Adjusted base clearance, departmental approval, and merger doctrine governed refund computation and limitation under the notification scheme.

Under Notification No. 198/76-C.E., base clearance and base period were required to be declared by the assessee but approved by the Department before refund could be quantified. For computing concessional clearance, the adjusted value of base clearance, not the unadjusted actual value, governed the computation. Limitation for refund began only when the base period and base clearance were determined and approved, not from the dates of duty payment. After the original order merged in the appellate order, a review show cause notice against that original order could not survive independently. The refund claim therefore had to be examined on the adjusted base clearance with limitation linked to departmental approval.

---

---

Issues: (i) whether the base clearance and base period were to be fixed and approved by the Department; (ii) whether, for computing the concessional clearance under Notification No. 198/76-C.E., the base clearance had to be taken at the actual value or the adjusted value; (iii) whether limitation for refund ran from the date of payment of duty or from the date of determination and approval of the base period and base clearance; and (iv) whether the review show cause notice survived after merger of the Assistant Collector's order in the appellate order.

Issue (i): Whether the base clearance and base period were to be fixed and approved by the Department.

Analysis: The declarations of base clearance and base period were to be made by the assessee, but refund under the notification presupposed quantification after those figures were determined and accepted by the Department. The approved base period and base clearance were therefore not matters left entirely to the assessee's unilateral choice.

Conclusion: The base clearance and base period had to be approved by the Department, in favour of the Assessee.

Issue (ii): Whether, for computing the concessional clearance under Notification No. 198/76-C.E., the base clearance had to be taken at the actual value or the adjusted value.

Analysis: The notification contemplated adjustment of the value for the purpose of determining the clearance which would form the base clearance. The adjusted value, and not the unadjusted actual value, was the relevant figure for working out the base clearance under the scheme of the notification.

Conclusion: The adjusted value of the base clearance was to be adopted, in favour of the Assessee.

Issue (iii): Whether limitation for refund ran from the date of payment of duty or from the date of determination and approval of the base period and base clearance.

Analysis: Since refund could arise only after the base period and base clearance were determined and approved, limitation was linked to that determination. The period of limitation therefore did not run merely from the dates of payment of duty.

Conclusion: Limitation ran from the date of determination and approval of the base period and base clearance, in favour of the Assessee.

Issue (iv): Whether the review show cause notice survived after merger of the Assistant Collector's order in the appellate order.

Analysis: Once the appellate order was passed, the original order merged in it and ceased to survive independently. A review of the original order thereafter was not competent; the proper course was to challenge the appellate order.

Conclusion: The review show cause notice did not survive, in favour of the Assessee.

Final Conclusion: The refund claim had to be examined on the basis of the adjusted base clearance and with limitation computed from approval of the base period and base clearance, and the attempted review of the merged original order was not maintainable.

Ratio Decidendi: Under the notification scheme, base clearance must be approved by the Department, the clearance value is to be computed on an adjusted basis, limitation for refund begins only upon approval of the base period and base clearance, and once the original order merges in the appellate order it cannot thereafter be reviewed independently.

---