Judgment:
1. The appellant is a manufacturer of chemical products. Acetic anhydride gets manufactured during the production of chemicals. The present appeal is in regard to refund/56A claim of the appellant in regard to acetic anhydride so manufactured and captively consumed during the period 17-3-85 to 28-2-86. Refund application was filed on 3-3-87. Under the impugned order, the refund application remains rejected on the ground of limitation and merits.
2. Developments leading to the filing of the refund application may be recalled. Till 17-3-85, it was classifiable under T.I, 68 and was exempt from duty when captively consumed. From that date, classification shifted to T.L 14AAA. The appellant filed a classification list which was approved on 29th March 1985. The classification list had indicated classification under T.I. 14AAA and duty rate of 15%. Even before the classification list was approved, the appellant wrote a letter dated 26-3-85 to the Assistant Collector, Moradabad with the subject "duty under protest". It was stated that they had been "asked to pay the duty on clearance of acetic anhydride" for captive consumption while they were entitled to duty free clearance of acetic anhydride. The letter also stated that they were filing this protest under Rule 233B of the Central Excise Rules. Again, on 27-6-85, the appellant wrote a letter to the Collector of Central Excise, Meerut claiming either exemption or Rule 56A benefit. (Here it may be noted that Rule 56A provides for benefit of credit of duty paid on inputs).
On 20/24-3-86, a reply was sent by the Superintendent stating that the Collector had taken a view that acetic anhydride cannot be said to have been used in the production of acetic acid and the appellant was not entitled to the captive consumption benefit. The reason for such a view was that acetic anhydride was used in the manufacture of an intermediate product emerging before the manufacture of acetic acid.
Finally, the appellant received a letter dated 28-1-87 directing them to file a refund application under Section 11B of the Central Excise Act, 1944 if they so intended so that the case "may be considered on merits". The appellant filed refund application on 3-3-87. The Assistant Collector rejected the same on the ground of limitation and on merits. The appellant challenged that order without success before the Commissioner (Appeals). Commissioner (Appeals) took the view that refund application should have been filed within six months of the disposal of the protest letter. The present appeal challenges that order.
3. The contention of the appellant is that the finding regarding limitation is contrary to Section 11B of the Central Excise Act.
Learned Counsel for the appellant has pointed out that proviso to Section 11B specifically states that "provided that limitation of six months shall not apply where any duty has been paid under protest". The argument is that since the Section specifically has excluded the limitation of six months from cases where payment of duty is under protest, Revenue authorities were in error in raising such a ground of limitation of six months, from the time of vacation of protest. Learned Counsel submits that, in the alternative, revenue authorities should have allowed the benefit of 56A.4. On the merits of the case, the learned Counsel has submitted that Rule 56A specifically covers the appellant's product and the credit was, there-fore, required to be allowed. Learned Counsel has also pointed out that emergence of other commercially recognized products at intermediate stages of production is no ground for denial of credit or refund 1991 (35) ECC 40 - Andhra Sugars Ltd. v. C.C.L., Guntur. Learned Counsel has emphasized that since the claim was for goods captively consumed, the entire transaction remains fully accounted. Learned Counsel has also submitted that there is no bar of unjust enrichment in regard to grant of 56A benefit.
5. Learned SDR's preliminary contention is that refund application was not maintainable at all inasmuch as the payment of duty was in terms of approved classification list and that approval had not been challenged in appeal by the assessee and became final. Learned SDK relies on the decision of the Apex Court in the case of C.C.E., Kanpur v. Flock (India) Pvt. Ltd. and Counsel for the appellants submits that since the refund claim is not contrary to the approved classification these decisions have no application. His contention is that refund claim/56A is in continuation of and consequent to the approval of the classification list and payment of duly. It is being pointed out that 56A claim follows payment of duty, rather than being contrary to it. Therefore, the appellant was neither aggrieved with the order of classification nor was there any need to challenge that order for claiming consequential benefit. With regard to the merits of the case, learned SDR has submitted that unless the benefit is contemporaneously availed of in terms of the rules, the same cannot be extended at a later stage.
6. The appellant claim was two folds - either (i) grant of exemption on account of the goods being captively used or (ii) grant of 56A benefit.
The first claim flows from 3rd proviso to Rule 9 of Central Excise Rules. The second claim was based on the product being notified under Rule 56A. As already recalled, the appellant had made these claims through a protest letter as well as a letter to the Collector. They remained unanswered until 20th March 1986 when Collector's observations were sent to them. Subsequently, they were also asked to file refund application. As already noted, the payment of duty was 'under protest'.
Section 11B specifically excludes the time limit of six months for the purpose of filing refund applications in cases of payment of duty under protest. Neither Section 11B nor Rule 233B which relates to filing of protest, stipulates a time limit of six months from the date of vacation of the protest, for the purpose of filing refund application.
In the legal and factual position noted, we are of the opinion that lower authorities were in error in invoking time limit. To such a case, time limit, if any, can be applied, it is a reasonable period for filing claim. In the present case, refund application was filed within a month of the communication. Therefore, the issue of claim being delayed does not arise.
7. Coming to the merits of the case, the appellant's claim was sustain-able both under Rule 9 and Rule 56A. That some other product came into existence at intermediate stage is of no relevance for the grant of 56A benefit. This position remains settled by the judgment of the Apex Court in the case of Swadeshi Polytex Ltd. - . That the benefit of credit can be granted subsequently also remains settled by the judgment in the case of Formica India Division v. C.C.E. . Therefore, both the grounds taken by the lower authorities arc not sustainable.
8. In the light of what is stated above, the appeal is allowed. The appellant is entitled to take credit equivalent to the duty paid by them on the acetic anhydride as mentioned in the refund application.