TMI Blog2002 (2) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... nts were totally oblivious of Public Notice No. 6/1995 issued by the Central Government on 9-1-1995 and which was published in 1st March issue of Excise Law Times at page T-17 that manufacturers/exporters working under the Quantity based Advance Licence Scheme (QBAL) can take input stage credit under amended Notification No. 204/1992 containing QBAL Scheme. When the petitioner discovered this mistake in November, 1995, it filed an application under Section 11B of the Central Excise Act, 1944 (Short 'Act') which came to be rejected finally on the ground of limitation by respondent No. 3 - Assistant Commissioner of Central Excise, against which, the present petition under Article 226 of the Constitution of India has been preferred. 4.A few important facts in greater details are necessary to appreciate the legal controversy before us arising under the provisions of Section 11B of the Act. 5.The period involved in the present case is between the years 1994 and 1995 and in the relevant period, there were two policies of the Union of India under the Import Export Policy for granting licences to various exporters for import of goods against such exports. One scheme was known as Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government on 9-1-1995 and published on 1-3-1995 in the issue of Excise Law Times, Page T-17. The Petitioner's case is that knowledge of the said Public Notice and amended policy of the Central Government in QBAL Scheme contained in Notification No. 204/1994 was derived by it in November 1995. Its further case is that although the petitioner-company had rightly availed the Modvat credit which it was entitled to do, because of want of knowledge of the amendment of QBAL Policy by Public Notice No. 6/1995 issued by the Central Government, the Local Central Excise Officers also erroneously insisted on the petitioner to reverse the Modvat credit entries, in its Modvat credit Register. Thus, it was a case of mutual mistake on the part of the petitioner and the local Central Excise authorities. 9.The petitioner in November 1995, filed an application for refund of Modvat credit erroneously reversed by it. 10.The Assistant Commissioner of Central Excise rejected the refund claim stating that provisions of Section 11B of the Act were not applicable to claims based on alleged erroneous reversal of Modvat credit. 11.The petitioner-company then preferred an Appeal to the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, relying on the decision in Raghuvar case (supra), it is urged that the said case arose on facts reflecting a converse situation on Modvat credit. In it action was initiated for recovery of erroneous Modvat credit by the Department under Section 11A of the Act, and it was held that provisions dealing with Modvat credit constitute a complete self-contained scheme and provisions of Section 11A cannot be read into it. Taking support from the said decision of the Supreme Court in Raghuvar case (supra), learned counsel argued that Sections 11A and 11B, as held by the Larger Bench of the Supreme Court in Mafatlal Industries case reported in 1997 (89) E.L.T. 247 (S.C) = (1997) 5 SCC 536, are complementary to each other and as Section 11A cannot be availed by the Department in case of Modvat credit, Section 11B should also be held as not available for claiming refund of Modvat credit by manufacturer. In this respect, it is further pointed out that it is only after insertion of that reference to the expressions 'duty of excise' or 'duty' will prospectively be construed to include Cenvat (previously known as Modvat). Thus, the Legislature has now included Modvat/Cenvat in the expression ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. In these circumstances, the petitioner should not be allowed to turn round and contend that provisions of Section 11B are not attracted to its refund claim. 15.Faced with the situation aforesaid, arising from the plain language in Clause (c) of the proviso to sub-section (2) of Section 11B, which refers expressly to Modvat credit, the learned counsel for the petitioner in his counter reply submitted that the proviso contained in Clause (c) should not be construed as enlarging the scope of the main provisions in sub-section (1) of Section 11B to read Modvat credit to be covered by it. On the interpretation of the main provisions in the light of the proviso, reference is made to the decisions of the Supreme Court in - Income Tax Commissioner v. I.M. Bank Limited reported in AIR 1959 SC 712; Dibyasingh Malana v. State of Orissa reported in AIR 1989 SC 1737 (paras 2, 7); Dwaraka Prasad v. Dwaraka Das reported in AIR 1975 SC 1758 (paras 17, 18); S.B.K. Oil Mills v. Subhash Chandra reported in AIR 1961 SC 1596 (paras 8, 9). It is submitted that so far as the legal position is concerned, it would not change on the basis of the remand order made at interlocutory stages of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous reversal of Modvat credit would not be covered by Section 11A of the Act. 19.We have carefully gone through the facts and ratio of the said judgment of the Supreme Court in Raghuvar case (supra). What we find is that the Supreme Court therein compared the provisions of Section 11A with the provisions contained in Rule 57-I as originally stood prior to and after the amendment made on 16-10-1988. After comparing the provisions of Section 11A and Rule 57-I unamended and Rule 57-I amended, the Supreme Court came to the following conclusion : "The recovery of duty availed of and utilized in utter breach of the faith and mutual trust and confidence which is the raison d'etre for the proper and successful working of the Modvat Scheme and that too in gross violation of the mandatory requirements necessarily to be fulfilled before ever claiming or availing of such benefits cannot be said to be the same as the demand for payment to be made under Section 11A of the Act of any excise duty not levied or paid or has been short levied or short paid. They fall into two distinct and different categories altogether with basic as well as substantial differences to distinguish them from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess levy or short levy at the instance of the Department are not attracted to case of Modvat credit. 22.This case before us is on the question of applicability of Section 11B of the Act for the purpose of seeking refund of credit availed under the Modvat Scheme read with the Notifications incorporating Import Export Policy QBAL. For better appreciation of the contentions advance by the learned counsel for the parties, Section 11B of the Act in its relevant part thereof deserves to be quoted : "11B. CLAIM FOR REFUND OF DUTY. - (1) x x x (2) x x x Provided that the amount of duty of exercise as determined by the Assistant Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to : (a) rebate of duty of excise on excisable goods exported out of India or on excisable material used in the manufacture of the goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the Commissioner of Central Excise; (c) refund of credit of duty paid on excisable goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund. The normal function of a proviso is to except something out of the enactment or to qualify something enacted therein, which, but for the proviso, would be within the purview of the enactment. To this real nature of proviso is also another principle of interpretation that the proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception. Ordinarily, it is foreign to the proper function of proviso to read it as providing something by way of an addendum or dealing with a subject, which is foreign to the main enactment. Proviso can be taken aid of as useful guide to construction of the main enactment. Proviso can be taken aid of as useful guide to construction of the main enactment. If the enacting portion of a Section is not clear a proviso appended to it may give an indication as to its true meaning. As stated by Lord Herschell, 'Of course, a proviso may be used to guide you in the selection of one or other of two possible constructions of the words to be found in the enactment, and show when there is doubt about its scope, when it may reasonably admit of doubt as to having this scope or that, which is the proper view to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pretation of the proviso and its aid to be taken of for interpreting the main provisions, we are persuaded to accept the view point canvassed by the learned counsel for the Department that Clause (c) of the proviso to sub-section (2) is clear legislative indication that under sub-section (1) of Section 11B, refund claims on the basis of Modvat credit wrongly denied are fully covered in the absence of any special provision for it in the Rules containing Modvat Scheme. 27.At the conclusion of arguments, the learned counsel for the petitioner handed over to us, a note to bring to our notice, the provisions contained in Rule 57F as a part of the Modvat Scheme in Notification No. 85/87-C.E. dated 1-3-1987 as amended by Notification No. 2/94-C.E. (N.T.) dated 24-1-1994. Relying on Rule 57F in the Notification issued thereunder, submission made is that refund based on Modvat credit Scheme is governed by the said Rule and therefore, general provisions for claiming refund under Section 11B of the Act would not be attracted. On basis of Rule 57F, it is urged, as an addition ground, that the decision of the Hon'ble Supreme Court in Raghuvar India Limited (supra) squarely covers the legal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Excise Department were right in rejecting the petitioner's claim on the ground that the application under Section 11B was filed admittedly beyond the prescribed period of six months as was the period fixed prior to its substitution with one year with effect from 12-5-2000 by Section 101 of the Finance Act, 2000. Sub-section (1) of Section 11B in fixing period of limitation uses the words 'six months' from the 'relevant date'. 'Relevant date' has been defined in Explanation (B) below the Section. To cases not covered by Clauses (a) to (e), (ea) and (be), Clause (f) applies for computing period of limitation from relevant date. The relevant portion of the Explanation (B) reads thus : "Explanation (B). - 'relevant date' means - (a) x x x (b) x x x (c) x x x (d) x x x (e) x x x (ea) x x x (eb) x x x (f) in any other case, the date of payment of duty." 31.On behalf of the Department, it is urged that the Assistant Commissioner of Central Excise was right in holding that period of limitation will have to be reckoned in accordance with Clause (f) of Explanation (B) from February/March 1995 when the credit entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned even the excise authorities locally stationed were unaware of the Public Notice, which enabled the Petitioner to avail Modvat credit on inputs. In such circumstances, provisions of Section 17 can be passed into service in favour of the petitioner. Sub-section (2) of Section 29 of the Limitation Act provides that provisions of Sections 4 to 24 (which includes Section 17) shall apply to Special law in so far as and to the extent to which they are not expressly excluded, by such special law or local law. 34.Since the provisions of the Act, do not expressly exclude applicability of Sections 4 to 24 and particularly Section 17 of the Limitation Act, the said provision of the Limitation Act can be made applicable to refund claims filed under Section 11B of the Act. 35.For the purpose of commencement of limitation under Clause (f) of Explanation (B) to Section 11B of the Act, even though reversal of Modvat credit was done in February/March 1995, since the mistake was discovered only in November 1995 when the Public Notice clarifying the legal position came to the knowledge of the petitioner, the period of limitation for the purpose of refund application would commence from Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
