1985 (3) TMI 268 - AT - Central Excise

Summary

Issues: Exemption from duty under Notification No. 108/78-Central Excises, applicability of Section 11A of the Central Excises and Salt Act, 1944, time-limit for recovery of excess payment, nature of excess payment as refund or deposit.

Analysis:

The case involved the appellants being granted exemption from duty in accordance with Notification No. 108/78-Central Excises for a specific period. Subsequently, the Department claimed that an excess amount had been paid to the appellants, leading to a demand for recovery issued after 21 years. The Assistant Collector initially dropped the demand citing the time-limit of six months under Section 11-A of the Central Excises and Salt Act, 1944. However, the Collector disagreed with this decision and initiated proceedings to revise the order under Section 35A(2) of the Act, arguing that the excess payment was a deposit and not a refund of duty, thus not bound by the time limit of Section 11A. The Collector contended that the common law limitation of three years applied in this case, justifying the demand within the time frame. Consequently, the Collector set aside the Assistant Collector's order and directed a fresh decision. The appellants appealed against this Order-in-Revision before the Tribunal.

Upon hearing both parties, the Tribunal disagreed with the Department's position, stating that no evidence supported the claim that the payment was an advance deposit. The Tribunal emphasized that the excess production period and the rebate grant were not concurrent, emphasizing that the excess payment should be treated as an erroneous refund of duty. The Tribunal highlighted that the recovery procedure for such excess payments was governed by Section 11A of the Act, and the Department could not disregard the time limit specified therein. Moreover, the Tribunal noted that if the Department believed the common law limitation applied, the Collector lacked jurisdiction to decide the matter and should have pursued a civil suit for recovery. Consequently, the Tribunal found no merit in the Collector's order and set it aside, allowing the appeal lodged by the appellants.