurvedic medicines would fall under Tariff Item 14E upto 28-2-1978 and under Tariff Item 68 thereafter because of incorporation of ‘explanation’ to Tariff Item 68 w.e.f. 19-6-1980 by the Finance Bill, 1980.
8. On the second question, the Collector has stated that the refund claim is time barred. He has observed that the expression “payment under protest” was required to be predominantly within an all clearance documents i.e. ARI, GPI, PLA, etc. even prior to 1-6-1981 when Rule 233 was introduced. He has also observed “so far entitlement of being regarded as a protest claim concurrently with payment of duty under protest, there must exist some clear documentary evidence indicating beyond any shadow of doubt that the duty was being paid under protest on some concrete, specific and stated ground. But a close reading of their letter dated 15-3-1975 does not give any clear indication to that effect. That letter appears to be the assessee’s self-opinionated letter written with a view to exploring the possibility of their products coming under excise net probably consequent upon introduction of Tariff Item 68 by the 1975 budget. It is evident that in the 1st to 2nd, 27th to 32nd and 62nd to 67th lines of the said letter dated 15-3-1975, they have emphatically asserted that their ayurvedic medicines would fall neither (sic) under Tariff Item 14E nor Tariff Item 68″…. (underlined by us).
9. The Collector has further observed that the appellants have not used the expression “protest” or “duty paid under protest” etc. He has observed that this letter was also not written in response to any departmental directive which stood issued only on 19-4-1975. He has gone to observe that “The contents of their letter dated 15-3-1975, nowhere gave any indication that they would be paying duty under protest in the instant case. Even measured in the light of para 34 (iii) of the Compilation of Rulings as relied upon by them, the said letter, by no stretch of imagination, can be called to be a protest letter as it does not contain the essential ingredients of protest viz. grounds and indication of expressed desire to pay duty under protest. When that letter totally denounces the very excisability of the product both under Tariff Item 14E and Tariff Item 68, how such letter can be deemed to be a letter of protest for their quite opposite act of paying duty under Tariff Item 68 subsequent”. The Collector after observing the contradictory and fluctuating version of the appellants, held that the refund claim was time-barred. The Collector has further observed “This position stands further strengthened when in para 9 (sheet No. 8) of their appeal petition, they contend that the general law of limitation of three years from the date of discovery of the instant erroneous payment of duty (i.e. from 17-2-83) should apply in this case. If their date of discovery of the mistake was 17-2-1983 (i.e. date of receipt of Calcutta Collector’s order dated 30-1-1983) how they could later treat their letter dated 15-3-1975 as a letter of protest for the purpose of the instant refund claim? In other words that letter dated 15-3-1975 cannot be deemed to be a protest letter for the instant refund case based on a different footing and filed on a different ground”.
10. The Collector after relying on several citations rejected the appellants’ view that time limit should be counted from the discovery of the mistake as not legally valid.
11. Shri V. Lakshmikumaran, learned Advocate, appearing for the appellants, argued the matter and submitted that the letter dated 15-3-1975 is a letter of protest and that the appellants had been paying duty under protest and that their claim for refund has to be allowed. He submitted that the ayurvedic medicines were not attracted to duty during the period 1-3-1975 to 28-2-1978. He further submitted that the term “not elsewhere specified” was specific to exclude ayurvedic medicines from liability of duty under Tariff Item 68. He further submitted that ayurvedic medicines were not excisable during the material time and hence the period of limitation under Rule 11 read with 173-J was not applicable in this case. He further submitted that the Department had obtained the declaration in From I in 1975 under coercion by the officers which according to him, is evident from the Superintendent’s letter dated 19-4-1975. However, he admitted that the appellants had no evidence to show or of any further correspondence on the subject with the excise authorities. He also admitted that the appellants did not have any records to show that the classification list was filed under protest and whether the challans, ARI, Gate Passes, PLA etc. were marked “under protest”. He wanted the Bench to hold the letter dated 15-3-1975 as letter of protest and in support of his contention, he relied upon the citation of Supreme Court given in 1989 (41) E.L.T. 358 (S.C.). He also relied upon the citation of Andhra Fertilisers Ltd. Tadepalh” case as reported in 1980 (6) E.L.T. 16 (A.P.). He further relied upon the citation 1989 (44) E.L.T. 704 (Tribunal) parties Collector of Central Excise v. Baidyanath Ayurved Bhavan.
12. Shri A.S. Sunder Rajan, Departmental Representative, appearing for the Revenue submitted that the alleged letter dated 15-3-1975 might not have been filed by the appellants and that the appellants have not placed on record any proof of having written that letter to the Department. Even taking for granted that such a letter was written by them, then, even in that case, the contents of that letter would not amount to protest.
13. Shri A.S. Sunder Rajan further submitted that the reading of both the order-in-original and order-in-appeal would not give any impression that the authorities had admitted the letter in question. In fact, the Collector had dealt at length about the letter and in one place, he has observed “that letter appears to be the assessee’s self opinionated letter written with a view to exploring the possibility of their products coming under excise net probably consequent upon introduction of Tariff Item 68 by the 1975 budget”.
14. Shri Sunder Rajan further submitted that even in the Supreme Court ruling relied upon by the appellants i.e. 1989 (41) E.L.T. 358 (S.C.), the Hon’ble Supreme Court has presumed that the assessee had paid the duty under protest. He referred to para 7 of the said judgment “It is not in dispute that the duty was paid for the period from July 4,1974 to 1st March, 1975. If it was paid under protest, the orders of the authorities cannot be sustained”.
15. Shri Sunder Rajan submitted that the letter referred to in the judgment of the Supreme Court, in the ruling referred to supra was an admitted letter and only the question of limitation was in question in that citation. The Supreme Court after perusing the contents of letter and in the background of that case, held the contents of that letter to be a letter of protest and gave a finding that the claim for refund of duty was within time. He further submitted that even in the case of (1989 (44) E.L.T. 704 (Tribunal)), the Tribunal had noted that the assessee in that case had marked ‘under protest’ on deposit challans made on various dates. The Tribunal had further observed “What is important in our view is that there should have been a protest setting out the reasons there for”. Therefore, he submitted that in both the rulings relied by appellants, the Supreme Court and Tribunal had taken the entire facts and circumstances in those cases and had come to the conclusion that indeed there was payment under protest. While in the instant case, except the disputed letter, the facts and circumstances of the case indicated in the order of the Collector (A), do not disclose that the appellants had indeed made the payment under protest. He has brought forth the contradictions in the appellants’ stand as set out in the Collector’s findings. He submitted that as there was no protest in this case, the refund claim of the appellants is time-barred.
16. We have heard both the sides, gone through the facts and circumstances of the case and also the documents and citations. The question that arises for our consideration is whether the letter dated 15-3-1975 was in fact a letter of protest by the appellants and whether the appellants, in fact, proved that they had made the payment under protest and whether the refund claim is barred by time. We have extracted in detail the Collector’s findings with regard to the circumstances under which the refund claim has come to be filed by the appellants. It is an admitted fact by the appellants that they did not appeal against the approval of the classification list. They have equally admitted that they did not have any records to show that payment was being made under protest. They are simply relying on the letter dated 15-3-1975 and the ruling of the Supreme Court in 1989 (41) E.L.T. 358 (S.C.) wherein the Supreme Court had held that the assessee’s letter written therein amounted to protest. Although it is true that Rule 223B was not in existence at the material time, as rightly held by the Collector, the appellants did not seem to have recorded the facts of payment of duty under protest in any clearance document. Shri Lakshmikumaran’s contention that the letter dated 15-3-1975 has been admitted by the Department does not seem to be correct as we find that the Collector has referred to the letter as “self opinionated letter”. We notice that the appellants have also not produced any evidence for having submitted this letter to the authorities. It is not as though that the Department has accepted and admitted the letter on record. The Collector in fact has gone in great detail and examined the circumstances to show that the appellants could npt have made the payment under protest. We are inclined to accept the findings of the Collector on this point. More so, as the appellants have also not produced any piece of evidence to show that they have admittedly filed the letter with the Department. As the circumstances indicated in the order-in-appeal show, there are several contradictions in the appellants’ stand and it is difficult to hold that there was indeed a protest payment in the case. The refund claim has been filed on 13-8-1983 received in office on 16-8-1983 for the period from 1-3-1975 to 28-2-1978 which is much beyond the period of 6 months. Hence, we have no hesitation in holding that the refund claim is barred by time. In 1978 (2) E.L.T. J-663 in the case of Inchek Tyres Ltd. v. Union of India and Ors., the Calcutta High Court has observed with regard to payment of duty under protest under Section 27 of the Customs Act which is analogous to Rule 11 of Excise Rules at para 4. “Until the payment is made under protest explicitly, there is no scope to infer from circumstances that the Petitioner had paid the duty in respect of their consignment under protest as to entitle him to get the benefit of the proviso of Section 27 of the Customs Act” and again in the same para the Court observed that “Involuntary payment and ‘payment under protest’ are not the same thing. For imposition of unjust duty one may be compelled to make payment and such payment will then be involuntary; but every involuntary payment cannot be held payment under protest within the meaning of proviso of Section 27 of the Customs Act.”
17. Viewing from this point of view also, as observed by us, the appellants have not shown anything except this letter dated 15-3-1975, which has been considered as ‘Self opinionated letter’ by Collector that duty had been paid under protest. As such, we are in agreement with the views of the Collector and hold that the order of the Collector is not vitiated by any illegality to call for any interference from our end. As such this appeal is dismissed.
G. Sankaran, President
18. I have carefully perused the order prepared by learned brother Shri Peeran but regret that I am unable to agree with the conclusion. As such I am recording a separate order.
19. The whole point of the dispute as regards limitation revolves round the question whether it could be said that duty was paid under protest in the admitted absence on record, owing presumably to non-availability of documents such as the classification lists, the deposit challans, the monthly assessment returns, gate passes etc., which would have clinched the factual position as regards payment of duty under protest. The point has to be resolved with reference to the appellants’ letter dated 15-3-1975 written to the Assistant Collector, Central Excise, Assessment Group III/1,4, Brabourne Road, Calcutta-1, with a copy to the Superintendent of Central Excise of the same Group (page 96-97 of the appellants’ paper book). The learned DR sought to suggest that since there’ was no evidence of actual receipt of this letter, it could not be taken into consideration. This contention, however, is found to be not tenable on close scrutiny of the record. The Assistant Collector’s order dated 26-12-1984 extensively discusses this letter dated 15-3-1975 in para 3 of the order. Similarly, it has been discussed at length in para 3D of the impugned order. Of course, both the lower authorities have held with reference to this letter that it could not be said that duty payments had been made under protest.
20. It is, therefore, necessary to closely scrutinise the contents of the appellants’ letter dated 15-3-1975. It is not necessary to reproduce the letter at length for the present purpose. The following extracts will suffice :-
“This is to bring to your kind notice that our medicines do not fall under Tariff Item No. 68 as one of the exemptions (exceptions?) is that dutiable goods covered under Section 2C of the M & T.P. Act will not attract duty under Tariff Item No. 68”.
Then follows a lengthy explanation of this ground. Another part of the letter says :-
“In this connection we may further clarify that Patent and Proprietory medicines not containing Alcohol, Opium, Indian Hemp or other Narcotic drugs or other Narcotics and exclusively Ayurvedic, Unani, Siddha or Homeopathic are also not subjected to excise duty as per Section 14E of Central Excise Tariff. Hence it is clear that all Ayurvedic preparations not containing Alcohol, Opium, Indian Hemp or other Narcotic Drugs or other Narcotics also fall under Item No. 5 of the said schedule”.
The letter ends by saying :-
“In view of above facts it is established beyond doubt that the Ayurvedic medicines manufactured by us are not subjected to any new Excise Duty”.
21. The Superintendent’s letter dated 19-4-1975 (page 94-95 of the paper book) to the appellants does not, of course, refer to their letter dated 15-3-1975. But as we have noted earlier the said letter has evidently been received by the addressees because it has come in for extensive comments in the orders of both the lower authorities. The Superintendent’s letter refers to his earlier letter dated 19-3-1975 advising the appellants to apply for L4 licence for manufacture of goods not elsewhere specified, that is, of goods falling under Item No. 68 and asking them to file classification lists. While advising the appellants to comply with the said instructions and not to take any clearance of goods falling under Item No. 68 without payment of duty the Superintendent says :-
“Please note that the undersigned will be compelled to take coercive measures against you in case of your failure to comply with the aforesaid instructions within 2 days of receipt of this letter”.
22. The appellants’ letter dated 15-3-1975 and the Superintendent’s letter dated 19-4-1975, read together, lead to the conclusion that while the appellants had vehemently contended that the goods manufactured by them were not liable to excise duty under Item No. 14E or 68 of the Central Excise Tariff, the Superintendent was compelling them to take licence, file classification lists and pay duty. In the circumstances, I do not think that the absence of any evidence on record to show whether the actual duty payment documents were marked by the words “under protest” or of the other related documents such as deposit challans, monthly assessment returns etc., would detract from the position that the appellants were paying duty under compulsion. This would mean that they were paying duty under protest though there is no evidence in specific terms to show that the actual payments were made under protest.
23. In the case of India Cements Ltd. v. Collector of C. Ex. 1989 (41) ELT 358(SC), the Supreme Court noted a letter written by the manufacturer to the Departmental authority raising many objections against the levy of duty on packing charges. The letter stated that the duty on packing charges on super fine cement was not leviable. It further stated :-
“If the department feels that the duty is leviable on packing charges, we have no option, but to suggest the rates fixed by the Government of India from quarter to quarter, as packing charges”.
In para 10 of the judgment the Court observed as follows :-
“We gave our anxious considerations to the rival submissions. A perusal of the letter dated June 11, 1974 clearly shows that all possible contentions which could be raised against the levy of duty,on the value of packing material were raised. If this could not be said to be a protest one fails to understand what else it could be. It does not require much time to analyse the contents of the letter. An ordinary reading with common sense will reveal to anybody that the appellant was not accepting the liability without protest. We have no hesitation to hold that the letter was in the nature of protest. That being the position, the question of limitation does not arise for refund of the duty”.
24. Though the full text of the letter has not been reproduced in the judgment, it is clear that the letter put forth contentions to the effect that no duty was leviable on packing charges. In the present instance also, as we have noted, the appellants’ letter dated 15-3-1975 argues at length that the goods manufactured by them did not attract excise duty either under Item No. 14E or under the new Item No. 68. Following the principle emerging from the Supreme Court’s judgment, I have no hesitation in holding that the appellants’ letter did constitute a letter of protest and that duty payments made thereafter must be deemed to have been made under protest. In this view of the matter, I hold that the bar of limitation would not apply to the appellants’ claim for refund of duty.
25. However, it would not necessarily follow that the claim is automatically admissible. The Tribunal had occasion to go into the classification and dutiability of some of the products manufactured by the present appellants in its order No. 438-439/85-C dated 7-6-1985 reported in 1985 (22) ELT 844. In disposing of the claim on merits, the settled position in law [see Gujarat High Court judgment in Darshan Hosiery Works 1980 (6) ELT 390 (Guj.)] has also to be kept in view. According to this judgment, the expression ‘not elsewhere specified’ used in Item No. 68 means total omission or failure to specify either for the purpose of taxability or for the purpose of exemption from taxability. Once an article or goods are found specified in any of the entries preceding Item 68, irrespective of the purpose for which they are specified, Item 68 does not come into play and does not render such goods taxable. This position was reversed only with the addition of an explanation to Item No. 68 by the Finance (No. 2) Act, 1980. In the present instance I, however, find that the Collector of Central Excise, Calcutta, by his order-in-original dated 31-1-1983 (not the subject of the present appeal) has dropped the proceedings initiated against the appellants for recovery of duty on their products cleared during the period from 1-3-1978 to 30-6-1982. The period to be considered in the present case is from 1-3-1975 to 28-2-1978. If any of the products manufactured by the appellants, forming the subject matter of this appeal, are found to be covered by the words used in Item No. 14E of the Tariff Schedule though such specification may have been for the purpose of exclusion from that item, it would follow that those products would not fall under Item No. 68 of the Schedule during the aforesaid period.
26. Following the above discussion, I would propose an order setting aside the impugned Order-in-Appeal and remanding the matter to the Collector (Appeals) for de novo disposal in accordance with law and after giving due opportunity to the appellants. In disposing of the appeal, the Collector (Appeals) shall bear in mind the findings of the Tribunal contained in this order.
G.A. Brahma Deva, Member (J)
27. I agree with the reasoning and decision arrived at by the Hon’ble President and accordingly the matter has to be remanded.
FINAL ORDER OF THE BENCH
In view of the majority opinion, the impugned Order-in-Appeal is set aside and the matter remanded to the Collector (Appeals) for de novo disposal in accordance with law and after giving due opportunity to the appellants. In disposing of the appeal the Collector (Appeals) shall bear in mind the findings contained in this order.