1. The appellant herein which is a sugar factory feels aggrieved by the decision of the excise authorities in calling upon them to refund the amount allowed by way of rebate, by adjustment in their Personal Ledger Account, in pursuance of the notification issued under Rule 8(1) of the Central Excise Rules, being, Notification No. 203/C.E., dated 28-9-1972.
2. The Central Government by virtue of the aforesaid notification had provided for relief to some sugar factories for different periods on some quantity of sugar produced during a given period in excess of the production, in the corresponding period, as mentioned in different parts of the notification. So far as the present matter is concerned, the rebate was claimed for the months of October and November, 1972 in terms of part I of the aforesaid notification and a sum of Rs. 6,87,600 was allowed to be adjusted by way of rebate by the concerned authorities in pursuance of the claim lodged by the party, for such rebate, on the ground that their production during the months of October and November, 1972 exceeded by 17,190 qtls. over the production of corresponding period of October and November, 1971. This adjustment was effected in the P.L.A. by means of entry 298 on 19-5-1973.
3. However, the party was served a show cause notice dated 16-2-1977 calling upon them to refund this amount, which according to the excise authorities had been allowed to be adjusted under mistake. The appellant contested this notice, both on merits; namely by staking their claim on the basis of the notification, and repudiating the Department's contention that they were not covered by the said notification. The notice was also resisted on the plea that it was barred by time having been made after almost four years of the adjustment in the P.L.A., which has to be treated to be the date of payment.
4. The Assistant Collector, by Order dated 2-3-1977, confirmed the notice, holding that since there was no production at all during the corresponding months of October and November, 1971; the party could not have availed of the duty concession, as contemplated by notification No. 203 of 1972. The party's contention about notice being time-barred was not touched at all.
5. An appeal against this order was filed to the Appellate Collector of Central Excise Bombay who dismissed the same by order passed on 26th August, 1977, upholding the Assistant Collector's view that the benefit of notification could be availed of only if there was some production during the corresponding period, and not in the case of there being no production at all. Thus the adjudication order of the Assistant Collector confirming the demand for recovery of Rs. 6,87,600 was confirmed. The contention that the demand could be raised only under Rule 10 was also rejected, observing that Rule 10 pre-supposed some assessment, and refund as a result thereof and not the case of rebate and consequently, the only rule applicable was Rule 10A, which did not provide any time-limit for raising the demand for refund. The appeal was thus dismissed in its entirety.
6. The party went in revision to the Central Government which stands transferred to the Tribunal by virtue of the provision under Section 35P of the Central Excites and Salt Act, 1944, to be disposed of as an appeal.
7. It has been taken up today for hearing when Shri G. Koruthu, Consultant appeared alongwith Shri B.A. Dodja, Chief Accountant of the appellant's company. He referred to certain judgments and placed particular reliance on Allahabad High Court Judgment reported at 1983 ELT 205 which according to him pertains to this very notification, and wherein it has been specifically held that in view of the fact that Proviso II of the notification, under reference, spoke only of base period which according to the learned consultant started from the first of October of a given year, and went up to the 30th September of the following year; the fact that during the corresponding period which in this case happen to be only two months of October and November, 1971 there was no production, would be of no consequence and party's claim to the benefit of this notification could not be defeated because of the fact that there had been no production at all during the corresponding period.
8. The learned consultant also laid great stress on the point that the Appellate Collector absolutely went wrong in holding that the notice could not be termed as barred by time on the view that the appropriate rule applicable in this case was Rule 10A, and not Rule 10, as had been contended by the party.
9. Shri K.D. Tayal, SDR addressed reply arguments and asserted that Rule 10 covered cases of refund and not that of rebate and so Rule 10A had been rightly invoked. He also sought to bring out the distinction between the case covered by the present appeal, vis-a-vis the reported judgments, by contending that in those cases there was at least some production, and those were not cases of absolutely no production, and consequently ratio of those cases would not apply in this case.
10. Shri G. Koruthu addressed a short rejoinder by pointing out that the Allahabed High Court specifically dealt with this notification, and the point as to eligibility of the benefit thereof, in spite of their being nil production during corresponding period. He also reiterated emphatically his contention about the notice being barred by time, and the lower authority having gone wrong in applying Rule 10A when according to him only rule which could be held applicable was Rule 10, which gave period of only one year for making a demand for refund of amount duty paid or adjusted, due to some mistake or error.
11. We have given careful thought to the matter and we find that in view Of the position set out in the notice itself that the adjustment in the party's P.L.A. was allowed by mistake, and that the rebate claimed had been passed erroneously, it is on face of it a case where Department's contention is that rebate was allowed due to error in interpreting the notification. We do not feel impressed with the distinction which the learned SDR sought to draw between a rebate claim and that of refund, because in our view when the party is given an adjustment, in the personal ledger account, after claim was lodged with reference to the notification conferring duty concession, on a party, then it virtually amounts to refund of duty paid. It is the Department's view that this was done erroneously. It is thus manifestly a case of error or mis-construction on their part, in interpreting the scope of this notification. We are thus of our firm view, that Rule 10 would clearly apply to the facts of this case, and there was no justification or basis for invoking Rule 10A. The period provided by Rule 10 in such circumstances was only that of one year. Consequently, the demand made by means of notice issued after almost four years was not sustainable, and on this ground alone the order of the Appellate Collector who had held the notice to have been rightly confirmed with reference to Rule 10A, is liable to set aside. In the view, we have taken on the basic question of limitation which renders the impugned order liable to be quashed, we do not feel necessary to examine the question of applicability or availability of the notification. The appeal is accordingly allowed on account of the show cause notice having been barred by time. Consequential relief, if any, shall follow.