M.R.F. LTD. versus COLLECTOR OF CENTRAL EXCISE, MADRAS.

Citation: [2004] 1 S.C.R. 1117 · Decided: 27-01-2004 · Supreme Court of India · Bench: P. VENKATARAMA REDDI · Disposal: Appeal(s) allowed

Judgment (excerpt)

..\· 
M.R.F. LTD. 
A 
V. 
COLLECTOR OF CENTRAL EXCISE, MADRAS. 
JANUARY 27, 2004 
[P. VENKATARAMA REDD! AND S.H. KAPADIA, JJ.] 
B 
Central Excise and Salt Act, 1944; Section 35-l and 11(8)(3)/Central 
Excise and Tariff Act: sub heading 4005.00 and 4006.90/Central Excise Rules, 
1944; Rule 2338/Notification No. 377186: 
c 
Classification--Payment of excise duty on vulcanizing solution as per 
approved classification list under sub-heading 4006.90-ls.rnance of Show 
cause notice by Revenue Department demanding ·excise duty as per re-
class//ication under sub-heading 4005.00-Payment thereof by the assessee 
under protest-Revenue Department confirmed the demand--On appeal, D 
reversed by the Appellate authority-Refund claims-A/I the claims except 
one allmred by the authority holding that differential 0111011111 of du(v in one 
of the claims was not under protest in terms of Rule 2338-Appeals dismissed 
by the Appellate Authority and thereafter by the Tribunal-On appeal, Held: 
since assessee succeeded before the Appellate Authority in the re-classification 
dispwe, Assessee entitled to claim refund of differential amount of duty in E 
terms of Section 118(3) of the Act-Revenue directed to refund the differential 
amount of duty with interest thereon--Directions issued. 
Appellant-assessee manufactures "vulcanizing solution". It filed a 
classification list under sub-heading 4006.90 in respect of the product. The F 
list was approved by the Revenue Department. Later, the Department had 
asked the assessee to submit revised classification list as the product was 
classifiable under sub-heading 4005.00 and thereby directed him to pay 
differential amount of duty for the relevant period. The Department also 
issued a show cause notice to him. Assessee paid the differential amount 
of duty under protest by endorsing the protest on the challan. Later, he G 
filed a formal letter of protest stating that the product was classifiable 
under sub-heading 4005.00 r/w exemption Notification No.377/86. 
However, Department rejected his claim and confirmed the demand. On 
appeal, Appellate Authority reversed the order. Consequently, assessee 
preferred 3 refund claims. Allowing all except one refund claim, Assistant 
1117 
H 
1118 
SUPREME COURT REPORTS 
[2004] I S.C.R. 
A Collector, held that since duty was not paid "under protest in terms of Rule 
233(B) of the Central Excise Rules, appeals filed by the aggrieved assessee 
were dismissed by the Appellate Authority and thereafter by CEGAT. 
Hence the present appeal. 
It was contended for the appellant-assessee that the differential 
B amount of duty was paid by the assessee under protest by making an 
endorsement on the challan to that effect and subsequently a protest letter 
had also been forwarded to the Department; that since the disputes in 
regard to payment of duty under the appropriate sub-heading of Central 
Excise and Tariff Act was resolved in his favour, refund claim thereto 
C should have been allowed; that in the facts and circumstances of the case, 
relevant provision of limitation could not have been applied; and that since 
differential amount of duty was paid much after the clearance of the goods, 
it was not possible to comply strictly with the provisions of Rule 2338 of 
the Rules. 
D 
On behalf of the Revenue, it was submitted that since the provisions 
of Rule 2338 of the Rules have not been complied with, there was no 
protest h)' the assessee, and so the refund claim was not maintainable; and 
that since the refund claim was not made within 6 months from the date 
of payment of duty, it was barred by time. 
E 
Allowing the appeal, the Court 
F 
HELD: I. I. Tribunal has relied upon Rule 2338 of the Central Excise 
Rules in support of its view that in order to put a protest payment the 
conditions and circumstances mentioned in Ruic 2338 should be complied 
with, otherwise there could be no protest payment under the Central Excise 
and Salt Act. On this reasoning the Tribunal denied refund to the 
appellants. However, there was one more reason for denying the refund. 
According to the Tribunal the differential payment was not the result of 
demand or legal compulsion. 11123-E-FI 
G 
1 .2. The decision on the larger issue of compliance of Rule 2338 as 
condition precedent to the applicability of the proviso to Section l IB(l), 
as it stood at the material time, need not be gone into as the appellants 
are entitled to relief of refund on the facts of the case in t

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