Commissioner of Central Excise vs Sri Balaji Cylinders P. Ltd. and Another

T.S. Sivagnanam, J.—These civil miscellaneous appeals by the Revenue are directed against Final Order Nos. 775 and 776 of 2008, dated July 24, 2008 passed by the Customs, Excise and Service Tax Appellate Tribunal, which have been admitted on the following substantial questions of law:

Whether on facts and in the circumstances of the case, the second respondent is right in upholding the order of the appellate authority, which ordered finalisation of provisional assessment under rule 9B of the Central Excise Rules, 1944 and also pursuing refund claim thereafter, as the first respondent had not requested for provisional assessment for the relevant period, as envisaged in section 11B of the Central Excise Act, 1944?

We have heard Mr. P. Mahadevan, the learned senior Central Government standing counsel appearing for the appellant/Central Excise Department. Though the assessees have been served and their name printed in the cause list, none appears for the first respondent/assessees.

The first respondent/assessees are manufacturers of LPG cylinders and had been clearing them to their customers, viz., M/s. Indian Oil Corporation Ltd., M/s. Bharat Petroleum Corporation Ltd. and M/s. Hindustan Petroleum Corporation Ltd. The contract signed by the first respondent with their customers provides for price variation. The first respondent filed refund claim on May 21, 2001 with the Assistant Commissioner of Central Excise, Chrompet Division on the ground that the oil companies have informed them of provisional downward revision of the price with retrospective effect from July 1, 1999 and that the differential amounts will be recovered from their bills and final assessments would be made later on finalisation of the cylinder price when the pricing formula is approved by the Petroleum Ministry. The refund claim pertaining to the goods cleared during the months of November, 1999, December, 1999 and January, 2000 was filed during May, 2001. This being beyond the period of one year from the relevant date prescribed u/s 11B of the Central Excise Act, 1944, the Assistant Commissioner of Central Excise, Chrompet Division issued a show-cause notice dated August 14, 2001 calling upon the respondents to explain as to why the refund application should not be rejected as time barred. After issuance of show-cause notice, the assessee filed another refund claim dated January 25, 2002 involving the period from January, 2001 to May, 2001.

After hearing the assessee, the adjudicating authority passed an order dated July 3, 2002, rejecting both the refund claims holding that the respondent/assessee had not sought an order for provisional assessment and indicated the actual duty paid by them in the invoice and had self-assessed the RT 12 returns finally and that apart, the claim for refund was barred by limitation. Further, the adjudicating authority observed that the incidence of duty has been passed on to their customers by indicating the duty paid in their invoices and the price of the LPG cylinder was not finalised till the date of passing the order-in-original and hence the claim of the assessee that they have paid excess duty is not tenable. Aggrieved by such orders-in-original dated July 3, 2002, the first respondent/assessees preferred an appeal to the Commissioner of Central Excise (Appeals).

The first appellate authority, by the order dated January 16, 2003, allowed the appeal and directed the lower authority to take up the refund claim after determining and finalisation of the cylinder price in accordance with law. Aggrieved by the same, the Revenue filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal on the ground that the Commissioner (Appeals) had incorrectly observed that the assessments were provisional. The Tribunal dismissed the appeal preferred by the Revenue by the impugned order dated July 24, 2008 relying upon the decision of the Bangalore Bench of the 2006 (108) ECC 442 and the decision of the Delhi Bench of the Tribunal in the case of Mauria Udyog Ltd. v. C.C.E. reported in [2006] 205 ELT 1012 (Trib.-Delhi), observing that in those cases, on similar refund claims on LPG cylinders supplied to oil companies, the finding of the Commissioner (Appeals) that the assessments to be not provisional was set aside and the decisions of the Tribunal in those cases were not appealed against. So holding, the Tribunal dismissed the appeals filed by the Revenue and sustained the refund claims. Aggrieved by the same, the present civil miscellaneous appeal are filed before this court.

The short-question which falls for consideration in these appeals is as to whether the claim for refund made by the first respondent/assessees could be entertained when they have filed refund claim beyond the period of one year from the relevant date as mentioned u/s 11B of the Central Excise Act.

Firstly, it is to be noted that the assessment in the case of the first respondent/assessees was not provisional. In this regard, the assessees'' letter dated March 25, 1999 addressed to the Assistant Commissioner of Central Excise, Chrompet Division acknowledging the receipt of provisional assessment order for the financial year 1997-98 stated that such provisional assessment has been resorted to for price variation clause contained in the contract received from oil corporations and further stated that they have been paying the differential duty whenever required at the time of raising the supplementary invoices and approaching the range officer, Palavakkam requesting issuance of the 57(E) certificate for differential duty payment. Further the assessee informed that as the price variation is regular to those goods, the provisional assessment need not be resorted to and undertook to pay differential duty in such cases wherever supplementary invoices are raised periodically in future.

Thus, factually, it has been established that the assessment in the case of respondent/assessees were not provisional but final assessments that too at the request and insistence of the assessees.

u/s 11B of the Central Excise Act, 1944, any person claiming refund of any duty of excise and interest, if any, paid on such duty is required to make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence including the documents referred to in section 12A as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person. The second proviso provides that the limitation of one year stipulated u/s 11B, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest:

Explanation 5 to section 11B defines ''relevant date'' as under:

(B) "relevant date" means,--

(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,--....

(eb) in case where duty of excise is paid provisionally under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof;

A reading of the assessment order shows that in the instant cases, the assessment was not provisional but final assessments made at the request of the first respondent/assessees. The period of limitation will be one year from the relevant assessment year. Therefore, in terms of the provisions, the period of limitation will be one year from the date of final assessment.

On the admitted facts, the assessment in both these cases related to 1997-98 and from the order passed by the original authority, it is seen that the final assessment was made in the year 1998 itself. Therefore, the claim for refund is wholly barred by limitation and the benefit of sub-clause (eb) of Explanation 5 to section 11B of the Act claimed by the assessee was rightly denied by the original authority. However, the Tribunal under misconception that the assessments were provisional and taking into consideration that there are earlier decisions of the other Tribunals, allowed the appeal filed by the assessee.

It is pointed out by the Revenue that as against those decisions, the appeals have been filed and pending. The facts are distinct in the decisions relied on by the Tribunal, wherein the refund claim was not time barred as the assessments were provisional. Here as mentioned earlier, the assessees themselves on their own volition directed their assessments to be finalised and requested the Department not to provisionally assess them and undertook to pay differential duty in such cases whenever supplementary invoices are raised periodically in future. In the light of the above discussion, we have no hesitation to hold that the claim for refund made by the respondents/assessees is barred by limitation. The order of Tribunal is set aside and the order of the original authority is restored. Accordingly, the appeals filed by the Revenue is allowed. No costs.