1989 (11) TMI 61 - AT - Central Excise

Issues Involved:
1. Whether the refund claim lodged after the substitution of Rule 11 on 6-8-1977 is governed by the old Rule 11 or the new Rule 11.
2. Whether the refund claim is time-barred under the new Rule 11.
3. Whether a vested right to claim a refund can be affected by the new Rule 11.

Issue-wise Detailed Analysis:

1. Whether the refund claim lodged after the substitution of Rule 11 on 6-8-1977 is governed by the old Rule 11 or the new Rule 11:
The appellants argued that Rule 11, as substituted by M.F. (R.D.) Notification No. 267/77-CE, dated 6-8-1977, curtailing the period to claim the refund of duty from one year to six months, should apply only to cases where the refund accrued after the insertion of the new Rule 11. They cited several case laws, including Universal Drinks (P) Ltd., Nagpur v. Union of India, 1984 (18) E.L.T. 207 (Bombay), to support their contention. Conversely, the respondent argued that since the new Rule 11 was in existence when the refund claim was lodged, the six-month period prescribed under the new Rule 11 should apply. They cited the Tribunal's judgment in the case of M/s. Harig India Ltd., Ghaziabad v. Collector of Central Excise, Meerut, and other relevant case laws. The Larger Bench was constituted due to an apparent conflict between decisions rendered by the Tribunal on this issue.

2. Whether the refund claim is time-barred under the new Rule 11:
The Assistant Collector rejected the refund claim on merits and on the ground that it was barred by time under the new Rule 11, observing that the claim was submitted after the expiry of six months. The Collector of Central Excise, New Delhi, upheld this decision. The appellants contended that their right to claim a refund, which accrued before the substitution of the new Rule 11, should be governed by the old Rule 11, which allowed a one-year period for claiming refunds. The Tribunal's earlier decisions in Nagarjuna Steels Ltd. and other cases supported this view. However, the Tribunal's decision in M/s. Harig India Ltd. took a contrary view, applying the new Rule 11 retrospectively.

3. Whether a vested right to claim a refund can be affected by the new Rule 11:
The appellants argued that a right to claim a refund is a vested right that accrued before the new Rule 11 and cannot be taken away unless expressly or by necessary implication. They relied on case laws, including The Central Bank of India v. Their Workmen, AIR 1960 SC 12, and The Workmen of M/s. Firestone Tyres and Rubber Company of India (P) Ltd. v. The Management and Others, AIR 1973 SC 1227. They contended that the new Rule 11 should be interpreted prospectively, not retrospectively, as no saving provision was made for the transitional period. The respondent argued that a right to claim a refund is not a vested right but a conditioned right, and changes in procedural law, such as limitation periods, have retrospective effect unless expressly stated otherwise. They cited several authorities, including Hoosein Kasam Dada (India) Ltd., v. State of Madhya Pradesh, AIR 1953 SC 2, to support their contention.

Decision:
The Tribunal concluded that a right to claim a refund is a vested right, and the new Rule 11, which shortened the limitation period, should not be applied retrospectively to extinguish this right. The Tribunal relied on the Hon'ble Supreme Court's decision in New India Insurance Co. v. Shanti Misra, AIR 1976 SC 237, which held that a new law of limitation providing a shorter period cannot suddenly extinguish a vested right of action. Therefore, the refund claim lodged by the appellants was not time-barred under the old Rule 11, which allowed a one-year period for claiming refunds. The Tribunal remitted the case to the Collector of Central Excise (Appeals), New Delhi, to decide the appeal on merits, as the refund claim was not hit by limitation.

Conclusion:
The appeal was allowed by remand, with the Tribunal holding that the refund claim was not time-barred under the old Rule 11 and directing the Collector of Central Excise (Appeals) to decide the appeal on merits.

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