Cements Ltd. Vs. Collector of Central Excise  INSC 138 (25 April 1989)
G.L. (J) Oza, G.L. (J) Shetty, K.J. (J)
1989 AIR 1496 1989 SCR (2) 715 1989 SCC (2) 676 JT 1989 Supl. 137 1989 SCALE
INFO : RF 1990 SC 977 (6)
Excises and Salt Act Rules, 1944: Section 3--Excise duty on price of packing
material used for packing superfine cement-Whether leviable--View taken by
Government in similar case that duty was not leviable--Whether should be
extended to all similar cases.
Excise Rules, 1944: Rule 11--Claim for refund of duty paid--Letter written by assessee
raising objections against levy of duty--Whether amounts to protest--Whether
period of limitation applicable.
appellant-Company, a manufacturer of superfine cement, preferred a claim for
refund of duty on price of packing material of the product, paid by it during July 4, 1974 to March 1, 1974, on the ground that duty on packing charges on superfine
cement was not leviable. But the claim was rejected by the Assistant Collector
of Central Excise, the Appellate Collector and also the Appellate Tribunal on
the ground of limitation under Rule 11 of the Central Excise Rules, 1944, since
the duty was not paid under protest. The Tribunal also held that the letter
dated July 11, 1974, in which the appellant had stated that the duty was not leviable
on packing charges and if the department felt it was leviable they had no
option but to suggest the rates fixed by Government from quarter to quarter as
packing charges, was not a protest to save the period of limitation prescribed
in Rule 11.
appeal before this Court, on behalf of the Company, it was submitted that a
similar claim was allowed by the Central Government in the case of Birla Cement
Works and that the Trade Notice dated 29.10.1979 by the Collectorate clearly
stated that the cost of packing was not liable to be included in the assessable
conceding that there was no particular form of protest, it was contended on
behalf of the department that if the payments were held as made under protest,
by treating the letter as a protest, then the period of limitation under Rule
11 of the Central Excise Rules, 1944 would not be applicable but the Trade
Notice of 20.1.1979 could not be 716 given retrospective effect and, therefore,
the matter had to be remitted to the Tribunal for disposal on other questions.
The letter of the appellant clearly shows that all possible contentions which
could be raised against the levy of duty on the value of packing material were
raised, and that the appellant was not accepting the liability, without
protest. Therefore, the letter was in the nature of protest.
being the position, the question of limitation does not arise for the refund of
the duty. i718-H] Giving the benefit without any Trade Notice in a similar
case, the Central Government held, in their revisional order, that as superfine
cement was capable of being sold without packing like grey portland cement, the
cost of packing for superfine cement should not be added to the assessable
value. The authorities ought to have, therefore, extended this view to all
similar cases. [719A, D] In these circumstances, the appellant is entitled to
refund of the duty paid by it. [719F]
APPELLATE JURISDICTION: Civil Appeal No. 500 of 1985.
the Judgment and Order dated 25.7.1984 of the Customs Excise and Gold (Control)
Appellate Tribunal, New
Delhi in Appeal No.
923/81-A in Order No. 559/84-A.
J. Sorabjee, A.N. Haksar, Sanjay Grover and K.J.
for the Appellant.
Additional Solicitor General, Mrs. Indira Sawhney, Miss A. Subhashini and Mrs. Sushma
Suri for the Respondent.
Judgment of the Court was delivered by OZA, J. This appeal involves the
determination of the only question as to whether the appellant is entitled to
refund of Rs.22,42,002.09 paid as excise duty on the price of packing material
used for packing of superfine cement which according to the appellant was paid
under protest whereas according to the respondent, it was not 717 paid under
protest and therefore, the claim of refund is barred by time.
brief facts necessary for determination are.
appellant-company is a manufacturer of superfine cement. The company preferred
the claim for refund of Rs.22,43,002.09 alleged to be duty on price of packing
material of the aforesaid product paid during July 4, 1974 to March
claim of refund was rejected by Assistant Collector of Central Excise Tirunelveli
on the ground that Rule 11 of the Central Excise Rules 1944 was applicable as
duty was not paid under protest and the claim was barred by time. On appeal,
the Appellate Collector of Custom and Central Excise by the judgment dated
February 7, 1981 maintained the order passed by the Assistant Collector on the
same ground of limitation, as the merits of the claim was not disputed by the
department. This is clear from the following observations in the Appellate
based their claim on the Trade Notice No. 232/79 dated 29.10.79 of Madras Collectorate
declaring that the said cement is not the variety of cement requiting packing
to prevent deterioration, and the cost of packing of such cement is not liable
to be included in the assessable value. The ground on which the claim was made are
not disputed in this appeal." Thereafter, the appellant unsuccessfully
approached the Customs, Excise and Gold (Control) Appellate Tribunal. Before
the Tribunal also, only the question of limitation was put against the
appellant. The Tribunal by its order dated July 25, 1984 has stated:
us, the only question argued was the question of limitation. It was urged that
the letter dated 11.6.74 amounted to a protest so that the period of limitation
prescribed in Rule 11 of the Rules ceased to be applicable." The Tribunal
also took the view that the letter dated June 11, 1974 was not a protest to save the
period of limitation.
heard learned counsel for parties. It is not in dispute that the duty was paid
for the period from July
4, 1974 to March 1, 1975. If it was paid under protest, the
orders of the authorities cannot be sustained. It is, therefore, necessary to
refer to the contents of the letter dated June 11, 1974. The letter raised many objections
against the levy of packing charges. It was stated that the duty on packing
charges on superfine cement was not leviable. The appellant finally said:
the department feels that the duty is leviable on packing charges, we have no
option, but to suggest the rates fixed by the Government of India from quarter
to quarter, as packing charges." The counsel also referred to us the
decision of the Central Government in the case of Birla Cement Works where a
similar claim was allowed by order dated December 31, 1980.
further referred to us the Trade Notice dated October 29, 1979 issued by the Collectorate,
Madras wherein it was clearly indicated that the costs of packing was not
liable to be included in the assessable value.
Additional Solicitor General frankly conceded that at the material time, there
was no particular form prescribed for protesting against the levy or paying
under protest. He also contended that if the letter is treated as a protest and
the payments are held to be payments under protest then the limitation
prescribed under Rule 11 admittedly would not be applicable, but the Trade
Notice issued by the Madras Collectorate on October 29, 1979 could not be given
retrospective effect and, therefore, the matter should go back to the Tribunal
for disposal on other questions.
gave our anxious considerations to the rival submissions. A perusal of the
letter dated June 11,
1974 clearly shows
that all possible contentions which could be raised against the levy of duty on
the value of packing material were raised. If this could not be said to be a
protest one fails to understand what else it could be. It does not require much
time to analyse the contents of the letter. An ordinary reading with common
sense will reveal to anybody that the appellant was not accepting the liability
without protest. We have no hesitation to hold that the letter was in the
nature of protest. That being the position, the question of limitation does not
arise for refund of the duty.
is rather strange that learned Additional Solicitor General wants the matter to
go back to the Tribunal for considering the effect of Trade Notice. The Central
Government in their revisional order dated December 31, 1980 in the case of Birla Cement Works
gave the benefit without any Trade Notice. There it was observed:
the circumstances Government accepted the petitioner's pleas and observe that
superfine cement is nothing other than ordinary portland which is grounded to a
very high fineness of not less than 3500 CM 2/gm and that this higher fineness
does not lead' to its deterioration without packing. The Government, therefore,
accept the contention of the petitioners and hold that the impugned good being
capable of being sold without packing like ordinary gray portland cement the
cost of packing for superfine cement should not be added to the assessable
value." The authorities ought to have extended the view taken by the
Central Government in the case of Birla Cement Works to all similar cases.
Moreover, the Appellate Collector and the Tribunal clearly stated that the only
question agitated before them was the question of limitation. The order does
not indicate that the counsel for the Department or the departmental
representative raised any other question on merits. Indeed no objection could
have been raised on the merits of the matter in view of the order of the
Central Government in the Birla Cement Works.
these circumstances, the appeal is allowed, the orders passed by the Tribunal
and Other authorities are set aside. It is declared that the appellant is
entitled to refund of the amount. The appellant shall be paid interest at the
rate of six per cent from the date of refusal of refund with costs of this
appeal quantified at Rs. 10,000.