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TMI Blog2013 (6) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the Union of India introduced a scheme referred to as "Compounded Levy Scheme" for independent textile processors, such as the present petitioners, under which they were obliged to pay excise duty not on actual clearance of the goods, but on the Annual Production Capacity. Such Annual Production Capacity would be decided under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 (hereinafter to be referred to as "the Rules of 1998") which rules were framed in exercise of powers under sub-section (2) of Section 3A of the Central Excise Act, 1944 (hereinafter to be referred to as "the Act"). Under the Rules of 1998, compounded levy for the textile units was to be paid on the basis of chambers of Hot Air Stenter at the prescribed rate. Subsequently, the Rules of 1998 were superseded by the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 2000 (hereinafter to be referred to as "the Rules of 2000"). Such Rules were published under Notification No. 14/2000, dated 1-3-2000. 3. It appears that the question whether a part in the machinery known as "gallery" should be considered as part of the chamber and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly. The said order has not yet been set aside by the appellate authority so far and hence, the question of refund of duty does not arise. 8. Since the refund is not due on merits, I do not go into other aspects or grounds raised in the SCN issued in this regard. 9. I accordingly pass the following order :- :: ORDER :: I reject the claim for refund of duty of Rs. 8,05,002/- (Rupees eight lakh five thousand two only) filed by M/s. Premraj Dyg. & Ptg. Mills, 74, GIDC, Pandesara, Surat." 7. Aggrieved by the said order dated 14-6-2001, the petitioners preferred an appeal before the Appellate Commissioner. Such appeal came to be dismissed by an order dated 5-9-2002. Such appellate order was carried further in appeal before the Tribunal. The Tribunal by its impugned order dated 17-12-2003, confirmed the decisions of the excise authorities holding that in view of the decision of the Apex Court in case of Mafatlal Industries Ltd. v. Union of India, reported in 1997 (89) E.L.T. 247 (S.C.) and decision in case of Collector v. Flock (India) Pvt. Ltd., reported in 2000 (120) E.L.T. 285 (S.C.), the authorities rightly did not grant refund because the petitioners could not have cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Bombay High Court in case of Om Textile Pvt. Ltd. v. Commissioner of Central Excise, Belapur, Navi Mumbai, reported in 2006 (74) RLT 233, wherein the Bombay High Court observing that the determination of Annual Production Capacity is not an appealable order, proceeded to uphold the claim of the processor for refund even though the determination of Annual Production Capacity was not challenged. (e) Counsel also relied on yet another decision of the Bombay High Court in case of Mahalaxmi Dyeing & Ptg. (I) Pvt. Ltd. v. Union of India, reported in 2011 (271) E.L.T. 194, wherein also, such refund claim, even without challenging the determination of Annual Production Capacity, came to be upheld. (f) Counsel relied on the decision of the Delhi High Court in case of Aman Medical Products Ltd. v. Commissioner of Customs, Delhi, reported in 2010 (250) E.L.T. 30, wherein the Delhi High Court upheld the refund claim without challenging the order passed by the customs authorities holding that in case on hand, there was no contest or lis and therefore, no adversarial assessment order passed by the authorities and that therefore, it was not necessary to challenge the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleries would form part of the stenters for determining the Annual Production Capacity. This aspect was clarified in the subsequent Rules of 2000 where in the new form, Explanation-I provided as under : "Explanation-I. - For the purposes of this notification, a float drying machine or any other equipment, except the galleries, 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 shall be deemed to be one chamber of a stenter and any fraction of such length shall be computed on a pro-rata basis." 12.2 The significant difference in the Explanation-I in the Rules of 2000 was the introduction of the words "except the galleries". This Explanation in the Rules of 2000, though made it sufficiently clear that the galleries should be excluded for computing the Annual Production Capacity, the legal controversy that arose was whether such explanation should apply only to the cases covered under the Rules of 2000 or also to earlier cases which may have arisen at the time when the new rules were not yet framed. The Tribunal in case of M/s. R.M. Gupta Textiles P. Ltd. (supra) took the view that such explanation is only c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the view adopted by the Bombay High Court in case of Om Textile Pvt. Ltd. (supra). In the said case also, the manufacturer had not challenged the determination of Annual Production Capacity. The manufacturer opposed recovery of duty demand on the ground that the length of gallery could not have been included for determining the Annual Production Capacity. The Tribunal ruled against the assessee. The Bombay High Court held and observed as under : "12. In so far as the present is concerned, as indicated above, though the appellant did not challenge the correctness of the order dated 12th July, 1999 in independent and substantive proceedings, in response to the show-cause notice, the appellant did raise objection to the correctness thereof. In our considered view, by the time the matter reached to the Tribunal, the law having been settled by the Supreme Court holding that the length of galleries having no fan or radiator attached to it cannot be taken into consideration while determining the numbers of chambers, the Tribunal was competent to consider and rather ought to have considered the applicability of law laid down by the Supreme Court in the case of SPBL Limited to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the case may be, shall take necessary action to verify its correctness and ascertain the correct value of each of the parameters. Proviso to sub-rule (3) of Rule 3 provides that such authority may, if he so desires, consult any technical authority for this purpose. 14.4 Rule 4 of the Rules of 2000 pertains to determination of annual capacity and average value. Detailed rules have been made for the manner in which the Annual Production Capacity of an independent processor shall be determined. Sub-rule (3) of Rule 4 provides that the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, shall, as soon as may be, after determining the annual capacity of production and the average value of processed textile fabrics and the number of chambers (of a hot-air stenter) of the factory of the independent processor, by an order, intimate the same, as also the rate of duty applicable to the independent processor. Proviso to sub-rule (3) of Rule 4 permits the competent authority to determine the annual capacity of production on a provisional basis pending verification of the declaration furnished by the independent processor and pass an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it becomes clear that the determination which is arrived at cannot be termed as a judicial or even a quasi-judicial order. It is an administrative exercise undertaken by the prescribed authority of determining the Annual Production Capacity and other related issues. The appeal envisaged under Section 35 of the Act would necessarily be against quasi-judicial order that the competent authority may pass under the Act deciding the list between the parties. In our view, therefore, mere determination of an Annual Production Capacity by the prescribed authority under the Rules of 2000 or even under the earlier Rules of 1998, would not give rise to any appealable order. 17. If the determination was not appealable, in our view, it would be incorrect to hold that without challenging such an order, the manufacturer cannot claim refund of duty erroneously collected. The fact that the galleries were included while determining the Annual Production Capacity and as such, the galleries were otherwise not required to be included by virtue of the decisions of the Tribunal and the Apex Court, there is no dispute. In our view, therefore, the petitioners were justified in filing refund claims in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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