1. This is a revision application to the Government of India, which under Section 35P(2) of the Central Excises and Salt Act, 19W is to be proceeded with, as if it were an appeal filed before this Tribunal.
2. The appellants are manufacturers of Fertilisers and Chemicals.
Excise duty was imposed on Fertilisers for the first time w.e.f.
1-3-1969. On the midnight of 28-2-1969, the appellants had in their factory 6366.659 Metric Tonnes of fertilisers stored in bulk and some quantity packed in bags with which we are not concerned. Excise authorities were insisting on payment of duty on bulk quantity of fertilisers contending that they were not fully manufactured as they were not packed. The appellants were Members of 'Fertilisers Association of India'. The Association advised all its members to pay excise duty on bulk quantity under protest if payment of duty before removal was insisted upon by the Excise authorities and lodge a separate strong protest in this behalf. The bulk quantity of fertilisers after being packed in bags were removed between 15-3-1969 to 20-8-1969. The appellants paid Central Excise duty amounting to Rs. 2,00,414.72 paise endorsing on the A.R. 1 application and gate passes that they were doing so under protest. The appellants also wrote two letters dated 22nd March, 1969 and 12th April, 1969 registering their protest.
On 11-3-1977, the High Court of Madras delivered a judgment in the case of E.I.D. Pvt. Ltd. and Ors. v. Union of India [reported in 1978 ELT (J 18)] inter alia holding that packing is not manufacture. The appellants then by their letter dated 15-5-1977 submitted a formal claim for refund of Central Excise duty amounting to Rs. 2,00,414.72 paise. The Assistant Collector of Central Excise by his order dated 7-7-1978 rejected the claim holding that prior to 1-3-1969, the bulk stock of fertilisers was not a finished product and that the claim was barred by limitation under Rule 11 of the Central Excise Rules, 1944. In appeal, the Appellate Collector of Central Excise, Calcutta relying on the Madras High Court judgment (Supra) held that quantity of fertilisers in the condition in which it was on 28-2-1969 was fully manufactured. He, however, rejected the appeal on the ground that the refund application was not filed within the period of limitation under Rule 11 and Rule 173J of Central Excise Rules, 1944 (as they existed at the material time). Aggrieved with this order, the appellant filed revision before the Central Government, which as already pointed out above is to be disposed of as an appeal, as if it were presented before this Tribunal.
3. On the date of ihearing, Shri N.C. Sen, Advocate represented the appellants. Shrimati Vijay Zutshi, Senior Departmental Representative represented the Respondent; Collector. They were heard and the record perused.
4. The appellants during the course of hearing produced their original record, from which it appears that the clearance of the goods was effected on payment of duty" under protest. The appellants have also filed copies of their letters dated March 22, 1969 and April 12, 1969.
In their letter dated March 22, 1969, the appellants inter alia contended that the stock of fertiliser was fully manufactured and ready for sale and use and should be treated as non-dutiable. It was further stated that the appellants would be paying duty under protest and requested the Assistant Collector to consider the appellants' claim in the light of arguments contained in the letter; that the letter be treated as registering their claim towards refund of duty. Two letters, however, make it clear that the appellants had clearly stated that the payment is made under protest and claim for refund of the same had been registered before the limitation fixed under Rule 11 had expired. It is common ground that no decision was taken by the Officers of the Excise Department for a number of years.
5. It has been urged by Shri N.C. Sen before us that the Officers of the Department were awaiting decision of the Madras High Court in a similar matter on the question. We see no reason to disbelieve Shri N.C. Sen. After decision of the Madras High Court on 11-3-1977 (Supra) as already pointed out above, the appellants requested the Assistant Collector of Central Excise by their letter dated 15-5-1977 for refund of duty.
6. After perusing the record and hearing the parties there can be no doubt that the appellants paid duty on the bulk quantity of fertilisers under protest. As already pointed out, the appellants by their letters dated March 22, 1969 and April 12, 1969 addressed the Excise authorities and unequivocally said that the goods were not liable to duty and payment is being made under protest, and request was also made to register their claim for refund. The question is whether under these circumstances the appellants claim for refund of duty by their further letter dated 15-5-1977 could be rejected as time barred.
7. The Assistant Collector of Central Excise rejected the appellants claim as barred by limitation under Rule 11 of the Central Excise Rules. The Appellate Collector of Central Excise also rejected the claim and referred to Rule 11 and Rule 173J of- the Central Excise Rules, 1944. It appears that the appellants were granted the facility of S.R.P. so as to attract Rule 173J. These Rules have undergone changes from time to time and have now been deleted. For case of reference Rules 11 and 173] of the Central Excise Rules as they existed at the material time are extracted below : Rule 11 : No refund of duties or charges erroneously paid, unless claimed within three months : No duties or charges which have been paid or have adjusted in an account current maintained with the Collector under Rule 9, and of which repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded (unless the claimant makes an application for such refund under his signature and lodges it with the proper officer) within three months from the date of such payment or adjustment, as the case may be." "Rule 173J : Time limit for recovery of short levy or refund of excess levy : The provisions of Rules 10 and 11 shall apply to the assessee as if for the expression 'three months' the expression one year were substituted in those rules." 8. On behalf of the Department, it has been argued by Smt. Vijay Zutshi, Senior Departmental Representative that as there was no provision at the material time for payment of duty under protest in the Rules applying to such payment, the appellants could neither make payment under protest nor could on this ground urge that the limitation under the Rule cannot apply to the appellants.
9. The appellants have relied on a number of precedents. All of them do not require mention. In Andhra Fertilisers Ltd., Tadepalli v. Assistant Collector of Central Excise - 1980 ELT 16 (A.P.), a case directly in point, that facts were : the assessee before the revenue authorities resisted the duty when it was demanded by the revenue authorities and finally paid the amount of duty under protest for clearance of Fertiliser under Rule 52. The payment, the Company represented in unequivocal terms, was made under protest. The payment was made as a measure in business expediency under the compulsion of circumstances.
The Andhra Pradesh High Court, on these facts while considering the applicability of Rule 11 of the Central Excise Rules, held as under : "The circumstances narrated above in no way warrant the application of Rule 11 of the 1944 rules. The Company had not paid the amount by 'inadvertence' or by 'error' or by 'misconstruction' of any rule.
The | payment was in no sense a voluntary payment except that the excise officials enforced the payment and duty was paid. Therefore, without any further discussion, Rule 11 of the Rules is held to have no application on the facts of the case." 10. Patel India (P) Ltd. v. Union of India and Ors., AIR 1973 SC 1300, is another authority on the point. Section 40 of the Sea Customs; Act, 1878 a provision analoguous to Section 27 of the Customs Act, 1962, had no provision stipulating that in case of payment under protest the limitation provided for in the Section would not apply. Dealing with 'the applicability of Section 40 of the Sea Customs Act, 1878, the Supreme Court has held as under : "If the Customs authorities were not entitled to levy the excess duty and retain it, they were bound to return it to the appellant company who had paid it under protest and only with a view not to incur demurrage charges, unless there was some provision of the Act which deparred the appellant company from recovering it." 11. In the instant case, it would be seen that even before the limitation stipulated in Rule 11 or Rule 1733 had expired, the appellants had protested against the demand and said that they register their claim for refund. At the material time, there was no particular form for registering protest. On the two applications of the appellants, it is common ground that no decision was taken by the authorities. We have already said that there does not appear any reason to disbelieve the appellants when they say that excise authorities were awaiting the decision of Madras High Court in a similar matter referred to in para 2 above. The contention of the Departmental Representative that merely because at the material time there was no provision under the Rules for payment under protest the appellants could not do so and the Government could unauthorisedly and illegally retain this amount cannot be accepted.
12. The appellants claim deserves to be allowed for two reasons : firstly, because before the limitation expired they had stated that they are making payment under protest and registering their claim for refund and secondly, to such a payment in view of the two judgments referred to above and the facts and circumstances obtaining in the case in particular the enunciation contained in Andhra Pradesh High Court's judgment, the claim would not be hit; by the time limit in Rule 11 read with Rule 1733 of the Central Excise Rules.
13. From the perusal of the Appellate Collector of Central Excise's orders, it is seen that he rejected the appellants claim only on ground of limitation, the order passed by the Appellate Collector of Central Excise is, therefore, set aside and the appeal allowed. The Department is directed to make consequential refund to the appellants within 2 months of the communication : of this order after verifying the correctness of the refund amount.