1. This is an appeal by the Collector of Central Excise, Calcutta under Section 35B(2) of the Central Excises and Salt Act, 1944 made to the Tribunal against Order-in-Appeal No. 502/Cal./82, dated 21-6-1982 passed by the Collector of Central, Excise, Calcutta.
2. The facts of the case are that the respondents are manufacturers of manipulated iron and steel pipes flanges and sittings of the following varieties, commonly known as piping products :- (v) Pipe coils (economiser, superheater and other types of pipe coils).
The local Central Excise Officer classified these 11 varieties of goods under Item 68 of the First Schedule on and from 1st March, 1975, prior to which date they had been classified under Item 26AA and were exempted from duty. The Department claims that the Company did not file any appeal or revision petition against the classification and continued to pay duty on and from 1-3-1975 under protest, though without formally appealing against the classification list with which they were aggrieved. Subsequently, in a letter dated 16-7-1979, they wrote to the Superintendent raising the issue once again and claiming that the goods were not liable to any further duty as the respondents were merely buying duty paid straight tubes and plates and finishing them into shaped pieces of pipes as required by customers. The Assistant Collector subsequently referred the matter to the Collector, who finally decided the matter by his Order-in-Original No. 62/82, dated 14-8-1980, holding that all the varieties of the said goods were rightly classifiable under Item 68. The respondents appealed to the Central Board of Excise and Customs who, in their Order-in-Appeal No.169-B/81, dated 28-2-1981, held that the varieties at S1. Nos. i to vii were classifiable under Item 26AA and hence not chargeable to any further duty; while those at S1. Nos. viii to xi were rightly classifiable under Item 68. The respondents thereupon filed a claim for refund of the duty already paid but not held payable by the Board. The refund claims for the period from 1-3-1975 to 30-3-1981 amounting to Rs. 58,05,319.61 were prepared but the Assistant Collector sanctioned the claim of only Rs. 20,70,159.76 for the period from 14-8-1980 to 30-3-1981 by his Order-in-Original dated 14-4-1982, holding that prior to 14-8-1980 i.e. the date of the Collector's order, no appeal had been filed against the classification lists and they stood legally in force till their suppression on and from 14-8-1980 and thus duties prior to this date had been correctly paid. The respondents appealed to the Appellate Collector who, by the impugned order dated 21-6-1982, set aside the order of the Assistant Collector with direction to grant refund in full holding that though the earlier classification orders had not been challenged, the respondents (appellants in that case) had clearly protested in writing that their products were not classifiable under Item 68.
3. This order is now challenged by the Collector as not legal, proper and correct because the mere fact that the classification under Item 68 was protested against is not sufficient to hold that the duties had been paid under protest, specially when their intention to do so had not been manifested by filing appeal against the classification lists.
The only conclusion to draw from their failure to appeal is that initially they might have felt aggrieved but subsequently reconciled themselves to classification under Item 68 and therefore did not appeal. They raised the issue on 16-7-1979 on which a formal decision was given by the Collector. So at most it can be presumed that only on and from 16-7-1979 did the respondents formally protest. Though the Assistant Collector has granted the refund on and from 14-8-1980, the only concession which can be granted is to allow the refund for the period back to 16-7-1979. However, for the prior period, namely, 1-3-1975 to 15-7-1979, no refund is admissible. The reason for this is that the orders of the Collector or the Board cannot have retrospective effect. The classification list is the legal document on which duty is charged and unless it is reversed/modified/superseded, it continues legally in force and all duties paid prior to 16-7-1979 on the un challenged classification lists would be considered to have been correctly paid.The Collector's order in a manner supersedes the earlier classification list but it will have effect from 16-7-1979. The only way the classification list can be amended retrospectively is by appealing against it or filing a revision application, which has not been done. Thus, any amendment can only have prospective effect.
Further, payment of duty under protest is merely a device for getting around the question of time-bar and does not automatically entitle refund which should be actually admissible. In the instant case, the duties prior to 16-7-1979 having been paid on valid classification list, no refund is admissible. Though the respondents have been claiming that they were paying duty under protest on and from 1-3-1975, there is no evidence on record to show that their letter ventilating their protest had actually been written to the local Central Excise Officers, or for that matter the said letter had been received by them.
The relief sought is that the order of the Appellate Collector may be set aside and the claim for refund be rejected. The appellant had also filed an application for stay of the order granting refund but this was not pressed when it came up for hearing on 30-9-1983.
4. In a written response, the respondents restricted their objection to the refund for the period 1-3-1975 to 16-7-1979 since the appellant admitted the entitlement for refund subsequent to 16-7-1979. It is contended that the appeal is liable to be dismissed since the appellant failed to comply with the order of the Tribunal rejecting the application for stay. There was also no authorisation of the Deputy Collector who verified the appeal made by the Collector as required under Section 35B(2) and the appeal is not, therefore, maintainable. As regards the merits, the respondents agitated right from 1-3-1975 that the fabricated material would not be liable for classification under Item 68. It is not, therefore, correct that purported orders of classification made by the Central Excise Officer without any authority of law and without jurisdiction, were and are valid orders needing to be appealed against. T.I. 68 covers goods manufactured and not elsewhere specified in Items 1 to 67. The appellant's contention that no appeal was filed though the classification and realisation of duty were protested against from 1-3-1975, would not and cannot render the goods liable to be classified under Item 68 from that date. The Assistant Collector considered and paid the refund, from 1-3-1975 to 31-3-1981 in respect of the respondents' Jhinjirapole Works and a separate claim in respect of their Hide Road Factory is the subjec-tmatter in this appeal. The Assistant Collector simultaneously prepared a cheque sanctioning refund of Rs. 36,93,226.66 bearing No.A/3 139313, dated 21-1-1982 on the Reserve Bank of India but when the respondent, after preparation of their receipt, asked for the cheque, they were asked to come later and thereafter a purported show cause notice was issued and the order denying the refund was passed. There is, therefore, distortion of facts apparent on the petition of appeal rendering it liable to be dismissed. The impugned order appealed against held that the respondent was and is still entitled to the refund from 1-3-1975. Under Section 11-B, where such an order is passed, the Assistant Collector is required to refund the amount without the appellant having to make any claim and the limitation period of six months shall also not apply if duty has been paid under protest. The Assistant Collector firstly erred by initiating proceedings when a claim for refund arose out of an order of the Board; and again for the second time, when the Appellate Collector directed him to grant the refund, he turned a deaf ear to the order of the Tribunal on the stay application. A decision has to be made within the ambit of Section 11B. When a correct classification order is passed, it applies to all the goods which came into existence when there was no change in law or the description of the goods and any duty recovered under an incorrect classification has to be claimed within the time-limit under Section 11B; but this does not apply where duty was paid under protest, and no question arises whether classification was disputed or not. The alleged grounds have no force and refund is due from 1-3-1975 to 31-3-1981. The contention that refund is due one year back from 14-8-1980 is not correct, since classification dispute was lodged by way of representation and this has been set at rest by the Oredr-in-Appeal passed by the board confirming their contention should take effect from the very beginning without authority of law. Even regarding grant of refund one year prior to the date of filing the representation, the law is very clear that refund is due when duty is paid under protest. The averments that there is no record to show the protest having been actually written or received by the local Central Excise Officers is not true and evidence will be produced. The appeal is claimed to be not sustainable since the very root of the proceedings was illegal, unauthorised and void.
5. Shri Lakshmi Kumaran stated that this was a simple case involving res judicata. The issue was whether the order dated 14-8-1980 of the Collector covered the classification lists already approved by the Assistant Collector or whether they were superseded by this order. If the answer is no, then the orders stand since there cannot be a plurality of orders for the same goods for the same period. If yes, the doctrine of merger will apply. If the Collector's order is a review under Section 35A, the Assistant Collector's order will merge and the Board would have no jurisdiction to deal with the appeal since the revision against the Collector's order would not lie to the Board and Section 35 would not be applicable. In any case, the Board cannot expand the scope of the Collector's order to cover the classification lists already approved and not appealed against. In fact, the Collector's order dated 14-8-1980 was an original order under Section 33 read with Rules 173B and C and was not an Order-in-Revision under Section 35A. The Collector decided classification of 13 items and an appeal was filed under Section 35 to the Board who passed an order on 28-2-1981. This is not a tariff ruling but an executive order. It is an order in personnem and not an order in rem. Since the classification list was finally approved by the Assistant Collector and no appeal was filed to the Appellate Collector, the order of the Collector cannot apply to such a closed matter. However, it can relate to the period from 4-6-1979 but the orders from 1-3-1975 to that date have become final notwithstanding the protest lodged. In rubuttal, Shri Ganguli reiterated the written submissions. He stated that the protest lodged in March, 1975 and subsequently cannot be said to be invalid because no appeal was preferred. In support he cited 1984 E.L.T. 461, Sirpur Paper Mills v. C. C. E., Madras -an order No. 387/83-Bench 'C' and 1984 E.L.T. 454-Order No. 368/83-C. The issue in this case is not a dispute on classification but on refund. Section 11B clearly states that no limitation will apply when duty is paid under protest and when the order is passed in appeal, the lower authority is bound to grant the refund. He cited 1983 E.L.T. P. 1833, Madras Rubber Factory v. C. C.E., Madras and 1983 ECR P. 397D, K. G. P. Madras v. C. C. E. Hyderabad which stated that the Revenue is bound to give refund after an Order-in-Appeal. He also cited 1983 E.L.T. P. 711, Triveni Sheet Glass Works v. U.O.I, stressing the public duty to make refund. Shri Ganguli stated that since the stay had been rejected, the Department was bound to refund the money ordered by the Appellate Collector and failure to do so amounted to non-compliance with the order dismissing the application for stay. On this short ground alone, the appeal deserves to be dismissed. He cited 1984 E.L.T: P. 125-D, Vembu Iyer v. U.O.I. In reply, Shri Lakshmi Kumaran referred to the Order No. 141/84, dated 20-2-1984 passed by Bench 'A' in case of E.S. Pathanwala to support his contention that no refund either under Sub-rule (1) or Sub-rule (3) of Section 1 IB was admissible since no formal appeals were preferred against the classification lists approved. He relied also on AIR 1963 S.C. 1124 to support his plea that the order of the Assistant Collector did not merge in the Collector's order and that the Board's order could not expand the scope to cover these orders which were not in issue before it. Under Section 35, the Board has only the power to confirm, alter or annul the order of the Collector.
6. The Bench then called upon Shri Ganguli to file copies of classification lists alongwith the Department's approval. At the resumed hearing on 16-4-1984, Shri Ganguly referred to the classification list dated 2-5-1975 and the covering letter dated 20-5-1975 from the Superintendent communicating the approval of the Assistant Collector effective from 1-3-1975. He contended that the list was filed on the insistence and dictation of the officers, as would be clear from mention of Notfn. No. 54/75, which referred to factories and was not relevant, as the use of power or employment of more than 49 workers, was never in issue. He referred to the letter dated 17th and 25th March and 2nd April, 1975 lodging protest against assessment and the internal correspondence in the department allowing payment of duty under protest. In particular he pointed to a letter VII/75/4269, dated 13-5-1975 from the Assistant Collector to the Collector that the party may be allowed to pay under protest. At this stage, the learned SDR said that the department could agree to treating the letter of 4-6-1979 as a protest and agree to go back for six months to grant refund. If this order is treated as a review of the classification orders, refund could even be given from 1-7-1978, on which date Section 35A was amended giving Collector to review Assistant Collectors' orders.
Counsel for the appellants, however, reiterated his pleas. He cited 1983 ECR 1525 where Mysore High Court held that dismissal of an appeal for non-compliance with a stay order was legal. Shri Lakshmi Kumaran cited order AIR 1961 S.C. 1549-1983 E.L.T. 1337 (S.C.) Digvijaysinhji Mills to support his argument that the appellate authority has no power to pass an order for the first time assuming jurisdiction of the lower authority and the classification, being such a decision, could not be changed retrospectively. Shri Ganguly's response was that the department should not take refuge in technicalities to deprive the citizen of his legitimate dues. (1983 E.L.T. 1534-A. V. Narasimhalu) and maintain that 1983 ECR 1931-Industrial Tractors-cited by the SDR, is not relevant in the present case.
7. We have given careful thought to the arguments on both sides. While the Department has not rebutted the respondents' plea for dismissal of its appeal for not having complied with the Bench's order rejecting the request for stay of the impugned order, we do not find any force in this contention of Shri Ganguli. The order rejecting the stay application filed by the appellants did not give positive directions to the appellants nor is payment of the amount ordered by the Appellate Collector to the respondent a pre-condition for the present appeal unlike requirement of Section 35F of the Act. We, however, do see considerable force in the other grounds urged by Shri Ganguli. The order has also not dealt with the reasons for granting refund in the case of the sister concern; or for taking a belated objection in this case, after obtaining the required receipt and preparing the cheque. It has raised mainly legal pleas for refusing the refund. The basic fact in this case is that the respondents protested as early as March 1975 that the goods were not liable to duty and they were allowed to pay duty under protest. The letters were addressed to the Collector's office and the depart ment has produced no evidence that these protests were ignored or the respondent was informed to appeal against the classification list dated 2-5-1975 as this was tantamount to rejection of their protest made to the Collector's office in March/April, 1975.
On the contrary, they persisted in agitating the matter and finally succeeded in getting an appealable order from the Collector. Whether this order involves a review of the final orders approving the classification by the Assistant Collector or not, there is a definite nexus between the protests earlier lodged and the one dated 6-7-1979.
There is also force in the respodent's plea that they were compelled to file the classification lists and pay the duty, now in issue. As far as the law is concerned, Section 173-6 (3) contains a clear provision for payment of duty under protest at the rates approved by the officer, and Sub-rule (5) stipulates that when the dispute about the duty has been finalised; the proper officer shall make such modification and inform the assessee accordingly. By Rule 173J, in force prior to 1980, Rule 11 was,)applicable to refunds. This provides that an application for refund should be made within 6 months from the date of payment of duty and since 1977, also provided that this limitation shall not apply where any duty has been paid under protest. This latter provision only expressly made clear a principle that a protest lodged simultaneously with payment of duty was tantamount to claiming a refund. The department has not adduced any proof that the Superintendent or the A.C. or the Collector had rejected the protest made in 1975. Having informed the Collector's office that they may be allowed to pay duty under protest on 13-5-75, it is reasonable to hold that the dispute remained unsettled. The Superintendent's indirect communication of the A.C. having approved the classification list was hardly an Order-in-Original; a reply to the protest made to the Collector; or an appealable order, as the department would have us believe. In that view of the matter, the protest would be technically still alive and there would be no question of any time-bar. In these circumstances, it would be neither legal nor proper to hold that the protests were deemed to have been extinguished since no appeal was filed. Were this, so, the refunds given to the Jhinjirapole Works were also illegally granted and ought to have been simultaneously recalled by initiating proceedings at the time of withholding the present refund. In these circumstances, we find insufficient justification for this appeal on facts and also in law, We accept the plea of the respondents and accordingly reject the appeal.