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TMI Blog1983 (7) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... it was for the first time with effect from 1-3-1975 that Item 68 covering all goods not elsewhere specified, was included in the first Schedule to the Central Excise Act. M/s. Shaparia Dock and Steel Co. Pvt. Ltd. claimed the refund of duty in their letter dated 30-1-1978 on two tugs manufactured by them on the grounds that these were pre-budget stocks and not chargeable to duty under the newly created Item No. 68. Soon after the insertion of Item 68 in the Central Excise Tariff by the Finance Bill of February, 1975, the appellants were asked to give the declaration of excisable goods in their factory and they had given the declaration in their letter dated 5-3-1975 inter alia showing therein the two tugs Nos. 172 and 173. However, the Inspector of Central Excise had remarked that the tugs had not been fully manufactured and the party had not produced any documents to show the same. But since the department was insisting on payment of duty on the two tugs on the grounds that they had not been fully manufactured and ready for delivery on 1-3-1975 and that therefore the manufacturers should pay duty, the appellants paid duty on tug No. 172 on 30-4-1975 and on tug No. 173 on 28-12-197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and it had to be read with Rule 2(v) which defined duty as duty payable under Section 3, and Rule 7 of the Central Excise Rules, 1944. Since these two tugs were pre-budget stocks, the duty paid thereon was not in terms of Section 3, but it could be treated as paid in terms of Section 72 of the Contract Act. Since this deals with liability of the person to Whom money is paid under mistake, the Government was required to repay the amount in terms of this section. Shri Thakor submitted that mistake envisaged in Section 72 of the Contract Act was not synonymous to error contemplated under old Rule 11. Hence Rule 11 was not applicable to the duty paid by the appellants on the two tugs. This duty was collected without jurisdiction and hence Rule 11 would not apply. Shri Thakor, further, pleaded that the levy and collection of duty on the two tugs violated Article 285 of the Constitution and in this behalf he submitted that he would urge that Rule 11 was ultra vires of the rule making power of the Government. When the Tribunal pointed out as to whether this was the proper forum where Shri Thakor could advance the aforesaid argument, Shri Thakor submitted that he would menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that case Rule 11 would apply to their application for refund and for these reasons the orders of the Assistant Collector and the Appellate Collector were legal. It would also be seen that the two tugs did not have the certificates from the Mercantile Marine Department on the critical date, viz. 1-3-1975 and therefore these two tugs could not have been used by the purchasers and hence the two tugs were not fully manufactured goods and it was for this reason that the appellants could not produce certificates to the Central Excise Officer when he visited their premises on 5-3-1975. Shri Pattekar therefore, has submitted that the refund claim of the appellant was time-barred and therefore it has been correctly rejected by the Assistant Collector and Appellate Collector of Central Excise. In view of these facts, he recommended that the Tribunal should also dismiss the appeal. 4. Shri Thakor for the appellants has replied that the Certificates were not available with the appellants on 5-3-1975 and hence it was not possible for them to produce the same to the Central Excise Officer. The certificates were obtained by the appellants because the Central Excise Department was insisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as they were goods produced or manufactured in India as defined by Section 2(f) and the duty is to be collected as per the prescribed manner as provided under Section 3. Rules 9 and 49 of the Central Excise Rules, 1944 prescribe the procedure for collection of duty and as per these rules no goods can be removed from any place where they are manufactured until the Excise duty leviable thereon has been paid. Therefore, under Section 3 read with Rules 9 and 49 manufactured goods cannot be allowed to be cleared from the premises of manufacture before payment of duty. The appellant s claim for non-levy of duty on these two tugs has to be examined in accordance with the aforesaid provisions of law. It is seen that on the dates of removal the two tugs were not in a fully manufactured condition and therefore they were not chargeable to duty in terms of Section 3 of the Act. The principle of not charging duty on fully manufactured goods which come within the purview of excise for the first time, is that these are not chargeable under Section 3 as they have been manufactured already and therefore duty thereon cannot be collected in terms of the Rules, as the Rules are subsidiary to the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation and not under Rule 11. I am aware that during the period in question there were no corresponding restrictions on the department as now imposed under sub-section (5) of Section 11B of the Central Excises and Salt Act, 1944. These have been brought into existence from 17-11-1980 as observed above and they do not have retrospective effect. They abundantly make clear that prior to the coming into effect of these provisions, refund of duty collected on goods which were not excisable was not governed under the Central Excise Law. The Learned Advocate has relied on the provisions of the Limitation Act, 1963 as the appellant s claim for refund was made within the period of three years. He finds further support from the department s own instructions as contained in the Central Board of Customs and Excise s letter No. 5/7/71-CX-I, dated 8-5-1973 published in 1979 Cen-Cus page 152-C. I find that these contentions are correct. In view of these circumstances, I set aside the orders of the lower authorities and direct the refund of duty amounting to Rs. 42,020/- recovered on two tugs to be paid to the appellants. The appeals is thus allowed. 7. [Order per : S.D. ha, Member (J)]. - For ..... X X X X Extracts X X X X X X X X Extracts X X X X
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