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 Collector of Central Excise (Appeals), Madras, dated 31-3-83 in No. 108/83(M) with consequential benefits allowed.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri C. Chidambaram, Representative of the appellants and upon hearing the arguments of Shri S.K. Choudhury, Senior Departmental Representative for the respondent, the Tribunal make the following : 3. The appellants had filed five refund claims for a total amount of Rs. 5,19,541.20 on two dates namely 29-8-81 and 19-9-81 relating to the years 1977 1978, 1979, 1980 and 1981. These claims were in respect of certain items manufactured by the appellant claimed to be classifiable under Item 26AA(iv) (exempt from payment of duty) but classified under Item 68, Central Excise Tariff. The Assistant Collector of Central Excise, Madras VII Division, by his Order C. No. V/26AA/18/104/81-RC, dated 18-9-82 allowed refund of Rs. 10,679.41, being the amount paid by the appellants within six months prior to the date of submission of the refund claim, but rejected the claim for the balance amount under Section 11B of the Act, An appeal against this order was rejected by the Collector of Central Excise (Appeals), Madras holding that the bar under Section 11B would apply; the Collector did not accept that the claims were saved by Sub-section (3) of Section 1IB of the Act, as was urged before him during the appeal.
4. Before us the representative of the appellant made the following points : (i) The provisions of Section 11B were brought into force with effect from 17-11-80. As part of the claims relate to earlier periods of assessment, provisions of that Section will not apply; the relevant law to be considered would be Rule 11 of Central Excise Rules, 1944; and under Rule 11 it is claimed that the payment made in excess is refundable without reference to limitation.
(ii) In terms of Section 11B(3), as well as Rule 11(3), when there is an order in appeal and a refund becomes due to any person, such refund has to be made without the assessee having to make, any claim in that behalf. Elucidating, the representative referred to the order-in-appeal passed by the Central Board of Excise and Customs in No. 160-B/81 of 1981 dated 28-2-81 in which it has been held that a number of products manufactured by the appellant are not liable to any effective duty; in terms of this order the appellant becomes entitled to payment of refund; and he does not have to make any fresh application. In this connection, he also referred to certain decisions of the High Courts and of the Tribunal itself.
(iii) Before part of the refund claim was rejected, no notice was issued stating the reasons for such rejection to enable the appellant to explain his stand. Though this aspect is referred to in the order of the Collector (Appeals), it does not meet the case of the appellant fully. That there was a discussion between an officer of the appellant's firm and the Assistant Collector does not obviate the need for the issue of such notice.
5. The Senior Departmental Representative, on the other hand, urged that the correct provisions of law as applicable to a claim for refund would be the one in force at the time of making of the claim. He resisted the plea that the provisions of Section 11B(3), or of Rule 11(3), would be applicable to the circumstances of the present case.
The order of the Central Board of Excise and Customs was passed in respect of certain proceedings relating to a factory of the firm situated at Calcutta and it cannot be applied to the proceedings arising in respect of clearances of the appellant's factory at Madras.
The licensee at Calcutta is a distinct entity from the licensee at Madras, they being situated in two different jurisdictions and being licensed individually. Though he stated that the practice of the Department is to issue a notice when part o>f a claim for refund is proposed to be rejected, he urged that this was not a requirement under law. On observance thereto of the practice he could not cite it as vitiating the present proceedings.
6. A five Member Bench of this Tribunal has had occasion to deal with the general proposition as to the law of limitation that would apply in a situation of the type under consideration. In paragraphs 80 to 84 of the judgment of that in the case of a reference arising out of Appeal No. ED(SB)(T) 11/82-B, dated 7-6-1984 in the case of Atma Steel Private Ltd. v. Collector of Central Excise, Chandigarh and other cases-1984 (17) ELT 331 (Tribunal)-the Bench has examined the pronouncements of the various High Courts and of the Supreme Court and have come to the conclusion that law of limitation is procedural and operates retrospectively; and the law that applies is the one prevailing on the date when the relief is claimed. Following the principles enunciated in this judgment of the larger Bench of this Tribunal, the correct law to be applied in respect of the claims in the present case would be the one in force at the time of making of the claim namely, Section 11B.7. The plea that the provisions of Section 11 B(3) would apply to the facts of this case is not acceptable either. The order of the Board is in respect of an appeal from M/s. Stewarts and Lloyds of India Ltd. against order No 26AA(3)78-Collr./62/80, dated 14-8-80 passed by the Collector of Central Excise, Calcutta. The latter order in turn is one dealing with classification of manipulated pipes and tubes manufactured by M/s. Stewarts and Lloyds of India Ltd., 39, Hide Road, Calcutta-43 in respect of Kidderpore and Jhirjirapole works. Though the orders contain certain conclusions regarding the dutiability or otherwise of the products under particular items of the Tariff, they are proceedings in respect of specific points that have arisen at Calcutta and are relatable thereto. The order of the Board cannot be considered to be of universal application in the sense that any and every person who manufactures similar products anywhere in the country would be entitled to a refund, of duty which may have been paid in excess, without an application for refund on the strength of this order of the Board. We do not consider that the amplitude of Section 11B(3) is that large.
8. The practice of issue of a notice to a claimant, that part of his claim may not be accepted by the proper officer and elucidating his response thereto, would not itself elevate it to a proposition of law, so that non-observance of breach would render the order of the Assistant Collector voidable. Section 11B of the Act does not contain any express provision for the issue of a notice before the rejection of a claim for refund either in part or in full- and we think, rightly so, Section 11A dealing with the recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded, provides for the issue of a notice to the person chargeable, with duty, considering the representation, if any, made by him and then determining his liability.
This is understandable as it is the Department that makes the claim for duty and has to explain why a particular sum is due to it, if the assessee has any points to urge in his favour he is certainly to be heard on these points. The situation in the case of a refund claim is just the reverse. If any notice is to be given it is the assessee who is claiming refund who has to do; he has to state why a particular amount is refundable to him. This, he does by the filing of a refund claim in which it is expected that he would explain the grounds on which he makes the claim. There is no further need for taking a tentative view in respect of the grounds urged by the assessee, to elicit his reactions to the tentative view and then decide on the claim. In any case, when the claim is rejected in part or in full, an older of the rejection is passed by the Assistant Collector. This is appealable to the Collector of Central Excise (Appeals) and thereafter to the Tribunal. The Assessee has ample scope for canvassing his points of view in the light of the points made by the Assistant Collector and to counter any views expressed by the Assistant Collector in not accepting his stand. Viewed in this angle, we do not consider that there has been any denial of natural justice in the present case.
It is an accepted practice that before refund claims are rejected, a show cause notice is issued and a personal hearing is also granted to the claimant. If the show cause notice and personal hearing is given in some cases and is not given in other cases, it may result in discrimination resulting in violation of the provisions of Article 14 of the Constitution which guarantees equality before law. It appears that this aspect of the matter has not been brought to the notice of the Hon'ble Tribunal. Further it was held in the case of Bharat Aluminium Ltd.- 1983 E.L.T. 1055-that it is incumbent on the Excise authorities to issue show cause notices before rejecting a refund claim because if the ground on which refund claim is liable to be rejected, is not disclosed to the assessee before passing an order of rejection, it would amount to violation of the principles of natural justice.