1. The captioned appeal was originally filed as a revision application before the Central Government which, under the provisions of Section 35-P of the Central Excises and Salt Act, 1944, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.
2. The appellants are engaged in the manufacture of teleprinter tapes/ rolls. They submitted a claim for refund amounting to Rs. 96,447.09 paise being the duty paid by them on teleprinter tapes/rolls during the period from 9-7-1975 to 17-5-1977. The claim was in pursuance of trade notice No. 93/Paper-4/77 dated 28-5-1977. The Assistant Collector of Central Excise, Calcutta II Division, rejected the claim by his order dated 5-6-1978 on the ground that "The Rule of Law on notices contemplates that a notice is effective from the date of issue". The period of the claim being prior to the date of issue of the trade notice, he rejected the claim. In accordance with the Calcutta High Court's decision, the Collector reviewed the Assistant Collector's order. In his order-in-revision No. 11 of 1980 dated 4-10-1980, the Collector observed that the assessee could not establish the duty-paid nature of the paper rolls used in the manufacture of teleprinter rolls save in 6 instances of purchase of paper rolls. In the remaining cases, the purchases were from the market and the assessee could not produce any evidence of payment of duty on the paper rolls. The Collector further observed that the question of refund of duty on teleprinter rolls (T.P. rolls) manufactured out of the purchase of paper rolls on the bill dated 27-6-1977 (16,157.400 kgs) did not arise, since the assessee did not pay any duty on T.P. rolls after issue of trade notice 93/77 dated 28-5-1977. After considering the evidence before him, the Collector sanctioned refund of Rs. 36,919.23 being the calculated amount of duty at 25% ad valorem on the value of 14,432.350 kgs. of T.P. rolls at the average value of Rs. 10.23 per kg. This was out of a quantity of 16,036.500 kgs. of paper rolls purchased on 13-12-1976 after deducting 10% wastage occurring during the manufacture of T.P.rolls. It is against this partial rejection of the claim that the appellants are before us.
3. Before us, Shri K.K. Bannerjee, learned Counsel for the appellants, submitted that the question for decision was whether printing paper purchased from the market was to be considered as duty-paid paper or not. He stated that the assessment in the disputed cases were provisional. The assessee had executed a B-13 bond on 27-3-1976. under Rule 9B of the Central Excise Rules, 1944 for provisional assessment and the said bond was accepted on 10-9-1976. No question of limitation was raised by the lower authorities in respect of the claim. At any rate, the limitation at the relevant time was only with regard to claims for refund of duties paid through inadvertence, error or misconstruction. In this context, reference was made to the Bombay High Court's decision in the Swedeshi Mills Co, Ltd. v. Union of India and Ors. (1982 ECR 165D) wherein it had been laid down that the limitation in Central Excise Rule 11 was in respect of arithmetical calculation mistakes. The purchases of printing paper from the open market should be presumed to be duty-paid. If the department contended that the paper was not duty-paid, the onus was on it to prove its case. If indeed the paper had not discharged the duty burden, it would have been liable to seizure which had not happened. The question of making deductions in the refund on account of shortage or wastage did not arise since what was being claimed was the refund of the duty paid on the T.P. rolls and not of the duty paid on the printing paper used for their manufacture.
4. On behalf of the respondent, Shri S.N. Khanna, learned Departmental Representative, contended that the claim was hit by the time-bar contained in Rule 11. The impugned order clearly said the R.T. 12 returns for the period July 1975 to February 1976 had already been assessed and returned to the assessee on 18-3-1977. None of the AR.1's (clearance documents) were marked "under protest" or "provisional".
Till the acceptance of the B-13 bond on 10-9-1976, there was no provisional assessment. The Collector had allowed refund in respect of the purchase of printing paper effected after 10-9-1976. Market purchases of paper could not, in the absence of supporting evidence be assumed to be duty-paid paper.
5. We have carefully considered the submissions before us. Goods purchased from the open market under proper bills, as in the present case, could not have, in the normal course, came into the market without discharging their duty burden. This would be a reasonable presumption. Otherwise, an intolerable burden would be cast on thousands and thousands of persons who purchase their requirements of goods not from the manufacturers of the goods (securing, in the process, evidence of payment of excise duty on the goods in the shape of gate passes etc.) nor even from the first-stage wholesalers but from retail points several stages removed from the manufacturers. It will be impossible, leave alone impracticable, for such purchasers to prove the duty paid character of the goods they buy. In the circumstances, it will be for the department to establish the non-duty paid character of the goods, if they allege the goods to be non-duty paid. This is also the ratio of the Delhi High Court decision in Sulekh Ram and Sons v.Union of India and Ors. reported in 1978 E.L.T. (J 525). We have, therefore, no hesitation in rejecting the department's contention that it is for the appellant to show that the market purchases of printing paper were duty-paid.
6. The bond was executed on 27-3-76, says the Collector, but it was accepted only on 10-9-76, six months later. There is no explanation for this strange conduct. However, there is no difficulty. The Collector's order says the bond was executed for provisional assessment and "the said bond was accepted on 10-9-76". If the said, meaning the self same, bond was accepted, it was valid and acceptable. Because the Central Excise took all of six months over this simple business cannot mean the bond became valid only on acceptance on 10-9-76. There is nothing in rule 9B requiring acceptance; it only says "... if such assessee executes a bond in the paoper form with such surety or sufficient security in such amount or under such conditions as the proper officer deems fit ...". We see there is even a proper form; not a form thought up by the assessee. And there is a security on terms the central excise alone can spell out. Unless, therefore, there are strong reasons, and we can see none against holding so, the date of execution of the bond must be also the date on which it goes into operation.
On this basis, the bond came into operation on 27-3-1976 and hence all assessments which can be covered by the bond must be deemed to be provisionally assessed.
The Collector's order that the assessee can get benefit only in respect of the quantity purchased on 13-12-76 from M/s. Nalikul was wrong. The benefit given by the Collector must be given from the date of execution of the bond for provisional assessment.
Then again, the Collector seems to have erred in co-relating the dates of market purchases of printing paper with the date of acceptance of the B-13 bond. What was material was not the dates of purchase of the printing paper from the market but the dates of clearance of the T.P.rolls. Similarly, there is no question of making any deduction on account of wastage in manufacture since the refund claim is of duty paid on T.P. rolls and not the duty paid on the base printing paper.
7. In all the aforesaid circumstances, a fresh determination of the dispute is, in our view, essential in the interest of justice.
8. We, however, do not accept the appellants' contention that the limitation in Rule 11 has no application to the present case. This argument is no longer available, now that the Supreme Court by its judgment of 6-4-1984 in Civil Appeal No. 1633 of 1984-Miles India Ltd. v. Assistant Collector of Customs-upheld the findings of this Tribunal that the Customs authorities are bound by the limitation in Section 27 of the Customs Act in. dealing with claims for refund of customs duty.
Central Excise Rule 11 is in pari materia with Section 27 of the Customs Act, 1962.
9. We set aside the Collector's order and direct him to redetermined the relief in the light of our order given above. This order will not, however, have the effect of negating the relief already granted by the Collector.