TMI Blog2003 (6) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... had to manufacture Bournvita (final product) using the raw materials and packing materials supplied by the said Cadbury India Ltd., as per the recipe and specification given by the said Cadbury India Ltd. The applicant would be paid Rs. 3.75 per kg. for this activity. Show cause notice dated 21-10-1992 was issued to both Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd. and Cadbury India Ltd., calling upon them to show cause why differential duty amounting to Rs. 1,01,20,771/- being the duty calculated on Cadbury products should not be recovered from them. The Assistant Commissioner confirmed the order. When the appeal was filed to the Commissioner (Appeals), the Commissioner (Appeals), after referring to the judgment of the Supreme Court in the case of Ujagar Prints - 1989 (39) E.L.T. 493, held that the manufacturer of the product was not Cadbury India Ltd., but the applicant Warana. However, the Commissioner (Appeals) held, Transport expenses of the Cadbury employees + rent for the free office accommodation provided to the Cadbury personnel + rent for godowns taken for storing of raw material + cost of technical know-how provided free to the appellants + cost of goodwill. The ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection has been taken by the learned departmental representative that when the Tribunal has passed the order on 9-4-2001 which was certified as C-II/1198-99/WZB/2001, dated 28-4-2001 [2001 (131) E.L.T. 676 (T)], the provisions relating to Section 35C(2) of the Central Excise Act, enabled any party to file an application for rectification of mistakes which appear on the face of the order passed by the Tribunal within four years of passing the order. However, it is argued by the learned departmental representative that by amendment made on 11-5-2002 in Clause 134 of the Finance Bill of 2002, the period of limitation has been substituted for the words four years to six months . It is therefore argued by the departmental representative that the appeal having been disposed of in April, 2001 the application for rectification of the mistake having been filed in January, 2003 is hopelessly barred by limitation. As far as the merit is concerned, the learned departmental representative argued that if there is any mistake this is not a case where it can be treated as a mistake within the meaning of Section 35C(2) of the Central Excise Act, but an error which could be rectified only by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Universal Drinks Pvt. Ltd. v. UOI - 1984 (18) E.L.T. 207 where in Paragraphs 10, 11 12, it has been held as follows :- 10. A bare reading of Rule 11, whether old or new, clearly negatives the construction that a substantive right to refund is created thereunder. The right to refund, in our view is a common law right of the assessee to recover back the amount of excise duty which is either illegally levied upon him or wrongly paid by him or recovered from him by the excise officer. It is worthwhile to notice the provisions of Section 72 of the Contract Act, which casts an obligation upon the person who has received the money under a mistake to repay the same to the person from whom it is received. The claim for refund of the duty arises as soon as the duty is illegally recovered by the Excise Officers or is wrongly paid by the assessee. 11. In these petitions, it is clear that the payment of the excise duty, of which refund is claimed, is made and a right to refund thereof arose prior to 6-8-1977 i.e. the date on which the new Rule 11 has come into force. The said right to claim refund is a vested right which has accrued to the petitioner prior to new Rule 11, or at any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation for civil suit was three years from the date of knowledge of the mistake, the said claim would be barred by limitation in some cases even before new Rule 11 came into force if the limitation of six months prescribed thereunder to be computed from the date of payment of duty were to be made applicable. There is no provision made in the new rule 11 that such claims could be preferred within the stipulated period from the date of application of the said rule. A right to a suit is itself a vested right and in the absence of clear provisions or clear intendment the said right cannot be allowed to be taken away by the provisions of the new Rule 11. Looked at it from another angle, there is no provision in the new Rule 11 that the claims which are barred by limitation of three months under the old Rule 11, can be preferred under the new Rule 11 if they are within six months from the date of payment of duty as provided thereunder. 6 The next case which the Senior Counsel relies on is the judgment of the Supreme Court in the case of Garikapati Veeraya v. N. Subbiah Choudhary Ors. - AIR 1957 SC page 540 where in Paragraph 23 the Supreme Court has held as follows :- 23. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be construed so as to interfere as little as possible with vested rights. The correct rule seems to me to be that though laws affecting limitation might abridge or enlarge periods of limitation in cases of suits or causes of action which were alive at the date when the new enactment came into force and which under the old law would expire afterwards, the change cannot, unless there is clearly expressed intention to the contrary, either by apt words in the enactment or otherwise, be retrospective so as to destroy rights of suits which were alive on the date. The above observation of Wallis, C.J. was agreed to by Justice Kumaraswami as is clear from the above observations made by the learned Judge. The learned Senior Counsel also invited our attention to the observations of G.P. Singh in the book Principles of Statutory Interpretation, 7th edition, at pages 380 and 381 where the learned author has observed as follows :- Statutes of Limitation Statutes of limitation are regarded as procedural and the law of limitation which applies to a suit is the law in force at the date of the institution of the suit irrespective of the date of accrual of the cause of action. The obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, revive a barred claim. 8. The sum and substance of the learned Senior Counsel s argument is that the instant application for rectification is filed only for clarifying the position of the inclusion of the technical know-how in the valuation of the goods for purpose of calculation and payment of duty. 9. As against this, learned departmental representative only emphasises the fact that the present application has been filed only after the order passed by the adjudicating authority on remand. If the appellant is aggrieved, he should file an appeal to the Commissioner (Appeals), not rectification of mistake application directly to the Tribunal. 10. At the outset, it has to be stated that in the instant case, the appeals of the assessee as well as the department against the order of the Commissioner (Appeals) made on 13-7-1994 was passed by us, as stated earlier, on 9-4-2001. At that time, the provisions of Section 35C(2) of the Central Excise Act made it very clear that any person who intends to file an application for rectification of any mistake apparent from the record, viz. the order passed by the Tribunal can be filed within four years from the date of such order. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2002 and find that you are under wrong impression that the information is being called for delaying the matter. Please note that the Department is interested in finalising the matter and in abiding by the orders of Hon ble CEGAT. However, this can be finalised with your co-operation only because the information called for under this office letter dated 10-12-2002 and as pointed out by Asstt. Director (Costs) Central Excise has to be submitted by you immediately. Though in your above letter you have stated that all information submitted, it is not a fact. However, you may point out specifically stating under which letter the above information is submitted, if at all submitted. You are once again requested to kindly submit the information called for in order to finalise the issue before stipulated time, preferably within two days from the date of receipt of this letter. Your esteemed co-operation will be highly appreciated. Thanking you. Yours faithfully, Deputy Commissioner The adjudicating authority on remand has understood the Tribunal s order in one way or the other way. Whether that is correct or not, I cannot pass order at this juncture, but an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the earlier Act on the date later Act will not be taken to be extinguished. He refers to the judgment of the Supreme Court in the case of New India Assurance Co. Ltd. v. Smt. Shanti Misra - 1975 (2) SCC 840, which is extracted below :- Whether accidents had occurred prior to the constitution of the claims tribunal and no suit had been filed in the civil court, the vested right of action was not meant to be extinguished. The change in law was merely a change of forum i.e. a change of adjectival or procedural law and not of substantive law. Such a change of law operates retrospectively and the person has to go to the new forum even if his cause of action or right of action accrued prior to the change of forum. He will have a vested right of action but not a vested right of forum. If by express words the new forum is made available only to causes of action arising after the creation of the forum, then the retrospective operation of the law is taken away. Otherwise the general rule is to make it retrospective. The expression arising out of an accident: occurring in sub-section (1) and over the area in which the accident occurred , mentioned in sub-section (2) in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into force. Giving retrospective effect to the change of law in relation to the forum, in the context of the object of the change, is imperative. That being so the principles aforesaid for overcoming the bar of limitation will be applicable. The jurisdiction of the civil court is ousted as soon as the claims tribunal is constituted and the filing of the application before the tribunal is the only remedy available to the claimant. So that an application can be filed within a reasonable time of the constitution of the tribunal, which ordinarily and generally, would be the time of limitation mentioned in sub-section (3). If the application could not be made within that time from the date of the constitution of the tribunal, in a given case, the further time taken in the making of the application may be held to be the reasonable time on the facts of that case for the making of the application or the delay made after the expiry of the period of limitation provided in sub-section (3) from the date of the constitution of the tribunal can be condoned under the proviso to that sub-section. On facts, the remedy available to the respondents was to go before the claims tribunal and sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as High Court referred to above in the case of Rajah of Pittapur. The Supreme Court in the case cited above has also said a right of appeal is not a mere matter of procedure but a substantive right carrying with it that all rights of appeal then in force or were preserved to the parties thereto till the rest of the career of the suit and it is considered as a vested right. 13. This takes us to the judgment of the Supreme Court in the case of Osram Surya (P) Ltd. v. CCE - 2002 (142) E.L.T. 5 (S.C.) = 2002 (50) RLT 129, referred to by the departmental representative during the argument, where in Paragraph 7, the Supreme Court has held as follows :- 7. Having heard the arguments of the parties and after considering the Rule in question, we think that by introducing the limitation in the said proviso to the Rule, the statute has not taken away any of the vested rights which had accrued to the manufacturers under the Scheme of Modvat. That vested right continues to be in existence and what is restricted is the time within which the manufacturer has to enforce that right. The appellants, however, contended that imposition of a limitation is as good as taking away the vested right. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion, viz. whether the instant application is to be accepted on merits. The reason why the instant Application has been made is reflected in Paragraphs 15 and 16 of the Application reproduced in Paragraph 3 of the order. In Paragraph 16 of the Application, it has been stated that there may be an ambiguity in the last two sentences occurring in Paragraph 8 of our order dated 9-4-2001 which we reproduce below :- 8. We will now proceed to consider the elements of value that are included by the Collector which are challenged by Warana. The first of these is the cost of technical know-how provided by Cadbury to Warana and what is described as cost of goodwill. By technical know-how is meant the information that governs the process of manufacture exactly what proportion of what ingredients is to be used, and at what stage in manufacture, and the exact processes to which these are to be subjected. The cost of technical know-how therefore would generally form part of the cost of manufacture. Such cost would however be not includible in the cost relating to technical know-how would hence not form part of the assessable value. In the instant case, the applicant worked as a job work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his judgment, it has been stated that The fact that the petitioners are not the owners of the end product is irrelevant. Taxable event is manufacture - not ownership. This view has been upheld by the Constitution Bench of the Supreme Court in the abovesaid case of Ujagar Prints at page 554 at Paragraph 31 where the Supreme Court held that on consideration of the matter, the view taken in the Empire Industries case did not call for reconsideration. In the subsequent paragraph it was specifically held that the Union of India and its authorities shall be entitled to recover the amounts due by way of arrears of excise duty. But here the question is about the items includable for purpose of valuation of the end product. Here the technical know-how is regarding manner of producing the end product. It is like a recipe. It is never transferred from Cadbury India Ltd. The end product is manufactured. All these statements are only reiteration of what is already in existence before us. The two sentences mentioned in Paragraph 8 of our order may lead to certain confusion. That is why we are rectifying or correcting the error which has been manifestly crept in the judgment. We are not arrivin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be treated as non-related persons. In remand, the Assistant Collector passed another order on 12-4-1977 in which he accepted the uniform discount of Rs. 1500/- given by main dealers to sub-dealers but disallowed the over-riding commission given by the respondents to their main dealers in the case of supplies made by the respondents directly to Government Departments etc. Not satisfied with the Appellate Collector s order, the respondents filed a revision application to the Central Government. The Central Government confirmed that main dealers were related persons but accepted the price charged by the main dealers to sub-dealers. All the clearances were consequently assessed uniformly on the price charged by the main dealers to sub-dealers, irrespective of the category of sales. The respondents persisted in their point that their main dealers were not related persons and took the matter to the High Court of Madras by way of a writ petition and sought the writ of certiorari. A learned Single Judge of the Madras High Court allowed the writ in favour of the respondents on 28-9-1981. The department filed an appeal before the Division Bench of the High Court, which was dismissed on 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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