1991 (5) TMI 157 - AT - Central Excise

Summary

Issues:
Appeal against the order of Collector of Central Excise (Appeals) accepting respondents' plea for availing benefit of Notification-178/77-C.E. for refund of duty. Department's contention on time-bar under Rule 11 of Central Excise Rules, 1944. Whether duty was paid by respondents or manufacturer. Applicability of Rule 173K. Observance of procedure for set-off under Notification 178/77.

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute arising from the Collector of Central Excise (Appeals) accepting the respondents' plea for availing the benefit of Notification-178/77-C.E., dated 18-6-1977, leading to a refund claim for duty paid. The Assistant Collector had rejected the refund claim as time-barred under Rule 11 of the Central Excise Rules, 1944, citing duty payment dates and claim submission date discrepancies. Additionally, the Assistant Collector deemed the claim inadmissible due to non-observance of Rule 173K, which the Collector (Appeals) disputed, stating the rule was not applicable to the respondents' case as per Rule 56A.

The department contended that the Explanation in Rule 11 did not include set-off provisions at the relevant time. They argued that the duty was paid by the manufacturer of the inputs, not the respondents, thus the request for set-off should not be considered a refund application. The department further claimed that since the refund claim was received after 14-11-1978, claims preceding that date were also time-barred. The respondents, however, argued that they followed the prescribed procedure for set-off under Notification 178/77, citing a Tribunal decision allowing set-off due to delayed permission.

The Tribunal analyzed Notification No. 178/77, which exempts excisable goods if duty on inputs has been paid, entitling the appellants to clear their finished product duty-free. The Tribunal found the respondents eligible for a refund since their set-off claim was not entertained by the authorities. Referring to the Kothari Chemicals case, the Tribunal rejected the department's appeal, stating the claim was not time-barred as the respondents had informed authorities of their intent to avail set-off. The Tribunal also clarified that Rule 173K observance was not necessary under Notification 178/77, directing the department to sanction the refund due to the respondents promptly.