1985 (3) TMI 315 - AT - Central Excise

Issues Involved:
1. Legality of withholding refund without proper demand under Section 11A of the Central Excises and Salt Act, 1944.
2. Relevance of Delhi High Court's judgment on the excisability of flush doors.
3. Assessment and classification of flush doors under Item 16B and Item 68 of the Central Excise Tariff.
4. Applicability of Section 11 of the Central Excises and Salt Act, 1944 for retaining sums payable to the government.
5. Legal implications of self-assessment and procedural compliance under the Central Excise Rules, 1944.

Detailed Analysis:

1. Legality of Withholding Refund Without Proper Demand:
The appellant argued that the withholding of part of the refund amount was illegal in the absence of a proper demand under Section 11A of the Act. The Tribunal noted that the appellant had paid duty under protest and filed claims for refund covering the period 21-7-73 to 31-5-80, and 1-6-80 to 31-5-81. The Assistant Collector had initially agreed that flush doors were assessable under Item 68 and asked the appellant to submit a detailed worksheet. The appellant complied, but the Department withheld part of the refund. The Tribunal concluded that no adjustment of duty under Item 68 was allowable in the absence of a legal assessment under that item.

2. Relevance of Delhi High Court's Judgment:
The appellant relied on the Delhi High Court's judgment in the case of "Wood Craft Products Ltd. v. The Superintendent (Technical), Customs and Central Excise and Ors." which held that flush doors are not excisable under Item 16B. The Tribunal agreed that the judgment was relevant and binding, rejecting the Department's argument that it was not applicable. The Tribunal emphasized that the judgment should be followed by authorities all over the country.

3. Assessment and Classification of Flush Doors:
The Tribunal examined the classification and assessment procedures under the Central Excise Rules. It noted that the appellant had filed classification lists under Item 16B, which were approved, and duties were paid under protest. The Delhi High Court and subsequently the Supreme Court held that flush doors are not assessable under Item 16B. The Tribunal found that the Assistant Collector's order to assess flush doors under Item 68 without following proper procedures was not justified. There was no legal levy under Item 68, and the Department's action to deduct amounts based on this item was not valid.

4. Applicability of Section 11:
The Tribunal analyzed Section 11, which allows the government to retain sums payable under the Act. However, it clarified that such sums must be legally payable and assessed. Since there was no legal assessment under Item 68, the amount withheld by the Department was not justifiable under Section 11. The Tribunal referred to various judgments, including the case of "Bharat Commerce of Industries v. Union of India," which held that without a proper notice or action under Rule 11 (corresponding to Section 11A), the Department could not retain sums based on an unassessed item.

5. Legal Implications of Self-Assessment and Procedural Compliance:
The Tribunal reviewed the self-assessment procedure under Chapter VIIA of the Central Excise Rules, 1944. It noted that the appellant had complied with the procedures for Item 16B but not for Item 68. The Tribunal emphasized that any assessment under Item 68 must follow proper procedures, including submission and approval of a classification list. Since the appellant's classification list for Item 68 was approved only on 29-8-81, effective from 16-4-81, the Tribunal held that deductions for the period after 16-4-81 were justifiable, but not for the period before that date.

Conclusion:
The Tribunal allowed the appeal in part, directing the Department to refund the amount withheld for the period up to 15-4-81, while upholding the deductions for the period from 16-4-81 to 7-8-81. The Assistant Collector was instructed to work out the amount due and make the refund within four months.

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