1989 (6) TMI 184 - AT - Central Excise

Summary

Issues Involved:
1. Whether the job activity undertaken by the appellants constitutes manufacture.
2. Validity of the rejection of refund claims for the periods 1-4-1982 to 31-3-1983 and 1-4-1983 to 31-3-1984.
3. Compliance with Rule 233B regarding payment of duty under protest.
4. Applicability of the limitation period under Section 11B of the Central Excises & Salt Act, 1944.

Detailed Analysis:

1. Whether the job activity undertaken by the appellants constitutes manufacture:
The appellants, structural engineers engaged in the fabrication of structures, argued that their job work for M/s. Garden Reach Ship Builders & Engineering Limited, which involves cutting and bending raw materials supplied by customers, does not constitute manufacture. The Assistant Collector is yet to determine if this activity amounts to manufacture. The Tribunal dismissed the Collector of Central Excise, Bombay's appeal, enabling the Assistant Collector to consider this issue along with other remanded appeals. If the job work is not deemed manufacture, the appellants would be entitled to deductions and refunds, and the value of such work would not count towards the exemption and ceiling limit of Rs. 30 lakhs.

2. Validity of the rejection of refund claims for the periods 1-4-1982 to 31-3-1983 and 1-4-1983 to 31-3-1984:
The appellants challenged the rejection of their refund claims for duty paid during the periods 1-4-1982 to 31-3-1983 (Rs. 1,53,906.30) and 1-4-1983 to 31-3-1984 (Rs. 2,19,009.18). The Assistant Collector rejected the claims on the grounds that the appellants failed to file the refund claim within the six-month period stipulated under Section 11B and did not properly file a letter of protest under Rule 233B. The Collector (Appeals), Bombay upheld these rejections. The Tribunal remanded the matter back to the Assistant Collector for fresh adjudication, emphasizing the need to determine whether the job work constitutes manufacture and if the value of such work should be excluded from the total clearances for exemption eligibility.

3. Compliance with Rule 233B regarding payment of duty under protest:
The appellants contended that they had complied with Rule 233B by lodging letters of protest on 4-10-1982, 3-4-1983, 6-4-1983, and 16-12-1983, and marking "duty paid under protest" on relevant documents. The Assistant Collector and Collector (Appeals) found these letters non-compliant without specifying the deficiencies. The Tribunal held that the appellants' letters of protest met the requirements of Rule 233B, which allows an assessee to pay duty under protest by delivering a letter to the proper officer and endorsing "duty paid under protest" on relevant documents. The Tribunal noted that the Superintendent of Central Excise is deemed a proper officer to receive such letters.

4. Applicability of the limitation period under Section 11B of the Central Excises & Salt Act, 1944:
The appellants argued that the three-year limitation period should apply as the duty was paid under a mistake of law. The Collector (Appeals) rejected this, citing that Section 11A does not permit extension or condonation of delay in filing refund claims, relying on the Supreme Court judgment in Miles India Ltd. v. Assistant Collector of Customs. The Tribunal did not directly address this argument but emphasized the need for the Assistant Collector to consider the validity of the grounds for refund along with the pending matter.

Conclusion:
The Tribunal remanded the matter back to the Assistant Collector to adjudicate comprehensively on whether the job work constitutes manufacture, the validity of the refund claims, and compliance with Rule 233B. The Assistant Collector is directed to pass a consolidated and comprehensive order within six months, considering the appellants' letters of protest as valid under Rule 233B. The appeals are allowed by remand.