1. Appeal under Section 35B of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the order of the Appellate Collector of Central Excise, Madras, dated 8-10-82 in C. No. V/l/18/82.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri S K. Choudhury, Senior Departmental Representative for the appellant and upon hearing the arguments of Shri Natarajan, Advocate for the respondent, the Tribunal makes the following order: 3. By his order C. No. V/1/30/60/81 T. 3, dated 29-6-82, the Assistant Collector of Central Excise, Hosur Division, Hosur, directed M/s.
Dharmapuri Cooperative Sugar Mills Limited, respondents herein, to debit an amount of Rs. 1,09,604.99 being excess payment of rebate for sugar manufactured by the respondent for the sugar year 1977-78 (incentive period May to September 1978), the rebate having been claimed in terms of Notification No. 107/78 dated 28-4-78. In considering an appeal against this order of the Assistant Collector, the Appellate Collector of Central Excise, Madras, held that in the circumstances of the case wherein R.T, 12 returns and other documents had been submitted to the departmental authorities, it cannot be held that there was misstatement or suppression of facts on the part of the respondent herein; as the clearances related to the period May to September 1978 and the notices of show cause having been issued on 4-6-80, 5-8-81 and 19-4-82, the demands are barred by limitation; accordingly, he allowed the appeal. The Collector of Central Excise, Madras, has come up in appeal before us against this order of the Appellate Collector.
4. It is stated that a credit taken in advance cannot be a refund of duty paid; at the time of clearance the respondent paid the correct amount of duty and hence the question of short levy or non-levy does not arise. In the alternative, it is claimed that as the fact of authorisation of incentive rebate in excess of the actual quantum of excise duty paid was not brought to the notice of the Department, there was suppression of facts and hence the extended time limit under Rule 10/S3ction 11A will be applicable.
5. The learned Senior Departmental Representative explained the scheme of grant of incentive for excess production as set out in the latter of the Ministry of Finance, Deptt, of Revenue F.No. 12/63/63-CX. IV dated 21-2-1964. According to this scheme as soon as crushing is over, the quantum of sugar which would be entitled to the incentive under the scheme is determined; an amount equal to this quantum is straightaway credited to the Personal Ledger Account (PLA) of the concerned factory.
The sugar which actually qualifies for the reduced rate of duty in terms of an exemption notification issued under Rule 8(1) of the Central Excise Rules, 1944108/78 dated 28-4-78 in the present casegets cleared at a future point of time; the amount of advance credited is placed at the disposal of the factory which is utilised for payment of duties of excise for other sugar of the same sugar, but all at the standard rates. He emphasised that at the time of actual clearance of sugar produced in excess and Which attracts a lower rate of duty in terms of the exemption notification, also pays duty at the standard (non-concessional) rate. Thus, what is given to the factory initially is a sort of an advance which is utilised towards payment of excise duty, not necessarily on the sugar that is entitled to the concession.
The whole scheme is an administrative arrangement. If, therefore, it is found that there has been an over-payment of the advance credited, it can be adjusted by mere executive action. Recourse to Rule 10 will not arise.
6. The learned Advocate for the respondent referred to various judgments to indicate the circumstances under which Rule 10 will apply and not 10A, how an erroneous credit could be claimed by the department (by way of re-payment of a short levy), how proforma credit wrongly given under Rule 56A could be or could not be claimed etc. He was inclined to argue that what has been done in the present case was affording of a refund in respect of excise duties leviable on sugar. If there was an over-payment of such refund by way of excess credit, it can only be recovered by resorting to the provisions of the Act and the Rulesin the present case, Rule 10. In this view of the matter, he urged that the order of the Appellate Collector is maintainable in law.
7. It was brought out during the hearing that the crushing at the respondent's factory stopped on 27-5-78. The application for incentive rebate claimed is in the letter of the respondent's factory dated 5-6-78, a date by which the sugar produced would hardly have started out. We have perused the procedure set out in the Ministry of Finance letter referred to supra. This leaves no doubt in our minds that what is being given to a factory producing excess sugar over a base period is an advance credit. In doing so, the Government is not exercising any of the statutory functions under the Central Excise Act and the Rules thereunder, but an administrative, or may be a banking, function. When the relevant goods have not reached the stage of assessment in the sense that they are not being removed from the factory of production, the time and place of levy envisaged in Section 3 of the Act read with Rule 9 has not arisen. If there has been an over-payment of an administrative credit given to the respondent it is certainly open to the Department to ask for its repayment. The question of time limit under Rule 10 would hardly be relevant. In this view of the matter, we set aside the order of the Appellate Collector of Central Excise, Madras, appealed against and restore the order of the Asstt. Collector of Central Excise, Hosur Division, Hosur in C. No. V/l/30/60/81 T.3 dated 29-6-82. The amount demanded by the Assistant Collector shall be paid by the respondents within 30 days from the date of service of this order on the respondents.
8. During the hearing of the case, mention was made of the provisions of Section 11 which provides for recovery of sums of any kind payable to the Central Government. This point has not been agitated in the forums below. We, therefore, do not deal with it at length except to observe that even in that Section the reference is to sums payable under any of the provisions of this (Central Excises and Salt) Act or the Rules made thereunder. In view of our finding earlier that the amount paid is by way of administrative or banking function, prima facie, the provisions of Section 11 may not be applicable.