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Collector of Central Excise Vs. Mafatlal Fine Spinning Weaving - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1988)(33)ELT566Tri(Mum.)bai
AppellantCollector of Central Excise
RespondentMafatlal Fine Spinning Weaving
Excerpt:
.....rule 2 of the khadi & other handloom industries development (exemption from payment of excise duty) rules, 1975 inserted by the notification dated 13.10.1978 from handloom cess for the period of 2 years. this exemption retrospectively could be interpreted to mean either that where the cess (additional duty) had not been recovered or had not been paid, it would not be chargeable; or that where it had been paid within two years, it would be reclaimable. if the interpretation of the appellant is to be accepted, it would mean that parties who had paid would be at a disadvantage vis-a-vis whose who had not complied with the then existing provision of law. it is also a moot point whether rule 11 of the central excise rules, 1944 (then existing) would apply to a case of payment of duty.....
Judgment:
1. This is an appeal under Section 35B of the Central Excises and Salt Act, 1944 by the Collector of Central Excise, Baroda against order No.V(22)18-73/79~R, dated "7.2.1983 passed by the Collector of Central Excise (Appeals) Bombay.

2. The facts of the case are that the Respondents manufacture man-made fabrics falling under Tariff Item 22(i) of the Central Excise Schedule.

They claimed refund of Rs. 7201.93 on 23.9.1979 on the ground that this was paid as handloom cess in respect of bona fide trade samples of rayon/art silk fabrics and chindies from 28.10.1976 to 31.7.1978. Their claim was rejected by the Assistant Collector as no date of payment by making a debit entry in Column 1 of the copy of PLA, submitted with the claim, was shown and nothing is stated about the day to day balance.

However, even according to the work sheet, the dates of payment are from 6.7.78 to 3.12.78 and even if these are relied upon, the claim is time-barred under Rule 11, because it has been made on 23.6.79 i.e.

after six months from the date of payment of duty. The Assistant Collector stated that the Notification under which the claim was filed does not check the period of limitation laid down under Rule 11.

Collector (Appeals) observed that Notification No.15012/4/75-Tex-IV/DCH dated 13.10.78 exempted trade samples and chindies of man-made fabrics from handloom cess, giving effect from a date 2 years prior to the publication of the Rules, namely, from 13.10.76 onwards. This establishes that there was no intention to recover handloom cess during this period. Since the fact that these were samples and chindies has not been disputed and so also payment of handloom cess on them, he set aside the Assistant Collector's order and allowed the appeal with consequential relief.

3. In the present appeal it is stated that the Notification in question is silent on the point of time limit for refund as prescribed in Rule 11 and the order of the Collector (Appeals) may be logically correct but, strictly within the framework of law, is not correct. The intention of Government is not to refund the duty paid as there is no sufficient clause or direction in this notification to refund the duty collected on account of late publication of the notification. The relief claimed is that the order be set aside and the lower authorities order confirmed.

4. When the case was called, the Respondents were not represented. For the appellant Shri Pattekar strenuously urged that under Rule 11, any refund claim must be made within six months from the date of payment and the claim in this case was rejected as time-barred. He was however unable to satisfy the Tribunal on the intention of the Government in giving retrospective effect to the third Proviso to Rule 2 of the Khadi & Other Handloom Industries Development (Exemption from Payment of Excise Duty) Rules, 1975 inserted by the Notification dated 13.10.1978 from handloom cess for the period of 2 years. This exemption retrospectively could be interpreted to mean either that where the cess (additional duty) had not been recovered or had not been paid, it would not be chargeable; or that where it had been paid within two years, it would be reclaimable. If the interpretation of the Appellant is to be accepted, it would mean that parties who had paid would be at a disadvantage vis-a-vis whose who had not complied with the then existing provision of law. It is also a moot point whether Rule 11 of the Central Excise Rules, 1944 (then existing) would apply to a case of payment of duty which was not made due to inadvertence error or mis-construction. We are also able to appreciate the learned Departmental Representative's argument that the claim should have been lodged at least within six months from the date of promulgation of the exemption, as there is no legal provision for such a condition. The department's argument that the exemption is silent on the period for claiming refund also cuts both ways. However, without going into the niceties of the matter, it appears that technicalities are being invoked to try to take away a benefit intended by the Government. This is, therefore, a fit case in which exercise of our discretionary power under Clause (i) of the proviso to Section 35B would be merited. We accordingly refuse to admit this appeal.


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