2005 (3) TMI 134 - HC - Central Excise

Modvat credit - Refund - Protest - Reference to High Court - retrospective effect of filing protest under Rule 233B - Payment under protest since no letter filed on that date giving any grounds for payment under protest and subsequently also filed no representation for payment made under protest as per sub-rule 5 of Rule 233B? - HELD THAT - In our opinion Rule 233B cannot control the full effect of the proviso to Section 11B(1). A rule made under the Act cannot limit a provision in the Act itself. It is well settled that a rule made under an Act will not be valid if it conflicts with or is in derogation to a section in the Act. Hence a rule should not be construed in a manner that it conflicts with a Section of the Act. In the present case, the Tribunal has found that there were several correspondences between the assessee and the revenue, in which the assessee had been urging that they are entitled to the benefit of Notification No. 33/90 (N.T.), and that they are also entitled to Modvat credit against their despatches. Hence, the facts of the decision of the Supreme Court in India Cements Ltd. v. Collector of Central Excise 1989 (4) TMI 80 - SUPREME COURT are similar to the facts of the present case. Thus, it is well settled that the meaning of the words under protest must not be taken in a narrow and pedantic manner. An overall view of the matter has to be taken, and hence we are of the opinion that the Tribunal has taken a correct view considering the facts and circumstances of the case. In view of the above, we find no merits in this reference petition and it is accordingly rejected.

Summary

Issues:
1. Whether the payment of duty was made voluntarily or under protest.
2. Whether the letter from the Superintendent of Central Excise and subsequent correspondences raised a dispute.
3. Whether the letter of protest filed by the assessee had retrospective effect.

Analysis:
1. The case involved a dispute over the payment of duty under the Central Excise Act, 1944. The assessee, engaged in manufacturing printed cartons, availed Modvat credit on inputs used in production. The revenue contested this claiming the credit was not valid for cartons exported without duty payment. The assessee expunged the credit, later claiming a refund. The Tribunal held the payment was made under protest, allowing the refund claim under Section 11B proviso.

2. The Tribunal considered the correspondences between the assessee and revenue, where the assessee asserted entitlement to benefits and credit. Citing precedents, the Tribunal found the payment was made under protest. The Supreme Court's decisions emphasized a substantive protest in writing, similar to the present case's facts. The Tribunal's decision was based on substantial evidence and not deemed perverse.

3. The Department argued that Rule 233B of the Central Excise Rules should control the refund claim's limitation period. However, the Court held that a rule cannot limit a statutory provision like Section 11B(1). Precedents emphasized that the protest need not be in a specific form, supporting the Tribunal's decision that the payment was made under protest. The Court upheld the Tribunal's decision based on the facts and circumstances of the case.

4. The Court also addressed the issue of unjust enrichment, stating that if the duty was not passed on to the consumer, the assessee would be entitled to a refund. The Tribunal's decision was affirmed, emphasizing that the determination of whether duty was paid under protest is a question of fact, which the Court should not interfere with unless based on no evidence or perverse findings.

5. Ultimately, the Court rejected the reference petition, concurring with the Tribunal's decision that the payment of duty was made under protest. The Court highlighted the importance of considering the overall circumstances and facts of the case, in line with established legal principles and precedents.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Court's reasoning in reaching its decision.