Bombay High Court
Universal Autocrafts Pvt. Ltd. vs Union Of India And Another on 11 August, 1987
Equivalent citations: 1990(26)ECC180, 1987(31)ELT912(BOM)
JUDGMENT S.C. Pratap, J.
1. The petitioner is a private limited company and a small scale industry carrying on business as manufactures of corrugated boards and boxes. For such manufacture the petitioner uses as raw material craft paper which it purchases from the manufacturers thereof.
2. Under Notification No. 46 of 1971, dated 24th April 1971 the Central Government exempted corrugated boards of the description given in column 2 of the table to the said notification falling under sub-item (2) of Item No. 17 of the First Schedule to the Central Excise and Salt Act, 1944, from so much of the duty of excise leviable thereon as was in excess of the duty leviable at the rates specified in the corresponding entry in column 3 of the said table which here was 5 per cent. ad valorem. On 24th January 1978 the Central Government, by its Notification No. 14 of 1978, amended the above Notification No. 46 of 1971 by inserting therein a new proviso after the existing proviso. The said new inserted proviso was as under :-
"Provided further that if it is proved to the satisfaction of the proper officer that such corrugated board has been produced out of Craft paper or out of paper and paper board of the type known as kraft liner or corrugation medium of a substance equal to or exceeding 65 grammes per square metre, in each case and on which the duty of excise has been paid at the rate of thirty-seven and half per cent. ad valorem, then such corrugated board shall be exempted from the whole of the duty of excise leviable thereon."
3. On 31st May 1978 the office of the Controller of Central Excise wrote to M/s. Western India Corrugated Box Manufacturing Association in reply to Association's earlier letter and in the said reply it was stated thus :
"I have been directed to inform you that even though the gate passes (G.P.Is.) under which the factories manufacturing corrugated board receive kraft paper from the paper mills indicate deductions in the duty payable by them, by virtue of Notification No. 128/77 dated 16-6-1977 in the effective rate on such paper cleared from the paper mills mentioned in Notification No. 15/78, dated 24-1-1978 for all purposes, the paper so received will be deemed to have discharged the duty liability at the full effective rate as indicated in the gate passes, for the purposes of Notification No. 14/78, dated 24-1-1978 since the concessional rate of duty on such paper manufactured by the paper mills is entitled to the concession granted, by virtue of Notification No. 128/77." (Underlining ours.)
4. Subsequent to Notification No. 14 of 1978, dated 24th January 1978, the petitioner had also submitted revised classification list on 31st January 1978 to the Assistant Collector in respect of corrugated boards and boxes manufactured by the petitioner from craft paper. In the said classification list reference was made to Notification No. 46 of 1971, dated 24th April 1971 as amended by Notification No. 72 of 1976, dated 16th March 1976 and further amended by Notification No. 14 of 1978, dated 21st January 1978. This classification list was duly approved on 28th February 1978. The petitioner also submitted RT-12 returns to the Central Excise Authorities every month.
5. Subsequently, on 26th August 1978 the Central Government issued Notification No. 159 of 1978. There is no dispute that as a result of this notification, the effect of the earlier Notification No. 14 of 1978 dated 24th January 1978 was obliterated and the original position under the unamended Notification No. 46 of 1971, dated 24th April 1971 stood restored. Over five months thereafter, the petitioner received notice dated 2nd February 1979 inter alia to the effect that the petitioner had, during the period 24th January 1978 to 25th August 1978, cleared and manufactured corrugated boards without payment of duty vide Notification No. 46 of 1971 as amended by Notification No. 14 of 1978 but not fulfilled the second proviso to the said Notification. The petitioners sent detailed reply to the said notice. The Assistant Collector, however, by his order dated 29th February 1980 (Exhibit 1) held the demand for the period 24th January 1978 to 25th August 1978 to be in order and the same was confirmed. Hence this petition.
6. Shorn of details, the short and the only point urged and arising for determination is whether the show cause notice in this case should in law be (under rule 10 of the Central Excise Rules as it then stood) for a period of six months prior to the date of its issuance or for a period of five years under the proviso to the said rule ? This rule as it stood at the relevant time is as under :-
Rule 10 : "Where any duty has not been levied or paid or has been short levied or erroneously refunded or any duty assessed has not been paid in full, the proper officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid, or which has been short levied, or to whom the refund has erroneously been made, or which has not been paid in full, requiring him to show cause why he should not pay the amount specified in the notice." (Underlining ours.) Under this rule, the period of limitation is six months but under the proviso thereto, it is five years, where any duty has not been levied or paid or has been short levied or has not been paid in full, by reason of fraud, collusion or any wilful misstatement or suppression of facts. Question, therefore, is : Are any of these conditions viz., "fraud", "collusion", "wilful misstatement" or "suppression" of facts established here ?
7. Hearing Mr. Parikh for the petitioner and Mr. Desai for the respondents and going through the record and considering all such facts and circumstances to which our attention was invited by the respective Counsel, it is clear that none of the said conditions is established in this case. Indeed, even the show cause notice does not even disclose any fraud, collusion, wilful misstatement or suppression of facts. The said notice is blissfully silent in this behalf. The petitioner has not even been called upon to meet any such charge. This fatal lacuna should resolve and conclude the question under determination in favour of the petitioner.
8. But apart therefrom, there are also other positive circumstances staring us in the face. As already noted, the corrugated box manufacturers' association had written to the Collectorate and had received clear-cut reply thereto, the relevant portion whereof has been reproduced supra. Then again, revised classification list was also filed by the petitioner and the same has also been duly approved. Still further, RT-12 returns were also regularly filed every month. It is also significant to note that this very question of limitation arose in several appeal matters similar hereto before the Collector of Central Excise, Bombay, who allowed all these several appeals and held the period of limitation to be six months and not five years. It may to an extent be useful to extract the relevant part of the Collector's order :
"The appellants are correct in saying that the demands issued for the period prior to six months from the date of issue of show cause notices are barred by limitation. In my opinion, in the given set of circumstances, it cannot be said that a longer period of five years as envisaged in the then Rule 10 (now Section 11A) would be attracted. Accordingly, I hold that part of the amount which pertains to the period prior to six months from the date of issue of relevant show cause noticed, is not recoverable, being barred by limitation."
We are informed at the Bar that this decision of the Collector has been accepted by the department. It is in the circumstances all the more surprising that the petitioner's claim should be so vehemently contested when the claim of several others similarly situated has been finally accepted. That the Central Excise Appellate Authority has itself, in contemporaneous and/or collateral proceedings, found, in precisely similar circumstances as here, the applicable period of limitation to be six months, is, indeed, a strong factor and circumstance in support of the petitioner's case. Considering all aspects and factors, we hold that the period of limitation application to the petitioner qua the impugned demand under the show cause notice to be six months prior to the date of the said notice. The said notice being of 2nd February 1979, the relevant period would be one from 3rd August 1978 to 25th August 1978. There is no dispute that on and from 26th August 1978 the original position under Notification No. 46 of 1971, dated 24th April 1971 stood restored by virtue of Notification No. 159 of 1978 issued by the Central Government in exercise of its power under Rule 8 on 26th August 1978. The relevant period thus would be from 3rd August 1978 to 25th August 1978.
9. Hence order :
(a) This petition succeeds and the same is allowed. The impugned order dated 29th February 1980 (Exhibit I) is set aside and quashed.
(b) The proceedings are sent back to the Assistant Collector of Central Excise who will now proceed to reconsider and redetermine the demand under the show cause notice dated 2nd February 1979 (Exhibit F) strictly in accordance with the period of limitation applicable thereto being six months i.e. from 3rd August 1978 to 25th August 1978.
(c) The petitioner through its learned Counsel Mr. Parikh gives undertaking to this Court here recorded to the effect that on the Assistant Collector redetermining the amount payable by the petitioner in accordance with this period, the same will be paid by the petitioner within thirty days of written intimation thereof to the petitioner. This undertaking is accepted by this Court.
(d) In view of the aforesaid undertaking and its acceptance by this Court, the bank guarantee furnished by the petitioner will stand cancelled. The same duly cancelled should be returned to the petitioner.
10. Rule is made absolute in terms aforesaid but, in the circumstances, with no order as to costs.