1987 (5) TMI 150 - AT - Central Excise

Issues Involved:
1. Assessable value for duty calculation.
2. Entitlement to refund claim.
3. Effect of payment under protest.
4. Finality of price-list approvals and RT-12 assessments.
5. Legal significance of the term "under protest".
6. Requirement of show cause notice before price-list approval.

Issue-wise Detailed Analysis:

1. Assessable Value for Duty Calculation:
The primary dispute was whether the assessable value for duty calculation should be the selling price of the Appellant to M/s. Bajaj Electricals Ltd. or the selling price of M/s. Bajaj to its customers. The Department initially insisted on using the selling price of M/s. Bajaj as the assessable value. However, the Assistant Collector, in an order dated 27-8-81, accepted the Appellant's contention that the duty should be based on their selling price to M/s. Bajaj.

2. Entitlement to Refund Claim:
The Appellant submitted a refund claim for Rs. 9,66,990.10 covering the period 3-7-75 to 22-7-80. The Assistant Collector rejected the claim on the grounds that the Appellant did not appeal against the approved price-lists or the assessments of RT-12 returns. The Collector (Appeals) upheld this decision, stating that the approved price-lists remained unchallenged and thus, the question of refund did not arise. However, the Tribunal found that the Appellants were entitled to the refund as the payments were made under protest, and the matter was pending with the Department for final decision.

3. Effect of Payment Under Protest:
The Tribunal emphasized that the term "under protest" has legal significance, safeguarding the payer from being considered as having made a voluntary payment. The Appellant had marked their price-lists and GPIs with "under protest" and filed covering letters recording their objections. The Tribunal concluded that payments made under protest were not voluntary and thus, the Appellant's claim for refund was valid.

4. Finality of Price-List Approvals and RT-12 Assessments:
The Tribunal noted that the Department's assurance in a letter dated 4-8-75 that the matter was receiving attention indicated that the issue was not finalized. The endorsement on the Assistant Collector's order to finalize pending assessments within a fortnight further suggested that the assessments were tentative. Therefore, the earlier price-lists and assessments were not considered final, and the decision on Price-List 2/80 should apply to the earlier periods as well.

5. Legal Significance of the Term "Under Protest":
The Tribunal highlighted that the term "under protest" is crucial as it prevents the payment from being deemed voluntary. This term preserved the Appellant's right to claim a refund. The Tribunal referenced Rule 173(C)(2)(B) and Section 11B, which provide that the limitation period does not apply where duty has been paid under protest.

6. Requirement of Show Cause Notice Before Price-List Approval:
The Tribunal found merit in the contention that the orders approving the price-lists could not be considered final as no show cause notice was issued to the Appellants before the approval. The determination of the assessable value is a quasi-judicial function, and the Appellants should have been given an opportunity to be heard. The absence of such an opportunity meant that the price-list approvals could not bar the refund claim.

Conclusion:
The Tribunal concluded that the Appellants were entitled to the refund claimed. The payments made under protest, the lack of finality in the assessments, and the legal requirement to issue a show cause notice before price-list approval all supported the Appellant's position. The Tribunal allowed the appeal with consequential relief, directing the Department to refund the excess duty paid by the Appellants.

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