Judgment:
1. This is an appeal which was originally filed as a revision application before the Central Government and which on transfer to this Tribunal is being treated as if it were an appeal filed before the Tribunal to be disposed of accordingly.
2. The brief facts of the case are that the appellants filed a refund claim in respect of duty paid on following item :- The appellants claimed the assessment of these under item 68 GET but the classification list approved was for classification of these under Item 52 GET. However, later these were held to be assessable under Item 68 as against original assessment done under 52 GET. The appellants therefore filed a refund claim and claimed the benefit of the exemption notification No. 167/79. The refund claim was partially allowed after the issue of show cause notice to the appellants and taking into account the submissions made by them in this regard. The original authority allowed the refund notwithstanding the fact that appellants had not followed the Chapter X procedure as envisaged under notification No. 167/79 for the reason that the appellants could not have followed this procedure when the goods were claimed on payment of duty paid under Item 52 GET as the Department did not allow assessment under Item 68 at the relevant time. The appellants have originally claimed the refund for the period 19-9-1979 to 31-1-1980; a protest was filed also by the appellants on 19-3-1980 in respect of the assessment done under notification No. 167/79. The original authority held the refund claim for the period 19-9-1979 to 10-1-1980 as time barred. The appellants did not file any appeal against the partial disallowance of the claim. However, the matter was taken up in revision by Collector under Section 35A of the Central Excise & Salt Act, as it then existed.
In revision the following two issues were examined :- (ii) whether the refund was legally allowed notwithstanding the fact that the appellants had not followed Chapter X procedure as stipulated under notification 167/79 for the purpose of availing the concession under the said notification.
3. In regard to (i), the Collector held that the goods had been correctly classified under Item 68 GET. However, regarding (ii) the Collector held that in as much as the notification 167/79 was a statutory in nature, the Assistant Collector has no authority to waive the requirement of the said notification and for this reason the refund of Rs. 8,386/- allowed was not in order.
4. The learned advocate for the appellants, Shri V. Lakshmikumaran,, pleaded that the appellants had originally filed a classification list for the classification of the goods under Item 68 GET, but the classification approved was under 52 GET and the appellants, therefore, paid duty under 52 GET. In as much as they were paying the full duty, the question of their following Chapter X procedure in terms of Notification 167/79 available in respect of goods falling under Item 68 GET did not arise. They therefore, filed a refund claim in this regard.
It was stated that it was impossible for them to have complied with the requirement of Notification No. 167/79 so far as it related to the following of Chapter X procedure was concerned. He read out the notification which is reproduced as under for easy reference :- " Notification No. 167/79, dated 19-4-1979 - In exercise of the power conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts parts and accessories of motor vehicles and tractors, including trailers, falling under Item No. 34A of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and intended for use in further manufacture of excisable goods either in the factory in which they are manufactured or in any other factory, from the whole of the duty of excise leviable thereon : (i) where such use is in a factory of a manufacturer different from his factory in which the said parts and accessories have been manufactured, the exemption contained in this notification shall be allowable subject to the proper officer being satisfied that the said parts and accessories are intended for such use; and (ii) where such use is in a factory of another manufacturer, the exemption contained in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the said rules. " 2. Nothing contained in this notification shall apply to the parts and accessories of motor vehicles and tractors, including trailers, the following :- So far as the 1st condition is concerned, he has stated that there is no dispute that the same had been fulfilled as the Assistant Collector allowed the refund after due verification. So far as the second condition is concerned, he has stated that in as much as the excise authorities disallowed the classification of goods initially under Item 68 GET and the appellants paid the duty under Item 52 GET as required by the authorities, the appellants could not have followed the Chapter X procedure. This procedure was to be followed in case the goods were assessed under Item 68 GET and the benefit of Notification 167/7.9 was made available. This being not the case, it was not possible for the appellants to comply with the 2nd condition of the Notification. He pleaded that a condition which in the circumstances was impossible to fulfil should not be asked to be complied with and made a reason for refusal of the refund. He cited in this regard Legal Maxims by Vepa P.Sarthi and Maxwell on the Interpretation of Statutes to back up his plea. He drew our attention to Maxwell's Interpretation of Statutes - maxim, lex non cogit ad impossibilia. He stressed that according to the interpretation of the statutes when conditions are not possible to be fulfilled, the performance of these is understood to be dispensed with.
He cited the following :- "Impossibility of Compliance - Enactments which impose duties upon conditions are, when these are not construed as conditions precedent to the exercise of a jurisdiction, subject to the maxim, lex non cogit ad impossibilia. They are understood as dispensing with the performance of what is prescribed when performance of it is impossible....".
In support of his plea, he stressed that second condition is more directory in nature rather than mandatory as, according to him, second condition is more procedural in nature.
5. Shri A.S. Sundar Rajan, the learned JDR, stated that plea taken by the appellants is that they substantially complied with the conditions of the notification. He has stated that the notification benefit is contingent upon the satisfaction of the two conditions stipulated therein and these have to be strictly complied with and a substantial compliance is not enough for the purpose of availing benefit of assessment. He conceded that the appellants did claim the assessment of goods under 68 right at the initial stage, but they were asked to pay duty under Item 52 GET. In as much as the goods had been assessed under 52 GET, the benefit of notification 167/79 was no longer available.
6. We observe the appellants had no option but go in for refund procedure and agitated the matter for classification of goods under Item 68 before the concerned authorities. The authorities conceded their plea and they proceeded to claim the benefit under 167/79. The Department, as has been pointed out by the learned Counsel for the appellants, had put them in a position where it was impossible for them to comply with the procedure stipulated under 167/79 as mentioned above. We agree with him that the condition which was impossible to comply with because of the action of the revenue should be taken to have been dispensed with so long as there has been substantial compliance with the requirement of Chapter X procedure on facts. In this case, the lower authority was satisfied that the goods had been cleared for the purposes set out in the notification and were duly accounted for as required under Chapter X Procedure and had in the circumstances, sanctioned the refund in this regard. We also observe that the procedural compliance with the requirement of the law, where goods had to be properly accounted for a particular end-use has to be held to be directory in nature and in the facts and circumstances of the case, the non-compliance with the Chapter X Procedure in entirety, therefore, does not vitiate the appellants claim. We hold, therefore, that the Collector was in error in denying them the benefit of refund as ordered by the Assistant Collector. We, therefore, allow the appeal.