Customs, Excise and Gold Tribunal - Bangalore
Cipla Ltd. vs Commissioner Of Central Excise, ... on 15 March, 2002
Equivalent citations: 2002(143)ELT202(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. When the Stay application was called, and heard for sometime, it transpired, that the matter could be finally decided. The appeal was thereafter taken for final decision with waiver of pre-deposit and consent of both sides.
2. The issue involved is :-
(a) WR Bench of CEGAT vide its order No. CI/4193-95, dtd. 29-11-2000, disposed off the appeal against Order-in-Appeal, dtd. 30-8-2000 by observing :-
"4. The Commissioner (Appeals)'s order is not maintainable for more than one reason. Firstly, it was his duty to give the appellant before him a reasonable opportunity by being heard before coming to his conclusion. Secondly, his conclusion that he could not hear the appeal because it was already pending in the Chennai Tribunal is incorrect. The notices that were adjudicated by the Assistant Commissioner did not demand duty, but merely proposed classification of the commodity. The appellant was therefore entitled to question before the Commissioner (Appeals) at Bangalore the validity of the demand of duty and to say that the demand did not flow from the proceedings commenced by issue of these notices. The ground in the appeal before the Bangalore Commissioner (Appeals)'s questioning the correctness of the conclusion of the earlier order of the Commissioner (Appeals) cannot of course be entertained by him.
5. The appeal is allowed and the impugned order set aside. The Commissioner (Appeals) shall now do what he ought to have done earlier hear and adjudicate upon the appeal before him. While doing so, he will not be bound by anything we have said in our order which appears to him to deal with the merits of the issues before him."
(b) Consequently, Order-in-Appeal No. 661/2001-C.E., dtd. 16-10-2001 came to be issued which is now impugned before us.
3. After considering the submissions of both sides we find :-
(a) The Commissioner (Appeals) has found in Order No. 661/2001-C.E., dt. 16-10-2001 :-
"The present appeal is against letter dtd. 24-6-99 of the Superintendent of Central Excise, K.R. Puram Range, Bangalore directing the appellant to pay Rs. 3,93,87,352/- being the CED on 51049.980 Kgs. of BMS manufactured and cleared from April 86 to September 97. As stated earlier the demand letter was issued consequent to passing of order in appeal No. 238/99, dtd. 1-3-99 holding BMS liable to duty. In my considered opinion appeal against any cause of action against the Commissioner (Appeal) order can be only before higher appellate authority and not before the undersigned. Be that as it may, I find that assessment of the appellants RT-12 returns have been subject to the outcome of Court cases in respect of BMS. It is consequent to decision of the Writ Petition and the appeal filed before Commissioner (Appeals) the Superintendent has issued the demand letter. In the case of M.P. Steel Corporation, Hon'ble Tribunal in the decision reported in 1999 (112) E.L.T. 331 (T) has categorically held that appeals against the assessment order passed by the Superintendent of Central Excise on the basis of decision of the Commissioner/Collector lies to Tribunal and not to Collector (Appeals)."
Accordingly he dismissed the appeal as unsustainable.
(b) The appellants have submitted :-
"(1) The Commissioner (Appeals) has totally misconstrued the CEGAT's decision in MP Steel Corporation (supra) relied upon in the impugned order. In that case, MP Steel Corporation had imported a ship for being broken up into scrap. The question was whether for calculating the light displacement tonnage (LDT) of the vessel for purpose of assessment, permanent ballast was to be included or not. After some correspondence the Collector decided that permanent ballast was to be included and accordingly directed the Superintendent to finalise the assessment and also ordered encashment of bank guarantee. The Superintendent wrote to MP Steel Corporation that the Collector had ordered assessment of the goods to duty by including the weight of permanent ballast and ordered encashment of Bank guarantee. The appellants in that case filed an appeal before CEGAT against the letter issued by the Superintendent for assessment of the goods and encashment of bank guarantee as ordered by Collector.
(2) From the facts as stated above it is clear that in that case the Collector's direction to the Superintendent was both on account of finalising the basis of assessment itself as well as to recover the amount by encashment of bank guarantee. Therefore, the action of Superintendent was arising directly out of the direction given by the Collector. In fact it is the communication of Commissioner's order on assessment and encashment of bank guarantee. The appeal in that case was correctly filed before the CEGAT instead of Collector (Appeals).
(3) In the present case of the appellants, the facts are clearly different. The order of the Commissioner (Appeals) pending in appeal before CEGAT SZB is only regarding the classification of BMS. There is no consequential demand of duty raised and confirmed in that case as a result of finalisation of classification. In fact the appellants main contention is that no Show Cause Notice demanding differential duty was raised by the department at any point of time. Hence, the letter dated 24-6-99 of the Superintendent of Central Excise is an independent decision to demand duty. Therefore, appeal against the same lies before Commissioner (Appeals) only.
(4) Therefore, the reliance placed by Commissioner (Appeals) on the decision of CEGAT in the case of M.P. Steel Corporation supra does not support his conclusion. The Commissioner (Appeals) ought to have proceeded to decide on merits of the appeal filed by the appellants."
(c) The Supreme Court in the case of U.O.I, v. Madhumillan Syntex Pvt. ltd. -1988 (35) E.L.T. 349 (S.C.) have after holding :-
"4.........In Gokhale Paid Vokhart Ltd. [1987 (28) E.L.T. 53 (S.C.) = AIR 1987 SC 1161] this court has held that the provisions of Section 11A(1) & (2) of the Central Excise Act, 1944 make it clear that the statutory scheme is that in the situations covered by sub-section (1), a notice of show cause has to be issued & sub-section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made before making the order. Notice is thus a condition precedent to a demand under sub-section (2)."
upheld the orders of the Larger Bench of Hon'ble M.P. High Court striking down such letters of quantification of demands issued by a Superintendent of Central Excise. The Apex Court, in the case of Serai Kella Glass Works (P) Ltd. -1997 (91) E.L.T. 497 (S.C.), while discussing short payments/non-payments of demands to be read under Section 11A and assessments under Rule 1731, as it then stood, prior to its amendment by substitution dt. 20-11-1996 by Notification 36/96-CE. (N.T.), has held in para 10 of the reported decision, "that duty has to be paid as per the assessment within 10 days from the receipt of the return, no question of Section 11A notice would arise in such cases. However, the same should be done within the time limitation to run from date of final assessment." If the case is, as made out here by Revenue of final assessment, Section 11 A, should have been resorted within six months of return of the final assessed RT 12s by issue of demand notice answerable to the Assistant Collector. The justification of a demand of 'short levy/non-levy' on basis of the simple letter, dtd. 24-6-99, cannot be upheld by us, in view of the law as laid down by the Apex Court. Central Board of Excise and Customs, after examining the ratio of judgments in the case of Swan Mills Ltd. [1989 (44) E.L.T. 601 (Bombay)] and M/s. Davangere Cotton Mills Ltd. of Karnataka High Court [1986 (24) E.L.T. 507 (Kar.)] and catena of Tribunal decisions on this subject, holding that demand raised on RT-12 without issue of show cause notice is not maintainable in the eye of law, issued instructions that to safeguard revenue necessary steps should be taken to immediately raise Demand-cum-Show cause notices and endorsements on RT12 returns to that effect should be made [Circular No. 228/62/96-Ex., dtd. 8-7-96]. No circular contrary to this instruction has been shown to us. Therefore, it was imperative, for the Range Superintendent to have issued a regular demand under Section HA and not a letter on 24-6-99. In any case, the Superintendent has no authority, to issue any assessment orders on RT12 after 20-11-96 under Rule 1731. The removals of exigible goods after that date are not on determinations of duty, under Rule 173F. Since Rule 173F, has also been amended to read that removals shall be after "assessee shall assess the duty due". Therefore, the nature of removals are different. The amendments vide Notification No. 36/96-CE. (N.T.), dtd. 20-11-96 have been overlooked by the Commissioner (Appeals), who has found the Superintendent's order for clearance from April 1986 to September 1997 to be assessments made by such a Superintendent. Removals after 20-11-96, are not required to be assessed, by a Superintendent in view of Notfn. 36/96-CE. (N.T.). The order of Commissioner (Appeals), as based on incorrect appreciation of facts and law on this account and also the letter dtd. 24-6-99 issued, and the Commissioner (Appeals) order is required to be set aside.
(d) The appellants have pleaded that the assessments were not provisional and were final. The demands thus were barred by limitation. We find, that even if it is considered that removals under Chapter VILA pending the final approval of Classification or Price List will be deemed to be provisional, as held in Samrat International (P) Ltd. v. Collector by the Apex Court [1992 (58) E.L.T. 561 (S.C)], then the proper officer to finalise such provisional assessments, will, under Rule 9B be the Assistant Commissioner. Therefore consequent proceedings, taken by the Superintendent to finalise these assessments would not within his jurisdiction. The letter dtd. 24-6-99 by the Range Superintendent therefore cannot be considered an order of finalisation of provisional assessments. We follow the decision in the case of CCE v. Sanghi Organisation [2001 (133) E.L.T. 618 (T)] to set aside the letter dated 26-4-99 on this account.
(e) We find that the orders of Karnataka High Court, in the writs filed in this case, nor that of Commissioner (Appeals), permit any more quantification of demand. They only determine the exigibility of BSM under CETA 1985. Even the Show Cause Notices proposing the Classification do not raise a presumption for a demand of duty. Therefore, we cannot uphold the plea made before us of a 'ministerial quantification' being made by Revenue, being arrived by the impugned letter.
4. In view of our findings, the orders are set aside and the appeal allowed.
5. Misc. Application stands disposed off.