| SooperKanoon Citation | sooperkanoon.com/4843 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Feb-09-1989 |
| Reported in | (1989)(41)ELT332Tri(Mum.)bai |
| Appellant | Polycone Paper Pvt. Ltd. |
| Respondent | Collector of C. Ex. |
2. During the hearing of the appeal, Shri Hidayatullah narrated the facts of the case and submitted that he is confining his arguments only with regard to the refusal o refund amounting to Rs. 9,01,129.79 by the Collector (Appeals) Insofar as the refusa of refund amounting to Rs. 77,238.64 covering the duty on paper cores and spools, he made it clear that he is not Dressing the aooeal with regard to this amount but reserve: his right to agitate in the appropriate forum. There was a dispute about the classifica tion of paper cones and tubes which led the appellants to file an appeal before the Col lector (Appeals), who by his order dated 19-4-1984 upheld the assessee's contention that they are classifiable under T.I. 17(4) and are eligible for exemption under Notification No. 66/82, dated 28-2-1982 exempting Articles of paper.
Following this decision the appellants are reported to have filed their claim for refund of duty already paid on such ar ticles of paper.
Originally, refund claim was for an amount of Rs. 24,17,017.83. This refund claim covered the period from 1-3-1982 to 20-4-1984. The Asstt.
Collector al lowed the refund claim partly. He, however, rejected the claim for Rs. 3,92,882.99 in respect of the period from 1-3-1982 to 15-3-1982 on the ground that there was no protest lodged. He also rejected the refund claim for Rs. 9,01,129.79 in respect of the period from 1-3-1983 to 30-11-1983 on the ground that no proper protest has been made and the claim is hit by time bar. The Asstt. Collector also rejected the refund claim for Rs. 77,238.64 relating to paper cones and tubes on the ground that these goods were not the subject matter of appeal decided by the Collector (Appeals) on 19-4-1984 and hence consequential relief cannot be granted on these goods. Against this order of the Asstt.Collector, the apellants filed the appeal before the Collector (Appeals). The Collector (Appeals) allowed their claim for Rs. 3,93,882.99 holding that valid protest existed from Rs. 27-3-1982.
However, the Collector (Appeals) disallowed their refund claim for Rs. 9,01,129.79 and also Rs. 77,238.64. Though the appellants filed the appeal against the order of rejection by the Collector (Appeals) with regard to the aforesaid two amounts, he is pressing the appeal only in respect of their claim for Rs. 9,01,129.79/-. He also brought out the following facts for purpose of better appreciation of his appeal:- The appellants filed the classification list No. 14/82 on 3-3-1982 classifying paper cones and tubes under T.I. 68. This classification list has been filed on their own, after the 1982 Budget. However, on 27-3-1982, they on their own, filed a revised classification list No.22/82 classifying these two products under T.I. 17(4) with the benefit of exemption under Notification No. 66/82. However, the Asstt.
Collector, instead of disposing the first classification list No.14/82, approved the classification list No. 22/82 on 7-4 1982. But on 28-4-1982, the same Asstt. Collector approved the earlier classification list No.14/82 with a remark that the approval given to C.L.No. 22/82 was cancelled. Against the order of approval of classification list No.14/82 classifying the goods under T.I. 68 they filed an appeal before the Collector (Appeals), which was finally decided only on 19-4-1984 holding that the products viz. paper cones and tubes are classifiable under T.I. 17. Consequent on the Budget 1983, they filed a classification list No. 2/83-84 effective from 1-3-1983. While, filing the classification list they also gave a letter No. PCP/CX/ 19/83, dated 3-3-1982 indicating that the excise duty on paper cones, tubes, spools and cores will be paid under protest. The learned Sr. Advocate showed us the original of the letter bearing the endorsement of the acknowledgement by the officer and also produced a photo copy of the same for record. The claim for refund of duty amounting to Rs. 9,01,129.79 is in respect of the duty paid period from 1-3-1983 to 30-11-1983. It was the contention of the learned Sr.
advocate that this payment is squarely covered by the protest letter dated 3-3-1983 and hence would not be hit by the limitation of time laid down under Section 11B. However, the authorities below have rejected their claim for this amount on the ground that they did not file protest as required under Rule 233-B of the Central Excise Rules and the protest is not a valid one. The appellants have also not filed any appeal against the approval of classification list 2/83-84 classifying the product under T.I.68. The authorities below have held the view that classification under T.I. 68 covered by CL No. 2/83-84 has therefore become final and their claim for refund is time barred.
Shri Hidayatullah pointed out that this view of the authorities below is not sus tainable because of the following reasons : Sub-rule (3) of Rule 173-B deals with payment of duty under protest. As per this Sub-rule 3, what is required to be done by the assessee is to give an intimation to the effect that he is paying the duty under protest at the rate approved by the officer. In this case, it has been complied with an their letter dated 3-3-1983 is such an intimation. He also referred to Section 11B proviso and contended that Section 11B does not talk about protest being made in accordance with the provisions laid down in the Rules. The said Section 11B only says that the limitation of six months shall not apply where any duty had been paid under protest. He also cited the Judgment of the Tribunal S.R.Bench reported in 1986 (26) ELT 553 wherein the Tribunal has held that the provisions of Rule 233B are directory and not mandatory in nature.
The Tribunal has held that the protest can be made even prior to the approval of the price list or the classification .list, as the case may be. He also cited the Judgment of the Tribunal reported in 1985(22) ELT 522 (SB-B). In this case, the Special Bench, New Delhi have held that it is not required that each of the classification list is to be appealed against when a correct classification order is passed, it applies to all the claims which came into existence. There was no change in law or the description of the goods and any duty recovered under an incorrect classification, can be claimed within the time limit of Section 11B but this time limit does not apply where duty has been paid under protest and no question arises whether classification list was disputed or not. He, therefore, contended that the protest letter dated 3-3-1983 was a valid protest. This classification list has not been agitated by the appealable order by the Asstt. Collector, because duty has been paid in pursuance of the letter of protest. No ap peal is required to be filed in respect of classification list No. 2/83-84 since they have al ready filed an appeal on these two items, which is pending. He, however, conceded that with regard to the duty element on cores and spools, if the same is included in the amount of Rs. 9,01,129.79, they would not make claim over it; because the duty paid on these two items, was not the subject matter of appeal pending and subsequently decided by the Collector on 19-4-1984.
3. Shri Arya, on behalf of the department, contended that there had been a time lag of nearly two years between the approval of classification list and the appellate order. During this time lag, the appellants had been filing the classification list on their own. Their protest letter dated 3-3-1983, while filing the C.L.No. 2/83-84 is anterior to the ap proval. Once, the Asstt. Collector gives an approval to the classification list filed by them, any protest made prior to the approval gets vacated and hence they should have appealed against that classification. He also pointed out that the classificatipn list No.2/83-84 not only contains paper cones and tubes but also other items like spools and cores, which were not the subject matter of appeal before the Collector (Appeals). He also took us through the Rule 233B of the Central Excise Rules and contended that a specific' reference has been made to the requirement of filing an appeal wherever such a course is available and in cases such a course is not available, he may file a representation which will be considered and suitable appealable orders passed. Shri Arya pointed out that the appellants had not choosen to comply with any of these requirements either by way of filing an appeal in respect of classification list No. 2/83-84 or by filing a representation against the classification list. Even the so-called letter of protest is not indicative of any grounds. Hence, he vehemently contended that in this case, in terms of Rule 233B, the letter dated 3-3-1983 cannot be construed as a valid protest which would be eligible for claiming the benefit under proviso to Section 11B. He also submitted that Section 11B is to be read alongwith the Rules and cannot be read in isolation. He contended that merely an endorsement of protest or a letter showing that the duty had been paid under protest could not be construed as a valid protest. In this context, he cited the decision of the Tribunal reported in 1987(27) ELT 728 (Tri) SB-A wherein the Tribunal has held that if no appeal is filed, refund cannot be entertained. He also cited the Judgment of CEGAT, Bombay reported in 1983 ECR 1223D, wherein it has been held that Section 11B has a precedence over the provisions of C. E. Rules and held that the time prescribed for purpose of claiming refund is prescribed in the Act itself. He, thus, supported the order of authorities below and contended that the appeal deserves to be rejected.
4. After hearing both the sides and perusing the available records, the short point for our consideration boils down to the question whether the appellants' letter dated 3-3-1983 enclosing therewith C.L.
No.2/83-84 is a valid protest giving the benefit of proviso to Section 11B of the Central Excises & Salt Act, 1944. It would be necessary for us to reproduce the letter dated 3-3-1983 - "We are enclosing herewith our C.L.No.2/83-84 for Paper Cones, Tubes, Cores and Spools falling under T.I.68 for approval as per finance bill for the year 1983-84.
Furrier, please note that the excise duty which we are paying from 1-3-1983 will be "DUTY PAID UNDER PROTEST"." 5. On careful reading of the aforesaid letter, we find that the essential ingredient viz. reason for protest is missing. We also note that the intimation is not only in respect of paper cones and tubes, which were the subject matter of appeals before the Collec tor (Appeals) and was pending during the material period but also covers cores and spools. The aforesaid letter does not make any mention about the pendency of the ap peal in respect of the classification of the two products viz. paper cones and tubes. It is also observed from this letter that they have submitted the classification list for the 4 products viz. paper cones, tubes, cores and spools as per the Finance Bill for the year 1983-84 classifying them under T.I.68. It is also observed that this intimation of protest has been given prior to the approval of the classification list and not after the approval. These observations made on the aforesaid letter are relevant for considering the various submissions made by the learned Sr. advocate as well as by the learned departmental representative. First considering the submission of the learned Sr. advocate that as per the Sub-rule (3) of 173-B it is enough if the assessee gives an intimation of protest. We are, however, unable to agree with this, argument because Sub-rule (3) of Rule 173-B reads as follows: "Where the assessee disputes the rate of duty approved by the proper of ficer in respect of any goods, he may, after giving an intimation to that effect to such officer, pay duty under protest at the rate approved by such officer." This sub-rule clearly indicates that the assessee's action to give a protest intimation would arise after the approval of rate of duty by the proper officer, which the assessee disputes. In this case, the letter has been given anterior to the approval and not posterior to the approval. On this Shri Hidayatullah cited the decision of the South Regional Bench of the Tribunal reported in 1986(26) ELT 553. We have carefully considered this decision. We would like to extract the relevant observations of the Tribunal: "Nothing prevents a party from filing a letter of protest alongwith filing of a price list at a higher value, particularly when it is noted from the letter of 29th December 1981 that the cost of the bags was included under instructions by the Asstt. Collector himself .There is considerable force in the arguments of the Ad vocate for the appellant that in terms of Rule 173C(8) payment of duty under protest after the approval of price list is a perfectly valid procedure. If the Asstt. Collector noticed the letter of protest prior to his approval of the price list, he owed it to the appellant to have specifically referred to it in his order of approval and stated why he did not accept the protest but over-ruled it. If however, he sighted it but did not take it into account while approving the price list, then ob viously, the letter would constitute a surviving protest in terms of Rule 173C(8). Thus, we find that in the present case, duty has indeed been paid under protest." "We would therefore, conclude that the provisions of Rule 233B in regard to endorsement of gate passes and RT-12 returns are directory and not man datory in nature." 6. Though the facts of the present case can be distinguished on facts of the case cited by the learned Sr. advocate, the legal question laid down by the Tribunal in the cita tion viz. that if the Asstt. Collector noticed the letter of protest prior to his approval of the price list, he owed it to the appellant to have specifically referred to it in his order of approval and stated why he did not accept the protest but over-ruled it, is quite evi dent from the said decision. We also take note of the observation of the Tribunal that if the Asstt. Collector cited the letter of protest but did not take into account while approv ing the price list, then obviously, the letter would constitute a surviving protest in terms of Rule 173C(8). In view of this, Shri Arya's argument that by approval of the classifica tion list the protest filed earlier on 3-3-1983 gets vacated, is not supported by the view taken by the South Regional Bench of the Tribunal. The Asstt.
Collector, having taken note of the letter of protest but glosses over it, without dismissing it keeps the protest alive in view of the Tribunal's decision cited by the learned Sr. advocate. In any case, we are satisfied that there was an appeal in respect of the two products viz. paper cones and tubes pending before the Collector (Appeals), this fact also being known to the depart ment. There is also no dispute about the fact that notwithstanding the changes in 1983 Budget, assessment on these two products viz. paper cones and tubes would not get dis turbed by the decision of the Collector (Appeals) in his order dated 19-4-1984. Hence, in regard to these two products we are inclined to accept the arguments of the learned Sr. advocate that the letter of protest dated 3-3-1983 is a valid protest in view of the pendency of the appeal. In this, we are also finding support in the Judgment of the Tribunal reported in 1985(22) ELT 522, wherein the Special Bench, New Delhi have held as below :- 'the basic fact in this case is that the respondents protested as early as March 1975 that the goods were not liable to duty and they were allowed to pay duty under protest. The letters were addressed to the Collector's office and the department has produced no evidence that these protests were ignored or the respondent was informed to appeal against the, Classification list dated 2-5-1975 as this was tantamount to rejection of their protest made to the Collector's office in March/April 1975. On the contrary, they persisted in agitating the matter and finally succeeded in getting an appealable order from the Collector. Whether this order involves a review of the final order approving the classification by the As sistant Collector or not, there is a definite nexus between the protests earlier lodged and the one dated 6-7-1979. There is also force in the respondent's plea that they were compelled to file the classification lists and pay the duty, now in issue. As far as the law is concerned, Section 173-B(3) contains a clear provision for payment of duty under protest at the rates approved by the officer, and Sub rule (5) stipulates that when the dispute about the duty has been finalised, the proper officer shall make such modification and inform the assessee accordingly...this limitation shall not apply where any duty has been paid under protest.This latter provision only expressly makes clear a principle that a protest lodged simultaneously with payment of duty was tantamount to claiming a refund. The department has not adduced any proof that the Superintendent or the A.C. or the Collector had rejected the protest made in 1975....In that view of the mat ter, the protest would be technically still alive and there would be no question of any time bar." 7. Going by the principles set out in the aforesaid decision of the Tribunal of the Special Bench, with which we respectfully agree that in this case, in the context of the undisputed factual position that classification of paper cones and tubes was the subject matter of appeal pending during the approval of the classification list No.2/83-84 and in respect of the classification list for those two items, letter of protest has been lodged and payment of duty done with gate passes bearing due endorsement of protest, it would be difficult to accept the contention of the department that in regard to the two products there was no valid protest. In this case, though the intimation of protest is not happily worded as it should have been, there has been substantial compliance of valid protest with regard to the two items viz. paper cones and tubes in view.of the factual position discussed above. We would at this juncture make it clear that the letter of protest can not be held valid for the other two products viz. paper cores and spools, in respect of which no appeal is pending.
When classification of paper cones and tubes was already under appeal, which was yet to be decided, the question of filing a fresh appeal on their classification did not arise. That would only involve multiplication of appeals on the very same issue. Hence, we hold that in regard to the duty paid on paper cones and tubes, the payments have been made under protest, and accordingly they would be entitled to the benefit of proviso to Section 11B. In this view of the matter, we direct that the Asstt. Col lector should work out the duty paid only on paper cones and tubes during the relevant period and grant consequential relief.