I.J. Rao, Member (T)

1. The appellants manufactured, during the period October 1974 to June 1975, Steel castings in which fresh unused duty paid steel melting scrap was used together with old steel melting scrap. They cleared the castings on payment of full duty and later applied for refund of a part of the central excise duty paid by them on the ground that under Notification No. 17/71-C.E. exemption was available to the castings to the extent that duty was paid on steel melting scrap. This claim was rejected by the Asstt. Collector on the ground that as the input consisted of duty paid and non-duty paid melting scrap, the benefit of the said notification was not available to the appellants. The Appellate Collector upheld the order. Hence the present appeal.

2. We heard the learned advocate who submitted that a perusal of the Notification No. 17/71-C.E. shows that it does not exclude from exemption manufacture made partly out of duty paid and partly out of non-duty paid raw material. He submitted that there are a number of judgments of the Supreme Court and of the Tribunal which took this view. The learned advocate argued that in view of the case law the appellants are entitled to refund of duty paid by them on the castings on a proportionate basis with reference to duty paid and non-duty paid scrap used by them. Shri Bagaria, the learned advocate relied upon the following judgments:

(i) 1977(1) E.L.T. J61 (UOI v. TISCO),

(ii) 1986(26) E.L.T. 259 (Aravali Ispat Ltd. v. CCE) CEGAT

(iii) MANU/CE/0096/1988 : 1988 (35) E.L.T. 535 (Indian Organic Chemicals v. CCE) CEGAT

(iv) 1978 (2) E.L.T. J452 (Aluminium Corpn. of India Ltd. v. UOI) - Supreme Court.

(v) MANU/CE/0270/1985 : 1986 (25) E.L.T. 297 (CCE v. Sirsilk Ltd.) - CEGAT

3. The learned advocate also argued that the appellants, under the direction of the department, revised their refund claim downward, but such revision being at the instance of the department, it should not stand in the way of their getting full refund. He further pleaded that Collector (Appeals) wrongly applied limitation of 6 months to their refund claim as their claims were filed prior to 6-8-1977 till which date Rule 11 of the Central Excise Rules had to be read with Rule 173J giving them a limitation period of one year.

4. Shri Arora, learned JDR perused the case law and had nothing to say about the legal position in view of the same. He submitted that the appellants having revised their refund claims, for whatever reason, they cannot now ask that limitation be relaxed in respect of the amount by which they themselves reduced the claim. He further submitted that the factual position regarding the proportion of the duty paid and non-duty paid scrap has to be verified by the Asstt. Collector before any refund can be granted.

5. We have considered the submissions of both sides. The case law cited by the learned advocate, which included the judgments of the Supreme Court and of this Tribunal is clear to the effect that in Notification No. 17/71-C.E. benefit should be extended on a proportionate basis with reference to the duty paid and non-duty paid scrap used in the manufacture of castings. To this extent the department's view was wrong in holding to the contrary. We, therefore, set aside the impugned order as this is against the law as interpreted by the Supreme Court.

6. In so far as the question of revision of refund claim is concerned, the law of limitation is applicable. Merely because the revision of the refund amount was done at the instance of the department limitation does not cease to operate. While reconsidering the matter the Asstt. Collector shall bear this in mind.

7. We have also considered the submission of Shri S.K. Bagaria, learned advocate regarding application of limitation under Section 11B to the claim. His submission that as the refund claims were submitted prior to 6-8-1977 they should be governed by the limitation which prevailed at that time is correct. The limitation in respect of these