Customs, Excise and Gold Tribunal - Delhi
Andhra Pradesh Paper Mills Ltd. vs Collector Of Central Excise on 16 October, 1985
Equivalent citations: 1986(23)ELT242(TRI-DEL)
ORDER
1. This is an appeal against Order No. 137/82(G) dated 20-4-1982 passed by the Appellate Collector of Central Excise, Madras.
2. The facts of the case, in brief, are that the Department of Industrial Development, Ministry of Industry, Government of India, issued on 27-10-1980 an order, in exercise of the powers conferred by Section 9(1) of the Industries (Development and Regulation) Act, 1951. The order specified certain classes of paper and paperboard etc. included in heading No. 24 of the First Schedule to the aforesaid Act and imposed a duty of excise at the rate of l/8th per cent ad valorem to be levied and collected as a cess for the purpose of the said Act. The order, which was gazetted on 27-10-1980, laid down that the impost would come into force with effect from the 1st November, 1980.
Simultaneously with the aforesaid order, the Central Government published the draft of the "Pulp, Paper, Paperboard and Newsprint Manufactures Cess Rules, 1980" on 27-10-1980, inviting objections and suggestions from all persons likely to be affected thereby, within 60 days.
On 16th February, 1981, the Central Government, after considering the objections and suggestions received from the public on the said draft, made the "Paper and Paper Board Cess Rules, 1981", in exercise of the powers conferred by Section 30 of the aforesaid Act. Rule 2 define inter alia, "Collector" as the "Collector of Central Excise and includes the Additional Collector of Central Excise, Deputy Collector of Central Excise, Assistant Collector of Central Excise and Superintendent of Central Excise". Rule 3, which applied the Central Excises and Salt Act and the Rules made thereunder to the aforesaid Cess, in the following terms :-
"Save as otherwise provided in these rules, the provisions of the Central Excises and Salt Act, 1944 (1 of 1944), and the Rules made thereunder including those relating to refund of duty, shall, so far as may be, apply in relation to the levy and collection of the cess as they apply in relation to the levy and collection of the duty of excise on paper and paper board under that Act and the Rules made thereunder."
The Rules also provided for submission of monthly returns to the Collector and other incidental matters.
3. The appellants are engaged in the manufacture of paper and other articles attracting the aforesaid cess. The Superintendent of Central Excise, in charge of the Appellant's factory, noticed from the Gate Passes issued by the appellants during the period from 1-11-1980 to 28-2-1981 and the monthly R.T. 12 returns filed by them for the months from November, 1980 to February, 1981, that the appellants had not paid the cess at l/8th per cent ad valorem on a quantity of goods valued at Rs. 14,22,90,236.91, amounting to Rs. 1,77,862.79. Accordingly, he issued a notice dated 24-4-1981 calling upon the appellants to show cause why the said amount should not be demanded from them in terms of Section 11-A of the Central Excises and Salt Act.
4. The appellants contested the notice by contending that the Collector of Central Excise, Guntur, had communicated the Paper and Paper Board Cess Rules, 1981, issued on 16-2-1981, by a trade notice only on 3rd March, 1981. The appellants could not collect the cess from their customers for the back period, as the earliest date on which any paper manufacturer could have known and collected the cess was 16-2-81, on which date the rules were issued. The demand for payment of the cess for the prior period was not tenable since the rules themselves were made only on 16-2-1981 and they could not be applied with retrospective effect. The Assistant Collector, after holding adjudication proceedings, however, held that the cess was levied and liable to be paid from 1-11-1980 from which date it was imposed by Notification dated 27th October, 1980. Consequently, he confirmed the demand for the payment of the cess amounting to Rs. 1,77,862.79 for the period from 1-11-1980 to 28-2-1981.
5. Aggrieved by the above order, the appellants pursued the matter in appeal. The Appellate Collector also held that the cess was payable from 1-11-1980. However, he also held that the demand had to be restricted to a period of 6 months counting back from the date of the show cause notice, viz. 24-4-1981 (we may state here that the significance of this sentence in the order-in-appeal is not clear The period of demand being from 1-11-1980 to 28-2-1981, the demand notice issued on 24-4-1981 was not in any case hit by limitation. During the course of the hearing before us, the appellant's representative also staled that the question of limitation did not arise in respect of the demand).
6. We have heard Shri D.N. Kohli, Consultant, for the appellant and Shri B.R. Tripathi, Sr. D.R. for the respondent. Shri D.N. Kohli submitted that till the issue of Notification No. GSR-66 (E) on 16-2-1981, applying the provisions of the Central Excises Act and the Rules to the levy and collection of the cess, the question of levy of the cess by the Central Excise authorities or payment of the cess by the appellants to the Central Excise authorities did not and would not arise. This notification was brought to the notice of the trade only on 3-3-1981 by the Central Excise department's trade notice. Shri Kohli further submitted that the Ministry of Industry's notification dated 27-10-1980 imposing the cess no doubt referred to the cess as a duty of excise but did not say that it was a duty of central excise. Only on 16-2-1981, it was notified that the Collector of Central Excise was to collect the cess, but even at that stage, it was not said that the cess was a duty of central excise. If upto 16-2-1981, the Central Excises and Salt Act and the Rules did not apply, Shri Kohli contended, there would be no question of contravention of Central Excise Rule 9(1) during the prior period. The Central Excise Rules could not have retrospective application. In this connection, he cited the Supreme Court's decision in the case of Cannanore Spinning and Weaving Mills Ltd. v. Collector of Customs and Central Excise--1978 E.L.T. (J 375) (S.C.) Therefore, the Central Excise authorities could demand and collect cess only from 16-2-1981. In this context, Shri Kohli also submitted that by a a rule, the provisions of one enactment could not be applied to another enactment. For this he relied upon the Supreme Court's decision in the case of Collector of Customs and Central Excise, Cochin v. A.S. Bawa-1978 E.L.T. (J 333) (S.C.) S.C. Continuing, Shri Kohli submitted that till the Collector was appointed to collect the subject cess, there would be no liability on the part of the appellant to pay the cess. For this proposition, he relied upon the decision of the Calcutta High Court in the case of Smt. Muniya Debi Kanoria v. Collector of Central Excise and Custom(r) and Ors.-1981 E.L.T. 263 (Cal.)
7. Shri Kohli stated that he was not disputing the liability of the appellants for payment of the cess in respect of the period from, 1-11-1980 to 16-2-1981' but no Collector having been appointed till 16-2-.1981, the question would arise to whom the payment was to be made. It could not be the Collector since he had no authority to collect the cess during the said period.
8. Shri Kohli also made the point that till the date of publication of the trade notice on 3-3-1981, the appellants were: not aware of their liability to pay the duty and, therefore, in, terms of the Madras High Court judgment in Asia Tobacco Co. Ltd., Hosur v. Union of India, 1984 (18) E.L.T. 152 (Mad.) the appellants were liable to pay the duty only from 3-3-1981.
9. Replying on behalf of the respondent, Shri B.R. Tripathi, SDR, drew our attention to the recent judgment of the Supreme Court in Dhanpat Oil and General Mills v. Union of India and Ors., 1985 (21) E.L.T. 636 (S.C.), in which the Court held that non-appointment of the Collector did not relieve the occupiter of a mill from the burden, of the levy of cess under the Produce Cess Act, 1966. He further staged that the draft rules were also published on 27-10-1980 simultaneously with the Central Government's order bringing into effect from 1-11-1980 the subject case. Referring to the Madras High Court judgment in- Asia Tobacco case (supra), Shri Tripathi submitted that it had been stayed by a Division Bench of the Madras High Court. Having regard to these circurmstarices, it was Shri Tripathi's contention that the appellants could not escape the burden of the tevy for the period from l-11-1980 to 16-2-1981 on the ground that no Collector had been appointed till 16-2-1981 and that the Collector published the rules by a trade notice only on 3-3-1981.
10. In a brief rejoinder, Shri Kohli submitted with reference to the Supreme Court judgment in the Dhanpat Oil & General Mills' case (supra) that in that case the relevant rules already existed; only the Collector had not been appointed. In the present case, however, no rules existed during the material period. It was not, Shri Kohli added, that appellants did not accept the liability for the payment of the cess w.e.f. 1-11-1980 but it was his contention that the Collector of Central Excise was not empowered to collect it till 16-2-1981. The draft rules published on 27-10-1980 had no legal force.
11. We have carefully considered the submissions of both sides. At the outset, we would like to refer to Shri Kohli's submission that the duty of excise notified by the Central Government' s order on 27-10-1980 (to take effect from 1-11-1980) was not a duty of central excise. The contention is that this cess could be considered as a duty of central excise only from 16-2-19&1, when the provisions of the Central Excise Act and the rules were made applicable to the levy and collection of the cess and that, therefore, the cess could not be collected for the prior period invoking the central excise law.
We do not think that this contention has any force. Even the duties of excise levied under the First Schedule to the Central Excises and Salt Act are not referred to in the said Act as duties of Central Excise. They are simply called: duties of excise. Ths term central excise which has, come into vogue appears to be only a method of distinguishing the levy by the Union from the duties of excise which are levied by the States which are popularly referred to-as State excises. Even entry No. 84 in List I (Union List) of the Seventh Schedule in the Constitution speaks of duties, of excise, not Central Excise, Whatever be, the nomenclature, the, cess which is now the subject matter of the dispute before us is undoubtedly a duty of excise imposed in terms of the provisions of the Industries (Development and Regulation) Act, 1951.
12. We Shall now deal with Shri Kohli's submission that since the provisions of the Central Excise Act and Rules were applied to the levy and eollee-tion of the subject cess only on 16-2-l980, the question of collection of the cess by the central excise authorities for the period 1-11-1980 to l6-2,1981, did not arise. The provisions of the Central Excises and Salt Act and Rules would have no retrospective application. For this, he has relied on the Supreme Court decision in the Cannanore Spinning 'and Weaving Mills case (supra). The facts in that case were that the appellant (the said mills) did not pay excise duty on yarn produced by it, and cleared put of the factory in coils during the period 17-8-1962 to 14-11-1962 oh the ground that under notification dated 13-6-1962, single cotton yarn between 17 and 35 counts, Whether grey Or bleached and grey multiple fold yarn cleared out Of the factory in hanks were totally exempt from payment of duty with effect from 24-7-1962. Admittedly, the length of the cotton yarn in the "hanks" cleared out of the appellant's factory was more than 840 yards and duty was demanded on the clearances taken. During the pendency of the proceedings, the 'Government issued another Notification on 16-2-1963, adding an explanation to the earlier notification that the term "hank" means "hank" which does not 'contain More than 768 metres of yarn in plain (Straight) reel and that this shall be deemed to have been taken effect from 17-8-1962.
The Court held that the rule making authority had not been vested with the power under Central Excises and Salt Act to make rules with retrospective effect. Therefore, the retrospective effect purported to be given to the notification was held by the Court to be beyond the powers of the rule-making authority. We do not quite see the relevance of this judgment to the facts of the present case. It is not as if, in the present case, the levy of the cess is sought to be made with effect front a date prior to the imposition Of the levy. The levy came into force on 1-11-1980 and Shri Kohli, the learned consultant, has fairly stated that he was not disputing the appellant's liability to pay the duty. It is not as if a new explanation or any other similar provision was sought to be given retrospective effect to the disadvantage of the appellants. The important fact to note is that though the levy was imposed with effect from 1-11-1980, the machinery for collection of the cess was set up only on 16-2-1981 when the provisions of the Central Excises and Salt Act and the rules made thereunder were made applicable to the levy and collection of the cess. The provisions of the Act and the rules gave authority to the proper officers for not only levying and collecting the cess for the prospective period but also for the back periods subject of course to the restrictions by way Of limitation imposed under the provisions of the Act and the Rules. (In this connection, it is relevant to note that there is no dispute touching limitation in the present proceedings). The real point, therefore; is whether the Collector, having been appointed for the collection of the cess only oh 16-2-1981 could have demanded and collected the cess for the back period when he had not been appointed as the Collector for the purpose of the cess.
In support of the contention that the Collector had no authority, Shri Kohli placed reliance on the (Calcutta High Court decision in the case of Smt. Muniya Debi Kanoria (supra). .In that case, the question was about the collection of cess under the Produce Cess Act. The Act came into force on 21-5-1966. Section 15 of the said Act provided for the procedure for levy and collection of the cess. The provisions of the, Central Excises and Salt Act and the rules made thereunder were made applicable by Section 15 of the Act (Produce Cess Act) for the levy and collection of cess. However, the Collectors were appointed, by the Central Government only on 26-3-1969 by a notification.
The Court held that unless a Collector was appointed, levy and collection of the cess could not be proceeded with. This decision is, however, of no avail insofar as the present case is concerned when we take into consideration the Supreme Court judgment in the Dhanpat Oil & General Mills' case (supra). In that case the limited point raised before the Court was that the appellant (the mills) was not liable to payment of the cess for the period during which the Collector and the Appellate authority had not been appointed and no penal proceedings could be taken against the appellant for not furnishing returns and depositing the cess pertaining to such period. The Collector was appointed only on 13-7-1970, whereas the Produce Cess Rules came into force on 28-3-1969 (We are not concerned in the present matter with penal proceedings and, therefore, we shall not touch upon that aspect). The Court held that the absence of a duly appointed Collector under the Produce Cess Act did not relieve the occupier of a mill from the burden of the levy. The levy was imposed by Section 3(2) of the Act and came into existence immediately on the taxable event attracting excise duty. The accrual of the obligation to suffer the duty did not depend on the appointment of a Collector. The imposition and accrual of the duty was a thing apart from its assessment and collection. The obligation to file returns remained in respect of the entire period during which the Collector had not been appointed and once the Collector was appointed, the occupier of the Mill was obliged to file returns for the entire period from the commencement of the levy including the period during which there was no Collector. The Court held that this was so because the liability to excise duty had already accrued with the earliest excisable event and it subsisted during the entire period including the period during which there was no Collector. The Court added that the position was that when the Collector was appointed the occupier of the Mill must, within a reasonable time thereafter, file monthly returns of the produce consumed or brought under processing or extracted in the Mill during each preceding month, such monthly returns being in respect of all the months included in the period up-to-date. Or, said the Court, the occupier might make a composite return specifying the amount of such produce month-wise for the entire period.
13. It is abundantly clear that by applying the ratio of the Supreme Court decision to the present case, the appellants were liable to pay to the Collector, though appointed later than the coming into force of the levy, the cess which became payable during the period even prior to the appointment of the Collector.
14. Shri Kohli, however, sought to distinguish the present case from the Dhanpat Oil and General Mills case by saying that the Produce Cess Act had already a provision making the Central Excises and Salt Act and the rules made thereunder applicable to the levy and collection of the produce cess unlike in the present case where the provisions of the Central Excises and Salt Act and the Rules were made applicable only by a notification on 16-2-1981. This distinction does not, in our view, make for any difference as to the liability of the appellants to pay to the Collector the cess for the back period. This is because, even though Section 15 of the Produce Cess Act provided for application of the provisions of the Central Excises and Salt Act and the Rules to the levy and collection of the produce cess, the Supreme Court, in para 9 of its judgment in the Dhanpat Oil and General Mills case (supra) has clearly held that no officer or authority constituted under the Central Excises and Salt Act, could receive returns and make assessments of the produce cess and that only a Collector appointed under the Produce Cess Act could be the assessing authority for the purpose. In other words, despite Section 15 of the Produce Cess Act, till the Collector was appointed, the situation was hardly different from the situation in the present case where the provisions of the Central Excises and Salt Act and the Rules were made applicable to the subject cess and the Collector was appointed on 16-2-1981.
15. Another point taken up by Shri Kohli is that the provisions of one enactment could not be made applicable to another enactment by a rule. In support of this contention, he relied upon the Supreme Court decision in the case of A.S. Bawa (supra). The facts of A.S. Bawa's case were that the Central Government, by a notification under Section 12 of the Central Excises and Salt Act, made the provisions of Section 129 of the Customs Act, 1962 applicable to the appeals in respect of Central Excise duties. Section 129 of the Customs Act required an appellant to deposit the duty or penalty levied, pending an appeal. But, under Section 33 of the Central Excises and Salt Act, a person aggrieved by any decision or order had an unfettered right to appeal. The Court held that Section 129 of the Customs Act whittled down the substantive right of appeal and accordingly the condition of the requirement of deposit of duty or penalty pending the appeal could not be applied to appeals under Section 35 of the Central Excises and Salt Act. This decision, according to us, has no bearing on the present case. The question before the Supreme Court was whether application of Section 129 of the Customs Act to Central Excise appeals could be regarded as a matter of procedure and the Court held that it was not so since the restriction touched on the substantive right of appeal. In the case before us, there is no substantive right of the appellants which are being sought to be altered to their detriment by the application of the provisions of the Central Excise Act and Rules to the levy of the subject cess. As the Supreme Court has said in Dhanpat Oil and General Mills case, the absence of a duly appointed Collector did not absolve the appellant from the liability to pay the cess. The appointment of the Collector and the application of the provisions of the Central Excises and Salt Act and the Rules on a date later than the coming into force the cess, do not make for any difference as we have already found. The rights of the appellant were in no way affected.
16. Shri Kohli relied on the Madras High Court decision in the Asia Tobacco case (supra) in support of his contention that the provisions of the Paper and Paper Board Cess Rules, though notified on 16-2-1981, would come into force only from 3-3-1981, when the Collector published a Trade Notice communicating the rules. In the Asia Tobacco Company case, the Madras High Court held that the date of release of the publication is the decisive date to make the notification effective. It was further held that printing the notification in the official gazette, without making it available for circulation to the concerned public or placing it for sale to the said public would certainly not satisfy the idea of notification in the legal sense. As the D.R. has pointed out, the said decision has been stayed by a Division Bench of the Madras High Court. The D.R. has produced a copy of the order dated 12-11-1984 in C.M.P. Nos. 14576, 14596 and 14597/84 in WANos. 1051 to 1053 of 1984 respectively. Apart from this, insofar as the present case before us is concerned, the decision in the Asia Tobacco Co. case has no application or relevance. We say this because we have already found following the Supreme Court's decision in the Dhanpat Oil & General Mills case, that, though the provisions of the Central Excises and Salt Act and the Rules were made applicable to the levy and collection of the subject cess only on 16-2-1981 (though the impost itself came into force on 1-11-1980), the Collector was competent to collect the cess for the back period and the appellants were liable to pay the same. It, therefore, would not make any difference whether we take the date of notification of the rules or the date of the Collector's trade notice into account.
17. In the light of the foregoing discussion, we do not find any merit in the appeal which, in consequence, we dismiss.