M/S Ashish Processors vs Commissioner Of Central Excise

[ Arising out of i) OIA-223-232/2004-AHD-I dtd 31/08/2004 ii) OIA-194/2004-AHD-I dtd 17/08/2004 Passed by Commissioner of Central Excise-AHMEDABAD-I ]

1. M/s Ashish Processors ] 2. M/s Dharmendra Textile Processors ] 3. M/s Priti Processors Ltd ] Appellant(s) 4. M/s Vinny Overseas Pvt Ltd ] 5. M/s Bajaj Processors Ltd ] 6. M/s Chamaria Fashions Pvt Ltd ]

Vs

Commissioner of Central Excise- AHMEDABAD-I - Respondent (s)

Represented by :

Appellant(s) : Shri P M Dave, Advocate Respondent (s) : Shri J Nair, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial)

Date of Hearing / Decision : 30/10/2015 ORDER No. A/11654-11659 / 2015 dtd 30/10/2015

Per : Mr.P.K. Das,

Common issue is involved in these appeals and therefore, all are taken-up together for disposal.

2. After hearing both the sides and on perusal of the records, I find that the appellants were engaged in the manufacture of Textile Fabrics classifiable under CH 52, 54 and 65 of the Schedule to the Central Excise Tariff Act 1985. They were discharging duty liabilities under the Compounded Levy Scheme as per Annual Capacity of Production under Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 issued under Section 3A of Central Excise Act, 1944.

3. Both the sides submit that these appeals involve on three issues viz.:-

a) Refund claims cannot be accepted without challenging Annual Production Capacity (ACP) Order.

b) The Refund claims are barred by limitation, and

c) The appellant failed to fulfil the principle of unjust enrichment.

4. I find that the Honble Gujarat High Court in the case of M/s Premraj Dyeing and Printing Mills Pvt Ltd Vs UOI  2013.288.ELT.357(Guj.) held the first issue is in favour of the appellants. It has been held that as the ACP order was not appealable, it would be incorrect to hold that without challenging such an order, the manufacturer cannot claim refund of duty erroneously collected. The other two issues, the Honble High Court remanded the matter to the Adjudicating Authority. The relevant portion of the decision of the Honble High Court in the case of M/s Premraj Dyeing and Printing Mills Pvt Ltd (supra) is reproduced below:

 16.?From the tenor of the Rules, the provisions made thereunder and the nature of exercise envisaged for determination of Annual Production Capacity, on the basis of the declaration made by the independent processor and if found necessary with the aid of consultation of the technical expert, 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 of Section 11B of the Central Excise Act claiming refund of excess duty collected on the basis of such consideration of galleries in determining Annual Production Capacity and collecting corresponding excise duty on such capacity. In our view, the excise authorities as well as the Tribunal erred in rejecting such claims merely on the ground that the determination of Annual Production Capacity was not challenged. The decisions of the Apex Court in case of Mafatlal Industries (supra) as well as Collector v. Flock (India) Pvt. Ltd. (supra) would not apply. In case of Mafatlal Industries, the Apex Court ruled that an assessee cannot claim refund that too after the indefinite 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 the determination of Annual Production Capacity by the prescribed authority under the Rules of 2000 did not give rise to an appealable order.

18.?We may, however, recall that in the show cause notice, three objections were raised. The refund claims were declined only on one ground, namely, that without challenging the 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.

5. In view of the above discussions, I hold that the refund claims cannot be rejected on the first issue as the ACP order was not appealable. The other two issues, the matters are remanded to the Adjudicating authority to decide afresh in the light of the decision of the Honble High Court. The impugned order is modified accordingly. The appellants are at liberty to submit the documents to substantiate on the other issues. Needless to say that, the Adjudication authority shall give proper hearing before decision. All the appeals are allowed as per above observation.

5. The Early Hearing applications filed by the appellants are dismissed as infructuous.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial)

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