Customs, Excise and Gold Tribunal - Tamil Nadu
Cheran Engineering Corporation Ltd. vs Collector Of Central Excise on 30 October, 1985
Equivalent citations: 1986ECR465(TRI.-CHENNAI), 1986(26)ELT611(TRI-CHENNAI)
ORDER C.T.A. Piliai, Member (T)
1. The facts of the ease have been set out in the order of the Collector of Central Excise, Coimbatore, referred to above. The short points for consideration in this appeal are whether the demand for duty on automotive brake drums which had been cleared from March 1979 to April 19S3 without, payment of duty, in 'terms of Rule 9(2) read with Section 11A of the Central Excises & Salt Act, i982 is maintainable because it encompasses a period longer than six months from the date of demand, and whether the order being that of the Collector is in conformity with the provisions of Section 11A at all.
2. It is accepted that brake drums are liable to duty under Item 68 of the Central Excise Tariff with effect from 1-3-79 because of the changes brought about by the Budget of 1979. It is also not disputed that goods have been cleared without payment of the duty leviable under that Item.
3. The learned advocate for the appellant urged that there can be no demand without a process of assessment and in this connection, he relied on the decision of the Supreme Court in the case of 'Assistant Collector of Central Excise., Calcutta v. National Tobacco Co. of India Limited.' (1978 ELT 416 at paragraphs 21 and 22). Reference was also made to the case of 'N.B. Sanjana, Asstt. Collector of Central Excise, Bombay and others v. The Elphinstone Spinning and Weaving Mills Co. Limited' (1978 ELT J 399, at page 406) where the words "duty paid" occurring in Rule 10 have been interpreted as referring to duty which ought to have been paid and even when no duty has been assessed, the entire duty when subsequently assessed will be a short levy.
4. Continuing, the learned advocate urged that the period of five years can be invoked only if there is fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty. Suppression can only be wilful non-disclosure which should be the meaning attached to the term if one were to follow the rule of Noiscitur a sociis. The words 'suppression of facts' occur along with the words 'fraud, collusion, wilful misstatement and wilful contravention'. "Fraud" as defined in Section 17 of the Indian Contract Act, 1872, brings in intent to deceive. There is always an element of intention in collusion. Wilful mis-statement again involves intent; And for the last category, there is a specific reference to intent to evade payment of duty. It was therefore, urged that 'suppression' should also be given the same meaning and be equated to wilful non-disclosure. A general reference was made to the exposition of this doctrine in Maxwell on 'The Interpretation of Statutes (12th Edition) at page 292. A reading of the order would show that the Collector refers only to contravention of the provisions of the Act. There is no reference to any intent to evade payment of duty on the part of the appellant; so even if Section 11A is to be appelied, only the last part regarding contravention of the provisions of the Act or the Rules with intent to evade payment of duty should alone apply to the facts of this case; hence, the demand for a period of five years will be hit by limitation.
5. The notice does not specifically refer to invoking the extended period under Section 11 A. It is thus bad in law. It has been held by this Tribunal in the case of 'Mac Laboratories (P) Limited, Bombay v. Collector of Central Excise, Bombay' - 1985(19) ELT 307 - that where there is no such reference to the longer period referred to in Section 11 A, cannot be the longer period covered.
6. Continuing the learned advocate disputed the legality of the order in that it has been passed by the Collector. According to Section 11 A, the power to demand duty, which has been not levied or paid, lies with the Assistant Collector of Central Excise. It is not open to the Collector to make a demand in terms of that Section. There is thus an inherent lack of jurisdiction and the order is therefore, void. When his attention was drawn to Rule 6 of the Central Excise Rules, 1944, the learned advocate mentioned that that Rule would refer the performance of duty or exercise of power assigned under the Rule and hence that Rule will have no applicability in dealing with a section of the Act. In this connection, he referred to the case of Manapolli Venkatanarayana v. State of Andhra Pradesh -10 (STC) 524 - where the question was whether the power given to a Commercial Tax Officer could be exercised by the Deputy Commissioner and it was decided that it could not be.
7. The learned Senior Department Representative observed that the theory of Noscitur a sociis would apply only in the case of ambiguity in the language of a provision of law. There is no ambiguity in the wording of Section 11 A; 'Suppression' is a clear word about which there can be no two views. The changes were brought about by the Budget. The contents of Budget are very widely published in all the media. An appellant of the status of Cheran Engineering Corporation cannot plead that they were not aware of the budgetary changes if proper care had been exercised.
8. The learned SDR observed that the order of the Collector does not invoke Section 11A but is one under Rule 9(2). So the submissions in regard to Section 11A will have no direct validity. In regard to the extended period the case of 'Mac Laboratories' has been cited. He pointed out that that was a case where there was no reference in the show cause notice to the longer time limit. In the present case, it is not so. In regard to the question of jurisdiction, the learned SDR pointed out that originally the show cause notice was issued by the Asstt. Collector of Central Excise, Pollachi Division calling upon the appellant to show cause to him; however, by an amendment issued about four days later he required the appellant to show cause to the Collector of Central Excise. The appellant was thus on notice as to the authority to whom cause was to be shown. Having submitted to the jurisdictional Collector, he cannot question the correctness of the order on the issue of jurisdiction alone before an appellate body like the Tribunal.
9. He also referred to the case of 'Collector of Central Excise, Guntur v. Hindustan Shipyard Limited, Visakhapatnam - ED-SB/ 1152/84-3 dated 6-1-1984 in which a Bench of this Tribunal has held that non-disclosure of production and non-mention of production and clearances of goods in the relevant R.T. 12 would constitute a situtation wherein the extended period of five years could be invoked for the purpose of levy.
10. In reply the learned advocate for the appellant referred to the decision of the Tribunal in the case of "Shriram Pistons and Rings Limited v. Collector of Central Excise, Meerut' - 1983 ELT 1927 - where the Bench had occasion to refer to the meaning of the word 'fraud' occurring in the proviso to Rule 10 and observed that 'wilful mis-statement' or 'suppression of facts' occurring in the proviso to Rule 10 after the word 'Fraud' falls within the ambit of part (i) and (ii) in the definition of 'fraud' in the Contract Act.
11. We have considered the submissions of both sides. The charge in the show cause notice is one of clearance of goods from March 1979 to April 1983 without payment of duty and hence contravention of Rules 9(1), 52A, 226 & 173G of the Central Excise Rules, 1944 and the party was called upon to show cause why duty should not be recovered in terms of Rules 9(2) and 173Q read with Section 11A of the Act and why a penalty should not be imposed under Rules 9(2), 52A, 210 and 1'73Q of the Central Excise Rules, 1944. Eventually the Collector dropped the question of imposition of penalty but confined his order to the demand of duty in terms of Rule 9(2) read with Section HA-of the Act.-While Section 11A refers to recovery of duties not levied or not paid or short levied or short paid or erroneously refunded, Rule 9 deals with removal of excisable goods from any place where they are produced. It is stipulated therein that such removal shall not take place until the excise levy or duty leviable thereon is paid in such manner as prescribed in the Rules. If goods are so removed, Rule 9(2) provides that on a written demand being made within the period specified under Section 11A of the "Act by the proper officer, the duty shall be paid. 'Proper officer' has been defined in Rule 2(xi) of the Central Excise Rules as "the officer in whose jurisdiction the land or premises of the producer of any excisable goods ... are situated." This definition of 'proper officer' is large enough to include all the Central Excise officers having jurisdiction over the factory of the appellant. Accordingly, it would include the Collector himself. Again Rule 6 specifically provides that Collector may perform all or any of the duties, or exercise all or any of the powers, assigned to an officer under the Rules. Show Cause Notice is one of demand for duty under Rule 9(2) and the final order is also confirmation of the demand under that Rule. Hence, we do not find any impropriety or lack of jurisdiction in the Collector passing the impugned order. There is no doubt a reference to Section 11A in Rule 9 but that reference is for the limited purpose of specifying the period within which a demand can be made even under Rule 9(2) -in ordinary cases, it will be six months from the relevant date as defined in Section 11A and in case of suppression etc., it will be five years. This is a far cry from the proposition that the power exercised under Rule 9(2) is in fact one exercised under Section 11 A.
12. We do not find any merit in the argument that the show cause notice does not invoke the longer time limit. A reading of the notice shows that it has set out the following facts:-
(i) The appellants have manufactured and cleared excisable goods -automotive brake drums - between 1-3-1979 and 12-4-83 without payment of excise duty.
(ii) The details of the year-wise clearances and the rate of duty applicable have been shown.
(iii) The sum which is liable to be paid has been indicated as Rs. 12,37,385.05 which covers a five year period.
In these circumstances, we are satisfied that the show cause notice does invoke the longer period of five years referred to in Rule 9(2) read with Section 11A of the Act.
13. In the light of the above, the case law cited on behalf of the appellants is hardly relevant. The 'Mac Laboratories case deals with a situation where the Tribunal found that there was no material to refer to the extended period. In the 'National Tobacco Co.' case, the issue before His Lordship was whether a debit made in the Personal Ledger Account of the assessee-firm would constitute as an assessment. The Court held that a process of assessment has to precede the collection of duty. The observation in that judgement is of no assistance in a case of demand for duty under Rule 9(2) where admittedly goods had been removed without payment of duty. We also note that the Elphinstone Spinning and Weaving wills' case deals with the applicability of Rule 10 to a case of non-levy, whether a demand could be issued at all under that Rule where goods have been removed without payment of duty; the Court clarified that the term 'paid' should be interpreted as 'ought to have been paid' and 'nil' levy would be a levy. The facts of that case are different from the present one.
14. We now turn to whether there has been suppression of facts which would enable the Department to make a demand for a period of five years from the date of the demand rather than for a period of six months. The rule of noscitur a sociis would not seem to be relevant in the context of the words occurring in Section 11A (as applicable to Rule 9). As aptly pointed out by a Bench of this Tribunal in "Shriram Pistons and Rings case' - 1983 ELT 1927 - the term 'fraud' as defined in Section 17 of the Contract Act would encompass both wilful statement and suppression of facts; if therefore, one were to go by the definition of 'fraud' as occurring in the Indian Contract Act, 1872, there would be no need for reference to the other phrases in Section 11 A. One has to read the provisions of an Act so as to give some meaning, if possible, to the various expressions occurring in a Section and not to give a meaning as would render particular phrases otiose or superfluous. This would mean that the term 'fraud' will have to be understood in a general way and not necessarily in the way it has been defined in the Indian Contract Act, 1872. We have already held that the term 'suppression of facts' occurring in Section 11A stands by itself and the adjective 'wilful' occurring before 'mis-statement' would not apply to 'suppression of facts' thereto as the suppression of facts is always with knowledge. One does not suppress of a things of which one is not aware. The proper construction of proviso to Section 11A would read that the reason for (i) fraud, (ii) collusion, (iii) any wilful mis-statement, (iv) suppression of fact or (v) contravention of any of the provisions of the Act 'with intent to evade payment of duty', will all attract the larger period of limitation. In the present case, the fact of production of the excisable goods had not been brought to the knowledge of the Department as required under the Rules. There has thus been suppression as correctly found by the Collector.
15. Reference on behalf of the appellant that the order refers only to contravention of the provisions of the Act and hence only contravention of the provisions with intent to evade payment of duty should be the operative part of Section 11A is without substance. The show cause notice clearly sets out that there have been clearances without payment of duty and there has been a contravention of various Rules. One of these Rules is Rule 173Q which, amongst other things, refers to contravention of Rules with intent to evade payment of duty but the rest of the Rules sought in the show cause notice namely Rules 9(1), 52A and 226 and Rules wherein the intent to evade payment of duty is not a necessary ingredient to invite penal consequences for violation. In the result we find that the order of the Collector is maintainable on facts and is correct in law.
The appeal is accordingly dismissed.