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TMI Blog1985 (5) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... ents pursued the matter in appeal. The Appellate Collector, Central Excise, Delhi allowed all the 13 appeals by his Order No. 14 to 27/CE/Alld/87 dated 17-3-1982. The relevant portion of the Order reads thus: I have gone through the appeals and the case records. In these cases, the issue is whether the case is time-barred or not. The Assistant Collector has rejected the claims as being time-barred, under Rule 11. The appellants have contended that the rule is not applicable and General Law of limitation applies as the claims are filed within 3 years. It is their contention that it is in time, since the Government of India decided in their order in revision No. 1842/77 dated 30-9-1977 has held that wet chlorine is not excisable, and on basis of these orders, Tariff Advice No. 46/78 was issued vide F. No. 105/16/76-CX.3 dated 21-8-1978, I hold that the appellant is correct. In view of the order in revision cited above by them Assistant Collector s orders are accordingly set aside. Refund claims be sanctioned, if otherwise in order . On examining the case records, the Central Government formed a tentative view that the Appellate Collector s order was not proper, legal and correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, submitted before us that the refund claims in all these cases were filed after the expiry of a period of 6 months from the respective dates of payment of duty. Shri Mathur, Counsel for the Respondents admitted that this was so. Shri Khanna further submitted that, for the reasons set out in the Assistant Collector s order, it could not be said that the Respondents had paid duty on the goods under protest, although they had carried on some correspondence with the Excise authorities. In this connection, he referred to Central Excise Notification No. 116/81, dated 11-5-1981 promulgating Rule 223B regarding the procedure to be followed in cases where duty is paid under protest. No protest was lodged in respect of each payment of duty. The Appellate Collector went wrong in applying the general law of limitation ignoring the specific limitation in the Central Excise law. For this proposition, the Departmental Representative relied upon the Calcutta High Court decision in Incheck Tyres Ltd. v. Union of India Ors. - 1978 E.L.T. J-643, wherein the Court held that until the payment was made under protest explicitly, there was no scope of infer from circumstances that the petitioner had p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to see is whether the Respondents made it known to the Excise authorities that they were being compelled to pay duty on wet chlorine against their wishes and that, therefore, they were paying duty under protest. By a letter dated 5-6-1971, the Respondents wrote to the Superintendent, Central Excise, Allahabad stating that it was their feeling that chlorine gas converted into hydrochloric acid (wet chlorine) should not attract excise duty. They requested that the goods should be exempted and a confirmation in this regard was asked for. The letter also briefly set out why the Respondents felt that wet chlorine gas was not liable to be charged to duty. This letter was followed by another dated 22-7-1971 again seeking exemption of wet chlorine gas from excise duty for the reasons set out therein. It appears from the said letter that there was a discussion between the Respondents and the Superintendent and Assistant Collector during the latter s visit to the Respondents factory. The letter ended by saying that for the time being the Respondents shall be paying duty under protest. There is another letter again of 22-7-1971 more or less covering the same ground and restating that duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents should continue payment of duty. Thereupon, the Respondents wrote to the Collector, Allahabad on 26-12-1977 setting out the history of the case and requesting the Collector to issue directions to the Assistant Collector, Mirzapur in the matter and also to grant the consequential relief and refund of the excise duty already paid under protest. This is followed by a telegraphic reminder on 12-9-1978. The Collector s reply of 28-9-1978 asks the Respondents to approach the Assistant Collector for further necessary action in the light of tariff advice No. 46/78, dated 21-8-1978. This tariff advice is in pursuance of the Government s order in revision referred to earlier. 9. From the above narration of the correspondence between the Respondents and the Departmental authorities it is crystal clear that right from the beginning the Respondents were paying duty on the Department s insistence and that they had made it quite clear to the Department that they were paying duty under protest. As we have said earlier, there was no prescribed procedure during the relevant period for lodging protest. We have, therefore, to deduce from the facts and circumstances whether the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks Ltd. case - 1978 E.L.T. J713 (supra) held that wet chlorine did not constitute goods within the meaning of Section 3 of the Central Excises and Salt Act, 1944. Of course, in that case Item No. 68 was not in the picture and the order-in-revision said that wet chlorine was not excisable under Item No. 14H. We do not agree with Shri Mathur that the question of correct classification of the goods cannot be gone into at this stage. As held by this Tribunal in Cynamid India Ltd. v. Collector of Central Excise, Bombay - 1984 (15) E.L.T. 186, it would not be in the interest of justice or conduce to a proper disposal of the question of correct classification of goods if the appellants are prevented from raising a new ground so long as that ground is relevant to the question of classification. In this connection the Supreme Court s observations in the Commissioner of Income-tax, Madras v. Mahalakshmi Textiles Mills Ltd. - (1967) 3 SCR 957 - are relevant and significant : By the first question the jurisdiction of the Tribunal to allow a plea inconsistent with the plea raised before the Departmental authorities is conversed. Under sub-section (4) of Section 33 of the Indian Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or non-levy as contemplated in Section 11A which concerns itself with situations where demand is issued asking the assessee to pay a certain sum of money on the ground that the duty leviable was not levied or paid or asking him to pay an additional amount of money on the ground that the duty already collected falls short of the duty actually leviable, i.e. duty was short-levied or short-paid. Such is not the situation here. The third proviso to Section 36(2) contemplates a limitation in the event of a notice being issued, inter alia, in a situation of erroneous refunds. In the present case, the refund in pursuance of the order passed by the Appellate Collector of Central Excise has not been paid. There is no question, therefore, of seeking to recover, by the present notice, any amount of money erroneously refunded. The notice has been issued prior to the amount being refunded. Now, erroneous refund could arise due to several reasons. One reason could be application of a wrong rate of duty or admission of a discount or some such element for deduction from the assessable value. Another reason, as in this case, could be erroneous classification. Section 36(2), viewed in this light, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the relevant date, i.e. the date of actual refund. If no refund had in fact been made, the limitation could not be said to arise inasmuch as the relevant date under Section 28 in the case of erroneous refund was the date of refund. Grant of refund, said the Court, was not actual refund. 14. The situation in the present case is analogous. Though Section 36(2) of the Central Excises and Salt Act talks also of erroneous refund unlike Section 131(5) of the Customs Act, this difference would not make for any tenable basis for not applying the ratio of the judgment of the Supreme Court in the Geep Flashlight Industries case. The refund in pursuance of the Appellate Collector s order not having been actually made, the review notice, in so far as it seeks to reduce the amount of refund, is not hit by the limitation in Section 11 A of the Act. 15. In the light of the above discussions, we are of the view that the question of classification of wet chlorine under Item No. 68, CET, as raised in the review notice, was not beyond the scope of the review which we are now hearing as an appeal by the Department, nor was it barred under Section 36(2) of the Central Excises and Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under Item 68 on the wet chlorine from 1-3-1975, when this item was never an item that appeared in the dispute. The notice of the Government is dated 6-9-1982 and seeks duty for the period 1-3-1975 to 31-8-1977. It is a new case, a new assessment and a new demand - and it is barred by limitation. Nor does it help the Government s case that it seeks to recover the money for this new demand from the money in its custody, money which belongs by right to the assessee, by refunding only what is in excess of the duty calculated according to Item 68. 21. Money can be sequestered and appropriated only to recover monies adjudged recoverable by due process. Until money is adjudged so due, it cannot be appropriated or adjusted in the manner proposed .. .. .. .. .. .. .. .. .. .. of September 1982. A sum of money must first be found by a proper authority to be recoverable before steps to recover are taken. Such steps can be by attachment, sale, detentions. But these steps must not precede the adjudgment by a proper authority. 22. Is the Central Government a proper authority for a new demand or a new assessment? It is not. The power to issue demands are given by Section 11A only to an Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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