Customs, Excise and Gold Tribunal - Delhi
V.B.C. Industries Ltd. vs Collector Of Central Excise on 31 May, 1991
Equivalent citations: 1992(57)ELT131(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The appellants herein are manufacturers of soft drinks under the brand names of Gold Spot, Limca, Thumps-up and Kismet. They availed of the benefit of MODVAT on duty paid on various inputs used in the manufacture of soft drinks. On 9.9.1987 Notification 203/87 was issued deleting soft drinks from the list of commodities entitled to the benefit of MODVAT Scheme. The validity of the Notification was challenged by the appellants before the Andhra Pradesh High Court which admitted the writ petition WP 1273/83 and by order dated 3.2.81 in WPMP No. 1581/88 directed as follows: "as and when the goods are cleared the petitioner is directed to pay half the duty". From February 1988 upto 26.2.1990, the appellants accordingly effected clearence of soft drinks on payment of 50% of the excise duty. During this period the Superintendent of Central Excise made endorsements in the RT 12 returns directing the appellants to make good the balance 50% subject to the orders of the High Court. The High Court vacated the stay on 26.2.1990. On 6.3.1990 the Superintendent called upon the appellants to pay the differential amount of Rs. 67,46,927.65 paise consequent upon the vacation of the stay order. The appellants challenged this communication on the ground that Section 11A procedure was not followed. The Collector (Appeals) dismissed the assessee's appeal holding that the lower authorities have only acted upon the order of the High Court of Andhra Pradesh and that the communication of the Superintendent is not an appealable decision or order in terms of Section 35 of the Central Excises and Salt Act, 1944. Hence this appeal.
2. We have heard Shri Prabhakara Sastry, the learned Counsel for the appellants and Shri Jayanarayanan Nair, the learned DR for the respondent.
3. The sole issue for consideration is whether the endorsement on the RT 12 returns is sufficient notice for the purpose of levy pursuant to vacation of injunction order by Court. This issue has been settled by the Madras High Court in the case of H.N. Mariam and Ors. v. Superintendent of Central Excise, Sankaran Koil and Ors. reported in 1984 (16) ELT 219 wherein the Hon'ble Madras High Court has held, after analysing Rule 9 of the Central Excise Rules that -
"By a careful reading of the above, jt is clear that no goods which attract excise duty can be removed from the warehouse unless and until the proper duty is paid. It is not denied before us that the appellants are liable to pay excise duty in accordance with Notification No. 42 of 1981, dated 1-3-1981, as amended by Notification No. 88 of 1981 dated 31-3-1981. It is common case that in so far as set-off was allowed to the extent of duty under item 68 on inputs like potassium chloride, glue and phosphorous, which set-off was denied where duty was paid through banderolls, it was unsuccessfully challenged in W.P. 1554 of 1981. During the pendency of this Writ Petition No. 1554 of 1981, batch, the respondent was prevented from collecting the proper duty as per the above notifications, since injunction was operative admittedly between 24-3-1981 and 19-11-1981. Thereafter, after the dismissal of the batch of the writ petitions all that is done by the impugned notice dated 20-11-1981, which has already been extracted, is to call upon the appellants to pay the differential duty. In our considered view, on removal under Rule 9 which, as seen above, prescribes the time and the manner of removal, the charge under Section 3 gets attracted. Properly speaking only on the payment of that duty which the appellants are liable as per Notification No. 42 of 1981, dated 1-3-1981, as amended by notification 88 of 1981, dated 31-3-1981, the excisable goods ought to have been removed. But the order of injunction enabled the appellants to remove the goods without payment of that excise duty. However, on the injunction being dissolved on 19-11-1981, consequent to the dismissal of W.P. 1554 of 1981, batch, we see no obstruction in the way of the Department recovering the full excise duty. To put the matter simply: The charge was already there and got attached to the goods on removal. Only the right of recovery by enforcement of the charge got postponed by reason of the order of the court. This is the position as we see. Under these circumstances we see no scope for applying Section 11A of the Act. That section confers power upon the Central Excise Officer for recovery of duty -
(i) not levied, or
(ii) levied and not paid, or
(iii) short levied, or
(iv) short paid, or
(v) erroneously refunded.
It is not open to the appellants to contend that this is a case which will fall under the category of not paid or short paid because it stands to reason that in either of these two cases there must have been a levy. In this case there was no possibility for such a levy because of the order of injunction by the court."
4. In paragraph 19 the findings of the learned Single Judge has been set out as under:
"The liability to pay duty having been already establised by the disposal of the writ petition, the authorities are well within their jurisdiction to recover the amount straightway from the petitioners in each writ petition and there is nothing left for them to decide where duty is payable or not. The present attempt made, if entertained, would only result in not only deliberate avoidance to pay duty, but would also amount to abuse of process of court, which cannot be encouraged."
5. To our minds the order supra squarely covers the issue before us. The decisions cited by the learned Advocate for the appellants are distinguishable. The reliance placed by the learned Counsel for the appellants on the decision of the Hon'ble Supreme Court in the case of Gokak Patel Volkart Ltd. v. Collector of Central Excise, Bel-gaum 1987 (28) ELT 53 (SC) will not be of any assistance as the facts of that case are not pari-material with the facts of this case. The Hon'ble Supreme Court was therein seized with the question of applicability of Explanation to Section 11A and the Court held that "it is not disputed by the Revenue that the appropriate period of limitation to apply to the facts of the case is 6 months as provided in Section 11A of the Central Excise Act and that the notice issued on 20.5.1982 was beyond that period. Reliance on the Explanation to Section 11A for obtaining extension of that period was not tenable because in the instant case, the order of stay passed by the High Court had only stayed the collection of excise duty which is a stage following levy under the scheme of the Act. Obviously, there was no interim direction of the High Court in the matter of issue of notice for the purpose of levy of duty. Under Section 3 of the Central Excise Act which is a charging section clearly shows that the levy and collection are two distinct and separate steps. Therefore, the benefit of Explanation is not available to the facts of the case and the demand was barred by limitation".
6. Following the ratio of the Madras High Court's decision supra, we hold that the demand is sustainable. We, therefore, uphold the order of the Collector of Central Excise (Appeals) and dismiss this appeal.
P.C. Jain, Member (T)
7. I have gone through the judgment proposed by the learned sister Ms. Jyoti Balasundaram. While the said judgment deals with the heart of the issue, some of the pleas made by the learned counsel for the appellants require to be dealt with. Hence this is a separate order.
8. Facts of the case have already been set out briefly in the judgment of the learned sister. I need not therefore, recapitulate them. I, therefore, straightaway deal with the pleas made by the learned advocate, Shri Prabhakara Sastry, for the appellants.
9. His tirst plea was that in view of the Supreme Court's judgment in the case of Gokak Patel Volkatrt Ltd. v. Collector of Central Excise, Belgaum [1987 (28) ELT 53 (SC)] the demand of duty made by the department vide Superintendent's letter dated 6.3.1990 calling upon the appellants to pay the differential amount of Rs. 67,46,927.65p consequent upon the vacation of the stay order by the High Court of Andhra Pradesh is bad in lawinasmuch as Section 11A of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) stipulates issuing of a show cause notice by the proper officer of Collector of Central Excise as the case may be. Since the letter of the Superintendent, urged the learned counsel for the appellants, could not be equated with the notice stipulated under Section 11A, the entire proceedings are vitiated. On a query from the Bench that the facts of Gokak Patel's case are different from the facts in the present case since in the said case before the Supreme Court no assessment of goods had taken place and the High Coart had only stayed the collection of duty and not the assessment of the goods, the explanation to Section 11A did not come into operation at all. This is clear from the following observations in para 8 of the Supreme Court's judgment, mentioned supra :-
"The High Court having direct stay of collection had, therefore, not given any interim direction in the matter of issue of notice or levy of the duty. The Explanation in clear terms refers to stay of service of notice. The order of the High Court did not at all refer to service of notice. Therefore, there is force in the submission of the appellant that the benefit of the Explanation is not available in the facts of the case."
9.1 The learned advocate fairly conceding that the goods have not been assessed in Gokak Patel's case as has been done in this case, his next submission was that demand of short levy on R.T. 12 is no assessment in view of a series of judgments of the various Courts and of the Tribunal. In this connection, he relies upon the following citations :-
(i) Collector of Central Excise, Baroda v. Kosan Metal Products Ltd. [1988 (38) ELT 573 (SC)]
(ii) Vipul Dyes Chemicals (P)Ltd. v. Collector of Central Excise [1989 (44) ELT 724 (Tribunal)]
(iii) Collector of Central Excise v. Doorvani Cables P. Ltd. [1990 (47) ELT 134 (Tribunal)] 9.2 Subsequent to the hearing, the learned advocate has submitted a copy of another judgment of the Tribunal in Order No. E/177/90-D in the case of Bharat Opthalmic Glass Ltd. v. Collector of Central Excise, Calcutta.
10. I have carefully considered this plea advanced by the learned advocate for the appellants but I am unable to agree with the same. I find that the facts in all the cases relied upon by the learned counsel which lay down the proposition that demand of short levy made on R.T. 12 returns does not meet the requirement of Section 11A which stipulates issuing of the show cause, are different from the facts of this case. Facts in those cases have been where the department has chosen to raise the demand on R.T. 12 after it had approved a classification list at lower rates. For example in Kosan Metal's case the goods had been assessed in the manufacturer's factory under T.I. 26A(1) (a) as mentioned in the relevent gate pass of the manufacturer and the respondents i.e. Kosan Metal Products (P) Ltd. had taken credit of the same under Notification No. 178/77 dt. 18-6-1977 to which the respondents were not entitled in terms of the said notification. It is in the above circumstances that the demand of short payment of duty made on R.T. 12 returns for the months of April 1979 to August 1979 was considered to be beyond the provisions of Section 11 A.
10.1 In the case of Vipul Dyes relied upon the learned counsel, facts are as follows :-
The appellants therein were engaged in the manufacture of Synthetic Organic Dye Stuffs falling under T.I. 14-D CET. Some of the dye stuffs were exempt from payment of excise duty in terms of Notification No. 180/61 dt. 23-11-1961. However, with the issue of Notification No. 71/78 dt.1-3-1978 the appellants Vipul Dyes became eligible for duty exemption on all SOD stuffs manufactured by them subject to certain conditions. One of the condition was that during the financial year the total value of the clearances eligible for exemption should not exceed Rs. 5 lacs. The notification did not contain specific provision as to whether the value of clearances of duty in terms of Notification No. 180/61 dt. 23-11-1961 were to be included or excluded from the said figure of Rs. 5 lacs in terms of Notification No. 71/78 dt. 1-3-1978. The Superintendent of Central Excise assessed the R.T. 12 returns filed by the appellants, Vipul Dyes pointing out the short assessment and demanding payment of short recoveries. It Is in the above circumstances that it was held that demand of duty on assessment of R.T. 12 does not meet the requirement of Section 11A and a seperate notice is required, as set Out in Section 11A for any recovery of short levy or non-levy. It is to be seen that entitlement to Notification 71/78 of the appellants was not questioned at the time of classification of the goods. It is only at the time of assessment of R.T. 12 returns that this was sought to be questioned on the ground that the value of goods cleared in terms of Notification No. 180/61 would also be counted in computing the value of Rs. 5 lacs in terms of Notification No. 71/78 dt. 1-3-1978.
10.2 In the case of Doorvani Cables relied upon by the learned counsel, facts are as follows :-
The respondents Doorvani Cables in pursuance of an order-in-appeal in their favour started paying duty in respect of their product at the rate of 10% as against 20% earlier paid by them. The Revenue authorities started raising demand for differential duty on R.T. 12 returns filed by the respondents. Since on R.T. 12 for the month of February 1976 the Superintendent of Central Excise did not raise the demand, the Collector in exercise of his powers under Section 35E(2) took the matter in appeal before the Collector (Appeals). The said Collector (Appeals) held that the department was free to issue demand notice so that the demand may not be time barred but if the department had not issued a demand notice under Section 11A it was not correct for the executive Collector to make it an issue for determination under Section 35E of the Act. Against the aforesaid order, the Revenue came in appeal to the Tribunal (SRB). Tribunal in coming to a decision that demand for differential duty is not maintainable if raised on R.T.12 return has observed that 'it is nobody's plea that the duty payment had not been paid as per the approved classification and price lists. The authorities only dispute that the respondents are not eligible for the lower rate of assessment though the same was allowed in terms of the appellate order. (The issue was still pending for final decision before the Tribunal against the appellate Order').
10.3 It is, therefore, clear that the demand was being made on account of rate higher than what was approved by the department in the approved classification and price lists.
10.4 Similar is the position in the case of M/s. Bharat Opthalmic Glass Pvt. Ltd. relied upon by the learned counsel. The goods were assessed in the first instance under Tariff Item 68 as per the classification list. Later on the department sought to change the classification at higher rate of duty under Tariff Item 23A(4).
11. In the instant case we find that the classification list had been filed by the appellants herein taking into account the effect of Notification No. 203/87. The department was merely assessing the goods in terms of the approved classification list. There was no dispute so far as the rate of duty was concerned between the department and the appellants calling upon for issuing of any notice for making a proper assessment. The appellants had only challenged the Notification No. 203/87 dated 9-9-1987 on the ground of its unconstitutionality. There was no dispute whatsoever of the construction of the said notification between the assessing authorities and the appellants. It is only when there is a dispute about the construction of a provision of law between an assessing authority and an assessee that the rule of justice require that notice thereof should be issued to the assessee before the assessment is finalised. It is this rule of natural justice which is incorporated in Section 11A. But in the instant case as pointed out earlier, there was no dispute whatsoever about the construction of the Notification No. 203/87 between the appellants and the assessing authorities. There was, therefore, no question of issuing any notice as required under Section 11A for determining the short levy on the goods. Assessment under Rule 173(I) of the Central Excise Rules in terms of the approved classification list was perfectly in order. Demand of duty made consequent to Andhra Pradesh High Court's direction dated 3-2-1981 was correct in law when the High Court's stay order was vacated. The demands made on the R.T. 12 returns were automatically revived. In such a situation on the facts and circumstances of this case a question of operation of Section 11A does not arise and therefore, I do not find any force in the plea of the learned counsel for the appellants.
12. The judgment of Madras High Court relied upon by the learned JDR mentioned in the learned Sister's order is on all fours of this case and ratio of this case is squarely applicable. Hence I dismiss this appeal.