Full Judgment
These letters had not been submitted earlier by them before the departmental authorities due to mistaken legal advice. As these letters were in existence at the relevant time, it has been pleaded that these may be permitted to be taken into consideration.
2. Shri L.P. Asthana, learned advocate appeared for the applicants. He referred to the aforesaid submissions contained in the application. He then referred to the affidavit of Shri B.C. Nema, advocate who was representing them earlier. In the affidavit he had confirmed that he had advised the applicants to file a refund claim as duty had been paid by them under mistake of law. He had seen the letters exchanged in the year 1976 between the applicants and the Central Excise Officers regarding the application for Central Excise licence under protest. In view of the Tribunal decision vide Order No. 559/84-A, dated 25-7-1985 in India Cements Ltd. v. Collector of Central Excise, he was of the view that the licence under protest could not be regarded as payment under protest. Subsequently the aforesaid Tribunal decision was set aside by the Honourable Supreme Court in May, 1989 but he came to learn about it a little later when the said judgment was reported in Excise Law Times. Hence, when the Assistant Collector's order of May, 1989 was received, he advised the appellants to take that plea in the appeal.
Shri Asthana, learned counsel for the applicants submitted that if these documents are not permitted to be adduced as additional evidence, irreparable damage would be caused to them. In accordance with various decisions, excise duty is not leviable on their activity. The plea of payment of duty under protest had not been taken by them before the authorities in view of the legal advice tendered to them and they filed the refund claim on the ground of the levy being without the authority of law. The protest aspect was not pressed by them in view of the Tribunal decision in the case of India Cements Ltd. v. Collector of Central Excise, holding that letter written by the appellants therein and claimed to constitute a protest was not one. It was observed by the Tribunal in their order that there was absolutely no hint of a protest anywhere in the said letter. Only when the Supreme Court reversed this decision on appeal by M/s. India Cements did the position of law become settled and it was only then that they could stress this aspect as has been stated by their counsel, Shri Nema, in his affidavit. In view of this position, Shri Asthana pleaded that the additional evidence sought to be included by them in support of the claim of payment of duty under protest by them may be permitted. He contended that duty had been paid under protest and they may be permitted to take up such a plea in the appeal. The argument was resisted by Shri K.K. Jha, learned Senior Departmental Representative who pleaded that this is a new plea taken by them in the appeal and as such it may not be allowed.
3. We have considered the submissions made by both the sides. We find that Rule 10 of CEGAT (Procedure) Rules, 1982 lays down that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any grounds not forth in the memorandum of appeal.
Further, the Tribunal in deciding the appeal shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal. Such a decision is subject to the condition that the Tribunal shall not rest its decision on any other grounds unless the party who may be affected thereby has had sufficient opportunity of being heard on such grounds. Examining the present case from the above angle, we find that in the grounds of appeal in their appeal memorandum, the appellants had urged that in view of the fact that the duty was paid under a mistake of law and that a licence was obtained under protest, there was absolutely no warrant in holding that the provisions of Section 11-B would apply. This is the only mention in their detailed appeal spanning fourteen pages of the word protest. Even that reference was to their obtaining a licence under protest. In the same sentence in which the obtaining of a licence under protest was referred to, they had mentioned that duty was paid under a mistake of law. Hence, notwithstanding the averments by their former counsel, Shri Nema in the affidavit furnished by him, the Supreme Court judgment in India Cements Ltd. v. Collector of Central Excise had not been properly applied by them in the appeal and there was no specific stand taken that duty was paid under protest. As stated above, the payment of duty was attributed to mistake of law and the protest was with reference to their obtaining a licence. One can obtain a licence and may not follow up with a manufacturing activity. There may not be any payment of duty even after obtaining a licence if the goods are within the exemption level. Hence, any protest, if it is pressed into service for saving a subsequent refund claim from the stigma of time bar, should be related to such payment of duty. Judged from this angle, we cannot persuade ourselves to accept that the appellants had raised the ground of payment of duty under protest in their appeal. Further the miscellaneous application also seeks to adduce additional evidence. The additional evidence so sought to be produced by them is only of the correspondence exchanged by them with the departmental authorities - the department's letter to them stating that duty is leviable on their goods from 1-3-1975 and that they had not yet been licensed under the Central Excises and Salt Act and Central Excise Rules. Their reply is only that the provisions of the Rules regarding obtaining licence and payment of excise duty may not be applicable to them. They had then stated that as however, the department had emphasised the necessity of obtaining a licence, they were submitting their applications in Form AC-4 for issue of licence under protest. In this letter, there is thus a mention of their impression that obtaining central excise licence and payment of excise duty may not be applicable to them but the same has not found expression in their appeal memorandum. In the miscellaneous application also while they have sought permission to submit and rely upon these letters the contention that duty was paid under protest has not been articulated. But such a claim has been made before us during the hearing by their learned Counsel, Shri L.P. Asthana. In view of the provisions of Rule 10 CEGAT (Procedure) Rules, 1982, we allow this ground to be raised by them. In so doing, we take note of the fact that they had in their letter addressed to the Inspector of Central Excise tentatively referred to their impression that payment of excise duty may not be applicable to them though they had not effectively followed up this stand to warrant a finding that they had paid the duty under protest.
4. Having allowed the ground of payment of duty under protest to be taken by them, we proceeded to hear Shri Asthana in the matter. He submitted that on merits there are several decisions in their favour.
Their activity did not give rise to any excisable goods. Among the several decisions cited in the appeal for this proposition, he referred to the Tribunal decision in Aruna Industries v. CCE, 580. Though they had relied upon several judgments of different High Courts for their contention that limitation would not be applicable where duty has been paid under a mistake of law, Shri Asthana fairly conceded that in view of the Supreme Court judgments in the Miles India Ltd., 1987 (30) E.L.T. 641 (SC) and Doaba Cooperative Sugar Mills, 1988 (37) E.L.T. 478 (SC) cases, the position is well settled that statutory authorities have to observe the limitation stipulated in the relevant statutes and the question of payment of duty under mistake of law will not be a relevant criterion for them to ignore the period of limitation provided for therein. He would not, therefore, press this point but would instead stress the other point that they had paid duty under protest. In this connection, Shri Asthana referred to their letter informing the department that excise duty may not be applicable to them and that because of the department's direction they would be complying with it under protest. Shri Asthana referred to the judgments of the Honourable Supreme Court in India Cements Ltd. v. Collector of Central Excise, reported in 1989 (41) E.L.T. 358 - where the letter addressed to the department contesting their stand and agreeing to pay the duty demanded by the department without accepting their claim was taken as a protest to save the subsequent refund claim from the disability of time bar. In the said case even the word protest was not there in their letter. In the present case they have mentioned their protest in their letter. He also relied upon another judgment of the Supreme Court in India Pistons Ltd. v. Collector of Central Excise - 1990 (46) E.L.T. 3.
It was held therein that in the absence of a prescribed form of protest it was not possible to say that duty was paid without protest when protest was lodged while filing the price list as per departmental directions. Again, it was held by the Bombay High Court in Roche Products Ltd. v. Union of India, reported in 1991 (51) E.L.T. 238 that letter written to Assistant Collector intimating that duty is paid under protest is sufficient compliance with the requirement of Rule 233B. Shri Asthana then referred to the two to one majority decision in Shree Baidyanath Ayurved Bhawan Ltd. v. Collector of Central Excise, reported in 1990 (48) E.L.T. 606 wherein it was held that payment of duty was under compulsion as was evident from the letter written by the appellants. That letter was held to amount to protest though actual duty payment documents were not marked with the words "under protest" and accordingly the bar of limitation was held to be not applicable to the refund claim filed. In view of these decisions, Shri Asthana contended that the payment of duty by the appellants which was under compulsion exerted by the departmental authority and which was protested against by them as seen from their Letter dated 30-11-1976 constituted payment of duty under protest. In view of this protest, their refund claim is not hit by the bar of limitation, contended Shri Asthana. Proceeding further and without prejudice to his main argument as above, the learned counsel raised an alternative plea that as the refund claim also covered payment of duty during the six months period immediately preceding the date of their lodging the refund claim, refund of the amount of the duty paid during the said period would, in any case, be admissible to them. He, however, reiterated in conclusion his plea for allowing the appeal.
5. The plea raised by Shri Asthana were strongly opposed by Shri K.K.Jha, learned Senior Departmental Representative. He submitted that the documents filed with the miscellaneous application cannot be admitted as these had not been verified by the department. Moreover the letter of the appellants which is dated 30-11-1976 was addressed to the Inspector and not to the Assistant Collector, the competent officer to decide classification and dutiability as well as protests. That apart, the most important point he emphasised was that even if their letter was taken as a protest it was not on the grounds that the goods were not classifiable under Item 68 of the Tariff on merits but that their workshop was not liable to pay duty as it had been set up by the Madhya Pradesh Electricity Board and was undertaking the fabrication of Transportation Line Towers Sub-station structures and Line Hardware materials in connection with the power supply in the State of Madhya Pradesh. Shri Jha distinguished the Supreme Court judgment in India Cements case where he pointed out the appellant had spelt out their stand as to why they were claiming the benefit in question. As the department was not prepared to accept their stand they had to accept the department's direction and accordingly they paid duty under protest. Though they had not specifically used the word protest with reference to payment of duty, their contention was clearly spelt out and that was the ground on which their claim could be considered and decided in their favour. That is not the case here. Their protest was only on the ground that excise duty was not payable as theirs was set up by Madhya Pradesh Electricity Board. Their protest then was on this ground and cannot be taken to imply that they were not liable to pay duty on the ground that the product was not a manufactured item classifiable under Item 68. This latter ground on which they can be said to have a case was never claimed by them at the time of paying the duty or while lodging their protest. If it is raised later on, that has no connection with their protest letter. The protest was not there originally for the ground on which their case could be considered. The appellants could not, therefore, be said to have paid duty under protest. The refund claim had rightly been rejected as time barred as statutory authorities are bound by time limit provisions stipulated in the relevant statute. Shri Jha, learned Senior Departmental Representative, however, conceded fairly that the alternative contention raised by the learned counsel regarding part of the claim being admissible, the same covering payment of duty within the six months period can be considered.
6. We have considered the submissions. The issue for decision falls in a narrow compass namely, whether the Letter dated 30-11-1976 addressed by the appellants to the Inspector of Central Excise in reply to his letter dated 29-11-1976 can be considered as laying the foundation for paying duty under protest. Though the word protest is there such protest had been lodged with reference to applying for Central Excise licence. Even if it is held to be applicable for payment of duty, the ground, therefor, as spelt out therein was only the fact of their having been set up by the Madhya Pradesh Electricity Board for fabrication of towers structures etc. in connection with power supply in the State of Madhya Pradesh. No duty exemption being available on the said ground, the protest in question cannot sustain their subsequent refund claim lodged on the ground that such fabrication did not amount to manufacture of excisable goods and that they fell outside the Tariff classification of Item 68. We accept the plea raised by Shri Jha, learned Senior Departmental Representative in this regard. Even in the India Cements case decided by the Honourable Supreme Court which was heavily relied upon by Shri Asthana, it has come out (in para 7 of the report) that the appellants therein had raised many objections against the levy of packing charges. It was stated by them that duty on packing charges on superfine cement was not leviable. Then they stated that if the department felt that duty was leviable on packing charges they had no option but to suggest the rates fixed by the Government from quarter to quarter as packing charges. The Honourable Court observed that all possible contentions that could be raised against the levy of duty on the value of packing material were raised and remarked that if this could not be said to be a protest, one fails to understand what else it could be. It was then held that an ordinary reading with common sense will reveal to anybody that the appellant was not accepting the liability without protest. We have to, with respect, distinguish the present case from the above cited case decided by the Honourable Supreme Court. The refund claim fell for determination on merits on the grounds raised in their letter. Such is not the case here. If the refund claim could be decided in the present case on the ground spelt out in their letter, then the payment of duty could be taken to be under protest. It is not possible to accept the position that a protest can be on one ground and later on a refund claim can be lodged on another ground unrelated to the original one. In the circumstances, the plea of payment of duty under protest is rejected by us. The impugned order is upheld accordingly and the appeal dismissed to the extent it seeks the support of the Letter dated 30-11-1976 for the plea that duty had been paid under protest.
7. The alternative plea raised by Shri Asthana regarding part of the refund claim being not barred by limitation as the same had been filed within a period of six months from the date of payment of duty merits consideration. We allow the appeal to this extent with the direction to the Assistant Collector to verify the records regarding the payment of duty and decide the case on merits for such payment of duty made in the period not barred by limitation. The impugned order is thus partially set aside and the appeal allowed to that extent. The respondent Collector has filed a cross objection. As the impugned order had totally gone against the appellants and in favour of Revenue and the relief sought in the cross objection is only dismissal of the appeal, the cross objection is misconceived in law. It is dismissed as such.
8. Before parting with the matter, we would like to acknowledge our gratefulness to the counsels of both the sides for ably presenting their respective cases with appropriate case law. Our particular appreciation goes to the learned Senior Departmental Representative, Shri Jha. At very short notice, he had to contend with a strong argument, undaunted by the judgments of the highest judicial authority of the land when he was quickly able to find out the distinguishing features thereof as compared to the present case and make his pertinent submissions which enabled us to decide this case involving a high amount of more than Rupees Two crores, properly, according to us.
Sd/- 9. While agreeing with my ld. brother for dismissal of the appeal for a period beyond six months, I wish to add as follows: (i) The appellants vide a misc. application No. 702/93-B2 filed before the Tribunal (i) a letter dt. 29th Nov., 1976 addressed by the Inspector, Central Excise, Raipur, M.P., by which the Inspector wrote to the appellant and informed them that the goods namely structures and fabricators for towers, sub-stations manufactured in the Central Workshop fell under Tariff Item 68 of the 1st Schedule to the Central Excise Act, 1944 and that duty of Central Excise @ 1% ad volorem is leviable on such goods w.e.f. 1-3-1975. The factory has not yet been licenced under the Central Excise Act and Rules, 1944 to manufacture the said goods and hence the Inspector requested them to supply the following particulars in respect of the goods manufactured in the factory:S. No. - Name of the goods Qty.
Value manufacturedQty. removed outside Value Qty. in Valuethe factory from balance by (ii) The Divisional Engineer Workshop Division, MPEB, Bhilai by his letter dt. 30-11-1976 wrote to the Inspector as follows : Sub :- Issue of licence under the Central Exxcise Rules, 1944 in respect of Central Workshop, M.P.E.B., Bhilai.
In this connection, it is to intimate that the Central Workshop at Bhilai set up by the MP. Electricity Board is undertaking the fabrication of Transmission line towers, sub-station structures and Line Hardware materials in connection with the power supply in the State of Madhya Pradesh. In view of this, it is felt that the provisions of the Central Excise Rules, 1944 regarding obtaining licence and payment of Excise Duty may not be applicable to the Central Workshop, MPEB, Bhilai. However, as you have emphasised the necessity of obtaining a licence, we are submitting our application in form L-4 for issue of licence for our Central Workshop, Bhilai under protest.
(iii) The Superintendent replied to the above letter vide his reply dated 30-11-1976, by which it was stated that the goods were dutiable under Tariff Item 68 and that they were liable to pay duty @ 1% ad valorem As they were manufacturing these goods without holding a CE Licence and have been removing the said goods without payment of CED, leviable thereon, the action of the officers of the Central Excise, in saying the finished goods found in the workshop is leviable to duty is correct and that they may get the goods released on executing B II (Sec) Bond.
(iv) Apart from the above correspondence, there is not a single piece of evidence produced or even an affidavit of any responsible person filed to show that the goods were cleared under protest after obtaining the licence. Further, the above documents had not been relied till date, before the lower authorities. In that view, these documents would become a fresh plea and inadmissible for consideration. However, in the ends of justice, even if the letter dated 30-11-1976 is taken into consideration, what follows from it is that the appellant had initially stated that they were obtaining the licence under protest. But there is nothing to show that after the reply dated 30-11-1976 of the Supdt, the appellant presisted in persuing the protest for obtaining the licence. To protest for taking a licence! is one thing and to make payment of duty on protest is another matter. There is absolutely no evidence of whatsoever nature of payment of dully under protest or even of taking licence on protest, after the reply of the Supdt. The appellants have not produced the copies of classification list, or other documents to show that they had filed the same under protest and that the goods were also removed under protest. There is no claim made for refund till their letter dt. 18-4-1988 was made to Asstt. Collector for refund of duty, said to have been paid under "mistake of law". There is no reference in this letter, of paying the duty under protest, which is a refund application. The appellants have filed an affidavit of Sh. B.L. Neema, aged 70 years, who was the advocate of the appellants. In his affidavit, he has stated that he advised the MPEB in the light of the Aruna Industries case to file a refund application on the ground of mistake of law.
In para 4 of his affidavit, he has merely given his opinion that in view of the decision of India Cement's case, he was of the view that "the licence under protest could not be regarded as payment under protest and I had argued the appeal in the case on the ground of "mistake of law" Therefore, the ld. Advocate Shri B.L. Neema, had also advised the appellant to file refund application only on the ground of mistake of law and that he had also argued only on that ground before the lower authorities. He has held the view that "the licence under protest could not be regarded as payment under protest". It follows that the appellant had been clearly advised so and the appellant had rightly not pressed the ground of obtaining the licence under protest, as a ground for refund for payment of duty under protest. The present plea of protest urged by ld. Advocate, is a mere after thought, without any basis or primary evidence in the matter. There had been no payment of protest at any time, nor the appellants urged the ground of protest also at any time. In that view of the matter, I agree with the conclusion of my ld. brother.