Judgment:
H.K. Thakur, J.
1. This appeal has been filed by the Revenue against OIA No.DP/182/ SRT-I/07, dt.03.08.2007 under which an appeal filed by the respondent was remanded to the original adjudicating authority on the basis that the benefit of law declared by Bombay High Court in the case of M/s Om Textiles Pvt.Ltd. [2006 (74) RLT 233] has to be extended to an assessee irrespective of non-challenge of Annual Production Capacity fixed. Respondent in their cross objection No.E/Co/08/2008 filed on 01.02.2008 argued that adjudicating authority has not decided the case in view of the remand order of the first appellate authority and that the appeal filed by the Revenue should be dismissed as the issue now stands decided in favour of the respondent.
2. None appeared on behalf of the respondents on 27.09.2013, 08.11.2013, 03.01.2014, and 21.02.2014 when the case was fixed for hearing.
3. Heard Dr. J. Nagori (A.R.) on the matter wherein it was informed that the same issue has now also been decided by the jurisdictional High Court in the case of Premraj Dyeing and Printing Mills Pvt.Ltd. Vs UoI [2013 (288) ELT 357 (Guj.)].
4. After hearing A.R. and perusal of the case records it is observed that the issue involved in the present proceeding is whether respondent could file a refund claim of excess duty paid when Annual Production Capacity fixed by the Revenue under Hot Air Stenter Independent Processors Annual Capacity Determination Rules 1998, has not been challenged. It is further observed that this issue is no more res-integra and has been decided by the jurisdictional Gujarat High Court in the case of Premraj Dyeing and Printing Mills Pvt.Ltd. Vs UoI (supra). Para 14.4 to Para 19 of this judgment are relevant and are reproduced below:-
14.4. Rule 4 of the? Rules of 2000 pertains to determination of annual capacity and average value. Detailed rules have been made for the manner in which the Annual Production Capacity of an independent processor shall be determined. Sub-rule (3) of Rule 4 provides that the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, shall, as soon as may be, after determining the annual capacity of production and the average value of processed textile fabrics and the number of chambers (of a hot-air stenter) of the factory of the independent processor, by an order, intimate the same, as also the rate of duty applicable to the independent processor. Proviso to sub-rule (3) of Rule 4 permits the competent authority to determine the annual capacity of production on a provisional basis pending verification of the declaration furnished by the independent processor and pass an order accordingly and thereafter, determine the annual capacity, as soon as may be, and pass an order accordingly.
14.5. Rule 5 provides for changes in parameters for capacity determination and covers the cases where independent processor proposes to make any change in the installed machinery or any part thereof which tends to change any of the parameters referred to in Rule 4 and requires him to intimate about such change to the concerned excise authority.
15. From the above set of Rules, it can be seen that the entire exercise of determination of annual production capacity is to be made by the competent authority, that is, the Deputy Commissioner or the Assistant Commissioner, as the case may be. At a such stage, no hearing of the independent processor is envisaged. Such determination is to be made on the basis of declaration made by the processor with the aid of the expert advice, if so found necessary. Such determination and inquiry can be on provisional basis, but would be followed by final determination as soon as possible thereafter. In either case, the Rules do not envisage any participation by an independent processor other than of making a declaration as required under Rule 3. At no stage of such determination, the independent processor is granted any audience. Even the experts view that the prescribed authority may obtain, is not required to be shared with the independent processor. The Rules do not provide for any appeal against the determination of Annual Production Capacity. Significantly, sub-rule (3) of Rule 4 which provides for communication of such determination, provides that after determining the annual capacity of production and the average value of processed textile fabrics, the prescribed authority shall intimate the same by an order as also the rate of duty applicable to the independent processor. The Rules, therefore, do not refer to such determination as an order to be passed by the prescribed authority, but envisages communication of such determination through an order to the independent processor along with the rate of duty applicable to him.
16. From the tenor? of the Rules, the provisions made thereunder and the nature of exercise envisaged for determination of Annual Production Capacity, on the basis of the declaration made by the independent processor and if found necessary with the aid of consultation of the technical expert, it becomes clear that the determination which is arrived at cannot be termed as a judicial or even a quasi-judicial order. It is an administrative exercise undertaken by the prescribed authority of determining the Annual Production Capacity and other related issues. The appeal envisaged under Section 35 of the Act would necessarily be against quasi-judicial order that the competent authority may pass under the Act deciding the list between the parties. In our view, therefore, mere determination of an Annual Production Capacity by the prescribed authority under the Rules of 2000 or even under the earlier Rules of 1998, would not give rise to any appealable order.
17. If the? determination was not appealable, in our view, it would be incorrect to hold that without challenging such an order, the manufacturer cannot claim refund of duty erroneously collected. The fact that the galleries were included while determining the Annual Production Capacity and as such, the galleries were otherwise not required to be included by virtue of the decisions of the Tribunal and the Apex Court, there is no dispute. In our view, therefore, the petitioners were justified in filing refund claims in terms of Section 11B of the Central Excise Act claiming refund of excess duty collected on the basis of such consideration of galleries in determining Annual Production Capacity and collecting corresponding excise duty on such capacity. In our view, the excise authorities as well as the Tribunal erred in rejecting such claims merely on the ground that the determination of Annual Production Capacity was not challenged. The decisions of the Apex Court in case of Mafatlal Industries (supra) as well as Collector v. Flock (India) Pvt. Ltd. (supra) would not apply. In case of Mafatlal Industries, the Apex Court ruled that an assessee cannot claim refund that too after the indefinite period of time on the strength of decision in case of another assessee. In Collector v. Flock (India) Pvt. Ltd. (supra), it was a case where classification of a product was the controversy. The Assistant Collector passed an order of such classification. Such order though appealable, was not challenged by the assessee. The assessee, however, filed a refund claim. The Apex Court observed that there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing the order. It was, thus, clearly a case where an order which was appealable was not challenged by the party. The legality thereof, however, was questioned in refund proceedings. It was in this background that the Apex Court held that the refund claim was not maintainable. In the present case, the facts are vitally different. We have already held that the determination of Annual Production Capacity by the prescribed authority under the Rules of 2000 did not give rise to an appealable order.
18. We may, however, recall that in the show cause notice, three objections were raised. The refund claims were declined only on one ground, namely, that without challenging the determination of annual capacity of production, the processor could not have sustained refund claim. In that view of the matter, the Deputy Commissioner did not go into other aspects. Therefore, even while setting aside the orders passed by the Tribunal and the central excise authorities and holding that the refund claims were maintainable without challenging the determination of Annual Production Capacity, we would still like to remand the proceedings to the Deputy Commissioner for further consideration and adjudication on other two issues raised in the show cause notice.
19. Under the circumstances, the orders under challenge in these petitions are set aside. All proceedings are placed back to the Deputy Commissioner for further consideration of the refund claims in the light of the show cause notice issued to each petitioner bearing in mind the observations made hereinabove. Such exercise should be completed expeditiously and preferably within a period of six months from the date of receipt of a copy of this judgment.
5. In view of the above law laid down, appeal filed by the Revenue is rejected and cross objection filed by the respondent is allowed.