Customs, Excise and Gold Tribunal - Tamil Nadu
Uma Laminated Products (Pvt.) Ltd. vs Collector Of Central Excise on 3 October, 1988
Equivalent citations: 1989(22)ECR13(TRI.-CHENNAI), 1993(66)ELT283(TRI-CHENNAI)
ORDER K.S. Venkataramani, Member (T)
1. This is an appeal directed against the order dated 27-4-1987 passed by the Collector of Central Excise (Appeals), Madras, by which he had upheld the order dated 13-10-1986 of the Assistant Collector of Central Excise, Hyderabad III Division, rejecting the refund claim of the appellants herein for a sum of Rs. 18,53,715.82 being the amount of duty involved on the laminated packing containers manufactured and cleared by them.
2. The appellants herein filed the refund claim on 11-7-1986 on the ground inter alia that since the appellants had not contravened Rule 9 (1) of the Central Excise Rules, 1944 there could be no demand against them under Rule 9(2) thereof. The background of the demand is that on 13-11-1984 a Show Cause Notice was issued to the appellants asking them to show cause why the goods produced by them should not be classified under the erstwhile Central Excise Tariff Item 68 instead of under Tariff Item 17(4) as has been approved earlier. After considering their reply to the Show Cause Notice and hearing them in the matter, the Assistant Collector confirmed the classification under Item 68 by his order dated 21-5-1985 and held that the revised classification will be applicable from the date of issue of the Show Cause Notice viz. 13-11-1984. Against this order of the Assistant Collector on classification, an appeal was filed before the Collector (Appeals) which was rejected by that authority, and a further appeal was filed before the Tribunal, New Delhi, which is said to be pending. Meanwhile on 16-12-1985, the Assistant Collector wrote to the appellants indicating the clearances of their product for the period 13-11-1984 to 16-12-1985 and quantifying the duty payable by them in accordance with the revised classification, and in response to their reply contending that the demand was not payable by them, the Assistant Collector in his letter dated 3-1-1986 referred to the adjudication order dated 21-5-1985 deciding the classification issue and requiring the appellants to pay the amount of Rs. 18,85,275.12 under Section 11A of the Central Excises & Salt Act, 1944. The appellants thereafter complied with the demand in instalments between 16-1-1986 to 24-2-1986 as stated above. They subsequently filed a refund claim on 11-7-1986. This refund claim was rejected by the Assistant Collector on the ground that the classification of the goods as decided by the Assistant Collector has been upheld in appeal by the Collector (Appeals) and that the appellants had paid the duty correctly as per the approved classification, and that therefore, no question of refund would arise. This order of the Assistant Collector rejecting the refund claim was upheld by the Collector (Appeals) and the present appeal is against that order of the Collector (Appeals).
3. Shri S.K. Srivastava, the learned Consultant, appearing for the appellants contended that in this case the duty has been demanded in terms of Rule 9(2) read with Section 11 A. Since there was no charge of clandestine removal he urged that there could be no ground for invoking the provisions of Rule 9(2). Further, in the order of the Assistant Collector dated 21-5-1985 deciding the issue of classification, there was no demand for duty at all. The learned Consultant contended that a notice for demanding duty not levied or short levied has to be issued under Section 11-A, and in this case no such notice has been issued, and the letter of the Assistant Collector dated 3-1-1986 requesting payment of duty was time-barred. He pointed out that the Show Cause Notice for revising classification did not at all mention that pending the decision, the assessment of the goods manufactured and cleared by them would be provisional, which was the requirement, according to the learned Consultant, in terms of Rule 173B of Central Excise Rules. The learned Consultant relied upon the decision of the Supreme Court in the case of Union of India and Ors. v. Madhumilan Syntex (Pvt.) Ltd. reported in 1988 (35) E.L.T. 349 (SC) wherein the Supreme Court held that demand raised without notice is invalid and that prior notice is a necessary condition under Section 11A of the Central Excises & Salt Act, 1944. He further relied upon the decision of the West Regional Bench in the case of Jhunjhunwala Rolling Mills and Engg. Works v. Collector of Central Excise, Nagpur, reported in 1987 (28) E.L.T. 534 wherein it was held that a decision merely deciding classification will not by itself be enough for a refund claim, under Section 11B and that there has to be a specific claim in terms of that section for a refund.
4. Shri K.M. Vadivelu, the learned D.R. appearing for the Department, contended that the Show Cause Notice issued on 13-11-1984 clearly spelt out the grounds for demanding duty. The notice had asked the appellants to show cause as to why the classification of the goods should not be revised to Item 68 of the Central Excise Tariff, and it also asked them to show cause why duty thereon shall not be demanded, and further, as to why the future assessment thereafter should also be not under the revised classification. Therefore, when the classification itself was decided on the basis of the notice as above, there was no need in law for a further notice for demanding duty as such. The appellants also cannot get around duty paid as per approved classification by filing a refund claim.
5. We have given careful consideration to the submissions made by the learned Consultant and the learned D.R. The main argument put forth is that the demand is invalid because the order of the Assistant Collector dated 21-5-1985 deciding the classification did not per se demand duty, and that in the absence of a specific notice for demanding duty under Section 11A, the payment of such duty by them was an unlawful collection on the part of the Department. Examining this contention, a perusal of the Show Cause Notice dated 13-11-1984 shows that the notice after setting out the grounds for considering the revision of the classification earlier approved, thereafter proposed to revise the classification of the goods under Item 68 of Central Excise Tariff instead of Item 17(4) of the CET, and also to demand duty under that Tariff Item on the goods, besides stipulating that the appellants would be required to take out a Central Excise Licence under Tariff Item 68 and follow other formalities thereof under the Central Excise Rules. After considering the defence put forth by the appellants the Assistant Collector, while confirming the classification under Item 68 in his order dated 21-5-1985, had further held that the revised classification would be valid from the date of issue of the Show Cause Notice viz. 13-11-1984. In such a context, when the adjudication proceedings starting with the Show Cause Notice culminated in the Assistant Collector's order, clearly the appellants had been put on notice regarding the revision of the classification of their product and also their liability to pay duty with effect from the date of the Show Cause Notice, and hence the contention that a separate notice for demanding duty should have been issued is unacceptable.
6. The Supreme Court decision in the case of Madhumilan Syntex (Pvt.) Ltd. relied upon by the appellants does not advance the appellants contention. In that case, the Supreme Court found that a demand for duty had been made without issuing Show Cause Notice for the modification of the classification list, whereas in this case the Assistant Collector has clearly issued a detailed show cause notice setting out the grounds for revising the classification, as also the liability to duty, and thereafter had ordered its revision, and the demand for duty followed as a consequence of such an adjudication by the Assistant Collector on the classification issue. In such a situation, when the decision of the Assistant Collector was upheld in appeal by the Collector (Appeals), and the appellants are pursuing the matter in a further appeal before the Tribunal, they cannot very well attempt to upset the decision on classification and the assessments completed on that basis indirectly by way of a refund claim.
7. The further case law relied upon by the appellants relating to the decision of the West Regional Bench in the Jhunjhunwala Rolling Mills and Engineering Works v. Collector of Central Excise, Nagpur, is also not on all fours with the facts of the present case. In that case the West Regional Bench was dealing with an application for refund under Section 11B, whereas here we are concerned with the demand for duty under Section 11A. Section 11A is a recovery provision and the two Sections 11A and 11B, although in a sense complementary, are not really pari passu. Section 11A provides for two different time limits for recovery which is absent in Section 11B.
8. It is further seen that in this case the revised classification has been made applicable by the Assistant Collector in his order dated 21-5-1985 with effect from the date of issue of the Show Cause Notice and such prospective revision of the classification has been upheld by the Supreme Court in the case of MAT Steel Equipment Private Ltd. v. Collector of Central Excise reported in 1988 (34) E.L.T. (8) (SC). In the circumstances, therefore, we do not find any reason to interfere with the orders passed by the lower authorities. The appeal is, therefore, rejected.