Judgment:
1. The bench first took up the application for condonation of the delay in filing supplementary appeal No. 3404/87-B1 and condoned it.
2. The learned Counsel's only argument was that the date of payment of the duty was during the currency of old Rule 11 of the Central Excise Rules, when the limitation was one year. If this limitation is applied, their refund claim would be in time. Furthermore the payment of the duty was under orders of the officers. It is, therefore, necessary to apply the old rule to their case and to overrule the judgment of the lower authorities holding their claims for refund were time barred. In fact, said the learned Counsel, there is no time limit for their claim, because they paid the moneys because of the decision of the departmental officers. They contested the assessment of the goods at all times, but the departmental officers paid no heed to them. They were entitled to receive back their money regardless of any time limit or any other consideration. The counsel quoted 1987 (30) ELT 807 and 1987 (32) ELT 415.
3. The learned SDR, however, opposed the arguments by saying that the time limit under the law must control all refund claims. And I agree with him. He said they had not appealed against the classification list approval and he quoted for this 1985 ECR 766. The law of the claim must be as on the date of the claim. He quoted 1986 (6) ECR 241 and 1983 ELT 49 (sic).
4. No refund can be made out of central excise revenue unless claims are made in accordance with the law. And claims made in accordance with the law require to be made within the time limit specified. This is the first and the most fundamental principle about refunds in central excise laws and I can see no way round it. No matter how mistaken an assessment was or how incorrect it may have been: the law provides the assessees the remedy of asking to be reimbursed the excess they may have paid and when they ask for such reimbursement or repayment, the department is bound by law to repay or refund the excess payment. But in order to do so, the claim must be a claim that satisfies the conditions imposed by the law for making such claims. It is not just any claim or every claim that can be met; only such claims which are strictly recognised by the law and controlled under the law can be met for the purpose of making restitution of the money paid in excess. To ignore this fundamental principle is the surest way not just to chaos and anarchy but to certain abuse, and heaven knows, there are enough of this. We cannot have a free-for-all when every body can demand that he paid the excess duty and so must be refunded the excess, without heed to law or procedure. There must be order and method in making refund from the revenue just as there ought to be order and method in the revenue department making demands for deficit payments from a citizen.
If the department does not follow the prescription of the law with respect to limitation and other just and necessary processes, we strike down their demands and prohibit the recovery of money under them. In all these things bounds are written into the law that bind both the state and the citizen so that government business is conducted in a manner that is sure and certain and free from caprice. The state may not be capricious any more than a citizen may be disorderly. Both must follow what the law lays down, and if the law binds them to a particular course, then good conduct dictates that they shall follow the courses set for them. They may not deviate or break free from them.
If they do so, they place their own interest at risk.
5. The learned Counsel said that they had been contesting the assessment from the beginning. If this was so, they could have taken the most elementary precaution of securing their rights by claiming a refund of the amount they consider they had been made to pay in excess of what was due. They did not do so, and in this way, endangered their whole claim before the time limit.
6. I am not able to agree with the suggestion that old Rule 11 with its longer time limit should be applied, because at the time the duty was paid, the time limit was one year. There is nothing in the law to sanction this. A claim by the citizen and a demand by the state must be made only in accordance with the law prevailing at the time of the claim of the demand. There might be explanations when the law specifies that the dead law would still operate even if it is no longer a part of the statute but unless there is an explicit provision to that effect, all actions under the law must be made as prescribed by the prevailing law. The claims are, therefore, not in order. I reject them both.
7. The learned Counsel sought support from the decision of this Tribunal in 1987 (32) ELT 415 re: Crystal Paints. He also read the decision of the Bombay High Court 1984 (18) ELT 207 Universal Drinks on which the Tribunal based its decision and said that the High Court had given a clear verdict to the effect that the time limit would be governed by the date on which the excess payment of duty was made by the assessee.
8. In the Crystal Paints decision the Tribunal reproduced paragraph 11 and the first two sentences of paragraph 12 of the Universal Drinks decision to arrive at its decision that the new Rule 11 would not affect the claim for refund, since the excess duty was paid between 15-7-1977 to 3-8-1977; and that the old time limit of one year under the old Rule 11 read with Rule 173-J would apply. I am afraid, however, that there is nothing in the Bombay High Court's judgment to support this conclusion.
9. In the Universal Drinks case, the High Court did speak of the right to claim refund being a vested right which accrued to the petitioner before the new Rule 11 came into operation and that it was a settled principle of interpretation of statutes that a vested right or even an existing right including a right of action is not affected or allowed to be taken away unless it is so affected or taken away by the enactment expressly or by necessary implication. The High Court went on to say in paragraph 12 that the new Rule 11 was clearly prospective in its operation in the sense that it would apply to the cases in which the right to claim refund had arisen after it came into force. The court explained that the old Rule 11 did not indicate a complete code but provided only for certain contingencies such as payment through inadvertence, error or misconstruction and as held in several decisions a civil suit or a writ petition under Article 226 could always be filed for refund of any duty illegally or wrongfully recovered or wrongly paid by an assessee under a mistake. Note carefully how the court contemplated the enforcement of the vested right. I will now indicate what the vested right which the court explained could be enforced was.
It said in para 12: a right to a suit is itself a vested right and in the absence of clear provisions or clear intendment the said right cannot be allowed to be taken away by the provisions of the new Rule 11." Further clarification is given in paragraph 13 in these words: In these circumstances, it must be held that the new Rule 11 is only prospective and is not applicable to the claims of refund in the instant writ petitions and, therefore, the contention raised on behalf of the respondents that the new Rule 11 provides a self-contained code and, therefore, bars the civil suit as well as the original proceeding directly under Article 226 of the Constitution for claiming refund of the excise duty does not survive for consideration.
10. There can be no more doubt now that the hon'ble Court was talking not of claims before the central excise authorities under the old or the new Rule 11 but of suits to enforce the vested right to claim the refund. In paragraph 11, it took original proceedings to enforce the claim thus: it was thus open to the petitioner to enforce its claim of the refund of excess duty paid through mistake by recourse either to a civil suit or by filing a writ petition under Article 226 of the Constitution. The petitioner has chosen to enforce the claim by preferring a writ petition in this Court after his applications with the department for granting refund have failed on the ground that the claim is barred by limitation under the new Rule 11 of the rules. If the old Rule 11 does not enact a self-contained code, the petitioner cannot be precluded from moving this Court under Article 226 of the Constitution in regard to a claim which is held to be barred by time by the department." There is not a word that the barrier under the new Rule 11 was invalid or that the department was mistaken in enforcing it against the claims. The action of the hon'ble Court was entirely under its high prerogative as a High Court to deliver relief under Article 226. The facts of the case throw complete light on this, because some of the claims fell even beyond the one year limit permitted by the old rule, and favoured by the Tribunal in its Crystal Paints decision. It could be nobody's claim or suggestion that even the old one year period of limitation was not applicable. Disregarding this, however, the High Court observed only that the duty had been paid under a mistake which came to the knowledge of the manufacturers when a decision given by it in another case was publicised. When, therefore, this party made its application for refund, most of the refund claims were barred even under the old Rule 11, to say nothing of the new Rule 11. However, some claims which fell within the time limit of the new rules were sanctioned by the Assistant Collector.
11. Here are the facts. By an application dated 30-10-1979, a claim for Rs. 808 339.61 and Rs. 839 947.52 was filed before the Assistant Collector for the period August, 1974 to August, 1976. We can see that this claim was clearly time barred even under the old rule. Another claim dated 2-9-1977 was filed for Rs. 528 084.05 for the period 8-9-1976 to 16-6-1977. Of this, a sum of Rs. 454 850.31 for the period 25-2-1977 to 16-6-1977 was sanctioned as it was within time ; but the Assistant Collector rejected a claim for Rs. 73 233.74 for the period 8-9-1976 to 24-2-1977 as barred by limitation. These two rejections formed the subject matter of the two writ petitions.
12. After discussing the details, the facts, and the law, the Court ordered refund of the claims of Rs. 808339.61 and Rs. 839947.52 excess paid during the period August, 1974 to August, 1976 claimed by the application dated 30-10-1979, and the sum of Rs. 73233.74 for the period 8-9-1976 to 24-2-1977 claimed by the letter dated 2-9-1977. In these sanctions by High Court, the sum totalling over rupees sixteen lacs in the application dated 30-10-1979 were barred even under the old one-year time limit. The court did not apply the old rule because the payments were made when it was in operation. I can find nothing to this effect in the judgment. The old rule would not have yielded the result of allowing the claims as most of them were beyond even its time limit.
13. This Tribunal has consistently held that the law as in operation on the day of the action should prevail and that demands by the department as well as claims by the assessee must draw their sanction only under the law in force at the time they are made. The time of the cause of action is not relevant; only the date of action, of making a claim or of issuing a demand, is relevant. This was laid down by the Supreme Court in the Rayala Corporation judgment in AIR 1970 SC 494. It struck down an action by the department seeking to proceed against a party under a rule which had been omitted. The Supreme Court agreed with the submission that the language in Clause 2 of the Defence of India Amendment Rules, 1965 afforded protection only to action already taken while the rule was in force, but could not justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule, but a new act of initiating a proceeding after the rule had ceased to exist. The principle is clear. If a rule has ceassd to form part of the statute, a saving clause like Clause 2 of the Defence of India (Amendment) Rules, 1965 would not enable action for anything under the rule after it is removed or omitted. And the Court also ruled that Section 6 of the General Clauses Act applies to repeals and not to omission, applies when the repeal is of a Central Act or Regulation, not a rule. Old Rule 11 of the Central Excises and Salt Act was not repealed: it was substituted. It was a Rule, not an Act or a Regulation. The fundamental law laid down by this is that no action/proceedings of any kind can be initiated under a rule that no longer exists. It is an axiomatic corollary that neiher a demand for duty nor a claim for refund can be started, initiated, served or filed under a rule that is no longer in operation.
14. The substitut ion of old Rule 11 by the new Rule 11 will justify no initiation of new claims under the old rule; it can only justify continuation of a proceeding under a claim made during the operation of the old rule. Thus, if a claim for refund had been made under the old Rule 11 within say, ten months, the substitution by the new Rule 11 cannot permit the department to block the claim as time barred on the ground that the new rule gave only six months. The claim having already been made and the proceedings already in progress, the claim under the one year limit would be a valid claim for processing it and finalizing it; the time limit of six months under the new rule cannot invalidate it. In this case, the refund claims were filed after the new rule had come into operation and were, therefore, time barred under it; they would have been in time under the time limit of the old rule. But for reasons I have explained above, the time limit of the old rule would not control the claims, since the claims were filed after the rule had been substituted by the new rule.
15. I agree with the views expressed by my Ld. brother, Shri H.R.Syiem, Member (Technical) and would like to add the following few lines.Atma Steels Pvt. Ltd. and Ors. v. Collector of Central Excise, Chandigarh and Ors., the larger bench of the Tribunal had an occasion to consider the effect of the show cause notices issued before 6-8-1977. The Tribunal also considered short levy and non-levy occuring prior to 6-8-1977, for which the show cause notices were issued after that date. In respect of the refunds made after 6-8-1977 when they write to claim for such refunds arising before that date was not directly dealt with in those proceedings because that point did not arise from any of those appeals. However, while considering the scope of retrospectively of Legislative Amendments relating to a limitation in paragraph 81, the Tribunal referred to the judgment of the Hon'ble Supreme Court in the case of Menon Abdul Karim Haji Tayab v. Deputy Custodian General, New Delhi and Ors. AIR 1964 SC 1256. That decision lays down that the procedural amendments to a law in the absence of anything to the contrary operate retrospectivly in the sense that they applied to all actions after the datethat come into force, even though the claim on which the action may be based may be of an anterior date.
In paragraph 84, the Tribunal has summed up the decision as follows: It thus becomes an established proposition that in the absence of a saving clause law of limitation would normally operate with retrospective effect.
17. This larger bench of the Tribunal confirms that recourse could be had to the provisions as prevailing at the time of the initiation of the proceedings of the period available would be one as permissible under the provisions existing at the time of issuance of show cause notice in spite of the fact that short levy or non-levy refers to the period when different period of limitation was available.(Collector of Central Excise, Patna v. Cyanides & Pigments Ltd., Jamshedpur), the Tribunal, in paragraph 21, has applied the same principle to claims for refund under new Rule 11. My Ld. Brother has rightly referred to the judgment of the Hon'ble Bombay High Court in 1984 (18) ELT 207 (Bombay) and has laid down the emphasis on the decision being in a writ proceedings where the Court has unfettered jurisdiction to accord relief.
19. In the result, I am also of the opinion that the refund claims having been filed beyond the period of 6 months specified under new Rule 11 is barred by time.