1988 (5) TMI 161 - AT - Central Excise

Issues Involved:

1. Eligibility for Concessional Rate of Duty under Notification No. 7/80-C.E.
2. Time-bar of Refund Claim under Section 11-B of the Central Excises & Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Rate of Duty under Notification No. 7/80-C.E.:

The appellants manufacture nylon moulding powder (NMP Chips) from caprolactum derived from raw naphtha. They claimed a concessional duty rate of 36% ad valorem under Notification No. 7/80-C.E., as opposed to the standard 40% ad valorem under Notification No. 5/80-C.E. The Assistant Collector of Central Excise rejected this claim on the grounds that the NMP chips were manufactured using both indigenous and imported caprolactum, and the additional duty paid on the imported caprolactum did not qualify as excise duty under the Central Excises & Salt Act. This decision was upheld by the Collector of Central Excise (Appeals).

The appellants contended that countervailing duty on imported caprolactum is equivalent to central excise duty, thus making them eligible for the concessional rate. They relied on the Supreme Court judgment in Union of India v. Tata Iron & Steel Co. Ltd. and a Tribunal order in Collector of Central Excise, Pune v. M/s. Beck (India) Ltd., which supported the view that the benefit of exemption should be given on a pro rata basis when duty-paid and non-duty-paid materials are mixed.

The Tribunal agreed with the appellants, stating that the benefit of Notification No. 7/80-C.E. should be granted on a pro rata basis, provided the appellants produce proof of the indigenous origin and duty-paid character of the raw naphtha to the satisfaction of the Assistant Collector of Central Excise.

2. Time-bar of Refund Claim under Section 11-B of the Central Excises & Salt Act, 1944:

The appellants filed a refund claim on 14.7.1982 for the period from 3.11.1981 to 29.4.1982. The Assistant Collector rejected the claim as time-barred under Section 11-B of the Central Excises & Salt Act, which mandates that refund claims must be filed within six months from the "relevant date." The appellants argued that the six-month period should start from the date of finalisation of RT-12 Returns, not the date of duty payment, citing Tribunal decisions in Rainbow Industries (P) Ltd. v. Collector of Central Excise and Shri Digvijay Cement Co. Ltd. v. Collector of Central Excise.

The respondent countered that under Rule 173-F, the assessee is responsible for determining the duty payable and must file a refund claim within six months from the date of payment of duty. The Tribunal considered various judicial decisions and concluded that the limitation period should be reckoned from the date of payment of duty, not the date of assessment of the RT-12 Return. They cited the Tribunal's decisions in Mettur Chemical and Industrial Corporation Ltd. v. Collector of Central Excise and Siemens (India) Ltd. v. Collector of Central Excise, which supported this view.

The Tribunal held that the assessment is complete once the classification and price lists are approved, and duty is paid before goods clearance. The RT-12 assessment is merely an arithmetical check. Thus, the refund claim period starts from the date of duty payment. Consequently, the appellants' refund claim, filed on 14.7.1982, was partially time-barred for the period beyond six months prior to the filing date.

Conclusion:

The appeal was allowed in part. The Tribunal granted the benefit of Notification No. 7/80-C.E. on a pro rata basis, subject to proof of indigenous origin and duty-paid character of raw naphtha. However, the refund claim was restricted to the period within six months from the filing date, as claims beyond this period were time-barred.

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