KCP LTD. Vs. COMMISSIONER CENTRAL EXCISE

JUDGEMENT

(1.) BY this appeal the appellant is challenging the correctness of the Order -in -Appeal No. 4/2000 (M -I) dated 18.1.2000 by which he has upheld the order of the Assistant Commissioner (C -Division) holding that there has been an erroneous refund sanctioned to the appellant in terms of Section 11A of the Central Excise Act.

(2.) THE brief facts of the case are that an Order -in -Original No. 20/97 dated 25.2.97 had been confirmed against the appellant. They had filed an appeal before Commissioner (Appeals) against the said Order in Appeal Nos. A/188/97 dated 10.11.97 and A/97 dated 20.7.97. When the appeal was still pending before Commissioner (Appeals) the Superintendent of Central Excise, Range C -V Division wrote a letter dated 16.3.98 and referred to Order -in -Original No. 39/97 dated 12.5.97 passed by the ACC of erstwhile Chennai VII Division and demanded the amount confirmed thereunder. He demanded the amounts immediately as there was no stay order for recovery from Commissioner (Appeals) in the pending appeal of the appellant. In view of this letter, demanding the amount the appellant deposited a sum of Rs. 4,93,300 by RG 23 Part -II Register SI. Nos. 2068 and 2069 dated 16.3.98 and wrote in the register against these entries "Amount paid on protest under Rule 233B as pre -deposit vide your OC No. 336/98 dated 16.3.98. Amount paid on protest under Rule 233B as pre -deposit vide your O.C No. 336/98 dated 16.3.98". The appeal before the Commissioner (Appeals) had been allowed in favour of the party and, therefore, they wrote a letter to the Assistant Commissioner to refund the amount which had been deposited after the passing of the Order -in -Original when their appeal was still pending before the Commissioner (Appeals). The Superintendent vide his letter dated 18.1.99 informed them that the Assistant Commissioner is pleased to grant refund amounting to Rs. 1,94,663. The letter stated that the said amount may be taken credit in RG 23A Part -II and compliance reported. The party in terms of the direction given took the credit in RG 23 A Part -II SI. No. 2069. The department after lapse of time issued show cause notice dated 12.7.99 stating that there was an erroneous refund on the ground that the appellant have not complied with the terms of Rule 233B and, therefore, the protest was not in order. It was stated that there should have been a letter of protest before making the payment and in the present case the letter of protest was sent on 31.3.98 after payment of duty done earlier on 16.3.98 and that there was no compliance of Rule 233B. As there was no protest therefore refund made by the department was an erroneous refund, hence they should make the payment as per the demands.

(3.) LD . Consultant Shri V.S. Venugopalan relied on the judgment of the Apex Court rendered in the case of Mafatlal Industries Ltd. v. UOI, 2002 (83) ECC 85 (SC) : 1997 (89) ELT 247 (SC) and referred to para 107 of the Apex Court's order which clearly laid down that the pre -requisite for invoking Section 11B(2) for filing application for refund within 6 months from the date of payment cannot be complied with in respect of pending decrees and orders. The Apex Court laid down that when the assessee was protesting against the recovery of the excise duty from him for which he had even initiated legal proceedings then in that even it should be therefore in order to assume that he had paid the duty even though he was protesting its recovery. The Apex Court held that to ensure that such orders and decrees are not frustrated, it must be deemed that the duties of excise in such cases were paid 'under protest' within the meaning of the second proviso to Clause (1) of Section 11B. He contended that this citation had been followed by the Hon'ble Gujarat High Court in the case of Shree Ram Food Industries v. Union of India, 2003 (152) ELT 285 wherein the High Court has clearly noted a similar instance of payment made under protest when the matter was still pending in litigation. The High Court after due application of the Apex Court judgment noted above held the deposits having been made under threat by Deputy Commissioner and Superintendent and not a voluntary payment has to be treated as payment under protest. He also referred to the judgment rendered in the case of India Cements Ltd. v. Collector, 1989 (22) ECC 284 (SC) : 1989 (41) ELT 358 wherein the Apex Court has held that a letter of protest is to be treated as sufficient to conclude the compliance of requirement of filing a letter of protest. He contended that this judgment was relied on in the case of Shree Baidyanath Ayurved Bhawan Ltd. v. CCE, 2990 (48) ELT 606, He also relied on the judgment rendered in the case of ICEM Engineering Co. P. Ltd. v. CCE, 1989 (44) ELT 744 wherein the letter of protest was found to be sufficient. He also contended that even the Apex Court in the case of Mafatlal Industries in paras 84 and 85 the Hon'ble Court accepted the letter of protest to be sufficient compliance of Rule 233B and there was no reference to other Sub -Rules of Rule 233B. He also relied on the judgment of the Tribunal in the case of Modern Woollen Mills (P) Ltd. v. CCE, 1999 (84) ECR 744 wherein the Tribunal held that a receipt of letter indicating payment of duty under protest which was not disputed by the department and were considered as "proper protest" and does not effect the time bar prescribed under Section 11B of the Act. Likewise reference was made to the Tribunal's judgment rendered in the case of Meghdev Enterprises v. CCE, 2002 (143) ELT 627. Further reference was made to Mahalaxmi Fabrics Mills Ltd. v. CCE, 2002 (100) ECR 407 wherein also it was held that duty debited under protest is also a compliance of law although non -filing of formal protest letter under Rule 233B could not disentitle to the respondent for refund. Reference was made to Bhanu Chemicals Pvt. v. CCE, 2001 (97) ECR 99 wherein the Tribunal noted that when the modvat credit was disallowed by the original authority and amounts debited under protest in RG 23A Part -n pending decision of the appellate authority that was to be considered as protest under Rule 233B and the Tribunal held that the claim cannot be rejected as time barred. Reference was made to STI Sanoh India Ltd. v. CCE, 2001 (127) ELT 572 wherein the Tribunal held that letter of protest delivered to proper officer after payment of duty instead of prior to payment of duty and entries as protest on documents was a sufficient compliance and the claim was not time barred. In the case of Samurai Electronics Pvt. Ltd. v. CCE, 1998 (97) ELT 85 the Tribunal held that the payment of duty made in terms of adjudication order under protest is deemed to be payment made under protest and hence refund claim is protected by limitation. In the case of Mahalakshmi Industries v. CCE, 1995 (80) ELT 352 the party had lodged a protest and deposited the amount by endorsing the words "under protest" on RT 12 Returns. They have not followed the procedure under Rule 233B and the Department had been intimated by the appellant about their intention to pay duty under protest.