1. The present proceedings pertain to an amount of Rs. 25,745.25 which was claimed as refund of duty in terms of rule 173L of the Central Excise Rules, 1944 (hereinafter referred to as "The Rules"), on certain goods which had been initially cleared from the appellants' factory on payment of duty and subsequently received back in the factory. The claim has had a chequered career going through two stages of adjudication and two stages of appeal, the last one resulting in the order dated 5-8-82 of the Appellate Collector of Central Excise, Calcutta allowing the respondents' appeal and directing grant of the refund. The Collector of Central Excise, Calcutta has preferred the present appeal before us against the said order of the Appellate Collector.
2. To recapitulate, in brier, the history of the case, it may be stated that the respondents cleared 27.779 M.Ts of Aluminium Lamp Cap Strips (coils) falling under Central Excise Tariff Item No. 27(b) on payment of duty during the period from 15-2-76 to 5-8-76. Out of this quantity, 3.602 M.Ts of the said products were returned to the factory on 13-12-76 and an intimation to this effect was given to the Excise Authorities in the prescribed form D-3 dated 13-12-76. The respondents also claimed refund by an application dated 13-6-77 of the Central Excise duty of Rs. 25,745.25 involved on the returned goods. It was stated by the respondents that the goods had been returned because of defects. Though the respondents had stated that the extract from the P.L.A. and triplicate copies of Gate Passes etc. had been submitted to the jurisdictional Superintendent and the same were not available with them, the Assistant Collector rejected the claim observing, among other things, that the duty paying and other connected documents had not been produced before him, that the returned goods could not be correlated with the original goods due to loss of identity at the time of re-processing/remaking with other goods in the factory, that the goods were originally cleared in packed condition but returned to the factory in loose condition, that the duty against 9 out of 11 Gate passes was paid through RG-23 account and refund of Central Excise duty (by cash or cheque) paid through RG-23 account is not admissible under rule 56A.3. The appeal against this order was allowed by the Appellate Collector by his order dated 23-7-79. For reasons which will be apparent later we consider it proper to reproduce the operative part of the Appellate Collector's order.
"I find that the Asstt. Collector has rejected the claim mainly on the following grounds : (2) Correlation of the goods was not possible due to loss of identity of goods at the time of reprocessing/remaking with the goods.
(3) The goods were cleared in packed condition but returned in loose condition.
The connected records i.e., P.L.A., D-3, R.G-23 were flying with Range Superintendent. It is, therefore, not correct to say that the appellants did not submit the duty paying documents. As regards loss of identity of returned goods, it must be remembered that the product like the appellants' cannot be reprocessed without melting and such remelting separately for small quantity is not practicable.
In such a case a broad correlation would do and it would be harsh to deny the benefit of Rule 173L on this ground alone. It is necessary to examine the original D-3 by the Asstt. Collector (D-3 is not available in the records). The order of Asstt. Collector is set aside and the case remanded for redetermination in the light of above observation." 4. The Assistant Collector issued a fresh show cause notice to the respondents asking them to explain why their claim should not be rejected on the following grounds :- "(a) that no refund as per rule 173L (3) (I) of Central Excise Rules is admissible in respect of opened packages containing goods with concessional rates of duty specified in a Notification under Rules; (b) that the duty paying documents like the relevant P.L.A.Book, assessed copies of R.T.12 returns, T.R. 6 challans etc., |were not submitted by the assessees as required as per Trade Notice No. 57/GL-23/72, dated 5-4-72; (c) that the claim was not submitted separately for the duty paid through P.L.A. and RG-23 Part II Register as the duty paid through RG-23 Part II cannot be refunded in cash or by cheque under Rule 56A of the Central Excise Rules, 1944." "I have gone carefully through records of the case and party's submission during personal hearing and hold that the goods involved attracted specific duty @ Rs. 600 per M.T. which was a concessional rate of duty as per Notification No. 164/75, dated 15-7-75 as amended by Notification No. 49/76, dated 16-3-76 whereas the tariff rate of duty was Rs. 3000 per M.T. Prior to 16-3-76 the concessional rate was Rs. 1500 per M.T. whereas the tariff rate was Rs. 2000 per M.T. The assessees also failed to submit the relevant duty paying documents as promised by them during personal hearing.
I, therefore, reject the claim of refund for Rs. 25,745.25 (Rupees twenty five thousand seven hundred forty-five & paise twenty-five) only of M/s. Indian Aluminium Co. Ltd." 5. Being aggrieved with this order the respondents went in appeal to the Appellate Collector who by his impugned order dated 5-12-82 allowed the appeal setting aside the order of the Assistant Collector with direction to grant the refund. The respondents had taken up the point that in the second adjudication, the Assistant Collector should have confined himself with the directions contained in Order-in-Appeal dated 23-7-79 passed by the Appellate Collector and he should not have searched for excuses for rejecting the refund claim and had cited in support a decision of the Calcutta High Court holding that when an order is set aside by an Appellate Authority and the matter is remanded back with specific directions then the power and jurisdiction of tie lower authority is limited to the extent the case is remanded back (Scientific Instrument Company Ltd. v. Collector of Customs and Ors.-1980 E.L.T. 89). A similar decision of the Allahabad High Court in the case of Ram Dayal Harbilas v. Commissioner of Sales Tax, U.P.-1979, Vol.44 Sales Tax Cases (1979) 84 STC was also cited. The operative portion of the Appellate Collector's order is reproduced below :- "When the fact that the original consignment was cleared on payment of duty and the further fact that a part of the duty-paid consignment has been returned to the appellants' factory are not disputed at all, the appellants are entitled to the refund.
Production of record is not very material. If the Asstt. Collector has been really interested to verify the genuineness of the claim of the appellants he has original copies of all the relevant records including D-3 intimation. With regard to the ground that the goods were cleared at concessional rate of duty, the Asstt. Collector has not specified as to what concessional rate and under what exemption notification the original duty was paid. Therefore, the submission of the appellants through their Advocate that the goods at the time of first clearance was cleared on payment of the tariff rate of duty has to be accepted. With regard to the ground that the aluminium circles had been returned in opened condition, when the original consignment was cleared in an opened condition the returned consignment has to be received back in the same condition.
Therefore, this is an occasion where that condition of open consignment becomes irrelevante. With regard to the ground that 'the returned goods had not been processed separately, it is not necessary that they should be invariably processed separately. It is sufficient that if the returned goods are recycled by remelt-ing the reprocessing is satisfied. Reprocessing is not reason for granting the refund of the duty. The refund arises only as soon as the duty-paid goods are received back by the appellants in their factory. Therefore, the appellants are entitled to the refund. I allow the appeal and set aside the order of the Assistant Collector with direction to grant the refund." 6. In the appeal filed before us by the Collector of Central Excise, Calcutta, it has been urged that in terms of rule 173L (3) (i), no refund shall be admissible of the duty paid in respect of opened packages containing goods with concessional rate of duty or partial exemption for small or cottage sector as set forth in the First Schedule to the Central Excises and Salt Act, 1944 or by a Notification issued under rule 8. It is submitted that the goods were originally cleared in cases i.e., in packed condition and not in opened condition, that the goods were cleared at the concessional rate of duty and not at the tariff rate of duty. The observations of the Appellate Collector in this behalf have been contested. Further submission in the appeal is that the Appellate Collector's observation that production of records is not very material runs counter to the provisions of Sub-section (2) of Section 11B of the Central Excises and Salt Act, 1944 which contemplates the satisfaction of the Assistant Collector as to the admissibility of the refund claim that suitable endorsements are required to be made in the original duty paying documents in case refund is sanctioned so as to guard against double/multiple refunds.
The Appellate Collector' observation that the refund arises only as soon as the duty paid goods are recieved back by the respondents in their factory has also been contested as running counter to the provisions of Section 11B of the Act and rule 173L. In the sequel, it has been submitted that the Appellate Collector's order is not correct, proper and legal.
7. The appeal was heard on 10-5-83 when Shri A.K. Saha, S.D.R.strenuously urged that in the second adjudication proceedings the Assistant Collector had not imported any new material nor had gone out of the parameters set for him by the Appellate Collector in his order dated 23-7-79. The Gate Passes alone could not be relied upon and the production of extracts from the P.L.A. was essential to deal with the matter. The Appellate Collector's order dated 23-7-79 directed the Assistant Collector to redetermine the matter keeping in view his observations, that a broad correlation would do and to examine the original D-3 and after examining the duty paying documents etc. Shri Saha, S.D.R. submitted that the original claim for refund dated 10th June, 1977 was made under Rule 173L and therefore, it was necessary that all the requirements of the said rule were shown to have been satisfied. The Sub-rule 3 of the said rule provides that no refund shall be admissible in respect of opened packages containing goods with concessional rate of duty or partial exemption for the small or cottage sector, as set forth in the First Schedule to the Act or by a Notification issued under rule 8. In the present case, the returned goods were in loose condition. The duty had been initially paid in terms of Notification No. 164/75, dated 15-7-75, as amended by Notification No. 49/76, dated 16-3-76 which provided for concessional rate of duty. Therefore, the mischief of the said Sub-rule 3(i) of rule 173L was squarely attracted in the present case.
8. Replying to the above submissions, Shri Mookherjee, the learned counsel for the respondents, urged that the initial rejection of the claim by the Assistant Collector was on the ground that the duty paying documents had not been produced, and that the Appellate Collector set aside this order and remanded the case back to the Assistant Collector holding that it was not correct to say that the duty paying documents had not been produced and that a broad correlation would do. At this stage, there is no question of compliance OB non-compliance with certain requirements of rule 173L being raised by the Department. The said questions were taken up by the Assistant Collector in the subsequent adjudication proceedings. This action was clearly beyond the parameters set for him by the Appellate Collector's order of remand and was, therefore, clearly in excess of jurisdiction. In support of his contention Shri Mookherjee relied upon the two judgments to which reference has already been made. It could also be seen that the Appellate Collector's latest order had confined itself to the ambit set by the first order. On the merits of the case, Shri Mookherjee submitted that the Notification dated 15-7-74 and dated 16-3-76 fixed only the effective rate of duty and not the concessional rate of duty.
If the rate fixed under these Notifications was taken as concessional rate all aluminium producers would be debarred from availing of the benefits of the rule 173L. The concessional rate in relation to aluminium would be a rate of duty even lower than the effective rate fixed by the two Notifications referred to.
9. Before considering the merits of the case we consider it appropriate to examine the contention of the respondents that the fresh determination of the case by the Assistant Collector was in excess of and outside the parameters set for him by the Appellate Collector's remand order dated 23-7-79. In this connection, Shri Mookherjee, the learned advocate for the respondents has cited two judgments. In the case of Ram Dayal Harbilas v. Commissioner of Sales Tax, U.P. a full bench of the Allahabad High Court was interpreting certain sections of the U.P. Sales Tax Act of 1948. The Court held that where the appellate authority sets aside under Section 9 of the U.P. Sales Tax Act, 1948, an order of assessment made under Section 7 of the Act and remands the case to the assessing authority with certain directions for making a fresh assessment, the assessing authority has, subject to carrying out such directions, the same power as it originally had in making the assessment under Section 7 of the Act. But where the order of assessment is set aside by a revisional authority under Section 10 of the Act and the case is remanded to the assessing authority, the jurisdiction of the Sales Tax Officer to make the assessment can be circumscribed by the specific directions given by the revisional authority in that regard. If under the remand order made by the revising authority, the jurisdiction of the Sales Tax Officer to make the assessment has been limited, the Sales Tax Officer will have the jurisdictioi to make the assessment only to the extent to which he has been permitted to do so under the orders of the revising authority. In the case of Scientific Instrument Company Ltd. v. Collector of Customs and Anr., the Calcutta High Court was disposing of a matter under the Customs Act, 1962. The Court held that where an order is set aside by the Appellate Authority and is remanded back with specific directions then the power and jurisdiction of the lower authority is limited to the extent the case is remanded back. Therefore, in such cases the entire matter is not at large before the lower authority nor is such authority free to decide the case in his own way. It was also held that when an order is set aside and ths case is remanded back to the authority concerned then while redeciding the matter, the jurisdiction and power of the lower authority is limited to the order earlier passed. In other words, if a point was not decided in the earlier order than it will be out of his jurisdiction to decide such a point on remand.
10. We have now to examine the Assistant Collector's second order of adjudication with reference to the remand order of the Appellate Collector dated 23-7-79. The relevant portions of the Appellate Collector's order have been reproduced in para 3. It may be noted therefrom the only observation of the Appellate Collector which can be said to set a parameter for the Assistant Collector is : "In such a case a broad correlation would do and it would be harsh to deny the benefit of rule 173L on this ground alone". The Appellate Collector's direction is contained in the sentence : "It is necessary to examine the original D-3 by the Assistant Collector". After making this observation and giving this direction, the Appellate Collector set aside the Assistant Collector's order and remanded the case to him for re-determination in the light of the said observation. In the initial order of adjudication dated 21-12-77, the claim was rejected on the ground, among others, that the identity of the goods was not established, that the goods were cleared in packed condition but returned to the factory in loose condition and that the refund (by cash or cheque) of Central Excise duty paid originally through RG-23 is not admissible under the provisions of rule 56A of the Central Excise Rules, 1944. The show cause notice contained a ground, among others, to the effect that no evidence, documentary or otherwise, was submitted with their claim to show that the conditions of rule 173L of the Central Excise Rules, 1944 were fulfilled by the respondents in order to establish that they were entitled to the refund. From the Assistant Collector's second adjudication order dated 29-10-81 it is seen that the respondents did not reply to the show cause notice, but their representatives were given hearing by the Assistant Collector. One of their contentions was that the clearances were at the effective rate and not at the concessional rate since duty was paid at 40% basic + 5% Special and as such they were entitled to the refund claim. It appears from the order that it was with reference to this specific submission before him that the Assistant Collector recorded a finding that the goods in question had been assessed at a concessional rate of duty in accordance with the Notification No. 164/75, dated 15-7-75 as amended by Notification No. 49/76, dated 16-3-76.
11. Having regard to this background and the nature of the Appellate Collector's order of remand we do not think that this is a case where the Assistant Collector had brought in any fresh material for the first time into the adjudication proceedings exceeding the parameters set for him by the Appellate Collector. As far as the merits of the matter is concerned, the contentions urged before us on behalf of the Revenue are that no refund is admissible in terms of rule 173L in respect of the goods received back in loose condition and which had been cleared at a concessional rate of duty as set forth in the tariff or by a Notification issued under rule 8. It was also contended that the production of duty paying documents and other records is very material to determine the admissibility of the refund claim. On behalf of the respondents it was contended that the two Notifications referred to earlier fixed only the effective rate of duty and not a concessional rate of duty.
12. We have carefully considered the submissions made by both sides.
Rule 173L permits refund of duty paid on manufactured excisable goods issued for home consumption from a factory which are returned to the same or any other factory for being remade, refined, reconditioned or subjected to any other similar process in the factory. This has been made subject to certain conditions, such as, the period within which the goods should be returned to the factory, the manner of storage of such goods giving intimation to the proper officer etc. and we are not concerned herein with these conditions. Sub-rule 3 provides that no refund shall be paid until the processes referred to above (re-making, refining, etc.) have been completed and also provides that no refund shall be admissible in respect of the duty paid in respect of opened packages containing goods with concessional rates of duty or partial exemption for the small or cottage sector, as set forth in the First Schedule to the Act or by a Notification issued under rule 8. There are certain other circumstances mentioned wherein also no refund shall be admissible but these are not relevant for our purpose. A perusal of the gate passes under which the goods were originally cleared shows that they had been packed in cases. When the goods were received back in the factory they came under a challan issued by the customer which contains a notation to the effect that "3602.65 kgs. of aluminium strips packed in 22 wooden cases rejected by our works". However, there is no dispute before us on the factual finding of the lower authorities that the goods were received back in the factory in open condition. In our opinion, however, this by itself could not militate against the grant of refund because the prohibition in respect of refund is not in respect of opened packages as such but in respect of opened packages containing goods with concessional rates of duty or partial exemption by a Notification issued under rule 8. The customer's challan referred to earlier shows a cross-reference to the gate passes under which the goods had been initially cleared. There is no dispute also on the fact that an intimation in Form D-3 about the receipt back of the goods was submitted by the respondents to the Central Excise Authorities. It would have been, therefore, not difficult for the authorities to have verified the goods with reference to the documents for the purpose of rule 173 L. From the submissions made before us it is not clear whether the Excise Authorities did verify the goods with the documents with a view to establish the identity of the returned goods with the goods initially cleared. We will have to give the benefit of doubt to the respondents in this respect. The Assistant Collector had rejected the claim and the Collector has now come up in appeal contending that the returned goods could not be correlated with the original goods due to loss of identity at the time of re-processing/re-making with other goods in the factory. We do not find any stipulation in the Rules requiring the separate re-processing of the returned goods; the requirement is in respect of storing of returned goods separately pending their being re-processed in order to make the goods available for inspection by the proper officer when so required. The next question which arises is whether the goods can be said to have been cleared initially at a concessional rate of duty or under a partial exemption by a Notification issued under rule 8. The expression "concessional rate of duty" has not been defined but it was urged by Shri Mookherjee on behalf of the respondents that the Notifications referred to earlier were applicable to ail aluminium, producers in respect of non-levy aluminium and, therefore, the said Notifications could be said to have prescribed only an effective rate of duty and not a concessional rate of duty. This contention was sought to be rebutted by the Revenue on the ground that the said Notifications were issued in pursuance of rule 8.
13. The point urged by Shri Mookherjee that if the Notification No.164/75, dated 15-7-75 as amended by Notification No. 49/76, dated 16-3-76 were taken to fix a concessional rate of duty, the result would be that all aluminium producers would be debarred from availing themselves of the benefit of rule 173L. We see force in this contention. This situation could well arise in respect of other goods falling under other items of the Central Excise Tariff Schedule. We would be reluctant to interpret the expression "concessional rate of duty" appearing in Sub-rule 173L (3) in such a way as to yield the result that the producers of goods of a particular description are, as a class, debarred from availing themselves of the benefits of rule 173L. The Notifications in question have the effect of lowering the rate of duty in respect of non-levy aluminium uniformly for all producers, though the tariff schedule prescribes a higher rate of duty.
When a lower rate of duty is fixed in terms of rule 8 of the Central Excise Rules which is applicable uniformly to a particular class of producers with reference to a particular description of goods, it would not be correct, in our view, to say that the rate of duty fixed by the Notification is a concessional rate of duty. A concessional rate of duty would be one which lowers the uniformly applicable rate of duty in specified circumstances. Such not being the case here, we hold that the Notification in question viz., 164/75, dated 15-7-75 as amended by Notification No. 49/76, dated 16-3-76 did not fix any concessional rate of duty.
14. In the light of the foregoing discussions, we reject the appeal and direct that the relief granted by the Appellate Collector be granted to the respondents within two months from the date of communication of this order. In respect of such goods on which duty was initially paid through RG-23 account, the refund of duty in cash or by cheque is not permissible in terms of Rule 56A ; the amount involved shall be credited to the said account of the respondents.