1. The K.C.P. Limited, L.4 No. 2/53 (Sugar) Vuyyuru, hereinafter referred to as the Company, filed a revision petition before the Additional Secretary, Government of India, under Section 36 of the Central Excises & Salt Act, 1944 against the order dated 14th of May 1980 passed by the Appellate Collector of Customs & Central Excise, Hyderabad in Appeal No. 166/80, on 25th of August 1980, which has been transferred to the Tribunal under Section 35(P) of the Central Excises & Salt Act, 1944 and is accordingly being disposed of as appeal.
2. In terms of the Sugar Directorate Release Order No.SC-11/77-78/AO/May/F.C.I. dated H-4-78, the District Manager, Food Corporation of India, Vijayawada, in his letter No. Sug.. 4(9)/78 August dated 5-8-79 requested the Company to send 2040 quintals of levy sugar to the District Manager, F.C.I. Nellore and 1040 quintals to Kavali by rail urgently and sent the Company a cheque for Rs. 46,200/- towards rail advance @ Rs. 15/- per quintal. The sugar required by the Government of India to be sold under Clause (f) of Sub-section (2) of Section (3) of the Essential Commodities 'Act,' 1955 (to be distributed to the public at fair price) was called "Levy Sugar" and the remaining sugar, which the manufacturers could dispose of in the open market as "the sugar other than levy sugar" was commonly called as "Free Sale Sugar". Based on the letter dated 5-8-1978 of the District Manager, F.C.I., Vijayawada referred to above, the Company cleared initially 300 quintals of D-30 grade sugar on 10-8-78 as levy sugar on payment of effective rate of duty under Notification No. 317/77-CE dated 16-11-77.
The said 300 quintals of sugar was transported under Gate Passes Nos.
2607 to 2609 dated 10-8-78. Due to non-allotment of railway wagons, the said sugar was lying in transit at Vijayawada. In other words, due to reasons beyond the Company's control, the said stocks could not be transported beyond Vijayawada. Meanwhile, the levy sugar system was abolished from 16-8-78 i.e. sugar was decontrolled by the Government of India, vide Notification No. 154/78-CE dated 16-8-78 which rescinded Notification Nos. 35/76 and 36/76-CE both dated 25-2-76 and Notifications Nos. 317/77 and 318/77-CE both dated 16-11-1977 (all connected with levy sugar system).
3. After the abolition of levy sugar system from 16th of August 1978 and as the above said sugar of 300 quintals did not reach the destination, i.e. Nellore, District Manager, F.C.I, on 16th August 1978 itself, i.e. the date of decontrol of sugar, required the Company to refund the advance of Rs. 46.200/- which was done. Afterwards, however, the Sugar Directorate revalidated the Release Orders issued by them prior to 16th August 1978 upto 30th of September 1978 vide Order dated 7th and 26th September 1978, which prompted the Company to request the District Manager, F.C.I, vide letters dated 14th and 26th September 1978, to lift the stock of sugar allotted to them on payment of value as directed by the High Court which had been approached by the Company.
After the expiration xf the period on 30th September 1978, the Company sold 300 quintals of sugar in the open market. The open market sale resulted in the Excise authorities, i.e. Assistant Collector of Excise, in demanding and recovering duty of Rs. 3,324.78 as differential duty calculated by him.
4. Later, the Assistant Collector changed the earlier decision of demanding the differential duty between the duty payable on the said 300 quintals of sugar at the rate of duty and tariff values in force on 2-12-1978 and the duty actually paid on the same at the time of its clearance from the factory on 10-8-1978 at the rate of duty on levy sugar in force on the same date. As per his revised working,, the Assistant Collector by treating the said 300 quintals of sugar as free sale sugar cleared on 10th of August 1978 demanded the differential duty of Rs. 11,499.75 plus Rs. 3,324.78.
5. The Company had filed two appeals against the demand of Rs. 3,324.78 as also Rs. 11,499.75. One of the appeals was dismissed by the Assistant Collector on 14th of November 1979 rejecting the refund claim of Rs. 11,499.75 and the other on 26th of November 1979 by which the company's claim to refund of Rs. 3,324.78 was also rejected.
6. The Appellate Collector of Customs & Central Excise, Hyderabad confirmed the Assistant Collector's order rejecting the refund claim of Rs. 11,499.75 vide order dated 12th of May, 1980 and 14th of May, 1980 passed the following reproduced two lines Order in relation to the refund claim of Rs. 3,324.78 in Appeal No. 162/80: "or the reasons stated in Order in Appeal No. 162/80 dated 12-5-1980, the appeal is hereby dismissed".
7. The Company filed Revision Petition before the Central Government against the Appellate Collector's Order dated 12th May, 1980 in relation to the refund claim of Rs. 11,499.75 and got the dispute decided in its favour, which was, whether the quantity of 300 quintals of sugar cleared on 10th of August 1978 was liable to duty on the basis of levy sugar or free sale of sugar and further what was to be its value. Though, normally, we do not like to burden our orders with the orders of the lower authorities, in this case we like to notice the entire Board Order dated 29th of August 1981, because it has the effect of deciding the dispute regarding the claim of Rs. 3,324.78 also in the Company's favour: "This is an appeal from M/s. K.C.P. Limited against the orders of the Assistant Collector of Central Excise, Vijayawada passed under the orders of the Collector demanding duty on sugar cleared from their factory on 10-8-78 as levy sugar at the rate applicable to free sale sugar on that date.
In appeal, it has been contended that as clearance had been effected on 10-8-78 as levy sugar, there was no obligation on their part to pay the duty at the rate applicable to free sale sugar.
The appellants were heard in New Delhi on 29-9-81 through their representatives. Consultant Shri K. Suryanarayana Raju appeared for the hearing along with the representative of the appellants. He pointed out that the goods had been taken clearance from the factory on 10-8-78 after payment of duty on the strength of the gate passes and for purpose of release as levy free sale sugar was abolished on 10-8-78 and as by that time the appropriate authorities had not lifted this levy sugar which was lying outside the factory premises--they had no other option but to divert the goods for free sale. At this stage the Department has asked them to pay further duty calculating the duty at the rate leviable at the relevant time.
Later on, however, they came forward with the further demand that the duty should be paid at the rate applicable on 10-8-78 when the goods were taken out of the factory as free sale sugar. They pleaded that as the goods had been taken out of the factory on 10-8-78 and at that time the clearance was validity made, as levy sugar, the demand for duty either at the rate fixed after 16-8-78 or at the rate applicable on 10-8-78 for free sale sugar was illegal. They accordingly requested that the orders of the Department be set aside and the additional duty paid by them Calculating the duty at the rate in force be refunded restricting the duty to the rate applicable on 10-8-78 for levy sugar.
The Board has considered the appellants' contentions. As the sugar had been validly cleared on payment of duty at the rate applicable to levy sugar as on 10-8-78 the orders of the lower authorities are legally untenable. The orders of the Assistant Collector passed on the basis of the Collector's orders are, therefore, set aside and the appeal is allowed".
8. The Company's representative very vehemently submitted, that the Appellate' Collector did not simply understand the Company's case and unless the Tribunal allows the appeal, the Revenue shall not accept the refund claim, of Rs. 3,324.78. Shri K.D. Tayal, Senior Departmental Representative, very effectively contended that in view of the Board's Order (reproduced above), in the fitness of things the Company should have withdrawn its present appeal.
9. According to us, in view of Boards clear order that the clearance of 300 quintals of sugar on 10th of August 1978 was liable to duty on the basis as it was levy sugar only, the Company's apprehension is entirely unfounded and we see no reason as to why the Revenue shall come in the Company's way for not refunding if any excise duty is collected on the basis other than the one decided by the Board. However, keeping in view the Company's anxiety, we make it clear that if any excise duty is refundable as excess recovery, on the basis of Board's order, it should be done forthwith. In view of peculiar circumstances of the case, for the purpose of statistics, the present appeal has become infructuous.