Holding

When duty is paid under the self‑removal (provisional) procedure, the relevant date for the limitation under Section 11B is the date of adjustment of duty after the final assessment, not the date of ledger debit.

Summary

Samrat International, a manufacturer of hacksaw and bandsaw blades, filed a classification list with an incorrect duty rate and later revised it. While awaiting approval of the list, it cleared goods under the self‑removal procedure, debiting duty in its personal ledger. It claimed a refund of excess duty for the period 1 April to 31 August 1985, but the Assistant Collector rejected the claim for 1 April to 27 April as time‑barred, treating the ledger debit as the date of payment. The Supreme Court held that under the self‑removal scheme the duty was paid provisionally, so the relevant date for the six‑month limitation under Section 11B is the date of final assessment (clause (e) of the explanation), not the ledger debit. Since the April RT‑12 return was assessed on 29 October 1985, the refund application filed on 30 October 1985 was within time. The appeal was allowed and the appellant was entitled to the full refund.

Issues considered

The appropriate 'relevant date' for the six‑month limitation period under Section 11B of the Central Excises and Salt Act, 1944, when duty is paid under the self‑removal/provisional assessment procedure.
Whether a debit in the assessee's personal ledger constitutes payment of duty for the purpose of determining the limitation period.

Legislation cited

Central Excise and Salt Rules, 1944s. 173B, s. 173C, s. 173CC, s. 173F, s. 173G, s. 9B
Central Excises and Salt Act, 1944s. 11B

Subjects

central exciserefund of dutylimitation periodself‑removal procedureprovisional assessmentSection 11BRT‑12 returnpersonal ledgerexcess duty

Judgment

SAMRAT INTERNATIONAL (P) LTD.
A

'
v.
COLLECTOR OF CENTRAL EXCISE. HYDERABAD

SEPTEMBER 21, 1990

[S. RANGANATHAN AND M. FATHIMA BEEVI, JJ.] B

Central Excises and Salt Act, 1944: Section 11-B Central Excise
and Salt Rules, 1944: Rules 173 B, C, CC, D and 1-Assessee clearing
goods under 'Self Removal' procedure-Application claiming refund of
excess duty-Starting point for period of limitation-What is.

The appellant was manufacturing Hacksaw blades and Bandsaw c
" falling under Tariff Item. No. 51-A(iv) of the Central Excise Tariff. On
26.3.1985 they filed a classification list as per Rule 173 B of the Central
Excise Rules, 1944 in respect of their products furnishing the tariff rate
of 15% Ad valorem by mistake Instead of furnishing the effective rates
of duty as per Notification No. 85/85CE dated 17.3.1985. The Assistant D
Collector of Central Excise approved the classification list on 3.6.198.$.
On 31.10.1985 the appellant filed a revised classification list with the
effective rates of its products with retrospective effect from. 26.3.1985
, which was also approved by the Assistant Collector of Central Excise.
On 30.10.1985 the appellant made an application under section UB of
the Central Excises and Salt Act, 1944 fo~ rei:imd of excise duty claim.ing E
that they had paid excess excise duty from.1.4.1985 to 31.8.1985. By its
order dated 13.12.1985 the Assistant Collector of Central Excise
allowed the claim...olily partly but rejected the claim. for the period from.
1.4.1985 to 27.4.i985 on. the ground that the claim. was barred under
s.ectioli UB of the Act because the 'relevant date' for preferring the
claim. for the appellant·.was the date of payment of duty and the ·duty F
had .been paid by adjnsline_nt in the personal ledger account as and
' when goods were removed~

The order of the Assistant Collector was coofmned in the appeal
by the Collector of Central Excise (Appeals).
G
Appellant's further·appeal to the Customs Excise !Uld,'Gold (Con-
trot) Appefiate Tribunal was also unsuccessM.

lo appeal to this Court under section 35L of the Central Excises
and Salt Act, 1944 it was contended on behalf of the appellant (i) that

"' mere debiting in the personal ledger account should not be fakell as the H
2 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A starting point for limitation and the relevant date should be the date on
1
I

which RT·12 Returns, which were filed on a monthly basis, were asses·
sed; and (ii) that clause (e) ofEiq1lanation to Section ll(B) was applicable
to the case.

Allowing the appeal, this Court,
B
HELD: 1. The scheme for payment of duty of goods under which
the appellant was clearing his goods is known as 'self-removal' proce-
dure. There will be no time hair for refund if the duty is paid under
protest. The period of 6 months is prescribed in other cases. [6H; 7A)

c 2. In the instant case, the classification list filed by the appellant
for the period 1.4.1985 to 27.4.1985 was not approved till 3.6.85. From
provisions of Rules 173B, 173C and 173CC of the CentralExcise Rules,
1944 it is clear that clearances can be made only after the approval of
the list by the particular officer. However, if there is likely to be delay in
accordance with the approval the officer can allow the assessee to avail
D himself of the procedure prescribed under Rule 9B for. provisional
assessment of goods. Between 1st April, 1975 when the classification list
was filed and 3rd June, 1985 when the list was approved, the assessee
was clearing the goods by determining the duty himself an!! debiting
the amount of duty in his personal ledger accoll!lt. The amount of duty
paid by him was obviously provisional and subject to the result of the
E final approval hy the officer concerned. In these circumstances, the
clearance of goods made by the appellant between 1st April and 3rd of
June, 1985 were in accordance with the procedure for provisional
assessment. In such a situation clause (e) of para (B) of the Explanation
under section llB will be attracted. The RT-12 Return for the month nf
April, 1985 was filed on 8.5 .1985 and the same was assessed on
F 29.10.1985. It is, therefore, only from the date of this assessment that
time bar in section llB will 01~erate. The refund application having
been filed on 30th October, 1\185 cannot, therefore, said to be time
barred. [7B-D; E-F)

G CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4460
of 1988.

From the Order dated 15.4.1988 of the Customs Excise and Gold
(Control) Appeilate Tribunal, New Delhi in Appeal No. E/Appeal
No. 2225 of 1986-A.
H
SAMRAT INTERNATIONAL v. C.C.E. [FATHIMA BEEVI, J.J 3

V. Sreedharan, V.J. Francis and N.M. Popli for the Appellant.
A
Ashok H. Desai, Solicitor General, Dalip Tandon and P.
Parmeshwaran for the Respondent.

The Judgment of the. Court was delivered by
B
FATHIMA BEEVI, J. This is an appeal under section 35L of the
Central Excises and Salt Act, 1944. The appeal is directed against the
order dated 15.4.1988 of the Customs Excise and Gold (Control)
Appellate Tribunal, New Delhi. The appellant is the manufacturer of
Hacksaw blades and Bandsaw Blades falling under Tariff Item No.
51-A(iv) of the Central Excise Tariff. The appellant filed a classifica-
tion list as per Rule 173B of the Central Excise Rules 1944 on c
26.3.1985 in respect of their products furnishing the tariff rate of 15%
Ad valorem by mistake instead of furnishing the effective rates of duty
as per Notification No. 85/85 CE dated 17.3.1985. The aggregate value
of the clearance in the preceding year i.e. 1984-85 did not exceed
Rs. 75 lakhs. In the case of first clearance upto an aggregate value not D
exceeding Rs. 7 .5 lakhs, the effective rates of duty is nil and in the case
of next clearance of Rs.7.5 lakhs, the duty is 3.75% Ad valorem. The
Assistant Collector of Central Excise, Hyderabad, approved the Tariff
{
rate 15% Ad valorem on 3.6. 1985 instead of the above effective rates
as the appellant did not claim the exemption as per Notification No.
85/85 CE dated 17.3.1985 due to ignorance. A revised classification list E
with the effective rates in respect of the products with retrospective
effect from 26.3.1985 was filed on 31.10.1985. The revised classifica-
tion list was approved. The appellant claimed that they had paid
excess Rs.2,55, 172.55 from 1.4.1985 to 31.8.1985 as excise duty. They
made an application for refund as per rule under section l lB of the
Central Excises and Salt Act, 1944 on 30.10.1985. F

The Assistant Collector of Central Excise by his order dated
13.12.1985 sanctioned the refund claim only partly. For the period
from 1.4.1985 to 27.4.1985, the refund claim was rejected on the
ground that the same was time barred. The Assistant Collector held
that the refund claim for the period 1.4.1985 to 27.4.1985 was time G
barred for the reason that under section l lB, the 'relevant date' for
preferring the claim for a case such as that of the appellant was the
date of payment of duty and, according to him, the duty had been paid
by adjustment in the personal ledger account as and when goods were
removed. The plea of the appellant is that mere debiting in the
personal ledger account should not be taken as the starting point for H

\
4 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.

limitation and the relevant date should be the date on which RT-12
A
Returns which are filed on a monthly basis are assessed. The order of
the Assistant Collector was confirmed in the appeal by the Collector of
Central Excise (Appeals). The further appeal to the Tribunal was also
unsuccessful.

B The question that arises for decision in the appeal is as to the
starting point of limitation for filing an application under section 1!B
of the Central Excises and Salt Act, 1944. Section 1JB so far as it is
material reads as under:

"l!B. Claim for refund of duty-(!) Any person claiming
refund of any duty of excise may make an application for
refund of such d,uty to the Assistant Collector of Central
Excise before the expiry of six months from the relevant
date.

Provided that the limitation of six months shall not
D apply wher,e any duty has been paid under protest.

Explanation-For the purposes of this section,~
E (A) ........... : ............ ·-- .................... - .

(B) "releva_nt di!te" means,-

00~1~ ............................... , .. ,,,,,,,,
F (e) in a case where duty of excise is paid provisionRlly
under this Act or the rules made thereunder, the date of
adjustment of duty after the final assessment thereof;

(f) in any other case, the date of payment of duty."
G The appellant's contention before the authorities was that the
. date of assessment would be the date-of payment of duty within the
meaning of clause (f) above. We agree with the learned Solicitor
'General that this argument is not tenable. Where an assessee main-
tains a ,personal ledger account, duty is paid by way of debit therein
H and goes to reduce the amount of deposit paid by the assessee. It is

'•'
I
l -v
/
Si\MRAT INTERNATIONAL v. C.C.E. (FA'IJiJMA BEEVI, J.] 5

not a mere adjustment, entry; it is effective payment.
A
Before us, however, learned counsel for the assessee has raised
an alternative contention. According to the appellant it is clause (e}
which is applicable in the case whereas the contention of the respon-
dent is that clause (f) is attracted. To understand this argument, it is
necessary to refer to 'Self-removal' procedure under which the appel- B
!ant cleared the goods.

Chapter VII-A of the Rules relates to re11,1oval of excise goods on
determination of duty by producers, manufacturers of private ware-
house licensees. Under Rule 173B, every assessee shall file with the
Proper Officer for approval a list in prescribed form showing full
description of all excisable goods or products manufactured, the rate c
of duty leviable on such goods and such other particulars as the Col-
lector may direct. The Proper Officer shall, after such enquiry as he
deems fit, approve the list with such modifications as are considered
necessary and return one copy of the approved list to the assessee wlio
shall unless otherwise directed by the Proper Officer determine the D
duty payable on the goods intended to be removed in accordance with
such list. All clearance shall be made only after the approval of the list
by the Proper Officer. Sub-rule (2-A) of Rule 173B provides as under:

"(2-A) All clearances shall, subject to the provisions of
rule 173CC, be made only after the approval of the list by E
the proper officer. If the proper officer is of the opinion
that on account of any inquiry to be made in the matter or
for any other reason to be recorded in writing there is likely
to be delay in according the approval, he shall, either on' a
written request made by the assessee or on his own accord,
allow such ass~ssee to avail himself of the procedure pre- F
scribed under rule 9B for provisional assessment of the
goods."

Where the assessee disputes rate of du!); approved by the Proper
Officer in respect of goods, he may have to give an intimation to that
effect to such officer and to pay duty under protest at the rate G
apProved by such officer. When the dispute about the rate of duty has
been finalised or for any other reason affecting rates of duty,, a modifi-
cation of the rate or rates of duty is necessitated, the Proper Officer
shall make such modification and inform the assessee accordingly.
~-
Under Rule 173C, the assessee shall file with the Proper Officer a
price list in prescribed form. 'Prior approval of the price list by the H
6 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A Proper Officer is necessary in the specified cases. Here also, sub-rule
(5) of rule )73C provides:

"(5) Subject to the provisions of rule 173CC, an assessee
specified in sub-rule (2) shall not clear any goods from a
factory, warehouse or other approved place of storage
B unless the price list has been approved by the proper
officer. In case the proper officer is of the opinion that on
account of any enquiry to be made in the matter or for any
other reas.ons to be recorded in writing, there is likely to be
delay in according approval, he shall either on a written
request made by the assessee or of his own accord allow
such assessee to avail himself of the procedure pres1:ribed
c under rule 9B for provisional assessment of the goods."

Under Rule 173CC, assessee may remove goods in certain cases
pending approval by the Proper Officer of the classification or price
list. Rule 173F provides that where the assessee has complied with the
D provisions of Rules 173B, 1730, and where applicable 173C, 173CC,
he shall himself detennine his liability for the duty due on the excis-
able goods intended to be removed and shall not, except as otherwise
expressly provided, remove such goods unless he has paid the duty as
determined. Under Rule 173G, every assessee shall keep an account •
current with the Collector. This rule lays down the procedure which is
E to be followed by the assessee for payment of duty. According to
sub-rule (3) of Rule l73G, within five days after. the close of each
month every assessee shall file with the Proper Officer a monthly
return in the prescribed form showing the quantity of the excisable
goods manufactured, duty paid on such quantity and other particulafs.
The Proper Officer makes an assess.men! as provided under Rule 1731
F on the basis of the information contained in the return and after such
further enquiry as he may consider necessary assess the duty due on
the goods removed and the assessment is completed. The duty
determined and paid by the assessee under Rule !73F shall be adjusted
against the duty assessed and where the duty so assessed is more than
the duty determined and paid, the assessee shall pay the deficiency by
G making a debit in. the current account within IO days of the receipt of
copy of the return and where such duty is less, the assessee shall take
credit in.the account current for the excess.

This is the scheme for the payment of duty for clearance of goods
by lhe manufacturers. This procedure is known as self-removal proce-
H dure. There will be no time bar for refund if the duty is paid under
SAMRAT INTERNATIONAL v. C.C.E. [FATHIMA BEEVI, J.I
,. 7

protest. The period of 6 months is prescribed in other cases. As we A
have already seen, section 1 lB says that the period of 6 months "in a
case where duty of excise is paid provisionally under this Act or the
rules made thereunder, the date of adjustment of duty after the final
assessment thereof". In this case, the classification list filed by the
appellant for the period 1.4.1985 to 27.4.1985 was not approved till
3.6.1985. From the provisions of Rules 173B, 173C and 173CC, which B
we have set out earlier, it will.be seen that clearances can be made only
after the approval of the list by the particular officer. However, if
there is likely to be delay in according the approval the officer can
allow the assessee to avail himself of the procedure prescribed under
Rule 9B for provisional assessment of the goods. In the present case
between !st April, 1975 when the calssification list was filed and 3rd c
June, !985 when the list was approved, the assessee was clearing the
goods by determining the duty himself and debiting the amount of duty
in his personal ledger account. The amount of duty paid by him was
obviously provisional and subject to the result of the final approval by
the officer concerned. This is the procedure prescribed under Rule 9B
except for the -circumstance that no bond as provided in Rule 9B is D
required in a case where the personal ledger account is maintained for
the clearance of the goods, since there is always a balance in the
account current sufficient to cover the duty that may be demanded on
the goods intended to be removed at any time. In these circumatances,
the clearances of goods made by the appellant between !st April and
3rd of June, 1985 were in accordance with the procedure for provi- E
sional assessment. In such a situation clause ( e) of para (B) of the
Explanation under section 118 will be attracted. In this case the RT-12
Returns for the month of April, 1985 was filed on 8.5.1985 and the
same was assessed on 29.10.1985. It is, therefore, only from the date of
this assessment that time bar in section 1lB will operate. In the present
case the refund application had been filed on the 30th of October, F
1985. It cannot, therefore, said to be time barred.

We, therefore, accept this contention of the appellant. The ap-
peal has therefore to be allowed holding the appellant is entitled to the
full amount and there is ilo bar of limitation as found by the Tribunal.
We, therefore, allow the appeal. In the facts and circumstances of the G
case there will be no order as to costs.

T.N.A. Appeal allowed.