Customs, Excise and Gold Tribunal - Mumbai
S. Subramaniyan And Co. vs Collector Of Central Excise And Customs on 16 December, 1991
Equivalent citations: 1993(63)ELT297(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an appeal directed against the order passed by the Collector (Appeals) bearing No. GSM-205/90 Baroda dated 16-4-1990, rejecting the appellants' appeal.
2. The facts of the case are that 5 consignments of inputs viz. cement were received by the appellants under modvat scheme and credit of the duty paid thereon was taken, which amounted to Rs. 16,117.86. This was objected to by the Department on the ground that the Gate Passes do not bear the name of the appellants and there were also no endorsements on the gate pass in their favour. A show cause notice was issued to the appellants on 5-10-1988 under Rule 57-1 of the Central Excise Rules covering the period from 1-6-1987 to 30-6-1987. In the adjudication proceedings, the demand was confirmed and the appeal before the Collector (Appeals) filed by the appellants was also rejected. Hence, the present appeal before me. In the written submissions made by the advocate on behalf of the appellants, it is submitted that a show cause notice was received by the appellants only on 6-10-1988 and on the date of service of the show cause notice, the amended Rule 57-1 has already come into operation. On scrutiny of Rule 57-1 as amended, it is evident that the show cause notice ought to have been served within six months and hence the Asstt. Collector could not have confirmed the demand, which is time barred. The written submissions mainly press the time bar aspect. The appellants did not choose to be present for personal hearing.
3. Shri Singh, the Id. JDR, on the other hand, pleaded that the show cause notice has been issued on 5-10-1988 prior to the amendment of Rule 57-1. Hence, during the period when show cause notice was issued, the amended Rule 57~I has not come into existence. Hence, no time limit was prescribed under the unamended Rule 57-1; the demand is therefore not hit by time bar.
4. After hearing both the sides, I observe that the only point to be decided in this appeal is, whether, the show cause notice issued on 5-10-1988 but served on the appellants on 6-10-1988, covering the period 1-64987 to 30-6-1987 in terms of Rule 57-1 is time barred or otherwise? Rule 57-1, prior to amendment on 6-10-1988, did not specifically provide for time limit for recovery of erroneous modvat credit. However, by way of an amendment carried out under Notification No. 28/88, dated 6-10-1988, sub-rule (1) of Rule 57-1 was substituted. The amended sub-rule (1) of Rule 57-1 reads as below :
"Where credit of duty paid on inputs has been taken on account of an error, omission or mis-construction, on the part of an officer or a manufacturer, or an assessee, the proper officer may, within six months from the date of such credit, serve notice on the manufacturer or the assessee who has taken such credit requiring him to show cause why he should not be disallowed to such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him :
Provided that where such credit has been taken on account of wilful mis-statement, collusion or suppression of facts on the part of a manufacturer or an assessee, the provisions of this clause shall have effect as if for the words "six months" the words "five years" were substituted."
5. From the above it is seen that for recovery of any erroneous credit taken on account of error, omission or mis-construction, the proper officer may have to serve a notice on the manufacturer within six months from the date of such credit and where the credit has been taken on account of wilful mis-statement, collusion or suppression of facts, such a notice has to be served within 5 years. The undisputed factual position is that the show cause notice was issued on 5-10-1988. As per the order in original I observe that, the show cause notice issued on 5-10-1988 was received by the appellants on 6-10-1988. Hence, on the date of service of the show cause notice (6-10-1988), the amended Rule 57-1 as above, has come into operation. The moot point of law to be considered is, whether, in a case where show cause notice is issued on 5-10-1988, prior to amendment of Rule 57-1, but served on the assessee on 6-10-1988, when the amended Rule 57-1 has come into operation, the Department can have the benefit of unamended Rule 57-1 or has to go by the provisions of the amended Rule 57-1. This is the point to be decided in the appeal. In this context, the decision of the Tribunal in the case of Wood Paper Ltd. reported in 1991 (56) E.L.T. 71 (Tri.) is relevant. Though, in the aforesaid case, the validity of the show cause notice issued by the Supdt. prior to amendment but despatched after amendment of Section 11A was the issue considered, the issue is similar. In the said decision, they had also referred to the judgment of the Supreme Court in the case of R.K. Upadhyay v. Shanabhai P. Patel reported in 1987 (166) Income Tax Reports . In the aforesaid decision, the Supreme Court has held that there is a clear distinction in the wordings between "issue of notice" and "service of notice". Hence, were the wording of the statute specifies only issue of notice, the authorities are well within their powers to invoke the statute as prevalent at the time of issue of notice. However, I find that Rule 57-1 contemplates service of notice within a period of six months. Hence, when such a notice has been served only on 6-10-1988, that notice ought to be in accordance with the provisions of the amended Rule 57-1. In this case, when show cause notice has been served on 6-10-1988, that notice could have been served only in the context of the amended Rule 57-1. In the absence of any allegation of suppression, fraud etc. made in the show cause notice, the normal time limit of six months is applicable. Since the credit has been taken during the period from 1-6-1987 to 30-6-1987 and the notice has been served on 6-10-1988, the demand is hit by time bar. I, therefore, allow the appeal.