Customs, Excise and Gold Tribunal - Delhi
Indian Aluminium Co. Ltd. vs Collector Of C. Ex. on 8 August, 1997
Equivalent citations: 1997(95)ELT154(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. In this appeal the Order-in-Appeal dated 15-1-1987 passed by the Collector (Appeals), New Delhi has been challenged. By the said order the Collector (Appeals) had upheld the order of the Asstt. Collector dated 22-10-1982 as regards the duty demand for the period 1-3-1975 to 29-4-1975 while remanding the matter back for the balance period of 30-4-1975 to 15-7-1975 for considering the eligibility for exemption under the exemption Notification No. 111/75.
2. Brief facts are :
The appellants are engaged in the manufacture of aluminium wire rods from E.G. grade aluminium ingots. By SCN dated 4-5-1982 demand was raised against them alleging short levy in respect of clearance of 532.737 M.T. of Properzi Rods (Aluminium Wire Rods) cleared during the period 1-3-1975 to 14-7-1975. Appellants were also asked to show cause why effective rate of duty on the said Properzi rods should not be demanded since the benefit of the Notification No. 42/75 claimed by appellants was not applicable in their case as Notification No. 42/75 applied only to primary manufacturers and not to Appellants, who were secondary manufacturers. The show cause notice also alleged that the Appellants had failed to file a revised classification list from 1-3-1975 when the rate of duty had been revised. It was also alleged that they had not fulfilled the conditions laid down in the proviso to Notification No. 111/75 because of which the concession of duty claimed by them had ceased to be available to them. By Order-in-Original Asstt. Collector confirmed the demand rejecting the present Appellants' plea of time bar. On merits he held that Notification No. 42/75 did not apply to them. In appeal Collector (Appeals) confirmed the Asstt. Collector's order on time bar by holding that the question of time bar did not arises as the original assessment was only a provisional assessment. He also confirmed the Asstt. Collector's order as regards demand for the period 1-3-1975 to 29-4-1975.
3. In the Appeal before us the following issues have been raised :
(a) The demand raised in the show cause notice on the ground that wire rods or properzi rods cleared by the Appellants on the concessional rate of duty under Notification No. 42/75 @ 30% ad valorem + Rs. 1,500/- per MT. + Rs. 500/- per MT. as additional excise duty did not refer to the relevant provision under which the notice had been issued. The period for which the demand related was 1-3-1975 to 14-7-1975 whereas the show cause notice was issued on 4-5-1982. The demand was, therefore, barred by limitation under Section 11 A.
(b) The appellants were eligible for the concessional rate of duty under Notification No. 42/75 since the said Notification was not restricted to primary manufacturers alone and the distinction sought to be made between primary manufacturer and secondary manufacturer in the show cause notice was unwarranted.
(c) Since Asstt. Collector had by his Order dated 22-10-1982 confirmed the demand raised in the show cause notice and held that the demand is not barred by limitation on the ground that the Appellants had filed a writ petition in the Delhi High Court challenging the classification taken by the Department that the assessment was provisional, was incorrect.
4. Appearing for Appellants Shri V. Lakshmi Kumaran, Advocate explained that Superintendent had on 1-9-1970 approved the classification list classifying properzi rod and Aluminium rods under T.I. 27A(ii) as aluminium wire rods. Appellants requested for provisional Assessment under Rule 9B at nil rate of duty. On 7-2-1972 the Dy. Collector rejected the Appellants' objection against the approval of ctassification list and on 16-3-1972 the Superintendent directed the Appellants to clear the rods on payment of duty. ld. Counsel submitted that with this order of the Superintendent dated 16-3-1972 the assessment had become final and there is no question of the assessment being provisional from the date. He contended that the letter from the Superintendent 1-4-1972 for payment of duty amounting to Rs. 38,78,064.19 confirmed this position. He stated that in the meantime by an order dated 6-4-1972, the Delhi High Court had on a writ petition filed by the Appellants granted interim stay of the assessment. However, on 18-5-1972 Appellants had withdrawn the writ petition. Thereafter on 20-5-1972 Appellants had requested for provisional assessment under Rule 9B which was rejected by the Superintendent on 26-5-1972. After this Appellants had further requested the Collector on 1-6-1972 for grant of provisional assessment under Rule 9B which was not accepted. On 12-6-1972 the Superintendent allowed 'NIL' assessment under Rule 9B and stayed the enforcement of the demand for the earlier consignment till the disposal of the Appeal by the Appellate Collector. On 7-9-1972 the Appellate Collector rejected the Appeal and on 22-9-1972 the Superintendent directed the Appellants to clear aluminium wire rods after payment of duty. Direction was also given for compliance of demand in respect of aluminium wire rods already cleared at Nil rate of duty under Rule 9B. Further, on 27-9-1972 the Collector had ordered that the goods cannot be allowed to be assessed provisionally as provided under Rule 9B in view of the Order in Appeal passed of the Collector (Appeals). The Appellants had again filed Writ Petition before the Delhi High Court on 4-10-1972 seeking the quashing of earlier orders of the Excise Authorities. However, the High Court by order dated 5-10-1972 granted only stay of recovery proceedings for properzi rods cleared thereafter on condition of proper bank guarantee being furnished for the amounts demanded. This interim order was confirmed by the High Court on 14-11-1972 and the Appellants were directed to continue the Bank guarantee in respect of further clearances. Ld. counsel contended that the facts as narrated above would clearly show that the provisional assessment had been withdrawn and had in any event come to an end on 22-9-1972 on the basis of the specific direction given by the Supdt. for effecting clearance after payment of duty., Further, the Collector had also passed a specific order dated 27-9-1992 refusing provisional assessment under Rule 9B. In this view of the matter there cannot be any provisional assessment. He also pointed out that the Appellants had made a specific prayer to the High Court in the Writ Petition filed by them, and the High Court had not passed any order on the said prayer thereby implying that the Appellants' prayer for continuation of provisional assessment was rejected by the High Court. The Deptt. therefore, cannot construe the order of the High Court directing stay of recovery on furnishing of bank guarantee as continuation of provisional assessment in terms of Rule 9B.
5. On merits of the case ld. Counsel contended that under Notification No. 42/75 Aluminium falling under erstwhile T.I. 27 declared by the Appellants to be of electrical conductor grade was required to be supplied and distributed in accordance with the Aluminium (Control) Order, 1970 which was subject to duty @ 30% as against the general effective rate of 30% + 1500 (basic excise duty). The said notification applied to manufacturers who declared the aluminium to be of electrical conductor grade. The Aluminium (Control) Order, 1970 also governed the supply and distribution of such aluminium. He further contended that the lower authorities had erroneously held that Aluminium (Control) Order applied only to producers as defined in Paragraph 2(e) of the Order. The lower authorities had on that basis concluded that the Appellants, not being primary producers within the meaning to Paragraph 2(e) of the Order could not supply and distribute aluminium in accordance with the provisions of the said order. He referred to Para 5A of the said Order which covered producers, manufacturers, dealers and importing agents. He, therefore, prayed for the setting aside of the impugned order.
10. Appearing for the Department Shri M. Jayaraman, ld. JDR referred to the order of the Collector (Appeals) and stated that the Collector (Appeals) has given detailed findings on each of the points raised by the present Appellants. On the question of time bar, the relevant Rule that was in force during the period of demand, namely 1-3-1975 to 14-7-1975 was Rule 10 of the Central Excise Rules and under Rule 10, limitation period for raising the demand expired on 14-7-1976. It was contended by the appellants that since the Show Cause Notice did not refer to any specific provision under which demand was proposed to be raised, the demand could not be sustained even otherwise as the demand could not be considered as provisional assessment. The Departmental Representative stated that according to the Section 11A where the duty of Excise was provisionally assessed, the date of adjustment of duty after the final assessment should be the relevant date for calculation of limitation period. However, for purposes of invoking Section 11 A, it was essential that the provisional assessment should have been on account of the dispute in question. He relied on the Tribunal decision in Castrol Ltd. reported in 1985 (20) E.L.T. 102 in support. He also drew attention to the Tribunal decision in Atma Steel reported in 1984 (17) E.L.T. 331 (Tribunal) wherein it was held that duty could be demanded under a particular provision of law which was in force at the time of issue of the Show Cause Notice and not on the basis of a provision of law which had been enacted subsequently. Since in the instant case, the duty was demanded in 1982, and Section 11A had already been enacted, it cannot be argued that duty could not have been demanded under the said Section. He also submitted that it was well-settled that mere omission to mention a provision of law demanding the duty would not be sufficient ground to invalidate the demand if it could be traced to a valid provision of law. He, therefore, submitted that the contention of the appellants that the Show Cause Notice did not invoke any specific provision under which the demand was proposed to be raised had no force. As regards applicability of Notification No. 42/75, DR submitted that the notification allowed a lower rate of duty in respect of aluminium falling under old Tariff Item No. 27 where the aluminium declared by the manufacturer was of electrical conductor grade and if it was required by the Central Government to be supplied and distributed in accordance with the provisions of the Aluminium (Control) Order, 1970, the Appellants had to satisfy the conditions contained in the Order. As regards the definition of 'manufacturer'/ 'producer' under the said order, DR explained that the definition of 'manufacturer' in the said order restricted it to a person who actually manufactured aluminium. Further, for purpose of the Aluminium (Control) Order 'producer' has been defined to be a person registered under the Industries (Development and Regulations) Act, 1951 who produces Aluminium from Bauxite or Alumina. He also drew attention to Rule 5A of the said Order which empowered the Central Government to direct that no 'producer', 'manufacturer', 'dealer' or 'importer', shall undertake production of any form of aluminium specified in the Schedule to the Order except in the manner specified by the Central Government or the Controller or other Officer as the Central Government may authorise from time to time. Since Notification No. 42/75 before its amendment by Notification No. 117/75, categorically stated that the exemption under the said Notification would apply only in respect of electrical grade aluminium required to be supplied by the Central Government to be distributed in accordance with the Aluminium (Control) Order, and Paragraph 4(1) of the Order provided that the Central Government might issue directions to any producer to supply aluminium to different agencies subject to certain conditions and since a producer under the Order is a person registered under the IDR Act who produces aluminium rod from Bauxite/Alumina, a producer to come within the definition of 'producer' under the said Order has to be primary producer of aluminium and not a manufacturer of aluminium products from primary aluminium produced by the first producer. The appellants had not been able to show that they were primary producers of aluminium as contemplated in the Aluminium (Control) Order. Further, even the allocation order dated 12-5-1975 which has been relied upon by the appellants by which certain electrical grade aluminium was allocated to the appellants for manufacture of electrical conductors did not show that the aluminium rods manufactured by the appellants and used for producing electrical conductors were supplied and distributed in accordance with the provisions of Aluminium (Control) Order. Hence, the appellants could not claim the benefit of Notification No. 42/75 before its amendment merely on the basis of allocation letter issued by the DGTD on 12-5-1985.
11. We have considered the rival submissions. On the question whether the original provisional assessment requested for by the appellants and allowed by the Superintendent by his letter dated 12-6-1972 continued after the rejection thereof by Collector by his letter dated 27-2-197.2, we find force in the contention of the ld. Advocate that to be considered provisional assessment under Rule 9B, the further requirements of the said rule, viz., execution of a bond was also necessary. Further, though no doubt the original assessment was made provisional at the instance of the appellants themselves, the same had become final on 1-4-1972 with the Superintendent demanding duty from the appellants as a demand can be made only after finalisation of the assessment. Even assuming that the Superintendent's demand dated 1-4-1972 did not amount to finalisation of assessment, no provisional assessment could continue after the order of the Appellate Collector dated 27-9-1972 rejecting the appellant's request for making the assessment provisional. Apart from this we also find that the Superintendent had approved the modified classification list on 1-9-1970. No assessment can also said to be provisional once the classification list has been approved by the Superintendent [Ajanta Iron & Steel v. U.O.I -1986 (23) E.L.T. 318].
12. As regards the question of time-bar we observe that according to Rule 10 read with Rule 173] as it stood at the relevant time demand could be raised only within a period of one year. The period of duty demanded being 1-3-1975 to 14-7-1975 no duty could be raised after 14-7-1976. We, therefore, do not find merit in the Department's contention that the longer period available after amendment of Rule 10 w.e.f. 6-8-1977 was available to the Department for re-opening a cause of action arising even before 6-8-1977.
13. On the question of whether the appellants were eligible for benefit under Notification No. 42/75 we find that the lower authorities relying on the definition of 'producer' contained in Rule 2(e) of the Aluminium (Control) Order, 1970 had held that the appellants who are manufacturers of secondary aluminium would not come whether that definition and, therefore, not eligible for the benefit. However, we observe that appellants are covered within the definition of 'manufacturers' under Para 2(d) of the said Order and by Para 5A thereof the Government is empowered to regulate production, supply and distribution of aluminium. Further, Aluminium (Control) Order also applies to producers, manufacturers and dealers insofar as production, supply, distribution etc. of aluminium is concerned. It is also seen that Notification No. 42/75 clearly mentions 'manufacturers'. Therefore, we find that the finding of the lower authorities to the effect that Notification No. 42/75 applies only to 'producers' of primary aluminium and not to 'manufacturers' of aluminium is not correct. Further, we also find from the record (pages 109 to 119 of the Appellants Paper Book) that the appellants had been allotted aluminium of B.C. grade by DGTD for manufacture of conductors for transmission lines to be supplied to various State Electricity Boards. There can therefore be no dispute on the question whether the appellants were manufacturers of electrical grade conductors for use by the State Electricity Boards. We, therefore, agree with the ld. Counsel for the Appellants that they satisfied all the conditions of Notification No. 42/75 and wore thereby fully eligible for the benefits of the said notification.
14. In view of the foregoing discussion we hold that the appellants were eligible for the concession under Notification No. 42/75 both before and after its amendment by Notification No. 111/75. They will accordingly be eligible for consequential benefits under law.
15. Accordingly, appeal is allowed and impugned order set aside.