Case: Union of India &amp; Others Vs. Uttam Steel Ltd

1. The respondent herein was engaged in the manufacture and export of steel products. They exported galvanised corrugated sheets. The goods were shipped on board on 25.5.1999 and 10.6.1999 respectively in two lots. As per the law prevailing at the relevant time, the respondent had to file claims for rebate within six months from the date of shipment i.e. on or before 20.11.1999 and 10.12.1999 respectively. However, claims for rebate on both counts were filed only on 28.12.1999 beyond the period of six months under Section 11B of the Central Excise Act, 1944 as it stood at the relevant time.2. On these facts, a show cause notice dated 7.3.2001 was issued and by an order dated 4.10.2001, the Deputy Commissioner (Rebate) rejected the claim for rebate on the ground that they were time barred.3. Section 11B was amended on 12.5.2000 where the period of six months was substituted by a period of one year. Since the rebate application was filed within the period of one year from the date of the two shipments, the respondent contended that they were within time.4. By an order dated 15.2.2002, the appellate authority allowed the respondents appeal holding that the extended period of one year was available to the respondent, the period prescribed for limitation being procedural law and, therefore, retrospective in nature.5. Against this order, the Central Government by an order dated 16.8.2002 allowed the revision applications of the Union holding that the extended period of limitation of one year was not available to the assessee.6. The assessees writ petition being Writ No.557 of 2003 was allowed by the impugned judgment dated 12.8.2003As stated hereinabove, right to rebate of duty accrues under Rule 12 on export of goods. That right is not obliterated if the application for rebate of duty is not filed within the period of limitation prescribed under Section 11B. In fact, Rule 12 of the Excise Rules empowers the excise authorities to grant rebate of duty even if some of the procedural requirements are not fulfilled. Even proviso (a) to Section 11B (2) clearly provides that in the case of rebate of duty, the rebate will be granted to the exporter even if the duty element is passed on by the exporter. Thus, under Section 11B the amount of excise duty is refunded to the exporter even if the duty element is passed on by the exporter. Thus, reading Rule 12 with Section 11B of the Act it becomes abundantly clear that the limitation prescribed under Section 11B is only procedural and does not affect the substantive right to claim rebate of duty under Rule 12. Moreover, there are no consequences set out in the statute, if the application for rebate of duty is not made within the period of limitation. Thus the right to rebate of duty which flows from Rule 12 is not destroyed by failure to apply for rebate of duty within six months time prescribed under the statute. Thus Section 11B merely debars the remedy if the claim is not filed within the period of limitation set out therein, if there is alteration in the procedural law, if there is no reason to presume that the amendment was not intended to apply retrospectively. In other words, where the amended statute alters the existing practice and procedure of enforcing the substantive rights, then the amended procedure would apply for enforcement of the substantive rights existing on the date when the amended provisions came into force. Accordingly, we hold that the limitation of one year provided by amendment to Section 11B with effect from 12th May 2000 would apply retrospectively and would cover exports made one year prior to 12th May 2000. To put it differently the amended limitation of one year with effect from 12th May, 2000 would apply to all exports made after 12th May 1999. In the present case, the exports were effected on 20th May 1999 and 10th June 1999 i.e. within one year from 12th May 2000 and hence, the amended limitation period of one year would apply to the case of the petitioners.45. Alternatively, once it is held that the limitation under Section 11B is procedural, then any amendment to such procedural law can be said to have retroactive effect, if not the retrospective effect. The amended Section 11B, without affecting the existing substantive right, merely enables an expanded remedy period. In other words, even if the amendment is not to have retrospective effect, it would nevertheless have retroactive effect and in that view of the matter, the case of the petitioners would be covered within the amended period of limitation and thus the petitioners would be entitled to rebate of duty. In the light of the view taken, for the reasons recorded, we do not think it necessary to dwell upon other contentions raised by the petitioners."

Court's reasoning:
There is no doubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, however, is with one proviso super added which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time barred before an Amending Act with a larger period of limitation comes into force. A number of judgments of this Court have recognised the aforesaid proposition.Shri Bagarias argument based on the proviso to rule 12(1) would obviously not have any force if Section 11B were to apply of its own force. It is clear from Section 11B(2) proviso (a) that a rebate of duty of excise on excisable goods exported out of India would be covered by the said provision. A reading of Mafatlal Industries (supra) would also show that such claims for rebate can only be made under Section 11B within the period of limitation stated therefor. This being the case, the argument based on Rule 12 would have to be discarded as it is not open to subordinate legislation to dispense with the requirements of Section 11B. Equally, the argument that on a bond being provided under Rule 13, the goods would have been exported without any problem of limitation would not hold as the exporter in the present case chose the route under Rule 12 which, as has been stated above, is something that can only be done if the application for rebate had been made within six months.The effect of the amendment of Section 11B on 12th May, 2000 is that all claims for rebate pending on this date would be governed by a period of one year from the date of shipment and not six months. This, however, is subject to the rider that the claim for rebate should not be made beyond the original period of six months. On the facts of the present case, since the claims for rebate were made beyond the original period of six months, the respondents cannot avail of the extended period of one year on the subsequent amendment to Section 11B.The effect of Section 11B, and in particular, applications for rebate being made within time, has been laid down in Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 ,The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.(i) Where a refund of tax/duty is claimed on the ground that it has been collected from thebefore the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 ormisinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Articleof this Court under Articlebe circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of SectionThis is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.The said enactments including Section11B of the CentralExcises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments areenactments providing for levy, assessment, recovery and refund of duties imposed thereunder. Section11B of the CentralExcises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to ais not a departmentalto this Court, which is a civilthe law laid down by this decision it is clear that all claims for rebate/refund have to be made only under Section 11B with one exceptionwhere a statute is struck down as unconstitutional. Further, the limitation period of six months has to be strictly applied.