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PETITIONER: SAMRAT INTERNATIONAL (P) LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE HYDERABAD

DATE OF JUDGMENT21/09/1990

BENCH: FATHIMA BEEVI, M. (J) BENCH: FATHIMA BEEVI, M. (J) RANGNATHAN, S.

CITATION:  1991 AIR  369            1990 SCR  Supl. (2)   1  1992 SCC  Supl.  (1) 293 JT 1991 (1)   181  1990 SCALE  (2)747

ACT:     Central Excises and Salt Act, 1944: Section 11-B Central Excise  and  Salt  Rules, 1944: Rules 173 B, C,  CC,  D  and I--Assessee    clearing   goods   under    ’Self    Removal’ procedure--Application    claiming    refund    of    excess duty--Starting point for period of limitation-- What is.

HEADNOTE:      The  appellant  was  manufacturing  Hacksaw  blades  and Bandsaw  falling under Tariff Item No. 51-A(iv) of the  Cen- tral Excise Tariff. On 26.3.1985 they filed a classification list as per Rule 173 B of the Central Excise Rules, 1944  in respect of their products furnishing the tariff rate of  15% Ad  valorem by mistake instead of furnishing  the  effective rates  of  duty  as  per  Notification  No.85/85  CE   dated 17.3.1985.  The  Assistant Collector of Central  Excise  ap- proved  the classification list on 3.6.1985.  On  31.10.1985 the  appellant filed a revised classification list with  the effective  rates of its products with  retrospective  effect from  26.3.1985  which was also approved  by  the  Assistant Collector  of  Central Excise. On 30.10.1985  the  appellant made an application under section 11B of the Central Excises and  Salt Act, 1944 for refund of excise duty claiming  that they had paid excess excise duty from 1.4.1985 to 31.8.1985. By  its  order dated 13.12.1985 the Assistant  Collector  of Central  Excise allowed the claim only partly  but  rejected the  claim for the period from 1.4.1985 to 27.4.1985 on  the ground  that the claim was barred under section 11B  of  the Act because the ’relevant date’ for preferring the claim for the  appellant was the date of payment of duty and the  duty had  been paid by adjustment in the personal ledger  account as and when goods were removed;     The  order of the Assistant Collector was  confirmed  in the appeal by the Collector of Central Excise (Appeals).     Appellant’s  further  appeal to the Customs  Excise  and Gold (Control) Appellate Tribunal was also unsuccessful.     In appeal to this Court under section 35L of the Central Excises and Salt Act, 1944 it was contended on behalf of the appellant  (i)  that mere debiting in  the  personal  ledger account should not be taken as the 2

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starting point for limitation and the, relevant date  should be  the date on which ART-12 Returns, which were filed on  a monthly  basis, were assessed: and (ii) that clause  (e)  of Explanation to Section 11 (B) was applicable to the case. Allowing the appeal, this Court,     HELD:  1. The scheme for payment of duty of goods  under which  the  appellant  was clearing his goods  is  known  as ’self-removal’  procedure.  There will be no  time  bar  for refund  if the duty is paid under protest. The period  of  6 months is prescribed in other cases. [6H; 7A]     2. In the instant case, the classification list filed by the  appellant for the period 1.4.1985 to 27.4.1985 was  not approved  till 3.6.85. From provisions of Rules  173B,  173C and 173CC of the Central Excise Rules, 1944 it is clear that clearances  can be made only after the approval of the  list by the particular officer. However, if there is likely to be delay in accordance with the approval the officer can  allow the  assessee to avail himself of the  procedure  prescribed under  Rule 9B for provisional assessment of goods.  Between 1st  April, 1975 when the classification list was filed  and 3rd June, 1985 when the list was approved, the assessee  was clearing  the  goods  by determining the  duty  himself  and debiting the amount of duty in his personal ledger  account. The amount of duty paid by him was obviously provisional and subject  to the result of the final approval by the  officer concerned.  In these circumstances, the clearance  of  goods made  by  the appellant between 1st April and 3rd  of  June, 1985  were in accordance with the procedure for  provisional assessment.   In such a situation clause (e) of para (B)  of the  Explanation under section 11 B will be  attracted.  The RT-12  Return  for  the month of April, 1985  was  filed  on 8.5.1985  and the same was assessed on  29.10.1985.  It  is, therefore,  only from the date of this assessment that  time bar  in  section 11 B will operate. The  refund  application having  been filed on 30th October, 1985 cannot,  therefore, said to be time barred. [7B-D; E-F]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 4460  Of 1988.     From  the Order dated 15.4. 1988 of the  Customs  Excise and  Gold (Control) Appellate Tribunal New Delhi  in  Appeal No. E/Appeal No. 2225 of 1986-A. 3 V.  Sreedharan, V.J. Francis and N.M. Popli for  the  Appel- lant.     Ashok  H. Desai, Solicitor General, Dalip Tandon and  P. Parmeshwaran for the Respondent. The Judgment of the Court was delivered by     FATHIMA BEEVI, J. This is an appeal under section 35L of the  Central Excises and Salt Act, 1944. The appeal  is  di- rected  against  the order dated 15.4.1988  of  the  Customs Excise and Gold (Control) Appellate Tribunal, New Delhi. The appellant is the manufacturer of Hacksaw blades and  Bandsaw Blades failing under Tariff Item No. 51-A(iv) of the Central Excise Tariff. The appellant filed a classification list  as per Rule 173B of the Central Excise Rules 1944 on  26.3.1985 in  respect of their products furnishing the tariff rate  of 15%  Ad valorem by mistake instead of furnishing the  effec- tive  rates  of duty as per Notification No.85/85  CE  dated 17.3.1985.  The  aggregate  value of the  clearance  in  the preceding  year i.e. 1984-85 did not exceed Rs.75 lakhs.  In the  case  of first clearance upto an  aggregate  value  not

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exceeding  Rs.7.5 lakhs, the effective rates of duty is  nil and in the case of next clearance of Rs.7.5 lakhs, the  duty is  3.75%  Ad valorem. The Assistant  Collector  of  Central Excise,  Hyderabad, approved the Tariff rate 15% Ad  valorem on  3.6.1985  instead of the above effective  rates  as  the appellant  did not claim the exemption as  per  Notification No.85/85  CE  dated 17.3.1985 due to  ignorance.  A  revised classification  list with the effective rates in respect  of the  products with retrospective effect from  26.3.1985  was filed  on  31.10.1985. The revised classification  list  was approved.  The appellant claimed that they had  paid  excess Rs.2,55,172.55  from 1.4.1985 to 31.8.1985 as  excise  duty. They  made an application for refund as per rule under  sec- tion  11B  of  the Central Excises and  Salt  Act,  1944  on 30.10.1985.     The  Assistant Collector of Central Excise by his  order dated  13.12.1985 sanctioned the refund claim  only  partly. For the period from 1.4.1985 to 27.4.1985, the refund  claim was  rejected on the ground that the same was  time  barred. The  Assistant Collector held that the refund claim for  the period 1.4.1985 to 27.4.1985 was time barred for the  reason that  under section 11B, the ’relevant date’ for  preferring the  claim for a case such as that of the appellant was  the date of payment of duty and, according to him, the duty  had been  paid by adjustment in the personal ledger  account  as and  when goods were removed. The plea of the  appellant  is that mere debiting in the personal ledger account should not be taken as the starting point for 4 limitation and the relevant date should be the date on which RT-12  Returns  which are filed on a monthly basis  are  as- sessed.  The order of the Assistant Collector was  confirmed in the appeal by the Collector of Central Excise  (Appeals). The further appeal to the Tribunal was also unsuccessful.     The  question that arises for decision in the appeal  is as to the starting point of limitation for filing an  appli- cation  under  section 11B of the Central Excises  and  Salt Act,  1944.  Section 11B so far as it is material  reads  as under: "11B.  Claim  for refund of duty--(1)  Any  person  claiming refund  of  any duty of excise may make an  application  for refund  of such duty to the Assistant Collector  of  Central Excise  before  the expiry of six months from  the  relevant date.           Provided  that the limitation of six months  shall not apply where any duty has been paid under protest. Explanation--For the purposes of this section (B) "relevant date" means,-- (a) to (d)  ........................................... (e)  in  a case where duty of excise is  paid  provisionally under  this  Act or the rules made thereunder, the  date  of adjustment of duty after the final assessment thereof; (f) in any other case, the date of payment of duty."     The  appellant’s contention before the  authorities  was that the date of assessment would be the date-of payment  of duty  within the meaning of clause (f) above. We agree  with the  learned  Solicitor General that this  argument  is  not tenable.  Where  an  assessee maintains  a  personal  ledger account,  duty is paid by way of debit therein and  goes  to reduce the amount of deposit paid by the assessee. It is 5 not a mere adjustment entry; it is effective payment.     Before us, however, learned counsel for the assessee has raised an alternative contention. According to the appellant it is clause (e) which is applicable in the case whereas the

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contention of the respondent is that clause (f) is  attract- ed. To understand this argument, it is necessary to refer to ’Self-removal’  procedure under which the appellant  cleared the goods.     Chapter VII-A of the Rules relates to removal of  excise goods  on determination of duty by producers,  manufacturers of  private  warehouse  licensees. Under  Rule  173B,  every assessee  shall file with the Proper Officer for approval  a list  in  prescribed form showing full  description  of  all excisable  goods or products manufactured, the rate of  duty leviable  on  such goods and such other particulars  as  the Collector  may direct. The Proper Officer shall, after  such enquiry as he deems fit, approve the list with such  modifi- cations  as are considered necessary and return one copy  of the approved list to the assessee who shall unless otherwise directed by the Proper Officer determine the duty payable on the  goods  intended to be removed in accordance  with  such list. All clearance shall be made only after the approval of the list by the Proper Officer. Sub-rule (2-A) of Rule  173B provides as under: "(2-A)  All clearances shall, subject to the  provisions  of rule  173CC, be made only after the approval of the list  by the proper officer. If the proper officer is of the  opinion that  on account of any inquiry to be made in the matter  or for  any  other reason to be recorded in  writing  there  is likely  to  be delay in according the  approval,  he  shall, either  on a written request made by the assessee or on  his own  accord,  allow such assessee to avail  himself  of  the procedure  prescribed under rule 9B for provisional  assess- ment of the goods."      Where  the assessee disputes rate of duty  approved  by the Proper Officer in respect of goods, he may have to  give an intimation to that effect to such officer and to pay duty under protest at the rate approved by such officer. When the dispute about the rate of duty has been finalised or for any other reason affecting rates of duty, a modification of  the rate  or rates of duty is necessitated, the  Proper  Officer shall make such modification and inform the assessee accord- ingly.  Under  Rule 173C, the assessee shall file  with  the Proper  Officer a price list in prescribed form.  Prior  ap- proval of the price list by the 6 Proper  Officer  is necessary in the specified  cases.  Here also, sub-rule (5) of rule 173C provides: "(5)  Subject to the provisions of rule 173CC,  an  assessee specified  in sub-rule (2) shall not clear any goods from  a factory, warehouse or other approved place of storage unless the  price list has been approved by the proper officer.  In case the proper officer is of the opinion that on account of any  enquiry to be made in the matter or for any other  rea- sons to be recorded in writing, there is likely to be  delay in according approval, he shall either on a written  request made by the assessee or of his own accord allow such  asses- see to avail himself of the procedure prescribed under  rule 9B for provisional assessment of the goods."     Under  Rule 173CC, assessee may remove goods in  certain cases pending approval by the Proper Officer of the  classi- fication  or price list. Rule 173F provides that  where  the assessee  has  complied with the provisions of  Rules  173B, 173D,  and  where applicable 173C, 173CC, he  shall  himself determine  his liability for the duty due on  the  excisable goods intended to be removed and shall not, except as other- wise  expressly  provided, remove such goods unless  he  has paid the duty as determined. Under Rule 173G, every assessee shall keep an account current with the Collector. This  rule

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lays  down  the  procedure which is to be  followed  by  the assessee  for payment of duty. According to sub-rule (3)  of Rule  173G, within five days after the close of  each  month every assessee shall file with the Proper Officer a  monthly return  in the prescribed form showing the quantity  of  the excisable goods manufactured, duty paid on such quantity and other particulars. The Proper Officer makes an assessment as provided  under  Rule 1731 on the basis of  the  information contained in the return and after such further enquiry as he may  consider  necessary assess the duty due  on  the  goods removed and the assessment is completed. The duty determined and  paid by the assessee under Rule 173F shall be  adjusted against the duty assessed and where the duty so assessed  is more  than the duty determined and paid, the assessee  shall pay the deficiency by making a debit in the current  account within  10  days of the receipt of copy of  the  return  and where  such duty is less, the assessee shall take credit  in the account current for the excess.     This is the scheme for the payment of duty for clearance of  goods by the manufacturers. This procedure is  known  as self-removal procedure. There will be no time bar for refund if the duty is paid under 7 protest.  The  period  of 6 months is  prescribed  in  other cases.  As we have already seen, section 1 1B says that  the period  of 6 months "in a case where duty of excise is  paid provisionally  under this Act or the rules made  thereunder, the  date of adjustment of duty after the  final  assessment thereof". In this case, the classification list filed by the appellant  for  the  period 1.4.1985 to  27.4.1985  was  not approved  till 3.6.1985. From the provisions of Rules  173B, 173C  and 173CC, which we have set out earlier, it  will  be seen that clearances can be made only after the approval  of the  list  by the particular officer. However, if  there  is likely to be delay in according the approval the officer can allow  the assessee to avail himself of the  procedure  pre- scribed  under  Rule 9B for provisional  assessment  of  the goods. In the present case between 1st April, 1975 when  the classification  list was filed and 3rd June, 1985  when  the list  was approved, the assessee was clearing the  goods  by determining the duty himself and debiting the amount of duty in  his personal ledger account. The amount of duty paid  by him  was obviously provisional and subject to the result  of the  final  approval by the officer concerned. This  is  the procedure  prescribed under Rule 9B except for  the  circum- stance that no bond as provided in Rule 9B is required in  a case where the personal ledger account is maintained for the clearance  of the goods, since there is always a balance  in the account current sufficient to cover the duty that may be demanded on the goods intended to be removed at any time. In these  circumstances,  the clearances of goods made  by  the appellant  between 1st April and 3rd of June, 1985  were  in accordance with the procedure for provisional assessment. In such  a situation clause (e) of para (B) of the  Explanation under section 11B will be attracted. In this case the RT- 12 Returns  for the month of April, 1985 was filed on  8.5.1985 and  the same was assessed on 29.10.1985. It is,  therefore, only  from  the  date of this assessment that  time  bar  in section  11B  will operate. In the present case  the  refund application had been filed on the 30th of October, 1985.  It cannot, therefore, said to be time barred.     We, therefore, accept this contention of the  appellant. The appeal has therefore to be allowed holding the appellant is entitled to the full amount and there is no bar of  limi- tation  as found by the Tribunal. We, therefore,  allow  the

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appeal.  In  the facts and circumstances of the  case  there will be no order as to costs. T.N.A.                              Appeal allowed. 8