TMI Blog2013 (6) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of annual capacity of production, the processor could not have sustained refund claim. In that view of the matter, the Deputy Commissioner did not go into other aspects. Therefore, even while setting aside the orders passed by the Tribunal and the central excise authorities and holding that the refund claims were maintainable without challenging the determination of Annual Production Capacity, we would still like to remand the proceedings to the Deputy Commissioner for further consideration and adjudication on other two issues raised in the show cause notice. - matter remanded back to original authority - decided partly in favor of assessee. - 3095 of 2004 with SCA Nos. 7272 and 3116 of 2004 - - - Dated:- 13-6-2012 - Akil Kureshi and Harsha Devani, JJ. Shri Paritosh Gupta with Paresh M. Dave, for the Petitioner. Shri P.S. Champaneri with Ms. Naynaben K. Gadhvi, for the Respondent. JUDGMENT These petitions involve common questions of law and facts. They have, therefore, been heard together and are being disposed of by this common judgment. The petitioners have questioned the orders passed by the Customs, Excise and Service Tax Appellate Tribunal ( CES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation of Annual Production Capacity, filed the refund claim on 18-12-2000. This refund claim was based on one single contention, namely, that the Deputy Commissioner erroneously included the galleries for ascertaining the Annual Production Capacity. As per the petitioners, such galleries were required to be excluded by virtue of the decision of the Tribunal in case of M/s. R. M. Gupta Textiles P. Ltd. and Others v. Commissioner of Central Excise, Hyderabad, reported in 2000 (122) E.L.T. 229 (T). 5. The Deputy Commissioner, Central Excise, however, issued a show cause notice dated 2-5-2001 calling upon the petitioners to show cause why refund claim should not be rejected. The show cause notice was based on three grounds, namely - (i) that the Annual Production Capacity was finally determined by order dated 10-11-2000 and the duty liability of the petitioners arose out of such an order and that, therefore, the refund claim was not tenable; (ii) that the refund claim was beyond the limitation prescribed under Section 11B; (iii) that the petitioners had not produced any evidence to show that the burden of the duty of which refund was claimed, had not been passed on to the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urts. He submitted that the order passed by the Deputy Commissioner determining Annual Production Capacity in case of the petitioners was not an appealable order. The petitioners, therefore, had no opportunity to challenge the same by filing independent appeal. On the basis of settled law, the petitioners, therefore, claimed refund. Such refund claim ought to have been allowed. 9. In support of his contentions, counsel relied on the following decisions : (a) In case of M/s. R. M. Gupta Textiles P. Ltd. (supra) in which the Tribunal held that the Explanation-I to Rule 5 of the Rules of 2000 was only clarificatory in nature and would, therefore, apply with retrospective effect. (b) Decision of the Larger Bench of the Tribunal in case of M/s. Sangam Processors Bhilwara Ltd. v. Commissioner of Central Excise, Jaipur, reported in 2001 (42) RLT 429 (CEGAT-LB). = 2001 (127) E.L.T. 679 (Tri.-LB). The said decision was rendered by the Larger Bench of the Tribunal in a reference in view of conflicting decisions of the Tribunal in case of M/s. R.M. Gupta Textiles P. Ltd. (supra) and in case of C.M. Paints (P) Ltd. v. Commissioner, reported in 2000 (120) E.L.T. 829 (Tribunal). The Larger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. In that view of the matter, it was not open for the petitioners to claim refund which was rightly rejected by the excise authorities and upheld by the Tribunal. He further pointed out that in any case, out of the three grounds mentioned in the show cause notice, refund claims were rejected only on one ground and in that view of the matter, other two grounds were not decided. 11. Having heard the learned counsel for the parties and having perused the documents on record, the crucial question that calls for consideration is whether the determination of Annual Production Capacity by the Deputy Commissioner in case of a processor under the Rules of 1998 or the Rules of 2000, as the case may be, is an appealable order or not. Before entering into such controversy, we may trace the judicial pronouncements on the inclusibility of the galleries while determining the Annual Production Capacity. 12. Rules of 1998 contained Explanation-I, which reads thus : Explanation I. - For the purposes of this notification, a float drying machine or any other equipment of a length 3.05 metres installed in or attached to a stenter for aiding the process of heat setting or drying of the fabrics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Tribunal did not commit any error in holding that such explanation only amounted to remove the ambiguity which arose out of the language used in the Rules of 1998. 12.3 The legal position, thus, is amply clear and stands concluded right upto the stage of the Apex Court. The fact that the galleries in Hot Air Stenters should not be included for determining the Annual Production Capacity of a processor, is not in dispute. Thus, this is an issue which is no longer possible to debate. A short question in the present case is whether the present petitioners are entitled to refund of the excess duty collected by the revenue on the basis of inclusion of such galleries for determining the Annual Production Capacity in view of the fact that such determination was not challenged by the respective petitioners. 12.4 The answer to this question would depend on the answer to the question whether such determination by the Deputy Commissioner was appealable. If the order that the Deputy Commissioner passed was appealable, it would be open for the Department to contend that in view of the decisions of the Apex Court in the case of Mafatlal Industries (supra) in which the Apex Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or order passed under this Act by a Central Excise Officer, lower in rank than a Commissioner of Central Excise, may appeal to the Commissioner of Central Excise (Appeals) [hereinafter in this Chapter referred to as the Commissioner (Appeals)] within sixty days from the date of the communication to him of such decision or order. 14.2 Thus, under sub-section (1) of Section 35 of the Act, any person aggrieved by any decision or order passed under the Act by specified authorities may appeal to the Commissioner within the time prescribed. Section 35B of the Act, in turn, provides for appeals to the Appellate Tribunal and provides for appeals, inter alia, against the decision or order passed by the Commissioner of Central Excise as an adjudicating authority or against an order passed by the Commissioner (Appeals) under Section 35A of the Act. 14.3 The Rules of 2000 have been framed in exercise of powers under sub-section (2) of Section 3A of the Act. These Rules apply to specified processed textile fabrics for determining the Annual Production Capacity and the average value of production of an independent processor if such textile fabrics are manufactured or produced with the aid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, as the case may be. At a such stage, no hearing of the independent processor is envisaged. Such determination is to be made on the basis of declaration made by the processor with the aid of the expert advice, if so found necessary. Such determination and inquiry can be on provisional basis, but would be followed by final determination as soon as possible thereafter. In either case, the Rules do not envisage any participation by an independent processor other than of making a declaration as required under Rule 3. At no stage of such determination, the independent processor is granted any audience. Even the expert s view that the prescribed authority may obtain, is not required to be shared with the independent processor. The Rules do not provide for any appeal against the determination of Annual Production Capacity. Significantly, sub-rule (3) of Rule 4 which provides for communication of such determination, provides that after determining the annual capacity of production and the average value of processed textile fabrics, the prescribed authority shall intimate the same by an order as also the rate of duty applicable to the independent processor. The Rules, therefore, do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of time on the strength of decision in case of another assessee. In Collector v. Flock (India) Pvt. Ltd. (supra), it was a case where classification of a product was the controversy. The Assistant Collector passed an order of such classification. Such order though appealable, was not challenged by the assessee. The assessee, however, filed a refund claim. The Apex Court observed that there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing the order. It was, thus, clearly a case where an order which was appealable was not challenged by the party. The legality thereof, however, was questioned in refund proceedings. It was in this background that the Apex Court held that the refund claim was not maintainable. In the present case, the facts are vitally different. We have already held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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