Maharashtra Cylinders Pvt. Ltd. vs CESTAT

J.P. Devadhar, J.—Heard learned Counsel for the parties.

This appeal was admitted on 7-8-2010 on the following questions of law:

(A) Whether the period of limitation stipulated in Section 11B of the Central Excise Act for making a claim for refund of excess duty paid is applicable where the prices are provisional and the self assessment is made by the Assessee based upon the provisional rate(s)? If No, then since when should the period of limitation for raising a claim for refund of excess excise duty paid where the excise duty is paid on the basis of provisional rates be deemed to have started?

(B) Did not the Respondent 1 commit an error of fact and an error of law in holding that the assessments in the Appellant''s case could not be considered as provisional and that the claims of the Appellant are time barred?

(C) Whether or not the Respondent 1 erred on facts and in law in distinguishing the decision in the case of Premier Automobiles Ltd., Bombay Vs. Union of India and others, and in the case of 1997 (71) ECR 565 vis-a-vis the facts of the instant case?

(D) Whether or not the Respondent 1 erred on facts and in law in relying upon the judgment in the case of MRF Ltd. Vs. Collector of Central Excise, Madras, in passing the order impugned?

(E) Whether or not the Respondent 1 erred on facts and in law in not appreciating the law laid down in the following cases: (i) Utkal Polyweave Indus Pvt. Ltd. v. Commissioner of Central Excise, Bhubaneshwar: 2001 (136) ELT 818 ; (ii) 1998 (74) ECR 895 ; (iii) 2003 (109) ECR 308 ; (iv) Bansal Mechanical Works Ltd. and Ors. v. Commissioner of Central Excise, Kolkata-II: 2003 (58) RLT 547 ; (v) 2003 (157) ELT 97 ?

(F) Whether or not the Order-in-Appeal No. C-II/2137/WZB/2003 dated 26-8-2003 (Annexure -X) passed by the Respondent 1 vitiated on account of non-compliance of the mandate/ tenets of the principles of natural justice ?

During the period from 1-7-1999 to 31-10-2000, the Appellant-Assessee had cleared the cylinders manufactured by it on payment of excise duty under the self removal procedure. It appears that pursuant to the contract between the Appellant and its customers, namely, Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd., there was downward revision of prices of cylinders, which were already cleared by the Appellant Assessee on payment of the excise duty. In the light of the downward revision in the prices, the Assessee filed a refund claim on 27-2-2001 for Rs. 23,69,640/-.

By an order dated 12-7-2002, the said refund claim was rejected as time barred. On appeal filed by the Appellant-Assessee, the Commissioner of Central Excise (A) by his order dated 31-12-2002 set aside the order in original dated 12-7-2002 and allowed the refund claim of the Appellant Assessee.

On further appeal filed by the Revenue, the CESTAT by its order dated 26-8-2003 set aside the order of the Commissioner of Central Excise (A) dated 31-12-2002 and restored the order in original, dated 12-7-2002. Challenging the aforesaid orders, the present appeal is filed by the Appellant Assessee.

It is contended by learned Counsel for the Appellant that the decision of the Tribunal suffers from serious infirmity mainly on the ground that the clearances effected by the Appellant were subject to revision of prices that were to take place subsequent to the clearances. He submitted that although the clearances effected by the Appellant could not be said to be provisional clearances, in the light of the decision of the Division Bench of this Court, dated 31-8-2007 in Central Excise Appeal No. 22/2006 (The Commissioner of Central Excise v. Orient Explosives (P) Ltd.), the Appellant was entitled to refund of the excise duty paid. Relying upon the decision of the Rajasthan High Court in the case of Central Office Mewar Palace Organization v. Union of India [2008 (12) S.T.R. 545 (Raj.)], learned Counsel for the Appellant submitted that since the goods in question were cleared under self removal scheme, there was no question of filing an appeal and, therefore, the Appellant was justified in seeking refund u/s 11B of the Central Excise Act, 1944.

We do not find any merit in the above contentions. Admittedly, while clearing the goods on payment of excise duty, the procedure for removal of goods on provisional basis has not been followed. The Apex Court in the case of Metal Forgings and Another Vs. Union of India (UOI) and Others, has held that in the absence of order of provisional assessment, the clearance cannot be said to be on provisional assessment basis.

Where the goods are cleared under the self removal procedure basis on approved classification list and approved price list, the clearances are on self assessment and unless such self assessment is varied or altered, the question of refunding the duty paid on self assessment does not arise at all. The Apex Court in the case of Priya Blue Industries Ltd. Vs. Commissioner of Customs (Preventive), ] has held that validity of an assessment cannot be considered while dealing with the refund claim. The said ratio would apply to the self assessment as well.

Strong reliance was placed on the judgment of the Division Bench of this Court in the case of M/s. Orient Explosives (P) Ltd. (supra). In our opinion, the said decision is distinguishable on facts. In that case, the manufacturer had made it clear to the Department that it was clearing the goods on payment of the excise duty on the basis of provisional price applicable for the period set out therein and the price was not fixed, (para 12 of the said judgment). In the present case, there is nothing on record to show that the clearances were effected on provisional basis. We find it difficult to agree with the decision of the Rajasthan High Court as in our opinion, the self assessment could be challenged by filing an appeal.

In the result, no fault can be found with the order of the CESTAT, which is impugned in this appeal. Accordingly, the questions are answered in favour of the Revenue and against the Assessee. Rule is discharged. No order as to costs.