1981 (2) TMI 90 - HC - Central Excise

Court orders refund per appellate decisions, rejects challenge to notice. Each party bears own costs.

The court partly allowed the petition, directing the respondents to refund amounts due to the petitioner as per appellate orders. The challenge to the ... Statutory duty to refund pursuant to appellate or revisional order - construction of 'may' in rule conferring public duty as mandatory - effect of price-list/Rule 173C orders on assessment, levy and shortlevy of excise duty - scope of provisos to Section 36(2) - limitation for revision by Central Government - distinction between determination of value under Chapter VII-A and assessment of excise duty under Rule 173IStatutory duty to refund pursuant to appellate or revisional order - construction of 'may' in rule conferring public duty as mandatory - obligation of the proper officer to refund amounts which become due as a result of appellate orders under Rule 11(3)/Section 11A - HELD THAT: - The Court held that subrule (3) of Rule 11 (now incorporated as Section 11A) contemplates that where refund becomes due by reason of an order passed in appeal or revision the proper officer is under a public duty to make the refund without requiring the person to claim it. The use of the word 'may' in subrule (3) must be read as 'shall' so as to impose a statutory obligation on the proper officer to give effect to appellate or revisional orders and refund the amount within a reasonable time, subject only to compelling reasons for deferment (for example, an express stay of refund or the need to complete some mandated exercise). Accordingly, where appellate orders stand and no valid stay or other inhibiting circumstance exists, the petitioner is entitled to a writ directing refund of the amounts found to be due by those orders. [Paras 9, 10, 31]Proper officer is under statutory obligation to refund amounts due in consequence of the appellate orders; respondents directed to refund those amounts forthwith.Effect of price-list/Rule 173C orders on assessment, levy and shortlevy of excise duty - distinction between determination of value under Chapter VII-A and assessment of excise duty under Rule 173I - whether an order under Rule 173C (approval/modification of price list) by itself constitutes an assessment or results in levy, shortlevy or erroneous refund of excise duty - HELD THAT: - The Court analysed the scheme of Chapter VIIA and Rule 173I and concluded that orders under Rule 173C determine the goods, rate and the value basis but do not themselves determine the amount of duty payable for any particular removal; assessment of duty occurs under Rule 173I on the basis of returns. Therefore a simple Rule 173C order cannot be equated with an assessment, levy, shortlevy or an erroneous refund. Consequently, an appellate order setting aside a Rule 173C modification does not itself effect assessment or create an erroneous refund or shortlevy; it only establishes the basis for subsequent assessments and may give rise to entitlement to refund under Rule 11(3) but not to an immediate conclusion that duty has been shortlevied or erroneously refunded for purposes of invoking the special proviso to Section 36(2). [Paras 25, 26, 27, 31]Order under Rule 173C does not by itself constitute assessment, levy, shortlevy or erroneous refund; therefore such orders are not of the kind which automatically trigger the special limitation proviso in Section 36(2).Scope of provisos to Section 36(2) - limitation for revision by Central Government - validity of the Central Government's notice dated 26th September, 1978 under Section 36(2) challenging the Appellate Collector's order dated 14th October, 1977 - HELD THAT: - The Court examined the pre and postamendment provisos to Section 36(2) (Act No. 25 of 1978) and the nature of the appellate order sought to be revised. It held that the second proviso (requiring initiation within one year) applied to the present case and that the impugned notice was issued within that period; hence the notice was not barred by limitation. The Court further observed that the third proviso (which imposes the timelimit in Section 11A for cases of nonlevy, shortlevy or erroneous refund) applies only where the Central Government must form an opinion that there has been nonlevy, shortlevy or erroneous refund so as to require an order levying or enhancing duty or requiring repayment; since the appellate order under consideration was not itself such an assessment or levy, the special restriction of the third proviso was not attracted. Accordingly the petitioner's challenge to quash the notice on limitation grounds failed. The Court declined to adjudicate merits or mala fides of the revisional exercise, leaving it open to the petitioner to represent before the Central Government. [Paras 19, 20, 31, 33, 34]The notice dated 26th September, 1978 is not without jurisdiction on limitation grounds and is not quashed; the Central Government may proceed to examine the appellate order.Final Conclusion: The petition is allowed in part: respondents are directed to refund forthwith the amounts admitted to be due under the appellate orders; the petitioner's challenge to the Central Government's notice under Section 36(2) (dated 2691978) is rejected and the revisional proceedings may continue. Parties to bear their own costs. Issues Involved:1. Inclusion of packing charges in the assessable value of glass sheets.2. Refund of excise duty as per appellate orders.3. Validity of the notice issued by the Central Government under Section 36(2) of the Central Excise and Salt Act.Issue-wise Detailed Analysis:1. Inclusion of Packing Charges in the Assessable Value of Glass Sheets:The petitioner, Triveni Sheet Glass Works Limited, manufactures glass sheets subject to excise duty under the Central Excises and Salt Act. The petitioner submitted various price lists for approval, which were modified by the proper officer to include packing charges in the assessable value. The petitioner contested these modifications and appealed to the Appellate Collector. The Appellate Collector ruled that extra packing charges for frame/case/crate packing and introductory discounts would not form part of the assessable value, while charges for handling and loading within the factory would. The petitioner complied with the modified price lists under protest and sought refunds based on the appellate decisions.2. Refund of Excise Duty as per Appellate Orders:The petitioner claimed refunds based on appellate orders which set aside the modifications made by the proper officer to the price lists. Despite repeated requests, the respondents did not refund the amounts. The petitioner sought a writ under Article 226 of the Constitution to command the respondents to refund the amounts. The court noted that the respondents did not deny the petitioner's entitlement to the refunds as per the appellate orders but justified the non-refund on the ground that the matter was under the Central Government's consideration. The court held that under Rule 11(3) of the Central Excise Rules, the proper officer has a statutory obligation to refund the amount due as a result of appellate or revisional orders, even without an application from the claimant. The court directed the respondents to refund the amounts due to the petitioner.3. Validity of the Notice Issued by the Central Government under Section 36(2):The petitioner challenged the validity of a notice issued by the Central Government under Section 36(2), which required the petitioner to show cause why the appellate order dated 14th October 1977 should not be revised. The petitioner argued that the notice was issued beyond the limitation period prescribed by the amendment to Section 36(2) by Act No. 25 of 1978. The court considered whether the amendments had retrospective effect and whether the case was governed by the second or third proviso to Section 36(2). The court concluded that the case was governed by the second proviso, allowing the Central Government to issue the notice within one year of the order. The court found that the notice was issued within the permissible period and was not without jurisdiction. The petitioner's request to quash the notice was rejected.Conclusion:The petition was partly allowed. The court directed the respondents to refund the amounts due to the petitioner as per the appellate orders. The petitioner's challenge to the validity of the notice issued by the Central Government was rejected. The parties were directed to bear their own costs.