Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs Bharat Heavy Electricals Ltd. on 20 July, 1990
Equivalent citations: 2002(146)ELT619(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This appeal is filed by the Revenue against the Order-in-Appeal No. 85/86 (M) dated 16-4-1986 passed by the Collector of Central Excise (Appeals), Madras.
2. The respondents remained absent at the time of hearing, but, however, requested to decide the case on merits. Accordingly, we have proceeded to pass this order after hearing Shri S. Chakraborty, learned J.D.R. for the appellant.
3. The question that arises for our consideration in this appeal is whether demand can be raised or not for the period of six months prior to the issue of Show Cause Notice for reclassification.
4. Facts of the case, in brief, relating to the dispute are that respondents M/s. B.H.E.L. manufacture Acetylene Gas for captive consumption within their factory. While filing the classification list for approval they declared that the Gas manufactured by them was of impure nature and would not conform to the ISI Specification. Accordingly, this classification list was approved by the Department classifying the Acetylene gas under T.I. 68. Subsequently, it was found out that the respondents were not manufacturing the acetylene gas by uninterrupted and continuous process and hence it was proposed to reclassify the acetylene gas under T.I. 14H instead of T.I. 68. Accordingly, show cause notice dated 17-1-1985 was issued for reclassification as well as for demanding appropriate duty under Section 11A for the period March, 1984 to December, 1984 in respect of the acetylene gas manufactured and used in the factory since exemption under Notification No. 118/75 would not be available to T.I. 14H. It was contended by the respondents that acetylene gas manufactured by them was classifiable under T.I. 68 and further that the demand raised by the Department was barred by time as there was no suppression of facts with an intention to evade payment of duty. These contentions were negatived by the Assistant Collector who confirmed the demand by classifying the item under T.I. 14H. In appeal, the Collector (Appeals) agreed with the Assistant Collector on the point of classification, but on the point of raising the demand under Section 11A of the Act, he held that the demand was barred by time observing that revised classification under T.I. 14H would be applicable from the date of the order of the Assistant Collector. Feeling aggrieved by the order passed by the Collector (Appeals), the Department has come before us by way of this appeal.
5. It is not the case of the Department that respondents have suppressed the facts with an intention to evade payment of duty, to invoke the larger period of 5 years under Section 11A of the Act. The prayer of the Department, as stated in the grounds of Appeal, is to set aside the portion of the order passed by the Collector and to confirm the demand for a period of six months prior to the issue of show cause notice in modifying the approved classification. On the other hand, the respondents are not challenging the issue of classification before us either by way of Appeal or by Gross objections. Hence only point to be determined in this case is whether demand could be retrospective or prospective from the date of notice for such alternation.
6. During the course of arguments Shri Chakraborty, appearing for the revenue, in support of his contention about the applicability of Section 11A and retrospective nature of the operation in the case where show cause notice was issued for modification of the approved list, cited a series of decisions. Further in all his fairness he drew our attention to the decisions which are not in favour of the revenue. After going through the decisions cited by him we feel that there is no direct decision of the Supreme Court on this issue by which an inference can be drawn and the decisions of the Tribunal are not uniform on this issue. Among them the decision of the Supreme Court in the case of Union of India v. Madhumilan Syntex Pvt. Ltd. [1988 (35) E.L.T. 349 (S.C.)] seems to be nearest and relevant to the issue. In that case the Supreme Court observed "that the notice of demand dated 7-2-84 was not a notice to show cause against modification of the earlier approval but was only for demand of duty and hence it was bad in law and of no effect so far as the earlier period is concerned and can be regarded as proper notice only so far as the subsequent period from 7-2-1984 is concerned". In the present case also as can be seen from the averments of the Show Cause Notice dated 17-1-84, it cannot be construed as notice to show cause against modification of the earlier approval but was only for demand of duty for the earlier period. We feel that this issue was well considered by the Tribunal in the case of M/s Brakes India Ltd. v. Collector of Central Excise [1987 (31) E.L.T. 1030]. In that case, on similar facts and circumstances, it was held that when there had been no change in the process of manufacture, nor have the Tariff entry undergone any change during the relevant period, though it was open to the Assistant Collector to go in to the question of classification, the revised classification cannot be made retrospectively applicable, that is, the demand for duty in terms of revised classification can be enforced only from the date of Show Cause Notice and not for any earlier period. Though an inference can be drawn from some of the decisions of the Supreme Court that the operation of the modification could be retrospective by issuing a show cause notice, but we have not come across any direct decision to show that duty could be demanded even for the period anterior to the modification. Further this Tribunal had an occasion to consider this issue in the case of Indian Oxygen Ltd., v. Collector of Central Excise as per Order Nos. 75-76/88-D dated 27-1-1988 in appeal Nos. E/1646/83 and 3050/87-D [1990 (47) E.L.T. 449 (Tribunal)] wherein it held that the demand cannot be enforced for the period prior to the date of the notice. This view was confirmed by the Supreme Court while dismissing the Civil Appeal Nos. 1960-61 of 1988 filed by the Department in the very case of Collector of Central Excise, Calcutta v. Indian Oxygen Ltd., [1990 (48) E.L.T. - Page A24]. This strengthens our view and accordingly we hold that cause of action arises only from the date of issue of Show Cause Notice in modifying the approved classification and hence the demand for duty in terms of the revised classification can be enforced only from the date of Show Cause Notice and not from the period prior to the issue of Show Cause Notice. Principles of natural justice demand that no one should be allowed to suffer for having acted in accordance with directions given by a properly empowered authority after disclosure of all facts without concealment. If any change takes place and that is merely a change in the interpretation of the tariff entry on similar facts and circumstances, it should come into effect from the date when it was made known to the party and not for the period anterior to such modification.
7. In the result we hold that the demand cannot be enforced for the period prior to the date of show cause notice and accordingly, the appeal is disposed of.