1986 (9) TMI 314 - AT - Central Excise

Summary

Issues:
The issues involved in the judgment are:
1. Classification of goods under Item 68 CET.
2. Compliance with Chapter X procedure under notification No. 167/79 for availing refund.

Classification of Goods under Item 68 CET:
The appellants initially filed a refund claim for duty paid under Item 52 CET, but later it was determined that the goods should have been assessed under Item 68 CET. The refund claim was partially allowed after a show cause notice was issued and submissions were considered. The original authority allowed the refund despite non-compliance with Chapter X procedure under notification No. 167/79. The Collector examined whether the goods were correctly classified under Item 68 CET and affirmed this classification.

Compliance with Chapter X Procedure under Notification No. 167/79:
The Collector held that the Assistant Collector had no authority to waive the requirement of following Chapter X procedure under notification 167/79. The refund allowed was deemed incorrect due to non-compliance with this statutory notification. The appellants argued that they had filed a classification list for Item 68 CET but were directed to pay duty under Item 52 CET. They contended that compliance with Chapter X procedure was impossible due to the authorities' actions. The appellants claimed substantial compliance with the notification's conditions, emphasizing that the procedural compliance should be considered directory rather than mandatory.

The Tribunal agreed with the appellants, noting that they had no choice but to pursue the refund procedure and challenge the goods' classification. The Department's actions made it impossible for the appellants to comply with the Chapter X procedure under notification 167/79. The Tribunal held that substantial compliance with the procedure, where goods were properly accounted for a specific end-use, should be considered directory. The non-compliance with Chapter X procedure in its entirety did not invalidate the appellants' claim. Therefore, the Tribunal found the Collector's denial of the refund benefit to be erroneous and allowed the appeal in favor of the appellants.