STEEL AUTHORITY OF INDIA LTD. Vs. CCE

JUDGEMENT

(1.) The appellants, M/s. Steel Authority of India (for short, SAIL] had been awarded a contract by Government of India, Department of Economic Affairs for supply of 5250 MTS of Stainless Steel Coin Blanks [for short, "coin blanks"] for the Government's Mint. A part of this quantity was procured from abroad and supplied by SAIL while the balance quantity (2640 MTs) was supplied indigenously from their factory viz. Salem Steel Plant. The dispute in the instant case is in relation to a refund claim filed by SAIL in respect of the coin blanks supplied by Salem Steel Plant to the Government Mint during the period 1.1.1994 to 12.10.1994. The clearance of the goods was on payment of excise duty at applicable rate. While so, Govt. of India granted ad -hoc exemption from payment of duty on 2570 MTs of coin blanks supplied to them by the Steel Plant vide Order No. 11.11.1994 -CX dated 21.9.1994 issued under Sub -Section 2 of Section 5A of the Central Excise Act. The ad -hoc exemption was valid upto 30.6.1995. On 17.11.1994, the Steel Plant of SAIL preferred a claim for refund of duty of Rs. 3,27,41,476/ - to the proper officer of Central Excise in respect of the coin blanks supplied for the period 1.1.1994 to 12.10.1994. In a show -cause notice dated 3.4.1995, the Assistant Commissioner proposed to reject as time -barred a part of this claim, to the extent of Rs. 1,17,94,674/ - relating to the period 1.1.1994 to 17.5.1994. This proposal was resisted by the Steel Plant in their reply to the show -cause notice, contending that, as the refund claim was filed promptly after receiving the ad -hoc exemption order of the Government and the intention of the Govt., obviously, was to exempt coin blanks from payment of duty, it was not proper to reject any part of the claim as time -bared. The Assistant Commissioner, in adjudication of the dispute, rejected the refund claim as time -barred (under Section 11B of the Central Excise Act) to the extent of Rs. 1,17,94,645/ - for the period 1.1.1994 to 17.5.1994 and sanctioned refund of Rs. 51,49,421/ - for the subsequent period [18.5.1994 to 12.10.1994] after adjusting the credit of duty taken on the inputs (stainless steel strips) consumed in the manufacture of coin blanks cleared during the said period [18.5.1994 to 12.10.1994]. It appears Govt. of India had, meanwhile, issued order dated 30.6.1995 amending the above ad -hoc exemption order to the extent of making the latter order applicable to the entire clearance of 2640 MTs of coin blanks for the period 1st January 1994 to 31st July 1995, but the amending order was not placed before the adjudicating authority. Against the order of adjudication, Salem Steel Plant preferred an appeal to the Commissioner (Appeals) but it did not succeed. Hence the present appeal.

(2.) Heard both sides, Ld. Counsel for the appellants submitted that they had no advance information about the ad -hoc exemption order issued by Central Govt. The exemption order was received by them on 17.10.1994 and the refund claim was promptly filed on 17.11.1994. In the circumstances, it was not correct to enforce the limitation provisions of Section 11B in this case. At best, the period of limitation prescribed under Section 11B, in this case, should be reckoned only from 17.10.1994 date of receipt of the ad -hoc exemption order instead of the date of payment of duty. Counsel pointed out that, in the case of Food Corporation of India v. Collector of Customs this Tribunal had held that an ad -hoc exemption order issued under Section 25(2) of the Customs Act in respect of goods already cleared on payment of duty could have retrospective effect and result in refund of duty. It was pointed out that Section 25(2) of the Customs Act was pan materia with Section 5A(2) of the Central Excise Act. Reliance was also placed on the decision of the Tribunal (Single Member) in Bharat Fritz Werner (P) Ltd. v. CCB wherein a refund claim dated 26.6.1979 for duty paid during 25.5.1978 - 8.11.1978 was held not time -barred under Rule 11 of the Central Excise Rules 1944 and was allowed by giving retrospective effect to the Government's special exemption order dated 17.1.1979 issued under Rule 8(2) of the said Rules. It was pointed out by counsel that the ratio of the decision in Food Corporation of India case was followed by the learned Single Member in the Bharat Friz Warner (P) Ltd. case Ld. Counsel also relied on the Tribunal's decision in Aeronautical Development Agency v. Commissioner of Customs wherein a claim made on 17.2.1995 for refund of Customs duty paid on goods imported in 1993, on the basis of an ad -hoc exemption order issued by Government under Section 25(2) of the Customs Act on 10.1.1995 was held not time -barred and was accordingly allowed.

(3.) Ld. Counsel submitted that, in the facts of this case, it was impossible to apply for refund within six months from the date of payment of duty as the ad -hoc exemption order was issued by Government providing cause of action for refund after six months from the said date. In such exceptional circumstances, it was permissible to by -pass the limitation provisions of Section 11B. To buttress this point, ld. Counsel quoted from "A SELECTION OF LEGAL MAXIMS" (By Herbert Broom) and argued thus: "Where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over, there the law will in general excuse him". In the instant case, the retrospective exemption in respect of the coin blanks supplied from January 1994 was granted only on 30.6.1995, more than six months after the payment of duty on the goods cleared from 1.1.1994 to 17.5.1994. It was only on 17.10.1994 that they received the original exemption order which had no retrospective application. Before that date, they were not aware of any exemption for the coin blanks. Hence it was impossible for them to claim refund of the duty paid on the past clearances of coin blanks. Counsel argued that this impossibility of performance was a good excuse against the department's plea of time -bar. According to the counsel, it was incumbent on the authorities to give effect to the retrospective exemption for the clearances in question, by refunding the duty already paid. He relied on the Apex Court's decision in Belapur Sugar and Allied Industries Ltd. v. CCE .