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TMI Blog1995 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... er strips were purchased from M/s. Devidayal and at the time of sale, M/s. Devidayal had paid the requisite excise duty. M/s. Bharat Bijlee Ltd. were availing proforma credit facility in accordance with Rule 56A of Central Excise Rules, 1944 in respect of paper covered copper strips received from M/s. Devidayal. The credit was secured for a period commencing from year 1975 till year 1985. 2.A Single Judge of this Court by judgment reported in 1982 (10) E.L.T. 10 (Bom.) (Shakti Insulated Wires Pvt. Ltd. and Anr. v. Union of India and Ors). held that the paper covered copper strips were liable to pay excise duty under Tariff Item No. 26 and the claim of the Department that the duty is payable under residuary Tariff Item No. 68 is not correct. The decision of the Single Judge delivered on October 3, 1981 was upheld by Division Bench of this Court on August 27, 1982 in Appeal No. 326 of 1982. The Department moved the Supreme Court and Civil Appeal No. 6816 of 1983 is pending hearing in that Court. M/s. Devidayal Electronics filed Writ Petition No. 1899 of 1983 under Article 226 of the Constitution in this Court claiming that recovery of excise duty in respect of manufacture of pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within ten days from the date of receipt of the order. M/s. Bharat Bijlee Ltd. challenged the order by filing appeal before the Collector, Central Excise (Appeals) and the appeal was allowed by order dated March 8, 1985. The Appellate Authority held that the proforma credit under Rule 56A was made available because of the error or misconstruction of the applicability of the tariff item by the Excise Authority and consequently the recovery in not permissible after period of six months. 4.The order of the Appellate Authority was challenged by the Department by filing Appeal No. 137 of 1985 before the Customs, Excise and Gold (Control) Appellate Tribunal. The appeal was placed for hearing before a Bench consisting Shri K.S. Dilipsinhji and Shri K. Gopal Hegde. The two Members differed and Shri K.S. Dilipsinhji held that the demand issued by the Assistant Collector of Central Excise was time barred and the order passed by the Appellate Authority is correct. The learned Member relied upon provisions of Section 11A of Central Excises Act in support of the conclusion. Shri K. Gopal Hegde on the other hand found that Section 11A is not attracted in cases where proforma credit is availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 passed by Assistant Collector, Central Excise sanctioning the refund of duty of Rs. 19,80,725/- in favour of the Consumer Welfare Fund. Shri Desai, learned counsel appearing on behalf of the Department, submitted that the refund claim made by M/s. Devidayal could not be sanctioned in their favour as M/s. Devidayal failed to establish that the excess duty paid was not collected from the buyer and consequently the Assistant Collector had credited that amount of refund to the Consumer Welfare Fund. It is not necessary in the present proceeding to examine that order and the reference is made thereto only to complete the record. Section 11A(1) of the Central Excises Act reads as follows :- "11A(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice." Shri Desai submitted that as M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of refund to, or recovery of more duty from, the manufacturer or importer, as the case may be, of such material or component parts, the credit allowed shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) or in the account-current maintained under sub-rule (1) of Rule 9 or Rule 173G (1) or, if such adjustment be not possible for any reason, by cash recovery from or, as the case may be, refund to the manufacturer availing of the procedure contained in this Rule". Shri Desai on behalf of the Department submitted that this proviso does not prescribe for any limitation for adjustment in the credit account or for cash recovery when the duty paid by M/s. Devidayal is varied subsequently in view of the decision of the Bombay High Court resulting in payment of refund to M/s. Devidayal. The submission is not correct because the submission overlooks the provision of sub-rule (5) of Rule 56A. Sub-rule (5) of Rule 56A reads as follows :- "56A(5)(i) When credit has been allowed under sub-rule (2) on account of an error, omission or mis-construction on the part of an officer, the proper officer may, within six months from the date of such credit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff Item No. 68 instead of Tariff Item No. 26A. The error or mis-construction of tariff item led to the Excise Authorities granting credit under sub-rule (2) of rule 56A to M/s. Bharat Bijlee Ltd. The error or mis-construction on the part of the officer compelled M/s. Devidayal to pay excess duty and the Department was directed to refund such excess duty after the mis-construction or error was corrected. It is therefore futile to suggest that the proforma credit granted to M/s. Bharat Bijlee Ltd. under sub-rule (2) of Rule 56A was not on account of error or mis-construction on the part of the officer. In our judgment, the limitation prescribed under sub-rule (5) of Rule 56A is clearly applicable to the facts of the case and we concur with the finding recorded by Shri K.Gopal Hegde and Shri S.D. Jha on the applicability of sub-rule (5) to the facts of the case. 8.Shri Desai then submitted that the decision of the Tribunal that the period of limitation of six months would commence to run from the date of order of refund in favour of M/s. Devidayal cannot be faulted. The Assistant Collector by order dated March 20, 1984 had ordered refund of Rs. 89,899.96 for the period commencing f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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