1. The facts giving rise to this appeal are that M/s. Hindustan Fertilizer Corporation Ltd., Durgapur Unit (a Government of India Undertaking) hereinafter called the appellants are the manufacturers of fertilizers classifiable under Item 14HH of the Central Excise Tariff leviable to duty at ad valorem rate.
2. During the period 1976-77 and 1977-78 the appellants paid the full amount of duty on the product manufactured by them without availing the benefit of Notification No 198/76, dated 16th June, 1976 which contemplated exemption of duty to the extent of 25% basic excise duty payable under certain conditions. As per the contention of the appellants the benefit conferred by the Notification 198/76-CE., could not have been enjoyed until and unless the Base Clearance was fixed by the Coordinating Assistant Collector. It was only on 12-1-1979 that the Base Clearance was fixed and the appellants came to know that they were entitled to the refund of the duty in view of the Notification 198/76, dated 16th June, 1976. They accordingly filed two refund applications, one for the year 1976-77 claiming refund of Rs. 14,50,270 and the other for the year 1977-78 claiming refund of Rs. 2,78,276. Both these refund applications were filed on 30th June, 1979 on the basis of exemption Notification 198/76, dated 16th June, 1976. The amounts mentioned in these refund applications were calculated on the basis of a formula given in Trade Notice No. 54/GL-13/ GE/77, dated 16th March, 1977.
3. On receipt of these refund applications, the Department issued two show cause notices bearing C.No. V-14HH(18)17-BDN/79/11062, dated 12-10-1979 and C.No, V-14HH(18)16-BDN/79/10338, dated 13-9-1979, asking the appellants to show cause as to why their refund claim be not rejected being barred by time.
4. Regarding the claim for the period from 1-1-1977 to 31-3-1977 it was alleged that the application for refund was received in the office of the Assistant Collector on 4-7-1979 i.e., after the expiry of six months from the date of payment of the duty.
5. Regarding the refund of the amount paid during the period 31-1-1978 to 31-3-1978, the application was received in the office of the Assistant Collector on 4-7-1979 i.e., after expiry of six months from the date of payment of the duty.
6. Replies to both these show cause notices were sent by the appellants on 11th March, 1980 and 14th March, 1980 explaining the circumstances as to how both the refund claims were within time. As per the replies sent by the appellants the benefit conferred by Notification No.198/76, dated 16th June, 1976 could not be enjoyed until and unless the Base Clearance was fixed by the Coordinating Assistant Collector. The Base Clearance was fixed by the Coordinating Assistant Collector only on 12-1-1979 and they filed the refund claim within six months from that date.
7. They also mentioned that the total amount of claim should be Rs. 3,17,042.00 instead of Rs. 2,78,276 for the year 1977-78 and, therefore, requested for amendment of the claim accordingly. They have also mentioned in reply dated 14th March, 1980 (at page 25 of the Paper Book) that while claiming refund by omission they forgot to include the amount of special excise duty amounting to Rs. 7,395 and that this may also be allowed to them. Similarly in the reply dated 11th March, 1980 the appellants alleged that on account of the wrong calculation the amount mentioned was Rs. 14,50,270 but actually the total amount should be Rs. 16,13,370 and to that extent the original claim be amended.
8. The Assistant Collector (Refund) accepted the plea of the appellants that the original claim filed by the appellants for the years 1976-77 and 1977-78 was within time, but only sanctioned refunds of Rs. 14,50,270 for the year 1976-77 and Rs. 2,78,276 for the year 1977-78.
No order was passed initially by the Assistant Collector regarding the additional claim lodged on 11th March, 1980 and 14th March, 1980. It was, later on, on the insistence of the parties, the Assistant Collector by his order dated 17th September, 1981 communicated to the assessee the reason for rejecting the supplementary claim for Rs. 38,766.00 and Rs. 1,63,100.00. The reasons given by the Assistant Collector for rejecting the subsequent claims were as under : "These amounts were not included in your respective claims for refunds for Rs. 2,78,276.00 + Rs. 14,50,270.00 originally submitted under your letter FM/Sales/1.01/310/0934 and 0935 respectively both dated 30-6-1979. Even though it is accepted that you formally claimed refund of the amounts under your replies dated 11-3-1980 and 14-3-1980 to show cause notices both the claims stand time barred as these were mentioned after expiry of ten months from the date of fixation of crossing the base clearances by the Coordinating Assistant Collector on 12-1-1979 for both the cases." 9. Aggrieved by the said order of the authority below, appeal was filed before the Appellate Collector, Central Excise, Calcutta who by his order in appeal No. 113/WB/82, dated 29-4-1982 rejected the appeal by observing as under : "... supplementary claims for the year 1976-77 and 1977-78 were indicated for the first time in their letters of 11-3-1980 and 14-3-1980. Their supplementary claims for the years 1976-77 and 1977-78 are clearly time barred under the then existing Rule 11 read with Rule 173] of the Central Excise Rules, 1944 since the supplementary claims were indicated for the first time'" in 'their letters dated 11-3-19,80 and 14-3-1980 which means beyond the limitation of time as mentioned in the aforesaid rules." 10. Aggrieved, the appellants filed Revision Application 'before the Government of India, Ministry of Finance, Department of Revenue, which now stands transferred to this Tribunal, to be heard as an appeal.
11. We have heard Shri A.K. Sil, Advocate for the appellants and Shri S.N. Khanna, JDR, for the department and gone through the record.
12. There is no dispute about the fact that the original refund claim application filed by the appellants for the year 1976-77 claiming refund of Rs. 14,50,270 and for the year 1977-78 claiming refund of Rs. 2,78,276 were held to be within time by the excise authorities. It is also not disputed that both these refund applications were filed in view of exemption Notification No. 198/76, dated 16th June, 1976 which provided 25% relief on excise duty on fertilizers as an Incentive Scheme to enhance production after fixing the base clearance. It is also not disputed that the calculation of the amount of refund was made on the basis of a formula given in the Trade Notice No. 54/GL/77, dated 16-3-1976. It is also not under dispute that the Trade Notice No.54/GL-13/CE/77, dated 16-3-1977 was declared later on as ultra vires.
13. Now the question which requires determination is whether the enhancement of the claim amount sought by the appellants vide their letters dated 11th March, 1980 and 14th March, 1980 amounts to a fresh claim or it is an amendment in the already filed claim. If it is an amendment in the originally filed claim then this would Be within time as the authorities below have held the original claim within time and this fact has not been challenged before us; otherwise it would be barred by limitation. In this respect we observe that it is only an amendment in the original claim and not a fresh claim. It was on account of wrong calculation of the duty amount sought to be refunded which necessitated the amendment in the amount mentioned in the original claims. The cause for refund remained the same. It is the duty of the department to calculate the exact amount refundable to an assessee and not to believe the figures given by the assessee in the refund application. If the assessee gives exaggerated figure as refund claim it does not mean that the department should refund that exaggerated amount, if it is found that the assessee is not entitled to that much amount. Similarly in a case when the assessee mentions less amount though more amount is due to him on the basis of an exemption notification or on some other ground, the department should calculate the. same and pay him the exact amount due to him.
14. In these circumstances, that much of the refund claim which is actually due to the appellants should be given to them in view of Notification No. 198/76, dated 16th June, 1976 after accepting the base clearance for the years 1976-77 and 1977-78 fixed by the Coordinating Assistant Collector but the claim put forward by the appellants with respect to the Special Excise duty amounting to Rs. 7,395 is definitely barred by time because it is only on 14th March, 1980 that the claim was lodged by the appellants, which has barred by limitation on that day.
15. Under these circumstances, we remand the case back to the Assistant Collector with the direction that he should find out from the record whether the appellants are, on merits, entitled to the entire claim of Rs. 16,13,370 for the period 1976-77 and Rs. 3,17,042 for the period 1977-78. The concerned Assistant Collector shall decide this matter as early as possible but not beyond a period of three months from the date of receipt of this order.
16. The factory began by writing a letter No. FM/Sales/1/4656, dated 15-11-1956 that it would avail the benefit of the exemption notification viz. 198/76-CE. The base clearance was exceeded on 31-12-1976 for the first time. It is clear that the factory became entitled to the concession from that date. Unfortunately, the base clearance was not fixed till the beginning of 1979, and for this the assessee is not at fault, if there is at all a fault. Having notified its desire to avail 198/76-CE in November, 1976, all duties thereafter which were paid on clearances that exceeded the base clearance were duties subject to concessional calculation. The party served notice that it ought to get back whatever money it paid which might qualify in the concessional calculation as exempted duty, i.e. duty not required to be paid. The base clearance may be reached tomorrow or the day after, or the month after but when it is reached, only a part of the duty recoverable at the normal rate would be rightly payable, the rest becoming refundable. The base clearance may take a long time to be calculated; but whether it takes long or short, that base clearance will form the starting line past which clearances will pay only concessional duty.
17. Such a claim was staked by the factory before the base clearance was announced, and in fact, even before it was- reached and exceeded.
Therefore, in my opinion, there was a clear claim to the money now asked in refund. We are not concerned with whether the amount of the money is correct or whether it should be less. A claim was staked out and the central excise must process it correctly and pay it not more, not less.
18. What the central excise did was to say that the later two claims were time barred. What they should have done was to try to determine whether the claims were correct. As I have discussed above, the claim to the concession was notified in good time and the time bar would not operate. The only thing that would prevent the claims being paid is whether they are correct and payable on merits, and not because they are time barred. They are not time barred from what we have seen of the proceedings and the papers.
19. I direct the Assistant Collector to recalculate the concession admissible on the clearances as recorded, and pay the right sum that becomes payable. He will no doubt bear all facts in mind including actions he may have taken in this matter.