1997 (8) TMI 83 - HC - Central Excise

Summary

Issues Involved:
1. Classification of the product under the correct Tariff Item.
2. Legality of the refund granted to the assessee.
3. Jurisdiction and limitation of the Collector's revisional powers under Section 35A of the Central Excises and Salt Act, 1944.
4. Applicability of Section 11A and 11B of the Central Excises and Salt Act, 1944, as amended by the Central Excise and Customs Laws (Amendment) Act, 1991.

Issue-wise Detailed Analysis:

1. Classification of the Product under the Correct Tariff Item:
The core issue was whether the product 'shutter lath' should be classified under Tariff Item 68 or Tariff Item 26AA(ia). Initially, the Assistant Collector classified it under Tariff Item 68, but this was contested by the assessee. After a series of appeals and a detailed inspection of the manufacturing process, the Assistant Collector reclassified the product under Tariff Item 26AA(ia) on 29-4-1980. The Collector later attempted to reclassify it under Tariff Item 68, but the learned single Judge found this reclassification unsustainable, especially since the Department itself conceded in its counter affidavit that the product falls under Tariff Item 26AA(ia).

2. Legality of the Refund Granted to the Assessee:
The refund of Rs. 12,78,921.69 was granted to the assessee based on the reclassification of the product under Tariff Item 26AA(ia). The Collector of Central Excise later sought to recover this amount, claiming the refund was incorrect. However, the learned single Judge ruled that the refund was a direct consequence of the reclassification order dated 29-4-1980, which was not revised within the statutory period. Therefore, the refund was deemed legal and proper.

3. Jurisdiction and Limitation of the Collector's Revisional Powers under Section 35A:
The Collector issued a show cause notice on 24-6-1981 to revise the order dated 29-12-1980, which enclosed the refund cheque. The learned single Judge noted that the Collector's revisional powers under Section 35A were time-barred since the original classification order dated 29-4-1980 was more than a year old when the show cause notice was issued. Therefore, the Collector had no jurisdiction to interfere with the classification order or the consequent refund.

4. Applicability of Section 11A and 11B of the Central Excises and Salt Act, 1944, as Amended:
The Department argued that the eligibility for the refund should be reassessed under the amended Section 11B, which came into effect with the Central Excise and Customs Laws (Amendment) Act, 1991. However, the learned single Judge and the appellate court both concluded that since the refund had already been completed before the amendment, the amended provisions did not apply. The Supreme Court's decision in Mafatlal Industries Ltd. v. Union of India was cited, emphasizing that refunds already ordered and finalized before the amendment cannot be reopened under the new provisions.

Conclusion:
The writ appeal by the Department was dismissed. The court upheld the classification of the product under Tariff Item 26AA(ia) and confirmed the legality of the refund granted to the assessee. The Collector's attempt to revise the classification and recover the refund was deemed time-barred and beyond jurisdiction. The amended provisions of Section 11B were not applicable to the case, as the refund was already finalized before the amendment came into effect.