Customs, Excise and Gold Tribunal - Delhi
Uma Match Industries vs Collector Of Central Excise on 27 August, 1987
Equivalent citations: 1987(14)ECC311, 1988ECR17(TRI.-DELHI), 1988(33)ELT502(TRI-DEL)
ORDER
G. Sankaran, Senior Vice-President
1. The Central Government, by notification No. 22/82 [G.S.R. 77(E)], dated 23-2-1982, provided for a concessional rate of duty of Rs. 1.60 per gross boxes of matches (Item No. 38 of the Central Excise Tariff Schedule) cleared from a factory upto a quantity of 120 million matches in a financial year. This concession was subject to the condition that clearance during the financial year did not exceed 150 million matches. There were certain other stipulations also but these are not material for resolution of the dispute before us. The above notification was given retrospective effect on and from 19-6-1980 by Clause 52 of the Finance Bill, 1982 (later Section 52 of the Finance Act, 1982). The Superintendent of Central Excise accordingly reviewed past assessments of duty on matches cleared by the appellant-factory and concluded that the appellant was not entitled to the concessional rate of duty during the period from April 1981 to March 1982. A notice dated 9-8-1982 was issued by the Superintendent to the appellant asking it to show cause why a sum of Rs. 59,348.50 being the differential duty should not be recovered from it in terms of Sub-section 2(d) of Section 52 of the Finance Act, 1982. The appellant resisted the demand, contending inter alia that the clearances during the aforesaid period had been effected by paying the appropriate rate in force then, and that Section 52 of the Finance Act did not have the effect of over-riding the provisions of Section 11A of the Central Excises and Salt Act, and that, therefore, the limitation of six months laid down in Section 11A would apply. The Assistant Collector, by his order dated 8-11-1982, rejected these contentions, holding inter alia that in view of Sub-section 2(d) of the Finance Act, 1982 the question of applying the time limit laid down in Section 11A of the Central Excises and Salt Act did not arise. Accordingly, he confirmed the demand for the amount specified in the show cause notice. In appeal, this order was confirmed by the Appellate Collector by his order dated 22-2-1983 which is now the subject of challenge in the appeal before us.
2. In response to the notice of hearing, the appellant has written to say that he would not be able to attend the proceedings and that the matter may be decided on merit. It has also been contended that the show cause notice in this case was barred by limitation under Section 11A of the Central Excises and Salt Act, having been issued beyond 6 months from the date of payment of duty.
3. We have accordingly perused the record and heard Shri-Sachar, departmental representative for the respondent.
4. Shri Sachar's contention is that the limitation in Section 11A is to be computed with reference to the date the appellant became liable to pay the duty. The submission is with reference to the definition of "relevant date" as contained in Section 1 l(3)(ii)(a)(c) - [in any other case, the date on which the duty is to be paid under the Act or the rule made thereunder]. The appellant came under the notification dated 23-2-1982 and, with reference to this notification, he became liable to pay the duty on 23-2-1982 and that limitation would run from this date.
5. Section 52 of the Finance Act, 1982 and Notification No. 22/82, dated 23-2-1982, were challenged by a number of match manufacturers before the Madras High Court. The Court, by a very elaborate judgment, upheld both Section 52 and the notification. The judgment is reported in 1984 (16) ELT 3 Bharat Match Works, Vanaramutthi and Ors. v. Union of India and Ors.. This judgment, however, does not touch on the issue which is being agitated in the proceedings presently before us.
6. An issue very similar to the one before us had come up before the Delhi High Court in J.K. Cotton Spinning and Weaving Mills and Anr. v. Union of India and Ors. [1983 (12) ELT 239 (Delhi)] (not referred to by the D.R) with reference to Section 51 of the Finance Act, 1982", which, as in the present case, gave retrospective effect to the provisions of Central Excise Rules 9 and 41, as amended by Central Government Notification No. G.S.R. 74(E), dated 20th February, 1982, from the date on which the Central Excise Rules, 1944, came into force. One of the points of challenge was that the aforesaid section created liability for payment of duty for an unconscionably long period. The relevant portion of Section 51 read as follows :-
"(d) recovery shall be made of all such duties of excise which have not been collected or, as the case may be, which have been refunded but which would have been collected or, as the case may be, would not have been refunded, if the amendments referred to in Sub-section (1) had been in force at all material times;"
The provision, it may be noted, is worded in the same way as in Section 52(d) of the Finance Act, 1982, which is the provision relevant to the case before us. The Court observed in para 28 of the Report as follows :-
"28. In our view, Rules 9 and 49 must be deemed to have been enacted in the rules from 1945. This would mean that duty had to be levied and collected in accordance with the provisions of the Act and the rules from 1945. Section 51 of the Finance Act does no more than this, besides making the penal provisions inapplicable for past transactions. It does not touch any of the other provisions of the Act or the rules. This means, that levy, collection, assessment of penalties etc. would all have to be done in accordance with the provisions of the Act and the rules as in force from time to time. Prior to the enforcement of Sections 11A and 1 1B of the Act with effect from November 17, 1980 by the Amending Act, 25 of 1978, the limitation for recovery of duty not levied or not paid or short levied or short paid or erroneously refunded on the one hand and claim for refund of duty on the other were covered by rules in this regard, adverted to by us earlier. Thereafter, recoveries and refunds are covered by the provisions of Sections 11A and 11B. We cannot persuade ourselves to accept the argument of the learned Solicitor General that Section 51 of the Finance Act over-rides the effect of Sections 11A and 11B of the Act. The particularisation by Section 51 of the Finance Act cannot have the effect of repealing Sections 11A and 1 1B of the Act. The excise authorities had no power to levy and collect duty on 'in-process' goods and this is what seems to have been remedied by the amendment of the rules. We cannot read Section 51 of the Finance Act to mean that the levy and collection can be made for past deemed clearances by ignoring the other provisions of the Act and the Rules. We also cannot accept the learned Solicitor General's argument that Section 51 of the Finance Act should be read as limited to actions postulated by Clauses (a) to (d) only and not permit levy of penalties etc. We, however, agree with the argument that no prosecution for past alleged breaches can now be ordered."
7. The ratio of the above judgment squarely applies to the facts of the present appeal. The provisions of Section 11A have to be given full effect to. As the show cause notice makes it abundantly clear, what was being sought to be recovered from the appellants was differential duty. It may not perhaps be correct to call this a case of short levy for there is no dispute that duty was paid at the time of clearance correctly at the prevalent rate. The notification dated 23-2-1982, read with Section 52 of the Finance Act, 1982, created, as it were, liability to pay duty at the rate laid down in the notification even in respect of the past period (subject of course, to the limitation in Section 11A of the Central Excises and Salt Act). This differential duty could, therefore, be more appropriately called non-levy, for non-levy it was in terms of the notification. Even so viewed, the rigour of the limitation in Section 11A comes into play. The date on which duty in terms of the notification had to be paid must relate back to the date or dates of payment of the duty on clearances during the period material to the present case. Otherwise, the levy will be only prospective from 23-2-1982, not retrospective as enjoined by Section 51 of the Finance Act, 1982.
8. The material period during which clearances were made on payment at the admittedly prevalent rates was April 1981 - March 1982. The show cause notice under Section 11A of the Central Excises and Salt Act was dated 9-8-1982 issued on 10-8-1982. The notice will, thus, be enforceable only for the differential duty in respect of the period of six months preceding the date of the show cause notice. The demand for the remaining period is barred by limitation and is set aside. The actual quantification has to be done by the Assistant Collector.
9. In the result, the appeal is partly allowed, as indicated above, with consequential relief to the appellants.