Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Baidyanath Ayurved Bhawan Ltd. on 5 November, 1986
Equivalent citations: 1987(10)ECR412(TRI.-DELHI), 1987(27)ELT671(TRI-DEL)
ORDER
S.D. Jha, Vice-President (J)
1. We have heard Smt. J.K. Chander, JDR, for the appellant and Shri Lachman Dev, Consultant, for the respondent and have perused the papers.
2 The issue for decision in this appeal is the value of the respondent's clearances for the purpose of Notification No. 71/78 dated 1-3-1978 as amended by Notification. 141/79 and whether Ayurvedic Medicines said to be falling under Tariff Item 68 cleared by the respondents free of duty in terms of Notification No. 55/75 as amended during the period 1978-79 were to be taken into account for working out the aggregate value of clearances of all excisable goods during the preceding financial year for the purpose of the aforesaid exemptions.
2. It may be stated that the issue relates to a period before amendment of Tariff Item 68 in 1980 whereby an explanation was added on 19-6-1980 to Tariff Item 68 in the following words :-
"For the purposes of this item, goods which are referred to in any preceding item in this schedule for the purpose of excluding such goods from the description of goods in that item (whether such exclusion is by means of an Explanation to such item or by words of exclusion in the description itself or in any other manner) shall be deemed to be goods not specified in that item."
In Notification No. 71/78 dated 1-3-1978 Tariff item 68. or the goods falling thereunder were not specified.
Notification No. 141/79 dated 30-3-1979, which came into force on 1-4-1979, added the following, Explanation IV to Notification No. 71/78 :-
"Explanation IV - For the purposes of computing the aggregate value of clearances under this notification, the clearances of any specified goods, which are exempted from the whole of the duty of excise leviable thereon by any other notification issued under sub-rule (1) of rule 7 of the aforesaid Rules and for the time being in force, shall not be taken into account."
3. The Revenue, however, appear to have proceeded on the basis that Ayurvedic Medicines which were mentioned for exclusion under Item 14E of Central Excise Tariff would fall under Tariff Item 68 and, therefore, the value of clearances of these goods would have to be included for determining the value of clearances' under the Notification. The respondent's contention before the lower authorities and before us has been that before 19-6-1980, i.e amendment of Tariff item 68 by adding the explanation supra Ayurvedic Medicines would not fall even under Residuary Item 68 and would be non-excisable. For the purpose they relied on a decision of the Gujarat High Court in Darshan Hosiery Works v. Union of India -1980 ELT 390 (Gujarat). The Collector of Central Excise (Appeals) accepting the respondent's contention and following the Gujarat High Court decision held that during the relevant period value of clearances of Ayurvedic Medicines were not includible for determining the value of clearances under the notification in view of the explanation as these were not excisable.
4. Smt. Chander, learned JDR, representing the appellant Collector Central Excise urges that the respondents had filed classification list classifying f their goods i.e. Ayurvedic Medicines including Dantmanjan Lal under Tariff Item 68 and this classification list was not challenged by the respondents before any superior authority. Having not done that the respondents could not claim that the goods would not fall under Tariff Item 68 or that they were not excisable.
5. Shri Lachman Dev, Consultant, representing the respondent stated in this connection that it is true that the respondents had classified Ayurvedic Medicines including Dantmanjan Lal under Tariff Item 68. But he submitted that after the decision of the Gujarat High Court they could contend that the goods were not excisable - there being no estoppel or resjudicata in the taxation matters.
6. Smt. Chander next contended that in any case Dantmanjan Lal is not an Ayurvedic Medicine in view of a recent decision of the Tribunal in the case of Shree Baidyanath Ayurved Bhawan, Patna & Another v. Collector of Central Excise, Patna reported in 1985 (22) ELT 844 and even if other ayurvedic medicines, following Gujarat High Court decision, be held not excisable, including the value of Dantmanjan Lal would take out the respondents from the eligibility of the notification. Shri Lachman Dev for the respondent, in this connection, relying on a Bombay High Court decision - 1984 (18) ELT 172 Godrej and Boyce Mfg. Co. v. Union of India, submitted that the appellant Collector of Central Excise could not challenge the impugned order passed by Collector (Appeals) on a new ground based on another decision of the Tribunal, because the respondents were not called upon to meet such a case in the show cause notice earlier served on them with respect to present matter. He also submitted that such a plea was not taken by the Revenue either by the Assistant Collector or before the Collector (Appeals).
7. Smt. Chander, however, maintained that this decision rather than help the respondents, would help the appellant because the show cause notice dated 8-7-1980 served on the respondents clearly alleged that the respondents had exceeded the value of clearances stipulated under the notification. Copies of the show cause notice were not in our file. But during hearing Shri Lachman Dev supplied copies of the two notices dated 8-7-1980 and stated that these were the relevant notices. Smt. Chander after going through these notices stated that these notices should pertain to the present appeal.
8. We have carefully considered the arguments advanced by the parties. The substance of the allegation against the respondents was that they were not eligible for benefit of concession under Notification No. 71/78-CE. Ordinarily, we would have been slow to interfere with the impugned order, but there has been a recent decision of the Tribunal holding that Dantmanjan Lal is not an ayurvedic medicine and would fall under Tariff Item 68. Thus, even if Gujarat High Court decision in Darshan Hosiery Works case be followed with respect to ayurvedic medicines, this would not be true of Dantmanjan Lal. As for Shri Lachman Dev's strong reliance on the decision of the Bombay High Court in Godrej and Boyce Manufacturing Co. Ltd's case (supra), on going through the decision we find that the departmental adjudication proceedings had become final by order of the Appellate Collector dated 28-10-1980 (para 16 of the judgment). Long after this, after decision of the Supreme Court in Bombay Tyre International Ltd.'s case, the Revenue proposed to reopen the matter and issued show cause notice dated 11-1-1983 calling upon them to refund the amount erroneously refunded to them. Such is not the case here. The matter has not become final and binding but is still alive and that is how this appeal is being heard by us. The decision, in our view, would clearly not apply to the facts of the present case. The other decision on which Shri Lachman Dev places reliance is the case of Commissioner of Income Tax v. Balkrishna Malhotra 1971 (81) ITR (S.C.). This report is not available in the Tribunal Library though called for, nor available with the learned Counsel appearing before us. Shri Lachman Dev brought to our notice an article (Show cause notice : Juridical Spectrum by Prof. Dr. D.C. Jain, Legal Adviser, Rajasthan Textile Mills) published in E.L.T. dated 1-7-1986 Vol. 25. Part 1. At page A-6 the following observation based on the decision is to be found :-
"If there was a judgment of superior Tribunal or of a High Court or the Supreme Court reversing the view of the Department the authorities must follow that judgment in future but they cannot reopen case decided by them on that basis unless specifically directed by the Court. (Commissioner of Income Tax v. Balkrishna Malhotra (1971) 81 ITR 759 (S.C.); Shree Ram Steel Rolling Mills & Metro Steel Roiling Mills v. State of Maharashtra 1984 (17) ELT 109 (Bom.)]. However, issuing of show cause notice for launching proceedings contrary to law declared by the High Court of the same state would be invalid and without jurisdiction. [East India Commercial Co. v. Collector, 1983 ELT 1342 (S.C.)]."
In the instant appeal there is no question of reopening any case because the matter is still alive and pending. Therefore, the ratio of the decision would not be applicable to the present case. As for his reliance on Bombay High Court decision, 1984 (17) ELT 109 (Bom.), the decision lays down -
"If, however, there is a judgment of a superior tribunal or of High Court or the Supreme Court, according to which the view taken by the authorities was wrong, the authorities must in future follow that judgment."
In fact that is what Smt. Chander seeks to and prays us to do with respect to Dantmanjan Lal. We do not think that this decision in any way helps the respondent. Questioned by the Bench, Shri Lachman Dev agreed that if value of Dantmanjan Lal were included in the value of clearances, the appellants would not be eligible for benefit of exemption under the notification. In view of this admission the respondents are held not eligible to benefit of exemption under Notification No. 71/78 dated 1-3-1978.
9. Shri Lachman Dev submitted that in any case the respondents with respect to demand should be given benefit of 6 months limitation under Rule 10 of Central Excise Rules 1944 as it stood at the material time. Smt. Chander, however, stated that a clear case of suppression of facts was made out as the respondent did not supply the clearance figures to the Central Excise authorities.
10. After going through the notice and the facts of the case we do not think that in this case a case of misstatement or suppression of facts justifying invocation of 5 years time limit is called for. The demand should be only for a period of six months preceding the date of show cause notice.
11. As a result the appeal is allowed. The respondent is held not eligible for benefit of exemption under Notification No 71/78 dated 1-3-1978 as amended but demand of duty is restricted to a period of 6 months preceding the date of show cause notice. The appeal is disposed of in these terms. Cross objection are comments on the grounds of appeal is filed.