1987 (5) TMI 155 - AT - Central Excise

Issues Involved:

1. Classification of Hardened Technical Oil under Central Excise Tariff.
2. Refund claim for duty paid under protest.
3. Procedural compliance by the Assistant Collector and Collector (Appeals).
4. Opportunity for personal hearing and adherence to natural justice.
5. Applicability of Rule 11 and Rule 233B of the Central Excise Rules.

Issue-wise Detailed Analysis:

1. Classification of Hardened Technical Oil under Central Excise Tariff:

The appellants, manufacturers of soap and other excisable goods, contested the classification of their Hardened Technical Oil. They argued that their product should be classified under Tariff Item 12 rather than Tariff Item 13. The initial classification list was filed under protest in March 1978 and another in March 1979. Despite repeated requests, the Assistant Collector did not issue an appealable order on the correct classification. The appellants cited a Tribunal decision (1986-(24)-E.L.T.-290) supporting their classification under Item 12, arguing that their product remained a vegetable oil and should not fall under Item 13 or Item 68.

2. Refund claim for duty paid under protest:

The appellants claimed refunds totaling Rs. 35,06,356.79 and Rs. 1,90,230.80 for the period from 1-3-78 to 28-2-80, stating that the duty was paid under protest. The Assistant Collector returned these claims, arguing that the classification list was approved under Tariff Item 13. The appellants contended that their refund claims were valid as they had paid duty under protest and that the limitation period under Rule 11 was not applicable.

3. Procedural compliance by the Assistant Collector and Collector (Appeals):

The appellants argued that the Assistant Collector failed to issue an appealable order, which was necessary for them to pursue an appeal. The Collector (Appeals) rejected their appeals on the grounds that no appealable order had been passed by the Assistant Collector, thus no cause of action had arisen. The appellants contended that the Collector (Appeals) should have remanded the case back to the Assistant Collector with directions to pass an appealable order.

4. Opportunity for personal hearing and adherence to natural justice:

The appellants claimed that the Collector (Appeals) did not provide an opportunity for a personal hearing, which they had specifically requested. This was a violation of the mandatory requirement under Section 35-A(1) of the Central Excises and Salt Act. The Tribunal noted that this denial of a hearing resulted in a breach of natural justice and was against the provisions of law.

5. Applicability of Rule 11 and Rule 233B of the Central Excise Rules:

The appellants argued that during the relevant period, there was no prescribed procedure for protest under Rule 233B, which came into force on 11-5-81. Therefore, their protest and subsequent refund claims were governed by Rule 11, which allowed for refunds when duty was paid under protest. The Tribunal agreed that the appellants' protest was valid and that the time limit of six months for refund claims was not applicable.

Conclusion:

The Tribunal found that the Assistant Collector should have issued an appealable order regarding the classification of the product, and the Collector (Appeals) should have provided a personal hearing to the appellants. The Tribunal set aside the impugned order and remanded the case to the Collector (Appeals) for a de novo decision, ensuring compliance with the provision of law and considering relevant Tribunal decisions. The de novo proceedings were to be completed within four months from the date of receipt of the order.

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