1983 (7) TMI 190 - AT - Central Excise

Summary

Issues Involved:
1. Limitation period for claiming a refund of duty.
2. Applicability of Rule 11 of the Central Excise Rules, 1944.
3. Jurisdiction and applicability of the general law of limitation.
4. Classification and excisability of the tugs under Item 68.
5. Validity of the duty collected and its refund under the Central Excise Act.

Detailed Analysis:

1. Limitation Period for Claiming Refund of Duty:
The primary issue was whether the appellants' claim for a refund of duty, made on 30-1-1978, was barred by the limitation period. The Assistant Collector rejected the claim under Rule 11 of the Central Excise Rules, 1944, which required a refund claim to be filed within three months of duty payment. However, the appellants argued that their claim was under the general law of limitation, which allows a three-year period for filing such claims.

2. Applicability of Rule 11 of the Central Excise Rules, 1944:
The appellants contended that Rule 11 was not applicable as their claim was not based on inadvertence, error, or mis-construction regarding the quantity, description, or value of goods. Instead, they argued that the duty was not due to the government and should be refunded under the general law of limitation. They further argued that Rule 11, as it stood before 6-8-1977, did not apply to their case since the duty was collected without jurisdiction.

3. Jurisdiction and Applicability of the General Law of Limitation:
The Tribunal examined whether the refund claim should be governed by Rule 11 or the general law of limitation. The Tribunal concluded that since the two tugs were not excisable at the time of their removal from the factory, the refund claim was not barred by Rule 11. Instead, it was governed by the general law of limitation, which allows a three-year period for filing such claims.

4. Classification and Excisability of the Tugs under Item 68:
The Tribunal scrutinized whether the two tugs fell under Item 68 of the Central Excise Tariff, introduced on 1-3-1975. The Tribunal found that the tugs were not fully manufactured on the critical date (1-3-1975) and were not within the factory premises as defined under the Factories Act. Therefore, they were not chargeable to duty under Item 68.

5. Validity of the Duty Collected and Its Refund under the Central Excise Act:
The Tribunal determined that the duty collected on the two tugs was not valid as they were not excisable goods. The Tribunal relied on various judgments, including those from the Bombay High Court, which held that Rule 11 did not apply to the refund of duty collected on non-excisable goods. The Tribunal concluded that the refund claim was not barred by Rule 11 and should be allowed under the general law of limitation.

Conclusion:
The Tribunal set aside the orders of the lower authorities and directed the refund of the duty amounting to Rs. 42,020/- to the appellants. The appeal was allowed, recognizing that the duty was collected without jurisdiction and the refund claim was filed within the permissible period under the general law of limitation. The Tribunal emphasized that the refund of duty on non-excisable goods is governed by the general law of limitation, not by Rule 11 of the Central Excise Rules, 1944.