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Indian Plywood Manufacturing Co. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1985)(5)LC2037Tri(Chennai)
AppellantIndian Plywood Manufacturing Co.
RespondentCollector of Central Excise
Excerpt:
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 14-9-82 in no. 225/82(b) with consequential relief by way of refund of rs. 8,05,422.87 claimed.2. this appeal coming up for orders upon perusing the records and upon hearing the arguments of shri s. padmanabhan, advocate for the appellant and upon hearing the arguments of shri s.k. choudhury, senior departmental representative for the respondent, the tribunal makes the following order : 3. the appeal is directed against the order of the appellant collector of central excise, madras, referred to supra. the brief facts of the case are as follows : 4. on 30-6-80.....
Judgment:
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 14-9-82 in No. 225/82(B) with consequential relief by way of refund of Rs. 8,05,422.87 claimed.

2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri S. Padmanabhan, Advocate for the appellant and upon hearing the arguments of Shri S.K. Choudhury, Senior Departmental Representative for the respondent, the Tribunal makes the following order : 3. The appeal is directed against the order of the Appellant Collector of Central Excise, Madras, referred to supra. The brief facts of the case are as follows : 4. On 30-6-80 the appellant filed a claim for refund of duty paid on flush doors during the period 21-7-73 to 31-5-80, indicating that duty had been paid under protest and that the Delhi High Court had held that flush doors are not excisable-the reference being to the judgment dated 17-3-80 of a Division Bench of the Delhi High Court in Civil Writ No.938/79 in the case of "Wood Craft Products Ltd. v. The Superintendent {Technical), Customs and Central Excise and Ors., Dubringarj"-1980 E.L.T. 684 (Del.). It was also indicated that as the duty under Item 16B of the Central Excise Tariff had been paid under protest, the claim did not attract any limitation under the Central Excises and Salt Act, 1944. A second claim on substantially the same grounds was filed on 23-6-81 for refund of duty paid from 1-6-80 to 31-5-81. Adverting to these two claims the Assistant Collector of Central Excise issued notice to the appellant as to why the claim should not be rejected, as he felt that as per Notification No. 41/73, dated 1-3-73 read with Collector's Trade Notice No. 157/73, dated 30-7-73 flush doors are liable to duty under Item 16B; classification of flush doors in another case under Item 16B had been upheld both by the Appellate Collector, Madras and by the Government of India in revision; the judgment of the Delhi High Court was not relevant to the facts of the present case, and the claim was barred by limitation. In a detailed reply the appellant pointed out the difference between plywood and flush doors and indicated that though Government might have held that assessment of flush doors could be done under Item 16B of the Excise Tariff, as the matter had been settled by the High Court of Judicature, Delhi the refund becomes due; it was wrong to say that the judgment of the Delhi High Court was not relevant, duty having been paid under protest the question of time bar will not arise. In a communication No.V/16B/18/52/80-B.2 and V/16B/18/8/81-B.2, dated 12-8-81 the Assistant Collector of Central Excise and Customs, Karwar Division observed as follows : "Considering all the evidence produced along with the replies to show cause notices during the hearing and subsequent to that, I agree that the Flush door is a board with inner core held in a frame and covered on sides with plywood is liable to be assessed under Tariff Item 68. Consequently duty to be refunded, keeping in view the limitation of time of the refund claim filed by the parties will have to be worked out in detail before completion of the refund claim. The party may submit a detailed work sheet through the Range Superintendent of Central Excise, Dandeli in the enclosed proforma." Pursuant to this communication of the Asstt. Collector a formal claim in the prescribed proforma was filed in which the net amount of duty to be refunded, after indicating the amount actually paid and the amount if goods are assessed under Item 68, was filed. This net amount was finally refunded. The Company again filed a refund claim for the amount which was withheld by the Department in respect of the period 1-3-75 to 7-8-81 on the ground that flush doors are assessable to duty under Item 68 with effect from 1-3-75. After issue of a show cause notice and receipt of a reply from the appellant, the Asstt. Collector of Central Excise, Karwar Dn. issued an order C. No. V/16B/18/63/81-B.2, dated 17-5-82; he observed therein that the Supreme Court upheld the decision of the Delhi High Court regarding non-excisability of flush doors under Item 16B by a decision dated 16-4-81; but the decision of the Delhi High Court itself indicated that flush doors are assessable under Item 68. The appellant had themselves filed a refund claim in respect of the duty paid on flush doors under Item 16B, after deducting the amount of duty leviable under Item 68 and that lower amount had been sanctioned.

A further claim towards the amount adjusted by the appellant towards duty under Item 68 is not refundable as the party themselves have deducted the duty paid under Item 68 and claimed the rest of the amount on their own accord. The deduction by the party is a correct one.

Accordingly he rejected the claim of the appellant. An appeal was filed against this order with the Appellate Collector of Central Excise, Madras. Noting that the amount sanctioned to the appellant was the one which they themselves indicated, after adjusting the amount payable towards duty under Item 68 of the Tariff with effect from 1-3-75 the Appellate Collector observed that in this way the appellant paid the duty on flush doors under Item 68 of the Tariff themselves. By this payment a legal obligation had been discharged by the appellant and hence the question of refund of the amount does not arise. That there was no confirmed demand in respect of the assessment under Item 68 would not make any difference to the decision as the appellant had paid duty voluntarily. Accordingly, he rejected the appeal vide his order referred to in para 1 above. Against this order of the Appellate Collector, the party has come up in appeal to the Tribunal.

5. Giving a detailed analysis of the case the appellant urged that the withholding of part of the amount due to the appellant is not legal in the absence of a proper demand under Section 11A of the Act; it was not open to the Department to have withheld part of the claim for refund preferred by the party in respect of an assessment made under Item 16B.6. During the course of arguments before us the learned advocate for the appellant stressed that payment of duty under Item 16B had been made under protest during the relevant period. Both in the orders of the Asstt. Collector and the Appellate Collector it has been stated that the appellant himself deducted the amount attributable to an assessment under Item 68 with effect from 1-3-75. This is not in accord with the actual facts of the case. The appellant had filed two different claims covering the period 21-7-73 to 31-5-80 for the whole of the amount paid under protest in respect of assessments under Item 16B. The Delhi High Court had held that flush door is not liable to duty under Item 16B at all. Initially the Department refused to accept the law as laid down by the Delhi High Court itself, and wanted to reject the whole claim. Thereafter on 12-8-81 the Asstt. Collector of Central Excise indicated that flush door was liable to be assessed under Item 68; the refund was due to the party and the amount was to be worked out; keeping in view the limitation of time of refund, the party was asked to submit a detailed work sheet through the Superintendent in a proforma enclosed by the Asstt. Collector himself. All that the party did was to complete the proforma as sent by the Asstt. Collector. The proforma contained three columns, viz., 7, 8 and 9 indicating the duty correctly payable in terms of Item 68. Thus, the appellant did not by himself deduct the amount of duty which may be assessable under Item 68 in respect of flush doors from 1-3-75 to 7-8-81 but merely indicated it in the proforma as ordered by the Asstt. Collector. The original claim of the appellant should stand. When the amount of refund eventually sanctioned by the Department was not for the full amount the matter was pursued by submitting a further claim for the balance amount. He urged that in law, as well as on the facts of the case, no adjustment of the duty will be allowable in terms of an assessment under Item 68, even if such an assessment is warranted but not made.

7. He referred to the decision of the Andhra Pradesh High Court in the case of Kesoram Cements, Besantnagar v. Union of India and Ors.- 1982 E.L.T. 214 (A.P.). This judgment sets out what exactly is a 'legal levy' that is enforceable in law. Next he referred to the decision of the Delhi High Court in the case of Bharat Commerce of Industries Ltd. v. Union of India and Ors.-1979 E.L.T. (J 527). In this case the assessee had paid certain duty on mixed yarn under Item 18B of the Central Excise Tariff. However, differential duty was demanded by the Department on the ground that the duty was correctly payable under Item 18. Ultimately the Court decided that the correct assessment was under Item 18, though under a different serial number. When refund claims were filed, the Department rejected the claim observing that the yarn was assessed at a rate of duty lower than what it should have attracted. Though a demand for duty at the higher rate applicable would at that time be barred by limitation under Rule 10 of the Central Excise Rules, 1944, it was considered that duty already realised could be appropriated towards the correct duty payable on the yarn; hence the refund claim of the assessee was rejected. It was urged on behalf of the assessee that when the Court has decided that Sl. No. 2(iii) under Item 18 was the correct levy, petitioner was entitled to the refund of the duty collected under Item 18B. The Department could not refuse the refund on the ground that duty could have been levied under Item 18 when in fact there has been no such levy and admittedly the demand on the basis of a levy under that Item would be barred by limitation. The Delhi High Court held that this contention was well-founded. In the present case duty was assessed under Item 16B of the Tariff; the Delhi High Court initially and the Supreme Court thereafter have held that flush doors are not assessable under Item 16B. Following the rationale decision of the Delhi High Court in the "Bharat Commerce of Industries" case, it is not open to the Department to retain any part of the amount paid after an assessment under Item 168 on the score that duty is leviable under Item 68. For a levy under Item 68, there must be a legal levy. In this case there is no assessment much less a levy under Item 68, at all relevant times. He then referred to the case of Deepchand Jain v. Income-tax Officer decided by the High Court of Punjab and Haryana-1983 (15) Taxman 522; in para 4 of this Judgment the Court repelled the contention that liability to pay tax is enough for refusing to repay an advance tax paid; "tax becomes recoverable from an assessee only after an assessment order in accordance with the provisions of the Act is passed". The assessment for a given year having become barred and no assessment order, therefore, having been passed, nor can be passed, no tax is due from the assessee; nor is any liable to be recovered from him from an advance tax collected from the assessee, as it could not be related for the given year to any order of assessment under the Act. Retention of the amount is without any authority of law. In the present case also there has been no assessment or levy of duty under Item 68. The payment made under Item 16B was provisional and had been held by the Supreme Court to be not legally collectable. The act of the Department in more or less deducting the amount from out of the original claim as that due to a liability under a different item of the Tariff is not justifiable.

8. Next he referred to the decision of the Bombay High Court in the case of Ceat Tyres of India Ltd. v. Union of India and Ors.-1980 E.L.T.563 (Bom.). In para 15 of this Judgment His Lordship has observed that, "It is the petitioner which made the mistake of paying it and which the department received from the petitioner without the authority of law. Therein lies the difference. If it is manifest, as in the present case it is, that the mistake was on the part of the petitioner in filing erroneous classification lists and paying additional duty on the basis thereof, the question, of the concerned authority receiving the amounts on the footing of the petitioner's mistake cannot elevate the receipt of such amounts to the dignity of a judicial or quasi-judicial order under which such amounts, were paid. There was no question of any erroneous finding by the department, in the sense that the department has not on its own levied any duty on the petitioner but received excess duty from the petitioner on the basis of the mistaken classification lists filed by the petitioner." The facts of this case would be similar to the one dealt with in the present case. The earlier classification under Item 16B and the payment of duty under protest were acts of error on the part of the appellant.

9. Next he referred to the case of G. Lakshminarayana v. Commercial Tax Officer, First Circle, Hyderbad and Anr.-(1974) 33 S.T.C. In dealing with the Andhra Pradesh General Sales Tax Act, 1957, and in particular to Section 33, wherein it is provided that when any refund is due the assessing authority may first apply the excess paid in respect of any period towards the recovery of any amount in respect of which a notice of demand may have been issued and then refund the balance amount. The Government pleader had argued that liability to pay tax arises as soon as the taxable event on the happening of which the tax is payable occurs. Once the assessee becomes liable to pay tax while considering the question of refund, that liability has to be worked out and it is not necessary that there should be an assessment order for the purpose.

The Court held that Section 33 uses the word "tax payable" and "tax leviable" and the word 'payable' connotes "a legally enforceable payment". Mere liability to pay tax will not deprive a person of the right to refund unlesss an assessment order is made and that liability is quantified. In the present case also there has been no assessment under Item 68 of the Tariff. There is no doubt a provision in Section 11 by which in respect of duty or any other sums of any kind payable to the Government under any of the provisions of the Act or the Rules made thereunder the proper officer may deduct the amount so payable from any money owing to the person from whom such sum is recoverable. Based on the analogy of the decision in the 'Lakshminarayana case', there may be a liability to pay tax under Item 68 because of the manufacture of flush doors, but the goods having been assessed under Item 16B but not under Item 68, an amount attributable to assessment. and levy under Item 68 has not become payable to the Central Government. Deduction of the amount on the part of the department is thus not justified even under Section 11 of the Act.

10. The learned advocate briefly referred to the procedure for assessment as set out in Chapter VII-A of the Central Excise Rules, 1944 and indicated that an assessment in terms of Rule 173-I has been made in the R.T. 12 returns under Item 16B. None under Item 68 had been made. Accordingly he pressed for setting aside the order of the Assistant Collector.

11. The learned Senior Departmental Representative observed that duty has been paid under protest only in respect of Item 16B. In terms of Rule 173F the assessee has to determine his liability for the duty due; under Rule 173G(3) he has to submit the relevant R.T. 12 return and under Rule 173-I assessment is made by the proper officer. No statutory time limit has been laid down for completion of the assessment return-R.T. 12. (At this stage the advocate for the appellant indicated that all the R.T. 12s have been completed and returned in due course and hence they are not pending).

12. Continuing the learned S.D.R. observed that the plea of the advocate that there was no order of assessment is incorrect. The communication of the Asstt. Collector dated 12-8-81 which is marked as the "order" states among other things.

"I agree that flush door which is a board with inner core held in a frame and covered on sides with plywood is liable to be assessed under Tariff Item 68." In the case of Bawa Batteries v. Union of India and Anr.-1981 E.L.T.114 (Del.), in para 12, His Lordship of the Delhi High Court has observed that an erroneous assessment can be corrected not only by means of an order of review but by means of a notice of demand under Rule 10. The power under Rule 10 is with a fact of limited power of review. The order of the Asstt. Collector referred to earlier talks about the manner of giving effect to his order. This in effect should be treated as a limited review. Referring to the judgment in the Bharat Commerce Industries case, he observed that the real point of decision as contained in para 12 therein, is that assessment is under Item 18 of the Central Excise Tariff and not under Item 18B. Para 13 then goes on to deal with what has been referred to by the Advocate. Para 13 starts by saying "secondly, even assuming that duty is leviable on these goods under the above item, it is not open to the respondent to put up the plea at this stage...". Thus what is contained in para 13 is an obiter and is not the law laid down by the Court. The case of Ceat Tyres of India is not relevant as it deals with a different issue namely mistake of law in payment of duty and the jurisdiction of the Court to interfere in such circumstances under Article 226 of the Constitution.

13. Referring to the case of G. Lakshminarayana, he pointed out that an order of assessment was made by the Sales Tax Officer which was not upheld by the appellate authority and the Sales Tax Officer did not decide the case de novo but retained the advance tax. However, in the present case, there is an assessment made by the Assistant Collector vide "order" dated 12-8-81. Dealing with the Deepchand Jain, case, he observed that where the amount was retained without assessment and hence the action was not considered as valid; in Central Excise there is no time limit for the issue of a classification order.

14. Continuing he also referred to the last part of the decision of the Delhi High Court in the Wood Craft Products case wherein His Lordship Justice Shri Deshpande observed : "In short, the assessment on the flush doors manufactured by the petitioner with effect from 1st April, 1973 is not to be made under Entry 16B, but under the residuary entry." 15. Referring to the decision in the case of Rohtas Industries Limited v. Superintendent of Central Excise and Ors. (AIR 1973 Patna 446) he stated that though Section 11 of the Act has not been indicated in the order of the Assistant Collector, this should not vitiate the order dated 17-5-82 of the Assistant Collector, as the power to retain the amount due to Government is provided for in law. Non-mention of the correct law does not make the decision invalid, if it is supportable in law.

16. By way of rejoinder the advocate for the appellant referred to Section 3 of the Act which provide that duty "shall be levied and collected... on all excisable goods..., set forth in the First Schedule" and in terms of this Section an amendment was made under Entry 16B; there was no reference to entry 68 at all. The Courts having held that the goods were not liable under Entry 16B the amount paid by the appellant in terms of Entry 16B has to be refunded in full. The process of assessment has been completed by the department when they finalised the R.T. 12s under Item 16B. Reopening of such an assessment is not available to the Department except in accordance with the law and the law provides that a demand for duty short levied had to be issued within six months under Section 11A of the Act. He did not agree with the Senior Departmental Representative that the judgment of the Delhi High Court in the Bharat Commerce of Industries case contain an obiter dicta the Court gave a finding both as regards the assessability of the yarn under a particular tariff item and the incorrectness of withholding a part of the amount because the yarn may be liable to duty under another item.

17. We have considered the arguments of both sides. As the main crux of the argument on behalf of the appellant is whether there has been a levy according to law under Item 68 in respect of flush doors, it will be useful to examine the provisions of the Central Excises and Salt Act, 1944 and the Rules thereunder to see in what manner provision has been made for purposes of assessment. Section 3 of the Act provides :- "3. Duties specified in the First Schedule to be levied.-(1) There shall be levied, and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in (India) and a duty on salt manufactured in, or imported by land into, any part of India." Thus, Section 3 refers to both the levy and collection of duties of excise in the prescribed manner. The procedure for the levy and collection is mostly contained in the Central Excise Rules, 1944. At the relevant times the goods, falling under Item Nos. 16B and 68 were notified under Chapter VIIA of the Central Excise Rules, 1944.

18. In terms of Rule 173B(1) the assessee is to file a list in the prescribed form giving the full description of all excisable goods as well as other goods produced or manufactured by him and intended to be removed from his factory. He is to indicate the Item number and sub-item if any, of the First Schedule to the Act under which such goods fall and the rate of duty leviable on each such goods. Rule 173B(2) provides that "the proper officer after such inquiry as he deems fit, approve the list with such modifications as are considered necessary and return one copy of the approved list to the assessee".

That Sub-rule also directs that unless otherwise directed by the proper officer the assessee, when determining the duty payable on the goods intended to be removed by him shall do so in accordance with such an approved list. Rule 173C provides for the filing of a price list for goods assessable on ad valorem basis. Here too, there is a provision for declaration and approval by the proper officer, and a duty cast on the assessee to follow the approved list at the time of removal of goods. Rules 173F provides that the assessee shall himself determine his liability for the duty due after he has complied with, among others, the provisions of Rules 173B and 173C, that is having obtained an approved Classification List and an approved Price List. Rule 173G(1) provides that the assessee shall "pay the duty determined by him for each consignment by debit to (an) account current maintain-ed by him before removal of the goods". Rules 173G(3) provides that at the close of each month the assessee shall file with the proper officer a monthly return in the proper form (R.T. 12) indicating the quantity of excisable goods removed on payment of duty, duty paid on such quantity alongwith particulars of the clearance documents etc. Rule 173-I provides that on the basis of the information contained in the return filed by the assessee under Rule 173G(3), and after such further inquiry as the proper officer may consider necessary, he may assess the duty due on goods removed and complete the assessment memorandum on the R.T. 12 return. It also provides that if as a result of the assessment by the proper officer there has been short payment at the time of removal of the goods, the assessee shall pay the deficiency on demand, and if there is an excess payment, the assessee shall take credit in the account current. Thus, in the system generally referred to as the "Self Removal Procedure" an assessee is permitted to remove the goods manufactured by him on payment of a certain sum calculated on the basis of an approved rate of duty and an approved value communicated to him by the Department. The assessment of the goods followed on the basis of a monthly return; and where there is either excess payment or short payment discovered at the time of completion of the R.T. 12 return, which is the time of assessment of the goods by the proper officer, the assessee has to either make good any short payment made early or can obtain credit for any excess payment.

19. Before we consider the effect of the above provision to the situation created in the present case, we shall take note of two other provisions of the Act : "Sec. 11 A. Recovery of duties not levied or paid or short levied or short-paid or erroneously refunded.-(1) When any duty of excise has not been levied, paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.

Section 11. Recovery of sums due to Government.-In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made thereunder, the officer empowered by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act 1963 (54 of 1963) to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the persons from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered he may prepare a certificate signed by him specifying the amount due from person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as were an arrear of land revenue." Section 11A thus provides for a situation where there has been either a short levy, or even a short payment either prior to the levy or after the levy in terms of the Rules relating to Self Removel Procedure, whereas Section 11 makes a general provision for deduction of a sum payable to the Central Government under the provisions of the Act in a particular manner. (Prior to 12-11-1980, Rule 10 of the Central Excise Rules was operative in respect of short levies or short payments and was worded more or less the same form as Section 11 A).

20. In the present case classification list had been approved for payment of duty by the assessee under Item 16B of the Central Excise Tariff (as valuation is not in dispute, we are not referring to this aspect); goods had been removed on the basis of the Classification List approved under Rule 173B; R.T. 12s filed, as envisaged under Rule 173G(3) and completed in terms of Rule 173-I, all in respect of Item 16B Central Excise Tariff. The appellant had protested against the levy of duty on flush doors as such from the very beginning-that it is not "plywood as referred to in Item 16B but something else. At the time this protest was made, Item 68 was not in existence; that came into being with effect from 1-3-1975. Following up the letter of protest, clearances had been made under protest. Followed by two claims for refund referred to in para 4 above. By the time the Department took note of these two refund claims the decision of the Delhi High Court in the Wood Crafts Product case [1980 E.L.T. 684 (Del.)]> declared that flush doors are not liable to duty under Item 16B of Central Excise Tariff at all. In fact, in issuing a notice to the appellant as to why their claim should not be rejected on grounds of (a) time-bar and (b) that the Delhi High Court judgment "would not be relevant to the present case", the Department was still considering the correctness or otherwise of the levy under Item 16B Central Excise Tariff. The proviso to Section 11B of the Act provides that the nominal period of limitation of six months within which an application for refund of duty of excise paid is to be made, shall not apply where any duty has been paid under protest. As we have noticed earlier duties in respect of the assessment under Item 16B have all along been paid under protest; hence the claims could not be rejected as barred by limitation. The other point made that the Judgment of the Delhi High Court is not relevant has merely to be noted to be rejected. For one thing, no particular reason has been given as to why it is not relevant, particularly when a High Court of the land had declared that the goods are not liable to duty at all prior to 1-3-75. In the case of Commissioner of Income tax-Vidharhha and Marathwada, Nagpur v. Smt. Godavaridevi Saraf, Tumsar (1978 E.L.T. J 624). Their Lordships of the Bombay High Court had occasion to consider the effect of a decision of the Madras High Court in declaring Section 140A(3) of the Income-tax Act, 1961 as violative of Article 19(1) (f) of the Constitution {A.M. Sali Maricar and Anr.-90 I.T.R. 116). In this the question raised by way of a reference before Their Lordships of the Bombay High Court was whether the Tribunal or an Income-tax authority in the jurisdiction of the Bombay High Court was bound by the decision of the Madras High Court. Their Lordships clarified that when the Section was struck down, though it was done by another High Court, that decision should be followed by the Tribunal and assessing authorities all over the country. On analogy when the assessability of flush doors was itself negatived by the Delhi High Court it would not be open to the Asstt. Collector to brush it aside by merely stating that it is irrelevant. Another interesting factor is that the notice of Sept. 1980 have been issued after Item 68 has been made part of the First Schedule to the Act subjecting "goods not otherwise specified" to a general rate of duty. Even on receipt of the reply from the appellant, the Assistant Collector did not pass a formal order one way or the other. He merely observed that he agreed that flush door is liable to be assessed under item 68 thus indirectly accepting the plea of the party that flush doors are not liable to duty under Item 16B. He also asked the party to file a claim in a form which he prescribed wherein for the first time reference to Item 68 has been introduced. If one were to treat it as an order indicating assessment under Item 68 for the relevant goods, as claimed by the Senior Departmental Representative, it would suffer for want of jurisdiction as the party had not been put on notice in respect of such an assessment. For another the detailed procedure of assessment in respect of goods has not, naturally in the circumstances of the case, been followed we have in mind the submission and approval of a Classification List for Item 68 Central Excise Tariff or even a formal amendment or revision of the ones already filed. The claims were eventually passed after deducting a sum equal to that that would have been collectible on the basis of an assessment under Item 68 with effect from 1-3-75. Thus, short allowed amount is the subject matter of the present proceedings. When a formal demand for such a claim was filed, the Assistant Collector took the plea and the Appellate Collector noted with approval that the assessee himself indicated the amount as deductible from the sum already collected when he filled the proforma prescribed by the Asstt. Collector in terms of his "order" dated 12-8-81 (referred in para 4 above). We note that what the assessee did was not the filing of a fresh refund claim, but the filing of a proforma in a form prescribed by the Assistant Collector on the lines indicated by him. They cannot be considered to have given up their claim for refund of the full amount paid under Item 16B because of such action.

21. The catena of judgments cited by the Advocate for the appellant brings out one factor namely that merely because that some payment has been made by an assessee, it cannot be retained except when there has been a levy according to law. As rightly pointed out that levy has to be a 'legal levy'-vide Kesaram Cements case [1982 E.L.T. 214 (A.P.)] and the Lakshminarayana case (1974 33 STC). If an assessee makes a mistake of paying an amount which the department received without authority of law, it does not entitle the department to retain the sum-vide Ceat tyres case (1980 E.L.T. 563). In the light of what we have set out regarding the procedure for the levy and collection of duty on excisable goods up to 1-3-75 flush doors were not excisable goods at all. There was no approved Classification List except one under Item 16B Central Excise Tariff which was determined by the Delhi High Court and then by the Supreme Court to be illegal. Hence there has been no legal levy under Item 68 of Central Excise Tariff in respect of the goods during the period in question. In fact the appellants claim for refund started with 21-7-73 when Item 68 was not even part of the Centra] Excise Tariff and the Classification List, then filed and approved could not by any stretch of imagination apply to Item 68 even by implication or by way of wrong indication. Therefore, it has to be held that there has been no legal levy under Item 68, as provided by the Act and the rules in so far as the goods vis-a-vis Item 68 are concerned.

22. Next we turn to the question whether Section 11 could be an authority for retaining a sum equal to that leviable under Item 68 of Central Excise Tariff after 1-3-75. This has been answerd by the Delhi High Court in the case of Bharat Commerce of Industries v. Union of India (1979 E.L.T. J 527). When the Department rejected a claim for refund of duty collected under one item on the score that a higher amount was collectible under another Item, that court held that it was not permissible to do so without a proper notice or action in terms of Rule 11 (corresponding to Section 11A of the Act). What is permitted in terms of Section 11 of the Act is retention of sums of any kind payable to Central Government in terms of Section 3 of the Act; what is payable is what is legally payable and has been levied; and the manner of such levy has been set out earlier. In respect of Item 68 there has been no levy as such. Hence the amount now withheld by the Department is not payable to the Government in terms of a legal levy of assessment. This becomes all the more clear if one refers to the case of Deepchand Jain v. I.T.O. [1983 (15) Taxman 522] where an amount paid as advance tax was ordered to be refunded even though the assessee was liable to pay but was not assessed to tax and the period for such assessment having expired an order of assessment could not be legally passed. We find that in the present case, the Department is put in a similar situation.

Though a larger amount had been collected from the appellant, there is no legal levy under Item 68; the amount paid by him is at best a payment-a deposit prior to assessment. Any assessment under Item 68 will be barred by limitation at the present stage and hence would not be adjustable against the amount already collected against an assessment under Item 16B, which has been declared as illegal, 23. In the light of the above, we consider that for the period from 21-7-73 to 16-4-1981, the Department would not be right in deducting an amount equal to an assessment under Item 68 in respect of flush doors.

24. During the hearing it has come on record that a Classification List in respect of Item 68 Central Excise had been filed on 29-8-81 and had been approved on that day itself though with effect from 16-4-1981. As we have already noted earlier once a Classification List has been approved by the proper officer under Rule 173B; in terms of Rule 173F the appellant, prior to removal of the flush doors had to pay duty in accordance with such an approved Classification List. If he did not do so but continued the old procedure of indicating an amount in accordance with an earlier Classification List in respect of Item 16B, he would not have been complying with the procedure for the purposes of clearance of goods as laid down by law. From the time, the Classification List was approved, we consider that clearance of goods without payment of duty in terms of Item 68 Central Excise Tariff was not proper and in terms of Rule 173G(3) at the time of finalising of the RT 12 returns all that the proper officer is to do is to indicate the short payment which shall thereafter be paid. Though this indication has not been given earlier, such a course is available at the present point of time. Hence, a sum representing duty in terms of Item 68 would be a sum due to Government with effect from 16-4-80, as envisaged in Section 11 of the Act. These could, therefore, be legally collected from out of any amount held by the Department on account of the assessee. To this extent an amount equal to the duty payable on flush doors on or after 16-4-81 could be legally deducted in terms of Section 11 of the Act. It is accepted law that when the power to do something is available in law, failure to indicate the exact authority at the time of exercise of the power will not vitiate the exercise of the power itself. Accordingly, we hold that it is proper for the Department to have deducted an amount equal to the duty leviable on flush doors under Item 68 of the Central Excise Tariff with effect from 16-4-81 to 7-8-81. (Though the classification list was submitted in August 1981 and approved then, as both the appellant and the Department have stipulated that it is effective from 16-4-81, we do not go into the question of the correctness of such approval with effect from a date earlier to the date of submission of the list itself).

25. Accordingly, we allow the appeal in part. In so far as it relates to the sum retained by the Department in terms of a so-called assessment under Item 68 up to 15-4-81, we allow it but reject it in so far as the period after 16-4-81 is concerned.

26. The Assistant Collector is directed to work out the amount due in terms of the above orders within another four months from the date of this order and make refund of such amount within the said period of four months.


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