SCA/12862/2004 1/18 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 12862 of 2004 With SPECIAL CIVIL APPLICATION No. 1174 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- HONOURABLE MS.JUSTICE H.N.DEVANI Sd/- ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ========================================================= COSMONAUT CHEMICALS & 1 - Petitioner(s) Versus UNION OF INDIA & 1 - Respondent(s) ========================================================= Appearance : SPECIAL CIVIL APPLICATION No. 12862 of 2004 MR UDAY JOSHI, MR HARDIK GUPTA AND MS POOJA GUPTA FOR M/S TRIVEDI & GUPTA for Petitioner(s) : 1 - 2. MR HARIN P RAVAL for Respondent(s) : 1, MR KL PANDYA for Respondent(s) : 1 – 2. SPECIAL CIVIL APPLICATION No. 1174 of 2005 MR PM DAVE for petitioners. MR YN RAVANI AND MR RJ OZA for Respondents. ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and SCA/12862/2004 2/18 JUDGMENT HONOURABLE MS.JUSTICE H.N.DEVANI Date : 30/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1 Both these petitions are taken up for hearing together as the issue involved is common, though on facts there is slight variation, which however, would not make any material difference. 2 Special Civil Application No. 12862 of 2004 has been heard as the lead matter and accordingly detailed facts as narrated are taken from the said petition. 3. The petitioner, a partnership firm, is engaged in the business of manufacturing and exporting chemicals manufactured. It is the case of the petitioner that on 27.05.2001 five consignments of manufactured goods were exported. In terms of Rule 12(1)(a) of the Central Excise Rules, 1944 and Rule 18 of the Central Excise Rules,2002 respectively, the petitioner preferred rebate claims. Such rebate claims had to be accompanied by an export promotion copy of the shipping bill duly endorsed by the Customs authorities evidencing proof of export. The said claims were filed on 29.07.2002 and 16.08.2002. On 30.09.2002 the petitioner was served with a Show Cause Notice proposing to reject the rebate claims as the claims were found to be beyond the statutory period of limitation prescribed under section 11B of SCA/12862/2004 3/18 JUDGMENT the Central Excise Act, 1944 (the Act). Vide Order- In-Original dated 15.01.2003 the claims made by the petitioners were rejected. 4. The matter was carried in Appeal by the petitioner and vide order dated 28.08.2003 Commissioner (Appeals) allowed the appeal by recording as under : “4. I have carefully considered the facts on record and the submissions made by the appellants. It is an admitted position that the EDI section of Customs House, Nhava Sheva had issued Export Promotion copy only after the stipulated period of filing rebate claim in the present case was over. The Deputy Commissioner, EDI department, Nhava Sheva's letter packed in a sealed cover addressed to Divisional Head is dated 16.8.2002, which is beyond one year's period. It is not necessary that the DC. Nhava Sheva should have mentioned in his letter that rebate claims will be filed late due to late printing of EP copy of shipping bills. It is a routine matter that any rebate claim has to be filed only after receipt of the said copy of shipping bill alongwith other required documents. Unless, the appellant received said documents, they could not have filed rebate claim”. SCA/12862/2004 4/18 JUDGMENT 5. The respondent-Revenue carried the matter in revision challenging the order of Commissioner (Appeals) and succeeded vide impugned order dated 12.05.2004. The reasons which have weighed with the Revisional Authority read as under : “7. In the instant case, undisputed facts indicate that the rebate claim were not filed within the statutorily prescribed time period. The Respondents admit that there was delay but submit that the delay was due to delay on part of customs authorities in handing over E.P. copy of shipping bill to them. In other words, they submit that as rebate claim is to be filed alongwith all required documents and they could not do this in the absence of EP copy of shipping bill, the consequent delay is to be condoned. 8. The question that emerges is – can the Commr.(A) condone this delay and direct the Original Authority to consider the subject rebate claims ? 9. Govt. notes that this issue is well settled by the Hon'ble Supreme Court. In the case of U.O.I. Vs. Kirloskar Pneumatic Company (1996(84)ELT 401 (SC), the Apex Court held that the customs authorities who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to the time limit prescribed by SCA/12862/2004 5/18 JUDGMENT the Customs Act. Thus authorities created by statute cannot ignore the time limit prescribed by the statute. In view of the above, the inescapable conclusion is that the Commr.(A) erred, in ignoring the time limit prescribed by the statute. 10. The next question that emerges is, what is the course of action for the claimant when some documents are not available because of laxity on the part of dept. over which they have no control. Para 2.4 of chapter 9 of the Central Excise Manual provides answer to this question. It says that in case of non- availability of any document due to reasons for which the Central Excise or Customs dept. is solely accountable, the claim may be admitted that the claimant is not in disadvantageous position with respect to limitation period. In other words, in such situation, incomplete claim is to be filed by the claimant within the time limit and it is to be admitted by the dept. so that the claim will not be hit by time bar, subsequently.” 6. It is the case of the petitioner that the Revisional Authority has erred in reading the provisions of Section 11B of the Act as well as paragraph No.2.4 of Chapter IX appearing in Central Board of Excise and Customs' Excise Manual of Supplementary Instructions (CBEC Manual) for New SCA/12862/2004 6/18 JUDGMENT Excise Procedure as on 01.09.2001. That in fact, in a case where an assessee is prevented from making a claim within the prescribed period of limitation due to non availability of relevant document from the Central Excise or Customs Department, and where such department is solely responsible, an assessee cannot be put in a disadvantageous position with respect to limitation period by reading provisions of Section 11B of the Act as being absolute and by applying said provision in abstract. It was submitted that Commissioner (Appeals) had rightly appreciated the fact that the delay had not occurred because of any laxity on part of the petitioner but it was because of the lapse on part of the Customs authorities in returning the export permission copy of shipping bill late over which the petitioner had no control. However, the Revisional Authority had failed to consider the same and by reading only one part of paragraph No. 2.4 of the CBEC Manual recorded a finding that even an incomplete claim ought to have been made within the period of limitation, and if the petitioner failed to make such a claim within such period of limitation as is prescribed under section 11B of the Act, the petitioner cannot claim any rebate. 7. On behalf of the respondent authorities it was submitted that the order made by the Revisional Authority was correct and justified in law when provisions of Section 11B of the Act were read in conjunction with paragraph No.2.4 of the CBEC Manual. It was submitted that paragraph No. 2.4 of the CBEC SCA/12862/2004 7/18 JUDGMENT Manual in fact laid down a general rule stipulating that no incomplete application should be entertained, but the latter part of the said paragraph carved out an exception to the effect that where the accompanying documents to a claim were not available due to lapse on part of officials of either the Central Excise or the Customs Department, even an incomplete claim was required to be preferred by an assessee within the period of limitation and the department was required to receive the same. That in the circumstances, once the period of limitation had expired the Departmental Authorities were not entitled to ignore the limitation prescribed under the Act and hence, Commissioner (Appeals) committed an error in ignoring the time limit prescribed by the statute. There were no powers of condonation of delay vested in any of the authorities under the Act for entertaining a belated claim under section 11B of the Act and therefore also the impugned order made by the Revisional Authority does not merit interference. 8. Section 11B of the Act as is relevant for the present reads as under : “SECTION 11B. Claim for refund of duty – (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the SCA/12862/2004 8/18 JUDGMENT relevant date] [[in such form and manner] as may be prescribed and 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 in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person:” 9. On a plain reading of the aforesaid provision it can be seen that the section provides for making a claim for refund of duty (which includes rebate of duty) but such a claim has to be made before the expiry of one year from the relevant date. The application has to be in the form and manner as prescribed and the application shall be accompanied by such documentary or other evidence which will enable the applicant to establish that the amount of duty of excise in relation to which such refund/rebate is claimed was collected from, or paid by, the claimant and the incidence of such duty had not been passed on to any other person. In so far as the incidence of duty being passed over it is clear that the same is not required to be considered, as in relation to a claim for rebate, under the Proviso below sub-section (2) of section 11B of the Act vide clause (a) of the Proviso rebate of duty of excise on excisable goods exported out of India or inputs which SCA/12862/2004 9/18 JUDGMENT have borne duty of excise having been used in manufacture of goods which are exported out of India the assessee becomes entitled, provided the application is in accordance with the prescription, viz. in form and manner and is accompanied by relevant documents. 10. In this context one has to keep in mind as to why the provision prescribes attachment of documents to such rebate claim. The object of the said requirement, simply stated, is nothing else but cross verification of the fact that :(1) the goods are exported outside India, and (2) such goods are duty paid goods. That is why the requirement of the Rules to obtain endorsement from the Customs officials on the shipping bills under which the goods have been exported. 11. The Central Board of Excise and Customs, in exercise of its delegated legislation, has framed the Manual of Supplementary Instructions. In Chapter 1 Part 1 of the said CBEC Manual the scope of the Manual has been explained. Paragraph No.1.1 indicates that the instructions are supplemental to, and must be read in conjunction with the Act and the Rules. Paragraph No.2 makes it clear that the Manual is a public document and is made available to all interested persons. On a conjoint reading of paragraph Nos.1.1 & 1.2 of the Manual it is also apparent that instructions therein are applicable throughout India and Officers of Central Excise SCA/12862/2004 10/18 JUDGMENT Department are not entitled to depart therefrom, without previous approval of the Commissioner, who in turn is required to obtain sanction from CBEC for such deviation. 12. Chapter IX of the CBEC Manual 2001-02 deals with REFUND and paragraph No.2 deals with Presentation of refund claim. Sub-paragraph No.2.4 of said paragraph No.2 deals with the subject matter of controversy and reads as under : “2.4 It may not be possible to scrutinise the claim without the accompanying documents and decide about its admissibility. If the claim is filed without requisite documents, it may lead to delay in sanction of the refund. Moreover, the claimant of refund is entitled for interest in case refund is not given within three months of the filing of claim. Incomplete claim will not be in the interest of the Department. Consequently, submission of refund claim without supporting documents will not be allowed. Even if claim is filed by post or similar mode, the claim should be rejected or returned with Query Memo (depending upon the nature/importance of document not filed). The claim shall be taken as filed only when all relevant documents are available. In case of non- SCA/12862/2004 11/18 JUDGMENT availability of any document due to reasons for which the Central Excise or Customs Department is solely accountable, the claim may be admitted so that the claimant is not in disadvantageous position with respect to limitation period.” 13. It is the last sentence of the aforesaid sub- paragraph which has generated the present controversy. The case of the petitioner is that the said sentence viz. commencing with the words “in case of nonavailability of any document” and ending with the words “with respect to limitation period” indicates that the normal rule that a claim application should be accompanied by requisite documents within the period of limitation has been modified so as to ensure that an assessee is not put to disadvantage only because of lapse or laxity on part of the Officers of Central Excise Department or the Customs Department. On the other hand the principal thrust of respondent authority, based on interpretation of the very sentence, is that the said sentence stipulates an exception to the effect that where, in a case, the claim is not accompanied by documents, and such deficiency is on account of non supply of the requisite documents by the Officers of the Department a deficient claim has to be made within the period of limitation prescribed and such a claim shall be considered as and when the deficiency is removed by supplying relevant documents SCA/12862/2004 12/18 JUDGMENT at a subsequent point of time. 14. When one reads entire sub-paragraph No.2.4 as a whole it is not possible to accept the stand adopted by the respondent authority. The text of the said sub-paragraph and the language employed therein would indicate that an assessee cannot claim refund/rebate when the application is incomplete in any manner whatsoever. In fact the submission of a claim without supporting documents will not be allowed, that is the mandate to the officer who is entitled to receive and scrutinise such a claim. It is further provided that in a case where an assessee files the claim by sending the same through post or by adopting a similar mode viz. a mode other than personal presentation, the claim is required to be rejected or returned with a query memorandum depending upon the nature or importance of document not accompanying the claim. It is further provided that the claim shall be taken as filed only when all the relevant documents are available. 15. The last sentence in the said sub-paragraph provides for a situation where a claimant is not in a position to make a claim due to non availability of documents for the reason that such documents are not available because Central Excise Department or the Customs Department is solely accountable for such deficiency, i.e. non availability of the requisite documents, then it is stated that the claim may be admitted so that the claimant is not put in a SCA/12862/2004 13/18 JUDGMENT disadvantageous position with respect to limitation period. The aforesaid sentence uses the word “admit” and the last part uses the phrase “with respect to limitation period”. The use of the aforesaid terms are significant and indicative. On reading of the entire sub-paragraph No.2.4 it becomes clear that a claim which is deficient in any manner shall not be taken as filed (emphasis supplied) and shall be taken as filed only when all relevant documents are available. As against that the latter part talks of the claim being admitted with respect to limitation period. The legislature has not stated that claim may be admitted so that the claimant is not put in a disadvantageous position “within the limitation period”, but the words used are “with respect to limitation period”. In other words, the intention that flows from a plain reading of the language employed is that an exception is provided for in cases where a claim application cannot be tendered for want of requisite documents and such lapse is on account of nonavailability of such documents due to the department being solely accountable. In such circumstances, an assessee cannot be put to disadvantage by asking the assessee to tender a deficient claim within the period of limitation and simultaneously treat the claim as not having been filed till the point of time all relevant documents are available. 16. Aforesaid interpretation derives support from the earlier part of the same sub-paragraph wherein SCA/12862/2004 14/18 JUDGMENT it is provided that if a claim is not processed and refund is not granted within a period of three months a claimant may become entitled to interest on the refund and hence, such incomplete claim will not be in the interest of the department. In fact, as noticed hereinbefore, submission of refund claim without supporting documents is prohibited. 17. There is one more aspect of the matter. Chapter 8 of the CBEC Manual is EXPORT UNDER CLAIM FOR REBATE. Paragraph No.8 of the said Chapter pertains to Sanction of claim for rebate by Central Excise. Sub-paragraph No.8.4 reads as under : “8.4. After satisfying himself that the goods cleared for export under the relevant A.R.E.1 applications mentioned in the claim were actually exported, as evident by the original and duplicate copies of A.R.E.1 duly certified by Customs, and that the goods are of 'duty-paid' character as certified on the triplicate copy of A.R.E.1 received from the jurisdictional Superintendent of Central Excise (Range Office), the rebate sanctioning authority will sanction the rebate, in part or full. In case of any reduction or rejection of the claim, an opportunity shall be provided to the exporter to explain the case and a reasoned order shall be issued”. SCA/12862/2004 15/18 JUDGMENT 17.1 As noted hereinbefore, the claim for rebate is in relation to excise duty paid on the goods which are exported outside India. When one reads the requirement of shipping bill being endorsed by the Customs authorities evidencing the physical export of goods which are duty paid it becomes clear that the entire scheme is an integrated scheme to promote exports. In fact the endorsement requirement itself stipulates endorsement of a copy of shipping bill by use of the phrase “export promotion”. Thus an interpretation which advances the object of the scheme has to be preferred as against a construction which militates against the scheme. 18. As noticed hereinbefore, provisions of Section 11B of the Act stipulate that a claim has to be accompanied by requisite documents, requisite documents in case of an assessee who has exported duty paid goods being copy of shipping bill duly endorsed by the Customs Authorities. Hence, 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. 19. The position in law is well settled 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. In the present case obtaining of an endorsed copy of SCA/12862/2004 16/18 JUDGMENT shipping bill is primarily a procedural requirement and such procedure is not within the control of claimant assessee. 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 SCA/12862/2004 17/18 JUDGMENT 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 nonavailability 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. 23. In the view that the Court has adopted, it is not found necessary to deal with the individual claims in each case. It will be open to the petitioners to pursue their respective claims in accordance with law and the Adjudicating Authority shall process the same in accordance with law keeping in mind what is stated hereinbefore. 24. Accordingly in Special Civil Application No. 12862 of 2004 order No.135/2004 dated 12.5.2004 (Annexure-A) and Order-in-Original dated 15.1.2003(Annexure E) are hereby quashed and set aside restoring the claims made to the file of the Adjudicating Authority for deciding afresh. Accordingly the petition is allowed. Rule made absolute to the aforesaid extent with no order as to SCA/12862/2004 18/18 JUDGMENT costs. SPECIAL CIVIL APPLICATION No. 1174 of 2005. 1 In the present case the petitioner has challenged Orders-In-Original Nos.1053/2004-R, 1054/2004-R and 1055/2004-R dated 11.10.2004 (Annexure- C [colly.]) wherein the claims of the petitioner have been rejected on the ground of being barred by limitation under section 11B of the Act. 2. It is an accepted position between the parties that contentions raised in Special Civil Application No. 12862 of 2004 in case of Cosmonaut Chemicals & Another Vs. Union of India & Another shall apply mutatis mutandis in case of the present petitioner and hence for the sake of brevity the facts and contentions are not reproduced. 3. For the reasons recorded in judgment of even date in Special Civil Application No. 12862 of 2004