1. The appellants M/s. Nagarjuna Steels Limited, applied for refund of Rs. 3,10,603.47 and Rs. 16,465.29 paid as duty during the period June 1977 to May 1978 and 29-5-1978 to 31-5-1978 respectively. With reference thereto a show cause notice was issued to them on 15-6-1978 calling upon them to explain why the refund should not be restricted to the period of six months before the date of their application for refund. The appellants pleaded That since their refund was on the basis of the incentive relief under Notification No. 198/76, dated 16-7-1978 they were entitled to relief in full and in any event the amendment to Rule 11 of the Central Excise Rules restricting the period to six months came into effect on 6-8-1977 only but that as the claim related to anterior period also they were entitled to full relief. The Assistant Collector under his order dated 12-9-1978 rejected the contentions of the appellants 'and ordered that the relief be restricted to the period of six months prior to the date of application for refund, in terms of Rule 11 of the Central Excise Rules. The said order was confirmed by the Appellate Collector under his order dated 3-6-1979. The appellants preferred a revision petition to the Government which, on transfer, is being dealt with and disposed of under this order as an appeal.
2. We have heard Shri D.N. Kohli, Consultant for the appellants and Shri V. Lakshmi Kumaran, Senior Departmental Representative for the respondent Collector.
3. Shri Kohli contended that from the working instructions contained in the Nagpur Collectorate Trade Notice No. 41/76, dated 25-6-1976 giving details of the scheme under Notification No. 198/76 the appellants understood that the applications for claiming relief under Notification No. 198/76 were to be made at the end of the financial year only and that is why they approached the Assistant Collector in April 1978 only.
He referred to paragraphs 4 and 12 of the Notice and also to the tabular column in the Annexure thereto as supporting this contention.
But, as pointed out by Shri Lakshmi Kumaran, the appellants were entitled to relief from the date of their first clearance itself, since the factory commenced production in June 1977 only and, in terms of paragraph 6(c) of the Notice itself, in respect of such factories the base clearance will be "NIL". That would mean that they could take advantage of the relief under the Notification from their first clearance itself and pay the reduced duty only. The contention of Shri Kohli that the appellants were to wait till the end of the financial year before approaching the Assistant Collector for passing orders declaring them entitled to relief under the Notification, is, therefore, not acceptable.
4. That would mean that from the date of the initial production itself the appellants were entitled to claim relief under the notification and clear their goods taking benefit under the Notification. If they had not done so, and had been paying duty at the normal rate, they would be entitled to claim refund of the excess paid, under the relevant provision entitling them to claim such refund. The said provision was, at the relevant time, Rule 11 of the Central Excise Rules. Acting under the said rule the Assistant Collector had granted refund limited to a period of six months preceding,the date of their application, which was 20-4-1978. But Shri Kohli contends that the period for which relief was claimed is 8-6-1977 to 31-5-1978 and since the period of limitation under Rule 11 was reduced to six months by virtue of the amendment which came into effect on 6-8-1977 only, the said rule should not have been applied with reference to the claim of the appellants. In this connection, he relied on the decision of a Division Bench of the Bombay High Court in Universal Drinks Private Limited v. Union of India 1984 (18) E.L.T. 207 (Bombay). But Shri Lakshmi Kumaran contends that the refund applications having been made in April 1978, it would be Rule 11 as it then stood that would govern the rights of the parties and if so, refund could have been claimed for a period of six months only before the said date and the orders of the lower authorities were, therefore, justified. He relied upon, in this connection, the decision of a five-Member Bench of this Tribunal in Attna Steels Private Limited v.Collector of Central Excise 1984 (17) E.L.T. 331. Under Rule 11 of theCentral Excise Rules, as it stood before 6-8-1977, the period of limitation for claiming refund was three months from the date of payment, the period being one year read with Rule 173-J. In the present instance it is not in dispute that the period, so far as the appellants were concerned, under Rule 11 as it stood before 6-8-1977, would have been one year. After the substitution of old Rule 11 on 6-8-1977 by anew Rule 11 the period of limitation was six months. The Bombay High Court, in its decision cited above, had held that when duty had been paid before 6-8-1977, the period of limitation for claiming refund thereof would be one year from the date of payment of duty, though the application for refund may be only subsequent to 6-8-1977. It had held that the new Rule 11 was clearly prospective in its operation and would apply only to cases in which the right to claim refund itself had arisen after the said rule came into force.
5. We have carefully perused the judgment of this Tribunal in the Atma Steels case. It is seen that question (3) (b) posed by the Tribunal read as follows; "(3) (b) : Whether claims for refunds made after 6-8-1977 when the right to claim for such refunds arose before 6-8-1977 would be governed by rules as they existed before 6-8-1977 or by the rules substituted on 6-8-1977?" That question would, therefore, govern the present case regarding payments of duty made after 8-6-1977 but before 6-8-1977. But it is seen from paragraph 31 of the said judgment that the Tribunal had held that the Bench would confine its deliberations t@ points (l)(a), (l)(b), (2)(a) and (2)(b) only. Therefore the question (3) (b) extracted supra was not considered by the Tribunal under its said decision. Hence that decision would not be any authority for the contention now raised by Shri Lakshmi Kumaran. The said decision specifically dealt with a case of a demand by the department and the decision was confined only to the question whether the demand would be governed by the rules as they stood at the time of raising the demand, though the demand related to an anterior period when the rules stood differently. We further take note of the fact that the decision of the Tribunal was based on the ground that in respect of suck demands for payment of duty there was no question of any vested right that could be claimed by the department and, therefore, there was no question of such vested rights being saved (in the absence of any specific saving provision) when the concerned rule stood substituted or deleted.
6. On the other hand, we find that the Bombay High Court in its judgment had upheld the claim of the assessee that once duty is paid, a right to claim refund thereof in proper circumstances was a vested right in the assessee. It was on that basis that the High Court had held that such a vested right was not defeated by the substitution of old Rule 11 by new Rule 11, in which the period of limitation was different and shorter than the one prescribed under the old rule.
7. In these circumstances, we are satisfied that the present case is to be decided not with reference to the decision of this Tribunal relied on by Shri Lakshmi Kumaran but with reference to the decision of the Bombay High Court.
8. No doubt Shri Kohli contends that the entire claim for the refund would be saved in view of the provisions of old Rule 11. But we find from the discussion earlier that the position in law is as follows : (i) when duty had been paid before 6-8-1977 i.e. when the old Rule 11 was in force, the claim for refund of the whole or part thereof, though made subsequent to 6-8-1977, would be governed by the provisions of Old Rule 11; (ii) since in respect of payments of duty made after 6-8-1977, the right to claim refund thereof would become vested on the party on the dates of payment subsequent to 6-8-1977 only, the said claim for refund would be governed by the New Rule 11 which had come into force on 6-8-1977.
9. Therefore, it is only with reference to payment of duty made before 6-8-1977 that the appellants could claim benefit of Old Rule 11 and maintain the claim for refund within one year after the payment. In respect of duties paid subsequent to 6-8-1977 their claim would be governed by the New Rule 11 under which the period of limitation is six months only. In the result in respect of payment of duty subsequent to 6-8-1977 the claim will have to be restricted for a period of six months before the date of claim as had been done by the lower authorities. But in respect of payments made before 6-8-1977 the claim will have to be allowed in respect of payments within one year from the date of refund claim. Therefore, in addition to the relief granted by the lower authorities the appellants will be entitled to refund of the differential duty in respect of duty paid between 8-6-1977 to 6-8-1977.
10. We, therefore, hold that the appellants are entitled to succeed to a limited extent in the manner indicated above. Accordingly, this appeal is allowed to the limited extent of modifying the orders of the lower authorities to grant the appellants a further relief of refund in respect of their payment of duty between 8-6-1977 to 6-8-1977, and the appeal is dismissed in other respects.