Judgment:
1. This appeal arises from Order-in-Appeal dated 18-11-1996, passed by the Commissioner (Appeals). By this order, the Commissioner has confirmed the Order-in-Original No. 85/95 holding that the refund claim filed by the assessee as time barred. It was stated before the Commissioner that the deposits had been made on the unlawful directions of the range Superintendent without having conceived about the rate of duty at which sugar will be cleared from outside godowns on receipt of release warrants from the sugar directorate, therefore, his directions have to be treated as nothing short of provisional assessment under Rule 9B, final assessment made on the RT 12 return in the month of February-March, 1993. Hence, it was contended that the claim is well within six months. It was also contended that they were storing the sugar in outside the godown as provided under Central Excise Rule 57(5) and had been so storing there after making the advance deposit of the amounts of money as directed by the authorities. They also contended that it was the Range Supdt., who had directed the appellants to make the advance deposit of money equivalent to the duty leviable on free sale sugar which they had complied as there was no alternative left for them. The learned Commissioner merely held that the refund related to period 22-2-1992 to 21-5-1992 and the refund claim had been filed on 17-8-1993. He held that the assessment also cannot be said to be provisional as procedure under Rule 9B had not been followed. Even clearance for levy sugar at concessional rate was between 28-11-1992 to 30-1-1993 and as such it was barred by time.
2. In this appeals the appellants contended that the due to shortage of storing space inside the factory premises they had to store 72,740 bags of sugar out of 1991-92 production in outside godowns which could be done under the directions of the Range Supdt. after advance payment of duty at the rate (Rs. 85.00 per quintal) applicable to Free Sale sugar.
Subsequently, a part quantity (24,480 bags) had been cleared as levy sugar after seeking permission and claiming the credit of differential duty. They had claimed refund of the differential amount at Rs. 85.00 - Rs. 52.00 = Rs. 33.00 per qtl. out of the advance deposited by debiting the PLA. The same had been disallowed on the grounds of time bar. In this connection they further clarified that they had kept the 1989-90 season sugar bags in outside godowns with the permission of the department after advance interim deposit of an amount equivalent to Central Excise duty at the rate applicable to Levy sugar sale.
Subsequently, vide their letter No. 2957-58/Sales/90-91 dated 13/16-8-1990 and another No. Sales/91-92/3103, dated 12/13-9-1991 they sought permission from the Range Supdt., Bijnor to sell the said sugar bags numbering 62,980 in Free sale after payment of the balance amount of duty. In anticipation of his written orders, they cleared the sugar bags from outside godowns after payment of differential amount of duty in Free Sale. Letters No. 2-GL/Misc. Corr./Bijnor Sugar Mills/91/5, dated 15-9-1991 and No. 2-GL/Misc. Corr./Bijnor Sugar Mills/91/406, dated 12-2-1992 from the Range Supdt., Bijnor would show that the department had been exercising their control over the storage in and clearance from the outside godowns of sugar bags kept therein. They state that for the subject of sugar bags of the season 1991-92 also they had by their letter No. Mfg./91-92, dated 30-1-1992 had requested the Range Supdt. for permission to store them in outside godowns expressing their preparedness to deposit the Central Excise duty in advance, as granted during the earlier years. This letter was "R.I.O." by the Range Supdt. on 31-1-1992 asking the appellants to spell out at what rate (Levy or Free sale) the duty would be deposited (in advance) by them. They state that they were verbally told for making the advance deposit at the rate applicable to Free sale sugar. Accordingly, by their letter No. Mfg./91-92, dated 1-2-1992 they undertook to make the advance deposit at the said rate of Free sale sugar while keeping the bags in outside godowns. On their reminder letter dated 18-2-1992, the Range Supdt. vide his letter No. 2-GL/Misc. Corr./Bijnor Sugar Mills/91/98, dated 20-2-1992 permitted them to store the sugar bags in outside godown No. 4 Compartment A of Central Warehousing Corporation Godowns, Bijnor after payment of duty at the rate applicable to Free sale sugar. Therefore, they stored the subject sugar bags of the season 1991-92 in the aforesaid outside godown after making the advance deposit of duty amount from their PLA at Rs. 85.00 per qtl. The total bags numbering 72,740 were kept in the said outside godowns during the period 22-2-1992 to 21-5-1992 after an advance deposit of Rs. 61,82,900.00 through Debit entries in their PLA. Subsequently on receipt of Release Warrants for Free sale sugar from the Sugar Directorate, Government of India, they wrote to the Range Supdt. vide their covering letter No. Lab/91-92/2418, dated 15/16-9-1992 requesting him to forward the enclosed letter of the date to the Collector, Central Excise, Meerut through proper channel. In the enclosed letter they had requested the Collector for permitting them to clear the sugar bags from outside godowns against the Levy sale and allowing them to take credit of the excess amount of duty deposited in advance by them while storing the sugar bags in the said godowns. Again by their letter No. Mfg./92-93/2695, dated 29-9-1992 in response to the Range Supdt.'s query vide his letter No. 2-GL/Misc. Corr./Bijnor Sugar Mills/91/371, dated 16-9-1992, they had requested him to forward their application dated 15-9-1992 to higher authorities for allowing them to make the clearances against Levy sale and take the credit in their PLA of the excess amount of duty deposited in advance. Since they did not receive any communication, the appellants' Chief Chemist personally met the Range Supdt., Bijnor on 28-11-1992 and apprised him the urgency of making the clearances from outside godowns. After about their request for taking the credit of differential excess of amount of advance deposit he was told that their request dated 15-9-1992 had already been sent to the Divisional Assistant Collector. Therefore, they state that the appellants started making the clearances on that very date from the outside godowns against Levy sale Release Warrants and informed about it to the Range Supdt. vide letter No. Lekha/92-93/3925-26 of date.
Thereupon the Range Supdt. vide his letter No. 2-GL/Misc. Corr./Bijnor Sugar Mills/91/483, dated 3-12-1992 directed them not to take credit of the differential excess amount of duty until permitted by the competent authority. In compliance with the above directions of the Range Supdt.
they waiting for the orders of the Assistant Collector/Collector on their applications dated 15-9-1992 and 29-9-1992 for taking credit of the differential excess amount, cleared total quantity of 24,480 bags of sugar against Levy sale during the period 28-11-1992 to 30-1-1993.
The duty on the Levy sugar sale being payable at Rs. 52.00 per qtl., they became entitled to get the credit/refund at Rs. 33.00 (Rs. 85.00 - Rs. 52.00) per qtl. on the said 24,480 bags = totalling Rs. 8,07,840.00. They state that having received no orders for taking the credit/refund they met several times the Range Supdt. but in vain. So, they requested the Divisional Assistant Collector by their letter dated 30-7-1993 to refund the said excess amount of Rs. 8,07,840.00 out of the advance deposits made by them. They state that on the advice of the Range Supdt. they formally filed a refund claim in the prescribed proforma vide their letter No. Camp./42-H/93/94/168, dated 16-8-1993.
They state that the observations of the Commissioner that they have not followed the procedure under Rule 9B is not correct, as now it is well settled that mere procedural irregularities will not annihilate the substantive rights of the assessee. They state that the final assessment having been made on the RT-12 returns for the months of February and March, 1993, the appellant's claim even if treated as filed on 16-8-1993 was within 6 months limitation period. It is stated that both the authorities have not considered their correspondence as claimed for refund and has proceeded only on the fresh claim which is not correct.
3. We have heard the learned Advocate, Shri Bipin Garg for the appellants and the learned JDR, Shri D.K. Nayyar, for the Revenue.
4. It is the contention of the Counsel that what is in deposit was merely advance and not duty, therefore, Section 11B(ii)(b) is attracted and 6 months have to be calculated under Clause (B) of its Sub-section (5). The date will arise only from the final assessment made by the Range Supdt. under Rule 9B(5). In this connection, he relied on the judgment of the Calcutta High Court rendered in the case of Nipha Machinery Mfrs. Pvt. Ltd. v. CEGAT as reported in 1994 (71) E.L.T. 680 (Cal.), wherein it has been held that if the money paid is not duty, then the refund of the same cannot be governed by the provision of limitation in Section 11B of six months, which is applicable to refund of duty paid. The learned Counsel also submitted that for non-following the procedural requirement, the substantive right cannot be denied and in this regard, he relied on the judgment rendered in the case of Wood Working Centre v. Collector of Central Excise, as reported in 1996 (85) E.L.T. 201.
5. He further submitted that the provisional assessment on RT-12 returns assessed on Feb., 1993 and therefore, the date should commence from Feb., 1993.
6. The learned DR submitted that the clearances had been made in terms of Rule 52A and therefore, what was paid was duty and not some deposits. He also submitted that letter dated 15-9-1992 cannot be considered as letter of refund. He also submitted that there is no concept of payment of advance in Excise Law, and the deposits had been made in PLA and hence they are of duty deposits. He also relied on the judgment rendered in the case of Collector of Central Excise v. Kashmir Conductors as reported in 1997 (96) E.L.T. 257, wherein it has been held that time limit for refund claim commences from the date of payment of duty.
7. On a careful consideration of the submissions, we notice that the Assistant Collector has held that the clearances had been made under rules for deposit of duty and not by payment of advance; as the deposit had been credited by the party in their PLA under Rule 9(1) read with Rule 173G of the said rules. We appreciate this point held by the Assistant Collector but we have to note that the credits made in the PLA by the assessee was not advance but the duty payment for clearance of 72,740 qtls. of sugar. They had made earlier the clearances of these qtls. of sugar on the ground of Free Sale sugar sale and had deposited duty at Rs. 85.00 per qtl. Later they sought clearances to clear the same as Levy sugar at Rs. 52.00 per qtl. In this regard, they had addressed several letters and thereafter they had credited the same.
However, a formal letter of refund was filed only by their letter dated 17-8-1993. The question that arises for consideration is as to whether the letters addressed by them on 15-9-1992 to 29-9-1992 can be considered as refund claim. The authorities below have not considered these letters but considered the letter dated 17-8-1993 addressed as the refund claim to hold that it is time barred. They have also held that non-following of the protest procedure under Rule 233B is also required to be considered to hold that the demands were time barred.
Although in this case there has been no protest letter in the context in which it is laid down in Rule 233B of C.E. Rules. However, the case of the appellants is that the earlier letters referred to are required to be treated as refund claim. It is now well settled that non-following of the procedure under Rule 233B is only a procedural violation and it does not effect the substantive right of claiming the refund. It is also well settled that there [is] no need to file a refund claim in a prescribed form and that is also a mere procedural requirement. Therefore, in the context of all these settled law, we have to consider as to whether the earlier letters dated 15-9-1992 to 29-9-1992 are to be considered as refund letters.Ex. Engr. Workshop Divn., M.P. Electricity Board v.C.C.E. as reported in 1997 (94) E.L.T. 445 (S.C.), it has been held that a letter written to the inspector protesting to take licence should also be considered as a protest lodged for depositing the duty.
The Hon'ble Supreme Court set aside the Tribunals' order holding that the letter written at the time of taking licence cannot be considered as a letter of protest. The Supreme Court relied on its own earlier judgment rendered in the case India Cements Ltd. v. Collector of Central Excise as reported in 1989 (41) E.L.T. 358, wherein the Court had laid down that no form is prescribed for payment of duty under protest and if letter of protest shows that the assessee was not accepting the liability without protest then that would be sufficient.
Relying on this judgment, the Hon'ble Supreme Court upheld the assessees' contention that even a letter lodged initially against the inspectors' letter to take out licence should be considered as a letter of protest.Shree Baidyanath Ayurved Bhawan Ltd. v.Collector of Central Excise, as reported in 1990 (48) E.L.T. 606, the Tribunal held that although there was no recording of the word 'under protest' in any of the clearances made, that their letter written by the appellants amounts to protest. Although actual duty payment has to be considered payments made under protest. This judgment has been confirmed by the Hon'ble Supreme Court as can be seen from the Court-Room Highlights appearing at 1991 (82) E.L.T. A102.
10. Thus, it follows that in the overall facts and circumstances of the case, it is required to be seen to consider whether the letters dated 15-9-1992 to 29-9-1992 are to be considered as letters of refund. In the circumstances, under which the claim has been made, we are of the considered opinion that those letters are to be treated as refund claims alone and the further stand of the Supdt. requiring them to file a formal letter, subsequently, is only to strengthen their earlier claim.
11. In that view of the matter, we set aside the impugned order and remand the case for consideration of their claim in terms of law.