1. On the appellants, M/s. Basti Sugar Mills Co., submitting a claim for rebate in terms of Notification No. 257/76-C.E., dated 30-9-1976 the Assistant Collector of Central Excise, Gorakhpur under order dated 23-11-1977 directed that the appellants were entitled for rebate in a sum of Rs. 9,41,707.67 in respect of excess production of sugar by them during the months of October 1976 to September 1977 and that the appellants are allowed to credit the said sum as basic duty in their Personal Ledger Account. Subsequently under letter dated 15-1-1981 (though the Paper Book shows the date to be 15-11-1981 the correct date appears to be 15-1-1981 as seen from the Assistant Collector's subsequent order as also a subsequent letter dated 17-1-1981 to be referred hereafter) the appellants were directed to redeposit, out of the abovesaid amount, a sum of Rs. 20,104/-, on the ground that out of the excess production a quantity of 1600 quintals had been exported under bond without payment of duty on 21-4-1977 and no rebate was allowable on that quantity. A demand under Form DD. 2 was enclosed with the said letter. Subsequently Anr. letter dated 17-1-1981 was sent making the same demand but mentioning that the appellants may, if necessary, appear before the Assistant Collector, Gorakhpur on 29-1-1981 if they had anything to submit with reference to the demand.
The appellants under letter dated 12-2-1981 resisted the demand on merits, further claiming that the demand was time-barred.
2. Under order dated 27-2-1981 the Assistant Collector rejected the contentions of the appellants and confirmed the damand. On appeal by the appellants the said order was upheld under order dated 28-11-1981.
The appellants preferred a revision petition to the Government against the said order. The said revision petition, on transfer to this Tribunal, is now being dealt with and disposed of as an appeal.
3. We have heard Shri D.N. Gaur, Consultant, for the appellants and Shri H.L. Verma, Senior Departmental Representative, for the respondent.
4. Shri Gaur contended that the demand made under Form DD. 2 under letter dated 15-1-1981 was invalid as it was not preceded by a Show Cause Notice. But it may be noted that though in the letter dated 15-1-1981 no opportunity was extended to the appellants to contest the demand such an opportunity was extended under the subsequent letter dated 17-1-1981. It may also be noted that the appellants took this opportunity and made their submissions and thereafter only the order-in-original was passed by the Assistant Collector.
5. But Shri Gaur then contends that the demand was time-barred and could not, therefore, for that reason itself be enforced. As earlier noted, the order of the Assistant Collector granting the rebate was dated 23-11-1977. The subsequent demand for deposit of a portion thereof was made in January 1981. It is not disputed that at the relevant period the time within which such demand should have been enforced would have been normally six months, though a larger period would be available if the appellants were guilty of fraud, collusion or any wilful mis-statement or suppression of fact which had to the grant of a larger amount to them by way of rebate than they were actually entitled to.
6. Shri Gaur rightly points out that neither in the letter dated 15-1-1981 nor in the letter dated 17-1-1981 is it even suggested that the appellants were guilty of fraud, collusion or any wilful mis-statement or suppression of fact.
7. With reference to this point the Assistant Collector in his order dated 27-2-1981 held that it was obligatory on the appellants to take credit of a lesser amount than ordered since, in making their claim for rebate, they had intentionally suppressed the fact of export of a part of the sugar without payment of duty. The Appellate Collector had also held to the same effect in paragraph 6 of his order. It is in this connection that Shri Venna relies upon the following sentence in the order dated 23-11-1977 sanctioning the rebate: "No rebate will be admissible on the quantity of sugar exported under bond without payment of duty out of the rebatable quantity of sugar shown above." It is contended by Shri Venna that though under the earlier portion of the order the Assistant Collector had granted rebate in a sum of Rs. 9,41,707.67 he had directed under the above sentence that credit should be taken for a lesser amount only if there had been export of sugar under bond without payment of duty and thus the appellants were not entitled to take credit of the entire amount in view of the export and that when they did so they were guilty of suppression of fact.
8. But it may be noted that even when the appellants made their claim for rebate they had submitted the RG.l register as well as RT. 12 returns for verification by the concerned authorities before passing the order granting the rebate. In the order of the Assistant Collector dated 27-2-1981 it has been mentioned that the claim submitted by the factory was checked on the basis of RG.l before the order granting the rebate was passed. Shri Gaur points out that the export was in April, 1977 and that the fact of export and the quantum of sugar exported were all specifically mentioned in the RG.l register for April, 1977 and were duly disclosed in the RT.12 returns also for that month and that it was after a perusal of these records that the order granting rebate was passed on 23-11-1977. Shri Gaur therefore rightly contends that far from there having been any wilful misstatement or suppression of fact by the appellants, they had disclosed all facts to the authorities before the Assistant Collector passed his order dated 23-11-1977. In the circumstances, we are satisfied that no charge of wilful mis-statement or suppression of fact could be made against the appellants when they made their claim for rebate. It may be noted that even now the department does not rely upon anything except the entry in the RG.l register to prove the fact of export of sugar without payment of duty. Therefore, when that evidence was available before the authorities even when the claim for rebate was sanctioned, it is difficult to appreciate the contention that in making the claim or in taking credit under the order passed on that claim the appellants had been guilty of wilful mis-statement or suppression of fact. The findings of the Assistant Collector and the Appellate Collector on this point appear to be patently erroneous.
9. We are, therefore, satisfied that when a demand for repayment of part of the refunded amount was made very much beyond the six months period after the refunded amount was credited in the Personal Ledger Account the said demand for repayment was in the circumstances discussed above patently barred by time. In view of this conclusion, it appears to us to be unnecessary to go into the merits of the claim.
10. Accordingly, this appeal is allowed and the orders of the lower authorities are set aside.