Judgment
A claim for refund of Rs. 23,746.95 was filed by M/s. Jain Ceramic Industries (Appellants) on the ground that they had paid duty on the item @ 25% instead of 15% on porcelain ware under 23B(4) during the period 5-4-1976 to 28-3-1977. They also requested that the entire amount paid @ 25% be refunded as their product falling under Item 68 was exempt vide Notification No. 176/77. On being called upon to explain as to why their claim should not be rejected as time-barred having been filed on 14-5-1980 and as to why it should not be held that the product was correctly classifiable under Item 23B(4), the party replied that they had paid the duty under protest by making an endorsement "under protest" on the TR challans and gate passes. They also stated that their claim for assessment under Item 68 was proper as Explanation-II under Item 23B showed that it did not include electrical insulators or electrical insulating fitting or parts thereof. Since they could not be under 23B they had only to be under Item 68. The same was reiterated by them during the personal hearing. While going through the claim the Assistant Collector found that kit-kats fuses, etc. manufactured by them were correctly classifiable under Item 23B(4) and exempt from duty in terms of Notification No. 152/71. It was only in 1979 after Explanation No. II was inserted under 23B these could be classifiable under Item 68 and the change in classification did not have any retrospective effect, appellant's claim having been received on 14-5-1980 was time barred and their contention that the payment was under protest was not tenable and they had not registered any regular protest with the proper officer as required under Rules. Accordingly, he rejected the claim.2. The Collector (Appeals) in the impugned order gave the appellants partial relief as in para 4 of his order reproduced below : "I have considered the matter. The points for determination in this case are two : (i) Classification of the item; and (ii) the aspect of limitation. On the classification of the item the appellants hold that their item viz. porcelain insulators are liable for classification under Item 68 with the benefit under Notification No. 176/77 even before the insertion of the Explanation-II of the said item while the Assistant Collector has taken the view that only from 1979 the item could be considered under 68 and outside the purview of 23B. In view of the point laid down by the Madras High Court in the case of W.S. Insulators of India and by CEGAT in the case of TELK it is clear that the insulators go under 68 and not under 23B. The benefit arising from classifying the item under 68 also should normally go to the appellant. With regard to the aspect of limitation, the Assistant Collector's finding, after conceding that the party was correctly entitled for the benefit of concessional assessment under Notification 152/71 is that the same is time barred as no procedure has been followed by them for filing the protest.
This cannot be endorsed. Before Rule 23B was introduced by Notification No. 115/81 no prescribed procedure existed for registering protest. As such writing a letter to the effect that they are paying duty under protest, and thereafter effecting payment with the endorsement "under protest", on TR 6 and gate passes should do. Payment made in that manner having been paid before 11-5-1981 should be correctly taken as having been made under protest and accordingly the time bar would not apply in this case. However, there is one slight point which is worth mentioning in this appeal.
While the claim for refund is for the total amount of Rs. 23,746.95 which has been claimed on the plea that the item was classifiable under 68, the protest letter filed by the party on 31-3-1976 is with reference to the denial of the benefit under Notification 152/71 - i.e. protest against being made to pay duty @ 25% as against 15%. As such the protest could be considered only for this aspect. The Assistant Collector having himself conceded in his order that the party was correctly entitled for the benefit of Notification No. 152/71, should not in the circumstances have invoked time bar, without giving any credence to the payment under protest and rejected the claim. The claim for the excess duty paid @ 10% for the period 1-4-1976 to July 1977, which works out to Rs. 7,606.14 should have been paid to the appellants." 3. When the appeal was called, none was present for the appellants, who have asked for a decision on merits based on their written submissions wherein they have cited and relied upon the following case law to say that their protest letter should be taken to cover all aspects of the claim including the claim for revising the classification of the goods under Item 68 CET, namely, 1991 (56) E.L.T. 169 (Tribunal) - Shellya Plastic Industries v. Collector of Central Excise; 1989 (41) E.L.T. 358 (S.C.) - India Cements v. Collector of Central Excise; 1990 (50) E.L.T.133 (Trib.) - Metroark Pvt. Ltd. v. Collector of Central Excise; and 1992 (58) E.L.T. 561 (S.C.) - Samrat International v. Collector of Central Excise.
4. Ld. S.D.R., Sh. M.K. Jain, however, urged that the benefit on limitation arising out of their protest letter has already been extended to them by order of Collector (Appeals) in so far as the protest was specifically for the lower exempted rate of duty for the whole of the block period, under Notification 152/71. The claim for revised classification under Item 68 was not covered by the protest letter.
5. On a careful consideration of the submissions made, we find that there is a lot of force in ld. SDK's submissions. The protest letter was clearly in the context of the claim for exemption under Notification 152/71 for the goods falling under Tariff Item 23B only and the relief in this regard has already been extended to them by Collector (Appeals). It is only in the refund claim filed on 8-5-1980 covering the period 1976 to March, 1979 that the claim for exemption under revised classification under Item 68 CET was made for the first time with elaborate grounds for the claim. This is an entirely new ground clearly not covered by the terms of their protest letter. It is now well-settled that the authorities constituted under the Act are bound by the period of limitation prescribed under the Act itself.
Being creatures of the statute, they have no powers to relax the statutory time limit under Section 11B of Central Excises & Salt Act, 1944. The case law cited by the appellants do not, therefore, advance their case in this regard and it has also been seen that this is not a case where the protest letter has been totally ignored, but that it is a case where the letter of protest has been correctly held to be valid for the clear terms of its contents and consequent relief in the matter of limitation based on the contents of the protest letter has been extended to the appellants. In this view of the matter, we see no reason to interfere with the order passed by the Collector (Appeals) and the appeal is, therefore, rejected.
6. I have gone through the proposed order written by learned Brother Shri K.S. Venkataramani, Member (Technical). With respect I am unable to agree with his findings. Hence this separate order.
7. I am not going to repeat the facts as they were correctly brought out in the order written by my learned brother.
8. It is true that letter of protest was filed by the party with reference to lower exempted rate of duty under Notification No. 152/71 without asking for re-classification as it was pointed out by the learned Departmental Representative. I am of the view that letter of protest filed by the party takes away the' stipulated period for filing refund claim. In other words, it extends time for filing refund claim.
It is well settled principle now that claim of re-classification can be made at the time of filing refund application. Since refund claim is in time after taking into consideration of the letter of protest, it is within the right of the party to claim for reclassification. Hence issue of reclassification has to be considered by the concerned authorities at the time of considering refund claim. It cannot be rejected on the ground that plea with reference to the issue of classification has not been made specifically in the letter of protest.
Decisions cited by the party (supra) in the written submission also support this view. In fact, in the impugned order the Collector (Appeals) has considered the issue of classification and held that they are appropriately classifiable under 68 and not under 23-B following the ratio of the decision of Madras High Court in the case of W.S.Insulators of India and of CEGAT in the case of TELK but he rejected the benefit of classification only on the ground that protest letter filed by the party was with reference to the denial of benefit under Notification No. 152/71 but claim with reference to revised classification has not been mentioned in the letter of protest. In my view, he is not correct in rejecting this ground since classification issue has to be examined while considering the refund claim as refund claim was filed in time. With this view and in view of the categorical finding given by the Collector (Appeals) following precedents that insulators are classifiable under Item 68, I do not find any valid reason for rejecting the claim made by the appellants on the issue of reclassification. Accordingly, I propose to allow the appeal filed by the party with consequential relief.
8A. Since there has been difference of opinion in between the Members of the Bench, the matter is placed before the Hon'ble President to refer it to a third Member to resolve the issue.
"In the facts and circumstances of case whether the appeal is liable to be rejected holding that issue of revised classification cannot be considered in the refund claim as there was no specific plea in the letter of protest filed by the party as it was held by Member (Technical) or whether deserves to be allowed on the ground that issue of revised classification can be considered at the time of refund claim as refund claim was filed in time as per Member (Judicial)." 9. I have perused the orders written by my learned brothers, Shri K.S.Venkataramani, Member Technical and Shri G.A.. Brahma Deva, Member Judicial. The following point of difference has been referred to me : - "In the facts and circumstances of case whether the appeal is liable to be rejected holding that issue of revised classification cannot be considered in the refund claim as there was no specific plea in the letter of protest filed by the party as it was held by Member Technical or whether deserves to be allowed on the ground that issue of revised classification can be considered at the time of refund claim as refund claim was filed in time as per Member (Judicial)".
10. Notices of hearing were issued to the parties. Nobody has appeared on behalf of the appellant. The appellant's advocate vide his letter dated 11th April, 1994 has written for the disposal of the appeal on merits.
11. Shri M.K. Jain, the learned SDR has appeared on behalf of the respondent. The learned Departmental Representative drew my attention to the order-in-original. He pleaded that the total refund amount was Rs. 23,746.95. The appellants had applied for refund on the ground that they had paid Central Excise duty @ 25% instead of @ 15% on porcelain-ware falling under Tariff Item 23B(4). They have applied for refund of excess duty from 6th April, 1976 to 28th March, 1977 and it was also contended that since the items fall under Tariff Item 68, so the amount paid at the rate of 25% be refunded being exempted under Notification No. 176/77-C.E., dated 18th June, 1977. Shri Jain, the learned SDR referred to the classification list filed by the appellant which appears on page 44 of the paper book and the tariff item has been shown under Heading 23B(4). That classification list was filed on 4th March, 1976 which was approved on 9th March, 1976. Shri Jain also drew my attention to the letter dated 31st March, 1976 written to the Inspector of Central Excise, Bahadurgarh which appears on page 43 of the paper book. Shri Jain, the learned Departmental Representative pleaded that there are statutory documents, viz., classification list, RT 12 return and gate passes and the appellant has not lodged any protest on these or on TR 6. Shri Jain pleaded that the only documents where they have written "under protest" are the TR 6 challans. Shri Jain pleaded that the appellant did not file any revised classification list and further argued that the refund claim has to be restricted to the claim as mentioned in the letter of protest. He pleaded that the learned Technical Member while disposing of the matter had taken into consideration all the judgments cited by the appellant on the subject.
He further argued that the payment of duty at the rate of 15% was by virtue of the Notification No. 152/71-CE, dated 26th July, 1971. He pleaded that the claim of assessment under T.I. 68 is an after-thought and the refund claim has only to be restricted to the amount or the rate mentioned in the letter of protest. He pleaded that the order passed by the Member (Judicial) is not correct and the order passed by the Member (Technical) should be accepted.
12. I have heard Shri M.K. Jain, the learned SDR and have gone through the records. I have perused the letter of the appellant dated 31st March, 1976 addressed to the Inspector of Central Excise, Bahadurgarh which appears on page 43. The same is reproduced below :- "Please find herewith enclosed treasury challan for Rs. 1118.55 in original. We have deposited this amount on your instructions @ 25%, whereas Excise Duty on our items should have been @ 15%. However the duty liability at 25% is being deposited under protest." A perusal of the letter shows that the appellant had enclosed a treasury challan for Rs. 1118.55 in original and the appellant had deposited this amount at the rate of 25% whereas excise duty on their item should have been at the rate of 15% and it is further mentioned that, however, the duty liability @ 25% is being deposited under protest. The perusal of the letter shows that in the letter there was only mention of one challan TR 6. There is no mention for the payment on future clearances and payments under protest. The lower authorities have restricted the refund to the extent of the claim mentioned in the appellant's letter dated 31st March, 1976 which appears on page 43.
Hon'ble Supreme Court in the case of Miles India Ltd. v. The Assistant Collector of Customs, reported in 1987 (30) E.L.T. 641 (SC) had held as under :- "After the matter was heard for some time and it was indicated that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefor under S. 27(1) of the Customs Act, 1962, learned counsel for the appellant sought leave to withdraw the appeal. We accord their leave to withdraw the appeal but make it clear that the order of the Customs, Excise & Gold (Control) Appellate Tribunal suffers from no infirmity. If really the payment of the duty was under a mistake of law, the appellant may seek recourse to such alternative remedy as it may be advised.
The Tribunal had occasion to deal with a similar situation in the case of Collector of Central Excise v. Dhampur Sugar Mills Ltd., reported in 1986 (38) E.L.T. 345 (Tribunal). Para Nos. 19 to 26 of the said decision are reproduced below :- The judgments cited by the appellant do not help him as the facts of this case are different.
The appellant's refund claim was filed on 8th May, 1980. The refund claim made by the appellant as mentioned in the protest letter dated 31st March, 1976 has been duly allowed by the lower authorities. In the present matter, the appellant is trying to enlarge the original refund claim. In the present matter, the appellant cannot be permitted to enlarge the refund claim. The refund claim made in the year 1980 will not enlarge the scope of the refund which was mentioned in the appellant's letter dated 31st March, 1976 which has been reproduced above. Since the claim of refund is beyond six months for getting its classification under T.I. 68, I agree with the conclusions arrived by the learned brother, Member Technical. The question referred to me is answered accordingly.
13. Registry is directed to place the matter before the regular Bench for passing appropriate orders in accordance with law.
Sd/- In the light of the majority view as above, there is no reason to interfere with the impugned order passed by the Collector (Appeals).
The appeal is, therefore, rejected.