COLLECTOR OF CENTRAL EXCISE Vs. CHENNAI BOTTLING COMPANY

JUDGEMENT

(1.) THIS is a case referred to this Court by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, under Section 35G of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) referring the following two questions :-.1. Whether, in the facts and circumstances of the case, the letter dated 2-.2-.1973 and 14-.3-.1973, can be construed to be a protest in terms of Section 11B of the Central Excise and Salt Act 1944 ?.2.Whether, in the facts and circumstances of the case, the protest, if any, related to the question of valuation only or "could cover rate of duty as well ?at the instance of the Collector of Central Excise, Madras, as arising out of its order dated 9-.8-.1983.

(2.) THE facts which gave rise to the above reference are as follows :THE respondent herein is a manufacturer of aerated waters assessable to duty at all material times under Item No. 1-D of the First Schedule to the Act, 20% ad valorem during the financial year 1973-.74 and 20% ad valorem plus 50% thereof as auxiliary excise duty during financial years 1974-.75 and 1975-.76. On or about 18-.6-.1977, the respondent filed a claim for refund of Rs. 10, 77, 987.70, claimed to be the amount of Central Excise duty paid in excess during the period between 18-.3-.1976 and 16-.6-.1977. In the said refund application, the respondent had contended that aerated waters is classifiable under Item 1-D(2) of the First Schedule to the Act, rather than under 1-D(1)(a) thereof. Agreeing with the aforesaid contention of the respondent, it was ultimately held by the Government of India, on 26th September 1980, in revision, that the respondent was entitled to the refund of duty paid in excess upto a period of one year prior to the date of filing the application for refund, while rejecting the claim for the anterior period. Accordingly, the refund came to be made in respect of the excess payment for the period of one year prior to the date of the claim for refund. THEreafter, the respondent applied on 23-.12-.1980, for refund of Rs. 13, 96, 582.23 p. for the period between 5-.2-.1973 and 17-.3-.1976. In that application for refund, the respondent relied upon the order of the Government of India, dated 26-.9-.1980 ordering refund and submitted that the respondent was entitled to refund pursuant to the said Government order, since the payment of duty in question was under protest. THE said claim for refund of the excess payment for the period between 5-.2-.1973 and 17-.3-.1976 was rejected by the Assistant Collector on the ground that the claim related to a period when the old Section 11 of the Central Excise Act was in operation under which refund of duties erroneously paid was barred unless the claim was preferred within three months from the date of payment of such duty and that there was nothing in the said Act to save the claim from the aforesaid bar of limitation on the ground of payment under protest. Against the said order of the Assistant Collector, an appeal was preferred to the Collector of Central Excise and the said appeal was allowed on the ground that since the application for refund was made on 23-.12-.1980, after Section 11-B of the Act was introduced on 17-.11-.1980 itself Section 11-B that will be applicable and not the old Section 11 as has been held by the Assistant Collector. But, in terms of Section 11-B, the claim for refund was not barred by limitation, when it is paid under protest. THEreafter, the Government of India issued a show cause notice dated 18-.9-.1982 under Section 16(2) [Section 36(2)] of the Act, as it stood then, requiring the respondent to show cause as to why the order of the Appellate Collector of Central Excise should not be set aside and the order of the Assistant Collector of Central Excise be restored. While that suo motu aforesaid proceedings before the Government of India was pending. Section 35-P of the Act came to be introduced and as a result of that provision, the said Revisional Proceedings stood transferred to the Customs, Excise and Gold (Control) Appellate Tribunal, and the said Tribunal after hearing the Counsel on either said, quashed the show cause notice as unsustainable in law and upheld the order of the Appellate Collector.

(3.) ACCORDING to the respondent, it came to know from the filing of a writ petition before Bombay High Court and therefore, it chose to make the payment towards the excise duty under protest. However, we find that the original case put forward by the respondent was that it came to know about the mistake from the judgment of the Bombay High Court rendered on 18-.8-.1977 and not before. Therefore, in February and March, 1973 when the said two letters had been sent by the respondent to the Superintendent of Central Excise, they could not have been aware of the mistake in making the excess payment. As a matter of fact, the other circumstances indicate that the protest referred to in the two letters was in respect of some other matter and not in respect of the excess duty paid. In the Revision Application filed before the Government of India, wherein they had succeeded in getting a refund for a period of one year prior to the date of the filing of the claim petition, the respondent has stated as follows :" *.4. 2. We had admitted that payment of duty earlier on the basis of Classification List was due to a mistake of law in interpreting the Tariff and that the claim was made within the period of limitation. The declaration in the Classification List was made in accordance with direction and advice of the Central Excise Officers and with a view to clear the goods without any hold-up of manufacture and/or delivery of consumption."".4. 3. We did not contend, in the beginning, that the flavoured material was only an essence and not a concentrate. When we become aware of the distinction and the effect on classification brought out in the Bombay High Court Judgment, we hastened to correct the inadvertence and/or misconstruction. "The above extract clearly indicates that the petitioners became aware of the mistake only after the date of the Judgment of the Bombay High Court in 1977. Before the date of the Judgment of the Bombay High Court, the respondent could not have been aware of the alleged mistake and therefore they could not have raised any protest in 1973, regarding the classification. In the written arguments given by the respondent before the Appellate Collector of Central Excise, Madras, the following passages occur :" *.1. 2. The claim for re-assessment was based on the Bombay High Court Judgment, in what is now popularly known as Dukes case. The judgment was delivered on 8/11th October 1976, and as soon as the appellants became aware of the decision that Aerated waters made using flavouring essences will not attract levy under Tariff Item 1-D(1), they approached the Assistant Collector of Central Excise asking for the re-classification of the goods and grant of consequential refund of duty."".4. 3. This difference in describing the raw material i.e., the flavouring essence has been made by all manufacturers who use flavouring essence and not blended flavouring essence in the manufacture of aerated waters. After the judicial pronouncement in Dukes case, that Essences are distinct from Concentrates, the appellants became aware of the inadvertence and misconstruction in the description of their goods and approached the Central Excise Officer for re-classification of the goods and refund of duty not due. "These passages also indicate that the respondent could not have raised any protest as regards the classification. Further, their price list submitted for approval by the respondent to the Central Excise authority in the year 1973, which has been enclosed along with the letter dated 2-.2-.1973 indicates that the assessee could have raised protest only as regards the inclusion of freight charges in the sale price. That price list contains the following writing in manuscript :"The above prices are inclusive of freight charges"which indicates that while the respondent sought exclusion of the freight charges as part of the price, the Department wanted the freight charges also to he included as part of the price. Even the order of the Appellate Collector dated 5-.11-.1973, shows that the dispute between the authorities and the respondent was only regarding the freight or handling charges, which the assessee wanted to have excluded. Therefore, the protest referred to in the first letter dated 2-.2-.1973, can only relate to the includibility of the freight or handling charges in the price and the said protest has not relevance to the classification.