1997 (7) TMI 142 - SC - Central Excise

Whether the letter dated November 30, 1976 sent by the Divisional Engineer, Central Workshop of the Electricity Board can be regarded as a protest against payment of excise duty for the purpose of second proviso to Section 11B of the Act? Held that - The said letter has to be read as a whole in the context in which the requirement for obtaining licence was being insisted, namely, that the goods manufactured at the Central Workshop were leviable to excise duty under T.I. 68, which liability was disputed by the Divisional Engineer. The letter of the Divisional Engineer dated November 30, 1975 must, therefore, be construed to mean that protest was lodged in the said letter both against obtaining the licence as well as against liability to payment of excise duty. In these circumstances we are unable to agree with the Tribunal that payment of duty was not made under protest. On that view of the matter the impugned judgment of the Tribunal cannot he upheld and has to be set aside. Appeal allowed.

Summary

Issues:
Claim for refund of excise duty barred by limitation under Section 11B of the Central Excises and Salt Act, 1944.

Analysis:
The appeal in question raised the issue of whether the claim for refund of excise duty was time-barred under Section 11B of the Central Excises and Salt Act, 1944. The appellant invoked the second proviso to sub-section (1) of Section 11B, which exempts the limitation of six months when duty has been paid under protest. The Customs Excise & Gold (Control) Appellate Tribunal did not accept the appellant's contention that the payment was made under protest. The Tribunal held that the protest was only regarding applying for a Central Excise license and not the payment of excise duty. The Tribunal also concluded that the grounds for protest did not align with the basis of the claim for refund, thus rejecting the refund claim.

The central issue revolved around the interpretation of the letter dated November 30, 1976, sent by the Divisional Engineer of the Electricity Board. The Divisional Engineer's letter stated that the workshop was not liable to pay excise duty as it was set up for specific purposes related to power supply in the state. The appellant argued that the Tribunal erred in determining that the duty payment was not made under protest. Citing precedents, the appellant contended that no specific form was required for a protest against duty payment. The appellant also highlighted that the grounds for protest need not align precisely with the basis of the refund claim, as per legal interpretations.

In its analysis, the court examined the context of the letters exchanged between the Inspector of Central Excise and the Divisional Engineer. The Inspector's letter indicated the liability to pay excise duty on goods manufactured at the workshop falling under Tariff Item No. 68. The Divisional Engineer's response disputed this liability and stated that the workshop may not be subject to excise duty requirements. The court construed the Divisional Engineer's letter as protesting both the requirement for a license and the liability to pay excise duty. Therefore, the court disagreed with the Tribunal's conclusion that the duty payment was not made under protest. Consequently, the court allowed the appeal, set aside the Tribunal's judgment, and remitted the matter for further consideration on the application for refund.

In conclusion, the Supreme Court held that the duty payment was indeed made under protest, contrary to the Tribunal's finding. The court's decision to set aside the Tribunal's judgment and remit the matter for a refund application review underscored the importance of properly interpreting protest actions in excise duty refund cases.