Customs, Excise and Gold Tribunal - Delhi
Collector Of C.E. vs Indian Iron And Steel Co. on 8 July, 1988
Equivalent citations: 1988(19)ECR465(TRI.-DELHI), 1989(39)ELT617(TRI-DEL)
ORDER I.J. Rao, Member (T)
1. This appeal involves the question whether the demand for duty raised against the respondents and confirmed by the Assistant Collector and set aside by the Collector (Appeals) in respect of 1522.791 M.T. of ingots is sustainable or not. Before commencing his argument Shri J.N. Nigam, the learned SDR stated that by an error the department, instead of demanding duty on steel melting scrap generated during the manufacture of steel ingots, wrongly included demand for duty on ingots also. It appears that the Departmental Representative corresponded with the Collector and the Collector confirmed the error which was noted by him with regret.
2. The question involved is whether the demand for duty on scrap generated during the manufacture of steel ingots is sustainable. Shri Nigam gave detailed arguments as to why the Collector (Appeals) was wrong in passing the impugned order. We are not going into the detailed reasons given by him for reasons which will be clear in the next few paragraphs.
3. Shri Mookherjee, the learned Advocate for the respondent opposed Shri Nigam's arguments and made submissions on the legal position. He also raised a ground that the demand is barred by limitation. According to him the respondents raised this ground before the Assistant Collector but this was not dealt with by the said officer.
4. The demand pertains to the period June, 1974 to February, 1977. The show cause notice was issued on 28.12.1981. The notice was for the recovery of duty under Section 11A of the Central Excises and Salt Act, 1944.
5. The learned SDR in reply argued that demands were raised on RT12 returns and the show cause notice issued on 28.12.1981 merely consolidated all the RG 12's for the period and then was issued. Therefore, the demands were in time.
6. The factual position as submitted by the learned Advocate for the respondents is correct insofar as the period of demand and the date of show cause notice is concerned. We have perused the show cause notice and note that it is issued under Section 11A. There is no allegation of suppression of facts or mis-statement or any of the elements required for invoking extended period of limitation under the said Section in this notice. Therefore, it appears to us that the normal time limit of 6 months should apply.
7. Shri Mookherjee, the learned Advocate for the respondents submitted, with reference to the learned SDR's argument, that there is no evidence of such demands having been raised. He pointed that the copies of the RT12 returns have not been filed by the department even though in the Cross-Objection the respondents specifically raised a ground that the demands are time-barred. We note that it is true that the RT 12's were not filed by the appellants.
8. All the same we examine the question as to whether, if demands were raised on RT 12 returns and a show cause notice was issued subsequently beyond the period of limitation, whether the demands would be valid. Shri Nigam relied upon an order of the Tribunal (Order No. 650/87-B1, dated 29th September, 1987 in Appeal No. 1099/83-Bl) M/s. Saroj Alloys and Steel Ltd. v. Collector of Central Excise, Bangalore. In that matter it was argued by the appellants that endorsements made in RT 12 returns were not enough (for the purpose of demand for duty) because such endorsements were not speaking orders and do not give the assessees an opportunity of explaining their case. The learned Bench recorded in paragraph 3 of the order that "The Assistant Collector did not issue the order merely on the endorsement/demand entered in the RT 12, but he also issued show cause notice thereby giving the assessees an opportunity of explaining their case". From the order itself it is seen that the assessee had full opportunity to explain their case which they utilised. All prescribed procedures were gone through and all demands and Rules of natural justice were satisfied before the Assistant Collector passed the order. It was in these circumstances that the demands were not held to be time-barred. There is nothing to show that in that case the show cause notices were issued after 6 months. In the same order the Bench made a reference 1978 ELT 471 (Kerala) - (Inspector of Central Excise v. Good Shephered Rubber Co., Olavakkode). Therein, the High Court had occasion to examine Rule 173(1) somewhat similar were the facts of the matter. The Court noted that no notice had been issued under Rule 10 though there were short levies and sufficient grounds to attract it. The single judge had quashed the assessment and the Division Bench upheld his order.
9. Shri Mookherjee, in reply to Shri Nigam's argument cited an order of the Tribunal reported in 1985 (20) E.L.T. 353 (Shree Yamuna Mills Co. Ltd., Baroda v. Collector of Central Excise, Baroda). In that appeal the appellants urged that the original assessment on RT 12 return was in violation of the principles of natural justice since no opportunity to present their case was offered to them and that there was no notice to show cause against the assessment at this stage, and that the notice to show cause issued subsequently did not result in a proper adjudication. The Bench held that the appellant was correct in his submission that the procedures had become vitiated in consequence of failure to afford an opportunity to be heard at the time of RT 12 assessment and to failure to adjudicate on the notice to show cause subsequently issued.
10. In the light of this case law, the legal position is clear that even if there is a demand on the RT 12, a show cause notice has to be issued. In the present appeal the show cause notice was issued well after the period of limitation provided by Section 11A, namely, 6 months.
11. We, therefore, held that the demand raised against the respondents as time-barred as the show cause notice was issued beyond the period of limitation. We, therefore, dismiss the appeal.
The Cross-Objection abates.