Can rebate claim rejected as time barred if the reason for delay in filing was due to fault of Customs Authorities?

Case:GRAVITA INDIA LTD. VERSUS UNION OF INDIA

Citation:2016(334) E.L.T. 321 (RAJ.)

Brief facts:M/s. Gravita India Ltd., petitioner herein, is a Company incorporated under the Companies Act, 1956. This company is engaged in manufacturing of lead and lead alloys falling under Chapter Headings 78.11, 78.04, 28.04 and 78.01 of the Schedule to the Central Excise Tariff Act, 1985 (for short, ‘the Act of 1985’).

Petitioner is also exporting goods manufactured by them and such goods are cleared from the factory of the petitioner on payment of duty for export under rebate claim under Rule 18 of the Central Excise Rules, 2002 (for short, ‘the Rules of 2002’). Petitioner removed the goods manufactured by them, which were cleared from the factory of petitioner on payment of duty of Rs. 4,75,039/- under the cover of Invoice No. 17, dated 10-7-2008 and the said goods were exported vide Shipping Bill No. 6474467, dated 9-7-2008. Goods were allowed for export on 14-7-2008. Relevant documents were received in the first week of September, 2009, from Customs Authorities. After export of the said goods and on receipt of the documents from Customs Authorities, the petitioner under Rule 18 of the Rules of 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, as amended from time-to-time, filed a refund claim on 10-9-2009 for the rebate of duty paid by them on the export goods. Simultaneously, the petitioner also filed a refund claim of Rs. 4,918/- along with said rebate claim of Rs. 4,70,121/- on the ground that it had paid said amount of duty on the post-removal expenses.

The Assistant Commissioner, Central Excise Division-II, Jaipur, served a notice dated 13-11-2009 on the petitioner calling upon it to show cause as to why the aforesaid claim be not rejected in terms of the provisions of Section 11B of the Central Excise Act, 1944, and the Rules made thereunder on the reason mentioned above. Petitioner, in its reply to said notice, submitted that although the claim submitted was rejected, as being time-barred by one year, but this delay was due to circumstances beyond control of the petitioner as the Customs Department at Nhava Sheva Port handed over the shipping documents after one year of export and the exception of claim filed beyond time limit of one year is available when delay is due to circumstances beyond control of the claimant or the delay is on account of lapse on the part of departmental officer. Petitioner, in support of his contention, relied on judgment of Gujarat High Court in Cosmonaut Chemicalsv. Union of India - 2009 (233) E.L.T. 46 (Guj.). Petitioner also filed affidavit of its General Manager (Commercial) Shri Kishan Gopal Gupta, that after exportation of the consignment from the port of Export, the firm handed over copy of shopping bill, bill of lading and ARE-1 duly signed and endorsed evidencing exportation of the consignment in first week of September, 2009 and after receipt of the document rebate claim was filed in the office of the Assistant Commissioner, Central Excise Division-1, Jaipur on 10-9-2009. The Assistant Commissioner, however, vide Order-in-Original dated 18-8-2010, rejected the claim of refund of the petitioner. Aggrieved thereby, petitioner approached the Commissioner (Appeals)-I, Customs & Central Excise, Jaipur, who also dismissed the appeal by order dated 2-2-2011. Petitioner there against preferred revision application to the Central Government under Section 35EE of the Act of 1944, which too was rejected by respondent no. 2 - the Joint Secretary to the Government of India, Ministry of Finance, Department of Revenue, New Delhi. Hence this writ petition.

Appellant Contention:The learned counsel for petitioner, submitted that the Joint Secretary to the Government of India, has grossly erred in rejecting the rebate/refund claim of Rs. 4,70,121/- of the petitioner vide order No. 1771/12-CX, dated 24-12-2012, which was issued on 26-12-2012, on the ground of limitation. The case of the Revenue is that while the goods were exported on 14-7-2008, the rebate claim was filed on 10-9-2009 (after expiry of one year from the date after export of goods) and as such the same was hit by the limitation under Section 11B of the Act of 1944. Firstly this provision would not be applicable to the present case and secondly, if at all the same is considered to be applicable, then the date of release of the necessary documents by the Department shall be the date for computation of limitation. Learned counsel argued that Section 11B of the Act of 1944 would not be attracted to the claim of rebate/refund of duty under the provisions of Rule 18 of the Rules of 2002, as no limitation has been prescribed therein. The order of the Government of India is therefore liable to be set aside.

It is submitted that learned Assistant Commissioner also erred in rejecting the rebate claim of refund on the ground of limitation whereas if the petitioner had not received the export documents and shipping bills from the Customs Authorities at the port of export, there was no way it could file the claim. Case of the petitioner before the Assistant Commissioner was that delay in filing the claim was due to the lack of properness in feeding the stuffing report by the Superintendent and Shipping Line. The petitioner was prevented from filing the rebate/refund claim in time. It is thus argued that the appellate authority and the revisional authority neither applied their mind to this aspect of the matter nor appreciated judgment of Gujarat High Court in Cosmonaut Chemicals, supra. In fact, the Order-in-Original would show that the Department have of course made a reference to learned Deputy Commissioner (Export), Jawahar Lal Nehru Customs House, Nhava Sheva, District Rajgarh, Maharashtra, to verify the facts stated by petitioner in its reply to the show cause notice. However, the order states that the said Officer has yet not informed the date of generation of EP copy of referred shipping bill. Considering the above facts it has been concluded that the claim filed by petitioner was time-barred. Learned Commissioner (Appeals) has also erred in not appreciating the fact that in case the correct information regarding generation of EP, copy of referred shipping bill was not coming from the Superintendent, Customs (Prev.), Jawahar Lal Nehru Customs House, Nhava Sheva, District Rajgarh, Maharashtra, it was obligatory on the Department to make another reference for obtaining the said information from the Customs Authorities, rather than rejecting the claim.

Learned counsel for the petitioner, in support of the case, has relied on judgments in Dorcas Market Makers Pvt. Ltd.v. Commissioner of Central Excise - 2012 (281) E.L.T. 227 (Mad.), Dy. Commissioner of C. Ex., Chennai v. Dorcas Market Makers Pvt. Ltd. - 2015 (321) E.L.T. 45 (Mad.), Exclusive Steels Pvt. Ltd. v. Union of India - 2011 (267) E.L.T. 586 (Guj.) and Collector, Land Acquisition Anantnag and Another v. Mst. Katiji and Others - 1987 (28) E.L.T. 185 (S.C.).

Respondent Contention:Per contra, The learned counsel for Revenue, opposed the writ petition and argued that learned Assistant Commissioner has clearly stated the reason of issuing show cause notice in its Para 7, wherein it is stated that the claim is liable to be rejected not only on limitation but also on merit. The reply and affidavit submitted by the petitioner have been duly considered by the Assistant Commissioner, who did not find any force in their contention. It is denied that the Assistant Commissioner has not passed reasoned and considered order. The Commissioner (Appeals) has also rightly rejected the claim. The Central Government, therefore, rightly rejected the revision petition. The claim admittedly was filed after expiry of one year from relevant date as per Section 11B of the Act of 1944. The petitioner failed to produce any documentary evidence or so-called circumstantial evidence, by which he was allegedly prevented from filing the claim within the prescribed time limit. The claim was filed for refund of rebate of duty on the export goods. The Joint Secretary to the Government was perfectly justified in rejecting the claim.

Learned counsel for Revenue, in support of his arguments, has relied on judgments in Everest Flavours Ltd.v. Union of India - 2012 (282) E.L.T. 481 (Bom.), Collector of C.E., Chandigarh v. Doaba Co-operative Sugar Mills - 1988 (37) E.L.T. 478 (S.C.), Indian Oil Corporation Ltd. v. Union of India - 2012 (281) E.L.T. 209 (Guj.), Oswal Chemicals & Fertilizers Ltd. v. Commissioner of C.EX., Bolpur - 2015 (318) E.L.T. 617 (S.C.), Sarita Handa Exports (P) Ltd. v. Union of India - 2015 (321) E.L.T. 434 (P&H), Union of India v. Kirloskar Pneumatic Company - 1996 (84) E.L.T. 401 (S.C.) and Miles India Limited v. Assistant Collector of Customs - 1987 (30) E.L.T. 641 (S.C.).

Reasoning of Judgment:High Court has given his thoughtful consideration to rival submissions and perused the material on record.

Section 11B of the Act of 1944, inter alia, provides that any person claiming refund of any duty of excise and interest, if any, paid on such duty, may make an application for refund of such duty and interest if any, paid on such duty, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and that the application shall be accompanied by such documentary or other evidence including the documents referred to in Section 12A as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty and interest if any, paid on such duty had not been passed on by him to any other person. Second proviso to Section 11B provides that limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest.

Rule 18 of the Rules of 2002 provides that where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, as may be specified in the notification. The Notification dated 6-9-2004 has been issued by the Central Government in this behalf laying down in its Clause (2) the conditions and limitations for grant of rebate. Clause 3(b) of the Notification provides that claim of the rebate of duty paid on all excisable goods shall be lodged along with original copy of the application to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacture or warehouse or, as the case may be, the Maritime Commissioner. It is thus clear that the claim would be maintainable only when the original documents are produced.

A Division Bench of Gujarat High Court in Cosmonaut Chemicals, supra, while interpreting Section 11B of the Act of 1944, observed that a claim has to be accompanied by requisite documents in case of an assessee, who has exported duty paid goods, being copy of shipping bill duly endorsed by the Customs Authorities. It was held that if the Customs Authorities delay parting with a copy of shipping bill bearing necessary endorsement, an assessee cannot be put to disadvantage on the ground of limitation when the assessee is not in a position to make a claim without accompanying documents. The court further clarified that mitigating circumstance as flowing from the legislative scheme is one and one only viz., an assessee cannot be penalized, where the lapse as to non-availability of requisite document is on account of Central Excise Department or Customs Department. The legislative scheme does not provide for any other exception or mitigating factor and there can be no other circumstance under which a claimant would be entitled to prefer a claim beyond the statutorily prescribed period of limitation. Then, this would be delay occasioned owing to such reason and circumstance, which is beyond control of the claimant. Paras 20, 21 and 22 of the judgment read as under :-

“20. Thus, considering the matter from any angle it becomes apparent that the interpretation placed by Revenue on provisions of section 11B of the Act read with paragraph No. 2.4 of the CBEC Manual cannot be accepted the same being contrary to the object and purpose of the scheme. It cannot be held that the petitioner was at fault in making the claim belatedly, because in fact the period of limitation has to be considered in light of availability of the requisite documents, i.e., from the said point of time.

21. The view adopted by the Revisional Authority that a departmental authority is bound by the prescribed period of limitation and cannot condone any delay also does not merit acceptance in light of what is stated hereinbefore. The Adjudicating Authority and the Revisional Authority have read the period of limitation divorced from sub-paragraph No. 2.4 of the CBEC Manual which has provided for a circumstance to mitigate the unwarranted hardship resulting from reading the provision of limitation in absolute terms. In other words, howsoever limited, an exception has been carved out in cases where the delay has occurred due to circumstances beyond control of the claimant assessee. In other words, in a case where the so called delay is on account of the lapse on part of the Central Excise Department or the Customs Department.

22. It is necessary to state and clarify here that mitigating circumstance as flowing from the aforesaid legislative scheme is one and one only viz. where the lapse as to non-availability of requisite document is on account of Central Excise Department or Customs Department. The legislative scheme does not provide for any other exception or mitigating factor and in the circumstances on a conjoint reading of the provision and the instructions in the CBEC Manual there can be no other circumstance under which a claimant would be entitled to prefer a claim beyond the statutorily prescribed period of limitation.”

The Madras High Court in Dorcas Market Makers Pvt. Ltd. v. Commissioner of Central Excise, supra, in which claim petition was dismissed as barred by limitation, having been filed beyond one year and the dismissal was sought to be supported by Section 11B of the Act of 1944, held that while earlier Notification No. 41/94-C.E., dated 12-9-1994 in Clause (iv) provided that the claim for rebate of duty has to be made within time limit as specified under Section 11B of the Central Excises and Salt Act, 1944, no such condition has been prescribed in the Notification No. 19/2004, dated 6-9-2004. The Madras High Court, relying on judgment of the Supreme Court in Collector of Central Excise, Jaipurv. Raghuvar (India) Ltd. - (2000) 5 SCC 299 = 2000 (118) E.L.T. 311 (S.C.), observed that provisions of Section 11A of the Central Excises and Salt Act, 1944, would have no application to any action taken under Rule 57-I of the Central Excises and Salt Rules, 1944, prior to its amendment on 6-10-88, and Rule 57-I of the Rules is not in any manner subject to Section 11A of the Act. It was therefore held that the Rule will act independently. Since notification issued under Rule 18 did not prescribe time limit, it was held that Section 11A of the Act, which provides six months time for claiming rebate, would not be applicable to deny rebate claim of the petitioner.

The Madras High Court in Dy. Commissioner of C. Ex., Chennai v. Dorcas Market Makers Pvt. Ltd., supra, has also taken a similar view with regard to Notification No. 19/2004-C.E., dated 6-9-2004, which superseded the previous Notification No. 41/94-C.E. that it did not contain the prescription regarding limitation, and held that a conscious decision taken by Central Government dismissing application for refund as time barred is unjustified. In Exclusive steels Pvt. Ltd. v. Union of India, supra, also, a Division Bench of Gujarat High Court held that the only circumstance under which a claimant would be entitled to prefer a claim beyond the statutorily prescribed period of limitation would be where the lapse as to non-availability of requisite document is on account of Central Excise Department or Customs Department.

The judgment of the Supreme Court in Miles India Limited, supra, relied on by the Revenue, is not an effective and well discussed judgment on merits. It is merely an order allowing the appellant to withdraw the appeal. Therefore, this judgment cannot be of any help to the Revenue. Another judgment of the Supreme Court in Collector of C.E., Chandigarhv. Doaba Co-operative Sugar Mills - 1988 (37) E.L.T. 478 (S.C.), cited on behalf of the Revenue, rather helps the petitioner because in Para 6 of the judgment, the Supreme Court observed that where the duty has been levied without authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder having no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light.

The Division Bench judgment of Bombay High Court in Everest Flavours Ltd. v. Union of India, supra, cited by the revenue, relating to Section 11B of the Central Excise Act, 1944, observed that Rule 18 of the Central Excise Rules, 2002, cannot be read independent of requirement of limitation prescribed in Section 11B. What was held was that mere presentation of an ARE-1 Form does not constitute the filing of a valid application for rebate. The judgment of Gujarat High Court in Indian Oil Corporation Ltd. v. Union of India, supra, is distinguishable on facts.

There is no quarrel with proposition that if Statute provided for limitation, it has to be adhered to. What however is being claimed by the petitioner is different. The question which arises in the present case is as to what should be the starting point for computation of this period of one year. We are persuaded to follow the view taken by the Gujarat High Court in Cosmonaut Chemicals, supra, that any procedure prescribed by a subsidiary legislation has to be in aid of justice and procedural requirements cannot be read so as to defeat the cause of justice. The claimant cannot be asked to tender deficient claim within limitation period and claim cannot be simultaneously treated as not filed till documents furnished, if the manual of supplementary instruction indicating that refund or rebate claim deficient in any manner to be admitted when delay in providing document is attributable to the Department. Where the lapse as to non-availability of requisite document is on account of Central Excise Department or Customs Department, this would be mitigating circumstance flowing from the aforesaid legislative scheme. Limitation is to be considered in the light of availability of requisite documents and should be taken to begin when documents necessary for substantiating the claim of refund are furnished by the department, which, in High Court’s considered view, should be the starting point for computation of limitation.

In view of the above, present writ petition succeeds and the same is allowed. The impugned judgment is set aside. The respondents are directed to allow the refund/rebate to the petitioner together with statutory rate of interest, applicable as per the Rules. Compliance be made within two months from the date copy of this order is produced before them.

Decision:Petition Allowed.

Comment:The gist of this case is that Rebate under Section 18 is available only if it is submitted within time-limit prescribed under Section 11B of Central Excise Act, 1944 i.e. before expiry of one year. However, assessee is eligible rebate under section 18 even if it is filed after expiry of one year only in case Customs Authorities delayed in providing with a copy of shipping bill bearing necessary endorsement and assessee is not in a position to make a claim without enclosing the accompanying documents.

Prepared by: Hushen Ganodwala

Comments

PJ/CASE LAW/2016-17/3117

Post a Comment

Query