Holding

The Court held that the letter was a protest, so the limitation period under Rule 11 does not apply, and the appellant is entitled to a refund of the excise duty on packing material.

Summary

India Cements Ltd., a manufacturer of superfine cement, claimed a refund of Rs 22,43,002.09 paid as excise duty on the cost of packing material between July 1974 and March 1975, asserting that such duty was not leviable. The department rejected the claim, holding that the payment was not made under protest and therefore barred by the limitation period in Rule 11 of the Central Excise Rules, 1944. The company relied on a letter dated 11 June 1974, which raised objections to the levy, and on the Central Government’s decision in Birla Cement Works that packing costs for superfine cement should not be included in assessable value. The Supreme Court examined whether the letter amounted to a protest, concluding that it did, and thus the limitation period was inapplicable. The Court also held that the view in Birla Cement Works should be extended to all similar cases, granting the refund with interest and costs.

Issues considered

Whether the letter dated 11 June 1974 constitutes a protest for the purposes of Rule 11 of the Central Excise Rules, 1944, thereby removing the limitation bar.
Whether excise duty on the price of packing material for superfine cement is leviable.
Whether the Central Government’s decision in Birla Cement Works should be applied retrospectively to similar cases.
Whether the Trade Notice dated 29 October 1979 can have retrospective effect.

Legislation cited

Central Excise and Salt Act Rules, 1944s. Section 3
Central Excise Rules, 1944s. Rule 11

Subjects

excise dutypacking materialprotestlimitation periodrefundCentral Excise RulesSuperfine cementTrade NoticeBirla Cement Works

Judgment

"' + INDIA CEMENTS LTD.
v.
A

COLLECTOR OF CENTRAL EXCISE

APRIL 25, 1989
B.
[G.L. OZA AND K. JAGANNATHA SHETIY, JJ.]
I '
A
r·
• Central 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.
c
Central Excise Rules, 1944: Rule 11-Claim for refund of duty
-')r paid~Letter written by assessee raising objections against levy of
duty-Whether amounts to protest-Whether period of limitation'
applicable.
D
The 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
E
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 levlaj>le
they had no option but to suggest the rates fixed by Government fro11,1
quarter to quarter as packing charges, was not a protest to saye the
y

-
period oflimitation prescribed in Rule 11. f

In the appeal before this Court, on behalf of the Company, it was
submitted that a similar claim was allowed by the Central Governme~
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
G
was not liable to be included in the assessable value.
··-..+
While conceding that there was no particular form of protest, it
was contended on behalf of the department that if the payments were
held as mad~ under protest, by treating the letter as a protest, then the
period of limitation under Rule 11 of the Central Excise Rules, 1944 H
would not be applicable but the Trade Notice of 20.1.1979 could not be
715
716 SUPREME COURT REPORTS [1989] 2 S.C.R.

A given retrospective effect and, therefore, the matter had to be remitted ·-t ~
to the Tribunal for disposal on other questions.

Allowing the appeal,

HELD: The letter of the appellant clearly shows that all possible
B contentions which could be raised against the levy of duty on the value
of packing material were raised, and that the appellant was not accept-
ing the liability, without protest. Therefore, the letter was in the nature
of protest. That being the position, the question of limitation does not •
arise for the refund of the duty. [718-H]
..
C 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, DJ
D
In these circumstances, the appellant is entitled to refund of the
duty paid by it. [7!9F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 500
of 1985.
E
From 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.
-
Soli J. Sorabjee, A.N. Haksar, Sanjay Grover and K.J. John for
F the Appellant.

G. Ramaswamy, Additional Solicitor General, Mrs. Indira
Sawhney, Miss A. Subhashini and Mrs. Sushma ·Suri for the Res-
pondent.

G The 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
H was paid under protest whereas according to the respondent, it was not
INDIA CEMENTS v. COLLECTOR OF CENTRAL EXCISE [OZA, J.] 717

'"' f paid under protest and therefore, the claim of refund is barred by A
time.

The brief facts necessary for determination are.

The appellant-company is a manufacturer of superfine cement. B
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 1, 1975.

This claim of refund was rejected by Assistant Collector of Cen-
• tral Excise Tirunelveli on the ground that Rule 11 of the Central
Excise Rules 1944 was applicable as duty was not paid under protest C
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 followin'g observations in the D
Appellate <Collector's order:
'
"They 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 requiring packing
to prevent deterioration, and the cost of packing of such
cement is not liable to be included in the assessable value. E
The groutid 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 F
y Tribunal also, only the question of limitation was put against the
appellant. The Tribunal by its order dated July 25, 1984 has stated:

"Before 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 f 1 of the Rules ceased to be applicable." G

The Tribunal also took the view that the letter dated June 11,
1974 was not a protest to save the period oflimitation.

Hence this appeal.
H
718 SUPREME COURT REPORTS [1989] 2 S.C.R.
A
We 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
B the levy of packing charges. It was stated that the duty on packing
charges on superfine cement was not leviable. The appellant finally
said:
~.
"If 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
c 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. Counsel further refer-
D red 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.

Learned Additional Solicitor General frankly conceded that at
the material time, there was no particular form prescribed for pro-
E testing 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 retrospec-
tive effect and, therefore, the matter should go back to the Tribunal
F for disposai on other questions.
'y
We 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 r;1ised. If this could not be said to be a
G protest one fails to understand what else it could be. It does not
require much time to analyse the coµ tents 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
H duty.
INDIA CEMENTS v. COLLECTOR OF CENTRAL EXCISE [OZA, J.] 719

It is rather strange that learned Additional Solicitor General A
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:
B
"In the circumstances Government accepted the peti-
tioner's pleas and observe that superfine cement is hothing
• 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 conten-
tion of the petitioners and hold that the impugned good C
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 D
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 Depart-
ment 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 E
Cement Works.

In these circumstances, the appeal is allowed, the orders passed
by the Tribunal and other authorities are set aside, It is declared that
y 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 F
··~ refund with costs of this appeal quantified at Rs.10,000.

N.P.V. Appeal allowed.