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TMI Blog1998 (6) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 44.10 as contended by the manufacturer. 1.2.2 Initially on classification lists (C/Ls) dated 1-3-1986, 11-4-1986, 21-7-1986, 1-3-1987, 4-5-1987 and 29-5-1987 filed by the manufacturer, classification of the said product was made by the Revenue under Tariff Heading (TH) 44.06 or 44.08 which were not disputed by the appellants herein. Hence these C/Ls got finally approved. 1.2.3 Later on, vide CLs dated 1-3-1988 and 5-4-1988, the appellants claimed classification of the said product under Tariff Heading 44.10. These two CLs were approved provisionally on 22-4-1988 and 29-4-1988. Simultaneously, two show cause notices dated 22-4-1988 and 29-4-1988 were issued by the concerned Asstt. Collr., C.E. (ACCE), Digboi proposing to classify the product under T.H. 44.08. He passed adjudication orders dated 1-12-1988 upholding the classification under t.h. 44.08. The appellants herein on appeal before the Collector (Appeals) did not succeed who vide his order dated 30-5-1989 upheld the classification under t.h. 44.08. 1.2.4 Against the said order dated 30-5-1989 of Collr. (Appeals), the appellants herein filed a writ petition bearing No. C.R. 1025/89 before the Hon'ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been decided by the CEGAT in respect of other manufacturers by different orders as well as of the appellants vide Order No. E/790-92/90-D, dated 18-12-1990 since the Revenue had challenged all such orders of classification of the product before the Supreme Court by filing appeals under the C.E. Act, 1944. 2.1.2 Thereupon, the appellants filed a writ petition bearing C.R. No. 2861/91 before Guwahati High Court which passed an order dated 20-5-1991. It is appropriate to reproduce the relevant portions of the same. "The petitioner demands refund of Rs. 1,00,78,427.86 P. from the respondents. This writ petition is covered by the decision reported in 1990 (2) GLJ 86, M/s. Assam Industrial Corporation v. Union of India and Others. Learned Sr. Central Govt. Standing Counsel does not dispute the liability but submits that the respondents be given liberty to correct if there by any mistake in calculation. This liberty is granted. Having regard to the fact that the subject matter is covered by the decision of this Court referred to above, the respondent authorities are directed to refund the amount of Rs. 1,00,78,427.86 p. The respondents are granted two months time to make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2.1 In the meantime, the appellants had filed C/Ls dated 2-4-1991, 24-7-1991 (two C/Ls on this date) and 9-10-1991. These C/Ls were approved provisionally by the A.C.C.E. u/T.H. 44.10 in view of Guwahati High Court's interim C.R. No. 543/91, dated 25-3-1991, mentioned supra. 4.1.1 In the Finance Bill, 1992, further amendment in the schedule to CETA, 1985 was carried out to classify the product u/T.H. 44.08. Nevertheless the appellants filed C.L. claiming the rate of duty applicable to T.H. 44.10 but the said C/L dated 1-3-1992 was approved provisionally u/T.H. 44.08 by the A.C.C.E. 4.1.2 The said approval, on challenge before Guwahati High Court, resulted firstly in interim C.R. 944/92, dated 28-5-1992 directing classification u/T.H. 44.10 but on final disposal of the C.R. 944/92, on 22-3-1993, the appellants lost to Revenue. 4.1.3 The appellants challenged the said judgment dated 22-3-1993 of Guwahati High Court before the Apex Court which did not grant stay on recovery of duty in terms of classification u/H 44.08 for future clearances but granted stay on recovery of past arrears subject to furnishing of the bank guarantee by the appellants. Consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Apex Court. Therefore, although the plea of the appellants' ld. Counsel may be technically correct, but nothing turns upon this plea so far as the dispute of demand is concerned. 8.3.1 His submissions on the aspect of provisionality of C/Ls are :- (i) There can be no provisional approval (assessment) on the basis of a dispute pending in Court. For this proposition, he relies on Tribunal's judgment in the case of Garware Plastics & Polyesters Ltd. v. C.C. - 1995 (79) E.L.T. 297 (para 4). (ii) No assessments can be said to be provisional once the C/L has been finally approved. He relies on : (a) 1986 (23) E.L.T. 318 (Del) [Ajanta Iron & Steel Co. v. U.O.I.], and (b) 1997 (95) E.L.T. 154 (T) [Indian Aluminium Co. Ltd. v. C.C.E.]. (iii) C/Ls dated 1-5-1989, 14-6-1989 and 6-7-1988 were approved provisionally in view of Guwahati High Court's order dated 13-7-1989 in C.R. 1025/89. These lists cannot be treated to be provisional, u/r 9B because the procedure u/r 9B i.e. bond for differential duty has not been taken. It was neither asked for by the department nor furnished by the appellants. For this propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le (2A) of Rule 173B provides that all clearances shall be made only after approval of the list by the proper officer. It further provided that if the proper [officer] is of the opinion that "on account of any enquiry to be made in the matter or for any other reason to be recorded in writing there is likely to be delay in according the approval, he shall, either on a written request made by the assessee or on his own accord, allow such assessee to avail himself of the procedure prescribed u/r 9B for provisional assessment of the goods". 8.3.5 We, therefore, hold that it is Rule 173B which gives the authority to approve a classification list provisional and not Rule 9B. That latter rule provides the basis for the procedure for approving the C/Ls provisionally. Procedure envisaged by Rule 9B is that the manufacturer has to furnish a bond in proper form for differential duty that may take place, if any, in resorting to provisional classification. Thereafter, on finalisation of enquiry or dispute or any cause resulting in provisional approval, final approval to C/Ls shall be accorded. 8.3.6 Each C/L, therefore, has to be seen whether it is provisional and final. 8.3.7&emsp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.K. Dutta for the Revenue has urged that the provisional approval u/h 44.10 was resorted to, as is apparent from A.C.C.E.'s endorsement on the face of C/Ls, in view of Guwahati High Court's direction in C.R. 1025/89, dated 13-7-1989. We find force in this plea of the ld. Advocate Shri P.K. Dutta. Apart from this, as we have already held, Rule 173B allows a proper officer on his own accord to approve a C/L provisionally, on following of the procedure under Rule 9B, for reason to be recorded in writing. Therefore, even if there had been no direction to levy and collect duty under Heading 44.10 from Guwahati High Court, the Asstt. Collr. was fully competent to approve the C/L provisionally after recording the reason that a dispute on classification was sub-judice before Guwahati High Court. As regards the plea of non-furnishing of a bond to detract from the provisional character of C/Ls, we observe that this is only a procedural aspect. In any case, non-furnishing of the bond by a manufacturer may pre-judice Revenue inasmuch as it may not be able to enforce liability in a Court of law in the absence of bond but it cannot pre-judice the manufacturer. What is material for determining w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the field without any restriction. 10.3.2 Ld. Advocate has further submitted that C.R. 2861/91, dated 20-5-1991 of Guwahati High Court had finally disposed of the question of refund for the aforesaid period. It only kept pending the other question of interest on refund claimed by the appellants. This is apparent from the terms of the C.R. 2861/91, dated 20-5-1991 (extracted earlier). When C.R. 2861/91 was dismissed in 1995 by Guwahati High Court relying on Apex Court's judgment in Woodcraft, it would only be the appellants claim of interest on refund amount which alone was kept pending. Revenue's reliance on that dismissal is futile, submits the ld. Advocate, for the purpose of the aforesaid demand of over Rs. 94 lakh. 10.3.3 Further submission of the appellants' ld. Advocate is that the Revenue filed S.L.P. before Apex Court against C.R. 2861/91, dated 20-5-1991 of Guwahati High Court but without success. 10.3.4 Revenue granted the refund in 1991 subject to decision of the Apex Court on S.L.P. That refund therefore, became final on dismissal of S.L.P. 10.3.5 Once the refund of duty has been granted, a show cause notice for recovery of erroneous refund cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of six months would reckon from the date of Apex Court's judgment dated 20-3-1995, (setting at rest the controversy of classification) because cause of action for demand of duty has accrued only on that date. Prior to this date, the question of classification was sub-judice. 10.4.3 Yet another plea of the ld. Advocate is that the matter being sub-judice and there being C.R. 1025/89, dated 13-7-1989 and 30-8-1989 holding the field to the effect that levy and collection for duty could only be under Heading 44.10, CEGAT vide its order dated 8-12-1990 upholding t.h. 44.10 and thereafter an appeal was pending in the Apex Court against CEGAT's order dated 8-12-1990, so far as the appellants were concerned, there was no reason for the A.C.C.E. to serve a show cause notice on the appellants. All these facts clearly amount to a virtual stay on service of show cause notice. 10.4.4 Ld. Advocate has submitted that Guwahati High Court's order dated 20-5-1991 in C.R. 2861/91 was only an interim order as it is apparent from the final disposal of writ petition bearing C.R. 2861/91 by way of its dismissal in 1995 relying on Apex Court's ruling in Woodcraft. It is well settled, submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of duty that can be deemed to have been decided by the High Court when it dismissed C.R. 2861/91 in 1995. Further, Guwahati High Court's C.R. 2861/91 dated 20-5-1991 got the seal of approval of the Apex Court when Revenue's SLP against that C.R. was dismissed by the latter. Therefore, refund of over Rs. 94 lakh given by Revenue was under the provision of the C. Ex. Act, 1944. Appellants had to seek the writ of mandamus from Guwahati High Court because the Revenue was delaying payment of sums due to the appellants on the basis of classification of blockboard u/h 44.10 holding the filed at that time. If the Revenue considered it to be erroneous refund at that time, it had the remedy available to it under the Act i.e. by issuing a show cause notice within six months of the refund u/s 11A of the Act. From a reading of C.R. 2861/91, dated 21-5-1991, it appears that Revenue did not consider it to be erroneous inasmuch as the C.R. records that the Counsel for the Revenue "does not dispute the liability but submits that the respondents be given liberty to correct if there be any mistake in calculation". The liberty was granted. This remedy of issuing the show cause notice within six mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, exhausted when a refund had been granted. That Rule does not provide for recovery of "erroneous" refund, only provision of this is Section 11A which envisages a service of a show cause notice within six months from the date of refund. 10.5.4 Shri Dutta, Counsel for Revenue has further pleaded, on the basis of doctrine of merger that cause of action for erroneous refund has accrued on pronouncement of the Apex Court in Woodcraft. Therefore, six months should be reckoned from that date. We are unable to accept that plea. Reliance has been placed by ld. Advocate, inter alia, on Supreme Court's ruling in 1989 (43) E.L.T. 790 (S.S. Rathore v. State of M.P.). That judgment has examined the limitation under Article 58 of First Schedule to the Limitation Act which provided as follows :- 58 To obtain any other declaration Three years When the right to sue first accrues It has been decided in the above case that three years will start reckoning from the date of the appellate/revisionary order and not from the date of adverse order of the original authority on the ground that before filing of a suit in a civil court, a person avails of the remedy of appellate/revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.10), C/Ls dated 29-10-1990 & 6-12-1990 (in para 8.5), C/Ls dated 2-3-1991, 24-7-1991 (two) and 9-10-1991 were correctly approved finally by the A.C.C.E. on 2-6-1995. C/L dated 1-3-1992 had been finally approved on 20-5-1993 consequent to Guwahati High Court's order in C.R. 944/92, dated 22-3-1993 against the appellants. Arrears arising as a result during the period of interim C.R. 944/92, dated 28-5-1992 to 17-3-1993 to the tune of over Rs. 20 lakh are secured by bank guarantee in terms of Apex Court's interim directions on appellants appeal against the aforesaid order dated 22-3-1993 of Guwahati High Court. 11.3 Ld. Advocate Dr. Chakraborty attempts to bifurcate the aforesaid period 25-7-1989 to 17-3-1993 into three periods and contending that the assessments were not provisional on the ground that no bond was taken by the appellant and therefore, the show-cause notice having been issued beyond the period of six months on 2-8-1995 is not correct. We have already held that execution of bond under Rule 9B is not always necessary. Non-execution of a bond does not detract from the provisional approval u/r 173B. Reliance placed by the ld. Advocate on Universal Paper Mills is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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