Customs, Excise and Gold Tribunal - Delhi
Ratlam Straw Board Mills (P) Ltd. vs Collector Of Central Excise on 16 January, 1992
Equivalent citations: 1992(61)ELT468(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. The appellants herein are manufacturers of straw board which fell under the erstwhile T.I. 17 C.E.T. Excise duty on straw board is charged ad valorem. The rate of duty applicable is 40% ad valorem but by virtue of Notification No. 70/76-CE, dated 16-3-1976 concessional rates have been provided for straw board cleared by any manufacturer for home consumption during the financial year as follows :-
(a) On the first 500 M.T. @ 15% ad valorem.
(b) On the next 500 M.T. @ 25% ad valorem.
The appellants had been clearing straw board from their factory at Ratlam after paying concessional rate of duty applicable vide the aforesaid notification but on scrutiny of the bills and invoices issued by them to their customers, it was noticed that they have recovered C.E. duty from their customers at the full tariff rate i.e. 40% ad valorem. This excess realisation in the garb of duty by the appellants herein enhanced the assessable value and show cause notices were issued by the department demanding differential duty on the excess recoveries so made by them as per formula prescribed in a Press Note. On due adjudication, the following amounts of duty against various show cause notices for different periods as shown below are confirmed :-
S. S.C.N. No. PERIOD AMOUNT OF DIFFERENTIAL DUTY
No. Basic Spl. Total
1. CEX - 20 (17) 1-4-1976 to 3,388.01 - 3,388.01
65/77/338-39 31-5-1976
dt. 23-1-1978
2. C. No. 3526-27 1-4-1977 to 3,399.15 - 3,399.15
dt. 27-9-1977 11-6-1977
3. CEX - 20 (17) 21-4-1978 3,313.17 165.65 3,478.82
65/77/315-16 to 1-6-1978
dt. 19-10-1978
4. CEX - 20 (17) 1-4-1979 to 5,867.97 5,867.97
65/78/314 11-6-1979
dt. 8-9-1979
5. CEX - 20 (17) 1-4-1980 to 7,372.97 64.18 7,437.15
65/78/432-33 1-7-1980
dt. 17-12-1981
6. CEX - 20 (17) 1-4-1981 to 8,455.41 422.77 8,878.18
65/78/412-413 20-6-1981
dt. 16-12-1981
TOTAL:- 31,796.68 652.60 32,449.28
by the Assistant Collector by his order-in-origjnal No. 16/82 dated 3-3-1982. The appellants herein thereafter filed an application for review of the aforesaid order-in-original under the erstwhile Section 35A of the C.E. & S.A., 1944 before the Collector of Central Excise, Indore within one year but after the statutory period of three months for filing an appeal before the Collector of Central Excise (Appeals) against the order-in original was over. The said Collector without going into the merits of the application rejected it on the ground that the review application was received after the appeal period was over and the review procedure could not be made use of circumventing the limitation for filing the present appeal before the competent authority. Hence this appeal before the Tribunal.
2. Shri A.C. Jain, learned advocate for the appellants has contended that all the show cause notices are not maintainable inasmuch as after amendment of Section 4 by insertion of the Explanation to Section 4(4)(d)(ii) the show cause notices should have been issued afresh since the basis for issuing the show cause notices in the instant cases was lost and a fresh basis in view of the said Explanation could be invoked. He submits that this is the true ratio of Supreme Court's judgment in the case of J.K. Cotton Spg. & Wvg. Mills as reported in 1987 (32) E.L.T. 234.
2.1 After hearing the learned advocate as well as the learned SDR on this issue, we do not agree with the learned advocate that this is the effect of the Supreme Court's judgment mentioned supra. In the context of retrospective amendment to Rules 9 and 49 w.e.f. 28th Feb. 1944 the Apex Court dealing with the appellants' apprehension that they would be "called upon to pay enormous amounts of duty in respect of intermediate goods which have come into existence and again consumed in the integrated process of manufacture of another commodity" held that in their opinion there was no cause for such apprehension because under Section 11A(1) the Excise authorities could not recover duties beyond the period of six months, the proviso to Section 11A not being applicable in the said case.. Nowhere in the judgment the Supreme Court has stated that the show cause notices would be required to be reissued on an enactment of Rules 9 and 49 with retrospective effect. Similarly, we feel that there is no cause for reissuing the show cause notices, as urged by the learned advocate for the appellants.
2.2 Another contention of the learned advocate is that the show cause notices in the present case are based on a Press Note and the decision has also been taken on the basis of the Press Note. In other words, he stressed that the adjudicating authority has been guided by the Press Note in arriving at its decision and it is not a case of application of mind by the said adjudicating authority on its own. Therefore, in that light the learned advocate has submitted that the order-in-original passed by the Assistant Collector is not tenable in law and vitiated by the non-application of the mind. We find that the learned advocate is factually wrong in his submission. The adjudicating authority has been guided in arriving at its decision not by the Press Note but by the retrospective amendment of Section 4(4)(d)(ii) vide clause 47 of the Finance Bill, 1982 made retrospectively effective from 1st day of October 1975. In view of the change in legal position, nothing is left much for the appellants to argue that it is only effective duty payable by the appellants which is required to be deducted from cum-duty-realisation made by it. Learned SDR's reliance on one of the recent judgments of Bombay High Court in the case of TELCO reported in 1990 (48) E.L.T. 182 is very correct. Delhi High Court's judgment relied upon by the learned advocate in the course of arguments in the case of Modi Rubber Ltd. reported in 1978 (2) E.L.T. (J 127) is not of much relevance now in view of the change in legal position.
2.3 Last submission of the learned advocate is that the show cause notices, as they stand, are barred by time wholly or partly. He submits that all the R.T. 12 assessments were duly finalised regularly by the concerned Range Officer of Central Excise. Therefore, any demand falling beyond six months of the date of issue of the show cause notice would be barred by time. The learned advocate also pointed out that the order-in-original was passed by the adjudicating authority without giving any personal hearing in respect of other 5 show cause notices referred to in para 7 of the order-in-original. Thus an opportunity to present their case on the plea of time bar has gone by default of the adjudicating authority. Hearing was given only in respect of the show cause notice dated 8-9-1979. In this respect, learned SDR, Shri V.K. Jain reiterates the findings of the original authority.
3. We have given our careful consideration to this plea of the learned advocate. It is true that some show cause notices would be hit either wholly or partly if the limitation of six months is applied but we are of the view that the shorter period of six months stipulated in Section 11A(1) (Rule 10, as it stood earlier) would not apply inasmuch as the excess recovery was being made by the appellants through their invoices and bills issued subsequently by the appellants. Such excess recovery made by the appellants in their invoices and bills was not reflected either in the gate passes or R.T. 12 returns submitted by them and finalised by the department. It was, therefore, a case of suppression of fact of excess recovery by the appellants. This is evident from the statement of facts mentioned in the order-in-original when it states :-
"...on scrutiny of the bills and invoices, both to their customers, it was noticed by the Inspector of Central Excise incharge of the unit that they recovered Central Excise duty from their customers at the full rate i.e. @ 40% Adv. Thus they recovered more duty from their customers than they actually paid."
The show cause notices would, therefore, fall within the terms of proviso to Rule 10 or Section 11A(1), as the case may be.
4. In short, we do not find any merit in the appeal and it is rejected accordingly. Cross-objections are also dismissed as not maintainable, since the impugned order was wholly against the appellants and the department could have no grievance against it.