1990 (10) TMI 177 - AT - Central Excise

Duty payment mix-up leads to taxpayer refund as Tribunal rules in favor of assessee.

COLLECTOR OF CENTRAL EXCISE Versus BRIGHT BROTHERS LTD.

COLLECTOR OF CENTRAL EXCISE Versus BRIGHT BROTHERS LTD. - 1991 (52) E.L.T. 385 (Tribunal) Issues Involved:1. Classification of goods under appropriate Tariff Item.2. Legality of duty payment and refund claims.Summary:Issue 1: Classification of GoodsThe central issue was the classification of plastic articles manufactured by the assessee. Initially, these goods were classified under T.I. 15A(2) but due to a mistake, the Excise Department reclassified them under T.I. 68 from 1-3-1982, leading the assessee to pay excise duty under T.I. 68. The department later realized the error and demanded special excise duty under T.I. 15A(2). The Assistant Collector rejected the assessee's refund claim for the duty paid under T.I. 68, asserting that the goods should have been cleared under T.I. 15A(2).Issue 2: Legality of Duty Payment and Refund ClaimsThe Collector (Appeals) allowed the assessee's appeal, holding that the duty paid under T.I. 68 could not be adjusted against the duty under T.I. 15A(2). The department's failure to raise a proper demand for basic excise duty under T.I. 15A(2) meant the assessee was entitled to a refund. The department appealed this decision.Judgment Details:1. Collector (Appeals) Decision: The duty paid under T.I. 68 could not be adjusted against the duty under T.I. 15A(2). The department should have raised a demand for basic excise duty under T.I. 15A(2) as well, which they failed to do. Consequently, the assessee was entitled to a refund.2. Tribunal's Findings: - The Tribunal found that the Assistant Collector's attempt to adjust the BED paid under T.I. 68 against the BED under T.I. 15A(2) was improper. - The Tribunal referenced the Delhi High Court's decision in Bharat Commerce of Industries Ltd. v. Union of India, which held that if the levy and assessment under one Tariff Item is illegal, the department cannot refuse a refund on the grounds that duty could have been levied under another Tariff Item without issuing an appropriate demand within the time limit.3. Majority Opinion: The Tribunal, considering the legal precedents and the facts, upheld the Collector (Appeals)'s decision, rejecting the department's appeal. The amount of basic excise duty paid under T.I. 68 was refundable as the department had not issued a proper demand under T.I. 15A(2).4. Separate Judgment by Member (Technical): Member (Technical) S.K. Bhatnagar dissented, arguing that the duty paid under T.I. 68 should not be refunded as it was correctly paid at the rate of 8%, albeit under a different heading. He emphasized that minor errors in tariff heading should not invalidate the payment if the correct amount was paid.Final Order:- Appeal No. E/2815/85-C was dismissed with consequential relief to the respondent (assessee).- Appeal No. E/434/87-C was dismissed as infructuous.- The majority opinion concluded that the department's appeal was rejected, and the cross objection was disposed of accordingly.