Decided on July 18,1986



S.K. Bhatnagar, Member (T) - (1.)THIS appeal is directed against the order-in-original no. 309/ASM/83 of 1983 dated 31.12.1983 passed by the Collector of Central Excise (Appeals), Calcutta upholding the order of the Assistant Collector passed in order no. V(18)Ref/ 9/ACG/83 dated 28.7.1983 rejecting the claim of the appellants for refund of duty.
(2.)Shri S. Sen, the Ld. Advocate, submitted that between March, 1972 to June, '1977, the appellants' company manufactured Coca Cola and Fanta (Orange) by and under a franchise agreement entered into with the Coca Cola Export Corporation Ltd. During this period they had filed classification list under rule 173B of the Central Excise Rules (hereinafter called 'the Rules'), erroneously and/or mistakenly declaring that the aforesaid Coca Cola and Fanta (Orange) fell within the ambit of T.I. ID of the First Schedule whereunder the rate of duty was 20% advalorem. The classification list submitted by the appellants effective from 1972 was approved by the Superintendent of Central Excise, Gauhati. In or about March, 1976, the tariff description under aforesaid item ID of this Schedule was amended. Though under item no. 1D(2) initially the rate of duty was fixed at 20% advalorem, by Notification No. 50/76 dated March, the 16th, 1976, the same was reduced to 10%. In view of the amendment mentioned above the appellants submitted another classification list again under the same erroneous assumption that Coca Cola and Fanta (Orange) contained blended flavouring concentrate falling under T. 1.1 D(1)(a). This classification list was approved by the Assistant Collector on March 26, 1976 without drawing any sample for Coca Cola or Fanta (Orange). Now, it is the case of the appellants before us that as a matter of fact these beverages did not contain blended flavouring concentrate but only essence and that the classification list submitted by them earlier was under the mistaken impression that it contained blended flavouring con-centrater Subsequently, an order passed in Sri Krishna Bottlers (P) Ltd. in order-in-review No. 876 of 1980 dated 26.9.1980 by the Government of India came to the notice of the appellants. According to this order the Coca Cola and Fanta (Orange) did not contain the blended flavouring concentrate and therefore, they did not fall under T.I.1(D)(1)(a). The appellants have contended that in this view of the matter their products fell under the definition of "aerated water" falling under TI 1D(2) and therefore, they were only liable to pay duty at 10% advalorem. It was the further case of the appellants that though the Department tested the sample of Fanta (Soda); for reasons best known to them; no attempt was made to test the sample of Coca Cola or Fanta (Orange) to ascertain their contents. The appellants, however, submitted a report of Dr. K.K. laya, an expert according to whom Fanta (Orange) or Coca Cola did not contain any natural fruit juice or pulp or their concentrates.
When the order passed in this aforesaid case came to the notice of the appellants they preferred their claim on the 13th July, 1983 for the refund of a sum of Rs. 29,60,059.45 before the appropriate authorities. The Assistant Collector rejected their claim as time-barred.... On an appeal, the Collector (Appeals) also rejected the claim of the appellants. Hence this appeal.

Shri Sen, the Ld. Advocate, emphasised that the lower authorities had wrongly rejected their refund claim under Section 11B of the Central Excise Act, inasmuch as the claim was filed with reference to the Common Law or General Law and not under the Central Excise Act.

In any case, during the period when the goods were cleared, the amended rule 11 was in force and not Section 11B which came into existence much later.

It was his submission that in this case the wrong classification and consequential wrong payment of duty resulted from an error of the Department.

It was his contention that the refund in this case was governed by the General Law or Common. Law and not by rule 11 or Section 11B. Citing a number of High Court and Supreme Court judgments Shri Sen, the Ld. Advocate, stressed that basically the following two approaches have developed during the course of evolution of law in this area.

(1) That there was no limitation for claiming refund in case of levy or realisation of tax without the authority of law, as evident from the judgments of the Hon'ble Supreme Court in the case of Aluminium Corporation of India v. Union of India AIR-1975-SC-2279 and Shivshankar Dal-Mills v. State of Haryana (AIR-1980-SC-1037) and the judgment of Calcutta High Court in the case of Khardah v. Union of India (1980-Vol.I-Calcutta-Law Journal-433);

(2) That even if some limitation is to apply, it is the limitation of three years as provided in Common Law or Contract Act read with Limitation Act, that would apply as is evident from the decisions in the cases of Messrs D. Cawasji & Co. v. State of Mysore AIR-1975-SC-813 (SC), Universal Drinks (P) Ltd. v. Union of India (1984-ELT-207 to 15) and Vallabh Glass Works Ltd. v. Union of India 19S4(16)-ELT-171.

In the instant case, the first judgment or order on the correct classification was delivered in the form of the Government of India's order-in-revision in. the case of Krishna Bottlers and the appellants had filed their refund claim within 3 years of the discovery of the mistake in the light of the Govt. of India's order-in-revision passed in the aforesaid case.

It was his contention that in similar cases the Department has already granted refund in identical or similar circumstances as in the case of Tripti Drinks and therefore, it would be a case of hostile discrimination if the refund is not granted to this appellant.

It was also his contention that there is no dispute that the refund was due on merits and the only question was whether the claim was time-barred and whether Departmental authorities could give relief in terms of Common Law.

It was his contention that as the claim was filed within three years from the date of discovery of the error which was not in dispute, the claim was in time. Furthermore, it was his contention that this Tribunal being the apex body created by an Act of Parliament is a Court in the sense that it is competent to give a definitive judgment which is final. It can take cognizance of various decisions of superior courts and apply the principles enunciated therein and the ratio of those decisions may be as relevant to the issues and the facts of the cases before it.

He would, therefore, urge that the various High Court and Supreme Court decisions which he has cited and presented in detail and which have been incorporated in the written submissions prepared by him and submitted may be taken into account and on this basis the order of the Ld. Collector (Appeals) may be set aside and the lower authorities may be directed to grant the refund.

It was also his contention that rule 11 was applicable only in certain circumstances as would be seen from these submissions.

In fact, neither rule 11 nor Section 11B was applicable in the instant case and the same was required to be dealt with only with reference to the Common Law.

Alternatively it was also his contention that since the claim was genuine, the same is required to be granted even if barred by limitation as the Government is neither required nor expected to keep any money belonging to a citizen which was not legally due to it and which was not collected under the authority of law. It was his submission that the relevant provisions of the Constitution and the Common Law should also be borne in mind while deciding the Central Excise or Customs cases.

However, in course of the arguments the Ld. Advocate appearing for the appellants has conceded that he would not press for the proposition that no law of limitation would apply to his case. He would principally seek the benefit of the second proposition of law of limitation namely the theory of the limitation of three years and would submit that the benefit of the same may be extended to him. In this view of the matter we will examine his contentions in the same light.

Shri M.C. Thakur, the Ld. S.D.R., speaking for the Department submitted that it is a simple case of a refund claim barred by law of limitation.

He submitted that the refund claim was filed on the 13th July, 1983 and by that time Section 11B had already come into existence. Therefore, Section 11B was the relevant provision and six months time-limit will apply. As the claim was admittedly filed after this period of limitation, therefore, it was correctly rejected as time-barred. In this connection, he would rely on an order of the Tribunal in the case of Collector of Central Excise, Patna v. Cyanides & Pigments Ltd., Jamshedpur 1986 (24) ELT 89 (Tribunal). He would, in particular, draw attention to its para 21 in this regard where it has been held that the period of limitation as permissible on the date of issue of a show cause notice (under rule 10 or 10A) would be that as applicable on the date of issue of a show cause notice and not the period which Was operative when the alleged short levy or non-levy occurred. The same principle would apply to claims for refund under rule 11.

Furthermore, he would like to draw our attention to Section 11B, Sub-section (4) &. (5) in which it has been specifically mentioned that 'Save as otherwise provided by or under this Act, no claim for refund or any duty of excise shall be entertained' and 'Notwithstanding, anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected was not excisable or was entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim."

It was his submission that in the light of this provision the authorities under the Act were required to entertain only such claims which have been filed as per the provisions of this Act and that the provisions of other laws did not apply. Therefore, it was his contention that the Contract Act or the Limitation Act or any other General Law or Common Law provisions were not applicable. In this connection, he would like to rely on the Andhra Pradesh High Court case of Godavari Plywood Ltd. v. Union of India 1984-ELT-732.

He would also refer to the case of Inchek Tyres 1979-ELT (J 236) in which reliance was placed on the case of Messrs Burmah Construction Co. v. State of Orissa (AIR-1962-SC-1320) in this connection.

It was his contention that in view of this judgment of the Andhra Pradesh High Court, the duty paid under mistake of law is also governed by the provisions of Section 11B. In other words, six months time-limit is applicable to the refund claim on this ground also and the Limitation Act did not apply. It was also his submission that this Tribunal is competent to pass orders only in terms of Section 35C of the Central Excise Act.

(3.)SPEAKING in reply the Ld. Advocate submitted that with due respect to the Hon'ble Andhra Pradesh High Court, he would submit that that judgment appears to have been passed per-incurium. Apparently, the Court's attention had not been drawn towards Article 265 of the Constitution which is the basic foundation for all taxing statutes, in the sense that it lays down a fundamental principle for levy and realisation of taxes. Perhaps, the point with reference to Article 265 was not urged before the Hon'ble High Court. It also appears that perhaps the Hon'ble High Court's attention had not been drawn to the Supreme Court's judgment in the case of Shiv Shankar Dal Mills (Supra).
It was his submission that he has cited a number of High Court and Supreme Court decisions with reference to the Common Law which laid down the principles which should govern the payment of refund in case of illegal realisation of any amount or excess amount and would earnestly urge this Tribunal to consider the matter in its wider perspective keeping in mind the well-defined principles of law governing collection of taxes and grant of refund of amount not due to the Government. Even otherwise, in cases where conflict of opinion is brought to the notice of the Tribunal, the Tribunal was at liberty to make up its own mind and was bound only by the orders and judgments of the Hon'ble Supreme Court in terms of Article 141 of the Constitution.

He would like to reiterate in this context that the right of refund is a substantive right and it is not a procedural matter. It is a vested right and it occurs with reference to the notional time when incorrect payment took place. In Central Excise cases since notionally Central Excise duty becomes due at the time of clearance from the factory, therefore, the cause of action arises with reference to the period during which the goods were cleared on payment of the disputed sums correctly. Once it was conceded that the realisation was without the authority of law, such realisation was void ab-initio and therefore, the Government had no authority or right to retain it and the date of filing of the refund claim was immaterial.

Therefore, in view of the judgments cited by him including the judgment in the case of Universal Drinks (Supra), he would urge that the appeal may be accepted and allowed.

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