1. This is a revision application (hereinafter called "appeal" filed before the Central Government which under Section 35P of the Central Excises and Salt Act, 1944, stands transferred to this Tribunal to be disposed of as if it were an appeal presented before the Tribunal.
2. Appearing before us for appellants, Shri Koruthu explained that they had applied for refund of the amount due to them as rebate on excess production of sugar during the sugar year 1974-75. In his order dated 28-9-76 the Assistant Collector observed that the appellants had not maintained separate accounts for the excess production of sugar and the clearances thereof as required under Trade Notice No. 14/76 dated 21-1-1976 of the Collector of Central Excise, Baroda. He therefore directed that the entire excess production should be granted rebate as if it had all been cleared as levy sugar. In other words, the Sower rates of rebate admissible in respect of levy sugar, corresponding to the lower rate of duty payable thereon, would only be allowed. He further directed that since the duty payable on levy sugar came to only Rs. 18.43 per quintal (as against the maximum rebate of Rs. 22 per quintal admissible, on levy sugar) the maximum rate of rebate would be limited to Rs. 18.43 per quintal. On the basis of these findings the Assistant Collector sanctioned rebate of Rs. 17,90,007.85.
3. The appellants went in appeal to the Appellate Collector against the above order. They submitted that the Trade Notice of the Collector of Central Excise, Baroda was issued only on 21-1-1976, whereas the excess production and clearances thereof in this case had already taken place before that date, and therefore there could be no question of their having followed the requirements of Trade Notice. They also claimed that since they were obliged under the law to apportion their sugar production in the ratio of 65% for levy sugar and 35% for free sale sugar, the excess production should also have been divided on the same basis for purposes of granting the rebate. They also contended that they should have been entitled to the maximum rate of rebate specified for levy sugar, namely Rs. 22 per quintal.
4. The last claim was rejected by the Appellate Collector, who held that the so called rebate was really an exemption under Rule 8(1) of the Central Excise Rules and the exemption would only be to the extent of duty payable, which in this case was Rs. 18.43 per quintal. However, in respect of the other ground advanced by the appellants, the Appellate Collector accepted their contention, holding that since the Trade Notice was issued only after the production and clearances covered by the appeal, there was no question of the appellants following the requirements of the Trade Notice. He also agreed with appellants' contention that it would be just and proper to divide the excess production on the basis of 65% levy sugar and 35% free"sale sugar. He directed the Assistant Collector to calculate the rebate on the basis of his findings and grant consequential relief.
5. Thereafter, another order was passed by the successor of the first Assistant Collector. (The photo copy furnished to us does not show the date of this order, and we shall refer to it as the "second order"). As directed by the Appellate Collector, the Assistant Collector apportioned the excess production namely 1,42,138.68 quintals of sugar, in the ratio of 65% and 35%, that is, levy sugar 92,390.16 quintals, and free sale sugar 49,748.52 quintals. Each of these quantities was further broken up into slabs of 7.5%, 10% etc., as provided in the notification. However, according to Shri Koruthu, the Assistant Collector fell into error at this stage. Instead of breaking up the excess production of levy sugar, that is, 92,390.16 quintals as percentages of the excess production of levy sugar (92,390.16 quintals), he broke it up into slabs of 7.5%, 10% etc. of the total excess production (that is, levy sugar and freesale sugar combined).
Similarly, the notional quantum of excess production of free sale sugar, i.e. 49,748.52 quintals, was broken up into slabs of 7.5%, 10% etc. of the total excess production and not the excess production of free sale sugar. Despite the allegedly erroneous method followed, the Assistant Collector found that as a result of these calculations, in addition to the rebate already granted namely Rs. 17,90,007.85, a further amount of Rs. 7,72,174.66 was due to the appellants, and he sanctioned that amount.
6. The appellants again went in appeal to the Appellate Collector against the above order. They submitted that the second Assistant Collectof had followed a wrong method of calculation, which resulted in 4 slabs or excess production for levy sugar and two slabs of excess production on freesale sugar. He should have followed the same method of calculatiod as was followed in the first order,.wherein the excess production was dividest into 5 slabs. They submitted that the Assistant Collector should have fird djvided the. excess production into .slabs of .7,5%,10.%, 10%' and beyoar 37.5%, and should thereafter have divided the quantity in each slab in the ratio of 65% and 35% and calculated the rebate allowable on the two sets of quantities at the rates mentioned in the notification.
7. The Appellate Collector rejected the appeal. He observed that the main contention of the appellants was that the Assistant Collector had calculated the excess production for different slabs in his impugned order in a manner different from the one adopted while calculating it in his earlier order. He added that when the case was remanded for de novo adjudication, the earlier order was implied to be set aside and the Assistant Collector's conclusion had to be independent and based on merits without his judgment being fettered. He further stated that the appellants had not disputed the calculation of excess production as arrived at by the Assistant Collector or its being divided into percentages of levy and freesale sugar. Their main objection was that the Assistant Collector had deviated from the method adopted in the earlier order. In the result, as already stated, the Appellate Collector rejected the appeal.
8. We are constrained to observe at this stage that the second Appellate Collector's order does not show a real appreciation of the points made by the appellants as regards the method of calculation adopted in the second Assistant Collector's order. His basic finding is that the second Assistant Collector was at liberty to adopt a method of calculation different from that adopted by the first Assistant Collector. Without pronouncing on this finding, we have to observe that the Appellate Collector had an obligation to see whether the method adopted by the second Assistant Collector was correct and justifiable, which apparently he did not attempt to do.
9. There are also references in the orders to a particular quantity of sugar which was reprocessed. We were, however, informed by Shri Koruthu that the appellants had no grievance on this score and the point need not be dealt with.
10. Further, Shri Koruthu fairly conceded that the appellants could not claim a rebate which was higher in amount than the duty actually paid, or in other words they could not claim a rebate in excess of Rs. 18.43 per quintal in respect of levy sugar.
11. Shri Koruthu however advanced a new argument. The appellants' claim was based on the presumption that the percentages in the notification were percentages of the average production, which was the view taken by the Department. Subsequently, it had been held by the Courts, and by the Tribunal, following the Courts, that the percentages would be percentages of the excess production (vide the Tribunal's order in the case of M/s Bhopal Sugar Industries Ltd. -1983 E.C.R. 1880-and several other subsequent orders). It was Shri Koruthu's contention that the appellants should be given the benefit of this decision, although the appellants had not sought this benefit either in their refund claim or in the appeals or even in the revision application. On Shri Tayal intervening to raise the objection that this ground could not be advanced at this stage, Shri Koruthu stated that he relied on an order of the Tribunal reported in 1984 (16) E.L.T. 419 (Tribunal) in the case of Premier Tyres Ltd. v. Collector of Customs, Madras. In that case, the Tribunal by a majority judgment had held that a claim for classification under a tariff heading which was not mentioned at the earlier stage could not be said to be a new claim made on a new basis constituted by new facts, and that refund could be allowed on the basis of the heading newly cited. Shri Koruthu contended that following the above decision, the appellants in the present case should be given the benefit of the decision in the case of Bhopal Sugar Industries.
12. Replying to Shri Koruthu, Shri Tayal strongly submitted that the appellants could not be allowed at this stage to take up the ground of interpretation of the notification with reference to excess production, and claim a higher amount of refund as a result. He argued that the case of Premier Tyres would not be a proper authority, because in that case there was a basic question of the correct classification of the goods, and it was incumbent on the Tribunal to give a decision on that issue. The grant of refund was a consequence of that decision. In the present case there was no such question requiring the Tribunal's decision. He also pointed out that the above decision was by a majority, and that one learned Member had recorded a dissenting judgment in which he held that the amount of refund could not exceed what had originally been claimed by the appellants within the prescribed time limit.
13. Shri Tayal also brought to our notice certain decisions to the contrary. One was that of the Tribunal in the case of Food Corporation of India v. Collector of Customs, Madras, reported in 1984 (15) E.L.T.417, where a three-Member Bench of the Tribunal had unanimously held that the grant of refund was governed by Section 27 of the Customs Act which provided a limitation period ; and that the applicants could not claim a higher refund before the Tribunal as compared to what they claimed before the Assistant Collector. Shri Tayal also referred to a decision of the Delhi High Court in the case of Madras Rubber Factory v. Union of India and Anr., reported in 1981 E.L.T. 879 (Delhi). In that judgment it had been held that if the levy of tax made by the authorities was not attacked by the manufacturer and therefore, whether it was wrong or right, the payment of duty became final, then it could not be reviewed in a civil suit merely because such levy was contrary to a subsequent judgment of the Supreme Court.
14. On these grounds Shri Tayal strongly urged that no claim for enhancing of the refund amount on the basis of subsequent decisions was permissible in the present case.
15. As regards the appellants' claim based on the alleged wrong method of calculation followed by the second Assistant Collector, Shri Tayal conceded that if the method was wrong the appellants would be entitled to appropriate relief.
16. We have carefully considered the arguments advanced by both sides.
The following 4 issues have been raised at various stages of the proceedings :- (1) whether the sugar which was reprocessed was duly taken into account ; (2) whether the rebate on the excess production should be calculated after apportioning the excess production in the ratio of 65% and 35%, or by treating the entire production as levy sugar; (3) whether the method of calculation followed by the second Assistant Collector, in dividing the excess production into different slabs, was correct; and (4) whether the appellants can at this stage seek the benefit from the interpretation of the notification followed in the case of Bhopal Sugar Industries and other cases.
17. On the question of reprocessing of sugar, as stated in para 9 above, Shri Koruthu had confirmed that the appellants had no grievance and this need not be further pursued.
18. On the question of apportionment of the excess production, the first Appellate Collector had accepted the appellants' argument that it was not reasonable to expect them to follow the procedure prescribed in the Trade Notice of the Collector of Central Excise, Baroda, which was issued after the sugar had been produced and cleared. The correctness of this view was not challenged by instituting revisional proceedings under Section 36(2) of the Central Excises and Salt Act as it then stood. Therefore, without making any pronouncement regarding the correctness of this finding, we are proceeding on the basis that it has not been challenged and should be followed.
19. As regards the method of calculation followed by the second Assistant collector, we find that there is substance in the arguments of the appellants. The Notification No. 146/74 lays down the method of calculating the "average production", and also lays down the extent of exemption or rebate on the excess production (in excess of the average production). However, on this excess production, the rate of rebate is different, depending on whether duty is paid as freesale sugar or levy sugar. It is therefore apparent that the excess production has to be divided into slabs of 7.5%, 10% etc. and within each slab the appropriate rebate has to be given depending on whether duty is paid as freesale sugar or levy sugar. Having regard to the decision of the first Appellate Collector regarding apportionment of the excess production, each slab will have to be divided in the ratio of 65% and 35% for this purpose. However, instead of following this simple method, the second Assistant Collector first divided the excess production into levy sugar and freesale sugar. He then worked out the different slabs for each variety of sugar. In doing so, however, he fell into the error of working out each slab with reference to the base figure of levy sugar plus freesale sugar, whereas it should have been worked out separately with reference to the base figure of levy sugar and freesale sugar respectively. The method adopted by him led to the result that there was apparently excess production of about 17% of freesale sugar and about 31% of levy sugar, whereas in terms of the first Appellate Collector's order the excess production in terms of percentages should have been the same for each category. We, therefore, agree that the second Assistant Collector should have broken up the total excess production into slabs first, and then broken up each slab into levy sugar and freesale sugar in the ratio of 35% and 65%.
20. We now come to the last contention of Shri Koruthu, namely that the appellants should be given the benefit of the interpretation followed in the case of Bhopal Sugar Mills, following various High Court judgments. This interpretation is that the excess production should be broken up into slabs corresponding to percentages of the excess production and not of the everage production. The Tribunal has been consistently accepting this ground wherever advanced before it.
However, in previous cases this ground was taken by the appellants at various stages and kept alive. In the present case, this ground has been taken for the first time in the hearing before us. Shri Tayal vigorously argued that this should not be permitted, and he cited a judgment of the Delhi High Court and an order of the Tribunal in support of his contention. The pronouncements in these judgments have been referred to in para 12 above. We find that the pronouncement of the Delhi High Court is not very relevant to the present case, because that was with reference to the question whether an assessment which had become final could be reviewed in a civil suit. The decision of the Tribunal in the case of Food Corporation of India (1984 E.L.T. 417) is mere relevant. In that case the appellants had claimed refund on the basis of the value of the goods which was a particular figure. However, at the revision stage they had worked out the value at a lower figure and claimed a higher refund. This claim was not accepted by the Tribunal. It was observed that the grant of refund was governed by Section 27 of the Customs Act and that this section provides a limitation period. The Bench, therefore, held that the applicants could not claim higher refund before them as compared to what they claimed before the Assistant Collector.
21. We also find that in the case of Premier Tyres Ltd. (1984 E.C.R.688) relied upon by Shri Koruthu, there was also a minority judgment recorded by one of the Members of the present Bench. In that minority judgment the view was expressed that it was correct to refuse payment of the increase in the amount claimed by the appellants after the time limit had expired.
22. We have considered the present case in the light of these citations. As pointed out by Shri Tayal, the case of Premier Tyres may not offer an exact analogy, because in that case it was not merely a question of a claim being allowed or rejected, but it was incumbent on the Tribunal to arrive at a finding on the correct classification of the goods. Having done so, the majority considered that the consequential relief should be allowed. That is not the situation here, because so far as the Tribunal is concerned the question regarding interpretation of Notification No. 146/74 has been clearly settled.
23. It was admitted by Shri Koruthu that the appellants had in their original refund claim quantified the amount of refund, on the basis of the interpretation followed by the Department, namely that the excess production should be worked out as percentages of the average production. Shri Koruthu's present submission that the percentages should be worked out on the basis of excess production is based on the interpretation of the Notification and could therefore be regarded as a submission based on a question of law, which can be advanced even now.
The question, however, is whether the relief which we could give should be limited' to the amount actually claimed by the appellants. We find that the present, case is one of its own kind and none of the other cases cited is an exact precedent. The appellants had claimed the benefit of Notification No. 146/74, which was found to be due to them.
The figures of average production and excess production which they had claimed have also been accepted. Their present claim does not involve any change in these figures. In this respect their case is different from the case of the Food Corporation of India. Their submission is that the interpretation of the notification as subsequently given by the Courts and by the Tribunal should be applied while working out the rebate on the basis of the figures furnished by them. Thus, there is no change in the factual submissions made by the appsllants, nor in the ground on which their claim was made, namely that they were entitled to the benefit of Notification No. 146/74. However, for the purpose of determining the actual quantum of rebate they are seeking the benefit of a more favourable interpretation of the notification, following subsequent judicial decisions. It appears to us that this could be regarded basically as a case of raising a point of law, which is permissible even at this stage.
24. We, therefore, direct that the amount of rebate due to the appellants be worked out after giving them the benefit of the interpetation which we have been following in the case of Bhopal Sugar Industries and other cases, that is, by working out the slabs as percentages of the excess production. The excess production should first be broken up into slabs of 7.5%, 10%, 10%, 10%, and the balance.
Each such slab should then be broken up into free sale sugar and levy sugar in the proportion of 35% and 65%. The rebate at the appropriate rate should then be worked out (bearing in mind that the rebate on levy sugar cannot exceed Rs. 18.43 per quintal). The total rebate admissible should be calculated on the above basis and consequential relief as due in excess of what has already been sanctioned should be granted to the appellants.