Customs, Excise and Gold Tribunal - Delhi
Sundaram Fasteners Ltd. vs Collector Of Central Excise on 12 October, 1992
Equivalent citations: 1993(64)ELT87(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. Both these appeals arise from a common order-in-appeal No. 135/84 dated 5-9-1984 passed by the Collector of Central Excise (Appeals), Madras. The Revenue is aggrieved ith the portion of the order passed by the Collector (Appeals), Madras in so far as restricting the demand for differential duty for a period of 6 months prior to the sho cause notice dated 19-10-1983 hich as referred to as corrigendum. On the question of merits, the Collector (Appeals) has upheld the order of the Asstt. Collector classifying the item fasteners falling under TI 52 of the erst hile Tariff.
2. The assessee is aggrieved ith the classification of the item under TI 52 and they have filed a separate appeal. They have also challenged the confirmation of the demand made for 6 months. As the issue involved is common, both the appeals are taken up for disposal as per la .
3. As regards the classification of the item fasteners is concerned, the matter is no longer res integra and the same has no been settled by the Apex Court in the case of Plasmac Machine Mfg. Co. Pvt. Ltd. v. Collector of Central Excise [1990 (51) E.L.T. 161]. The same has also been follo ed by the Tribunal in the case of Hindustan Motors v. Collector of Central Excise [1992 (59) E.L.T. 448]. The Hon'ble Supreme Court has held in the cited case that the fact that the Tie-bar nuts' function of fixing the platens as stated by the appellants and that of fastening, as argued by them, are not basically different, and the appellants themselves having called the goods 'nuts', e are of the vie that the Tribunal is correct in classifying Tie Bar Nuts under TI 52. e therefore, do not find any reason to interfere ith the department's prospective modification of the classification. e find no justification for classifying those in the residuary Item 68. As as held in Dunlop India Ltd. - 1983 (13) E.L.T. 1566 (S.C.) (supra), if an article is classifiable under a specific item, it ould be against the very principle of classification to deny it the proper perspective and send it to the residuary item." The Hon'ble Supreme Court has gone into the term 'fasten' in great detail and has held that tie bar nuts are to be classified under Item 52 of the erst hile Tariff. The Tribunal has also gone into detail in the case of Hindustan Motors Ltd. Therefore, applying the ratio, e have to hold that the Collector (Appeals) is justified in classifying the item fastener under TI 52 of the erst hile Tariff and e uphold the classification.
4. The other question that remains for determination in these appeals is as regards to the demands confirmed by the Asstt. Collector hich has been modified by the Collector (Appeals) for 6 months prior to corrigendum sho cause notice dated 19-10-1983. In this case, both the Revenue as ell as the assessee are aggrieved ith the order on the question of confirmation of the demand. It is the Revenue's case that the basic issue involved in the sho cause notice dated 30-6-1981,25-3-1983 issued to the party and corrected by corrigendum dated 19-10-1983 is the proposed reclassification of certain threaded items under TI 52 for hich the party as duly put to notice. It is the Revenue's case that the proposed reclassification ill enhance the rate of duty and resulting demand of differential duty in case the reclassification is confirmed by the Asstt. Collector. It is stated that the sho cause notice issued to the party proposing reclassification of certain items from TI 68 to TI 52, is independent and also it follo s that higher rate of duty is proposed to be levied on those items mentioned in the sho cause notice and therefore, the party is liable to pay the differential duty once the reclassification is confirmed. Therefore, the Revenue submitted that the Collector (Appeals) has erred in observing that hat the department sought under the sho cause notice dated 30-6-1981 and 23-5-1983, as a revision of an approved reclassification list and could not be treated as a notice under Section 11A of the Central Excises and Salt Act, 1944 as they are essential attributes in such notices viz. specifying duty short levied and quantified the duty short-levied ere found missing. The Revenue are placing reliance on a Division Bench Judgment of Delhi High Court in the case of Hindustan Aluminium Corp. Ltd. v. Superintendent of Central Excise [1981 (8) E.L.T. 642 (Delhi)] in hich it as held that non-mention of the amount of demand ould not render the sho cause notice void and illegal. They contended that the sho cause notice as duly issued to the party for the proposed reclassification of certain items hile notices dated 30-6-1981 and 23-5-1983 and hat as issued on 19-10-1983, is only a corrigendum to the original sho cause notice specifying the amounts of duty demanded under Section 11 A. As the Collector (Appeals) has upheld the reclassification of the items, the proceedings for hich ere initiated by sho cause notices dated 30-6-1981, 23-5-1983, the Collector ought to have upheld the demand of differential duty as raised and confirmed by the Asstt. Collector. In this context, the Revenue is asking for confirmation of the order of the Asstt. Collector ith regard to the duty demanded to an extent of Rs. 16,65,382.56 P. made in the corrigendum sho cause notice dated 19-10-1983 and to hold that it is not barred by time as reclassification notice had been issued giving notice to the party by sho cause notice dated 30-6-1981 and 23-5-1983.
5. The assessee is seriously contesting this vie taken by the Revenue in this appeal. In E/2863/84-D, they have also challenged the classification of the product under Item 52 of the erst hile tariff. As the matter is no longer res integra and the Supreme Court has already confirmed the classification of the item under Tariff Item 52 of the erst hile tariff, the party's challenge of the classification in their appeal to this extent has to be accepted. The Collector (Appeals) has confirmed the demand only for 6 months from the date of the corrigendum sho cause notice dated 19-10-1983 and this aspect of the matter cannot be challenged by the assessee but they have to contend by confining themselves and restricting the appeal filed by the Revenue asking the demand to be confirmed from the first sho cause notice dated 30-6-1981. Therefore, applying the ratio of the Supreme Court, the party's appeal No. E/2863/84-D is ordered to be dismissed. The operative portion of the order as pronounced in the open court. The only question that remains to be decided in E/Appeal No. 3047/84-D in hich the Revenue is contending is that the demand has to be computed from the sho cause notice issued on 30-6-1981 and 25-5-1983 should be 23-05-1983-Ed. and that the demand is not barred by time and the reasoning given by the Collector (Appeals) is not correct. The Collector (Appeals) in his order-in-ap-peal has held as under -
"I have carefully considered the appeal. I shall first examine the maintainability of the impugned order in so far as it demanded differential duty in respect of 21 items ith reference to the first notice issued and in respect of other items ith reference to the notice issued dated 23-5-1983.1 have perused the sho cause notice issued by the department from time to time as ell as the case records. As mentioned earlier, there is no indication in the case records hether the consolidated classification list filed by the appellants for 84 items, had been approved by the proper officer. I proceed on the basis that this classification list had been approved, as the Assistant Collector could other ise, have issued an order modifying the classification list, instead of demanding differential duty under Section 11A of the Act. Therefore, the original proceedings ere proceedings initiated to demand short levy arising as a result of the incorrect classification of the disputed items under TI 68, hile the correct classification in the opinion of the department as under TI 52. Therefore, these notices have to be examined in order to determine hether these notices could be considered as relating to a demand for differential duty, on account of erroneous assessment or erroneous classification. I note that the first notice issued proposed reclassification and did not allege short levy. Therefore, hat the department sought under this notice as a revision of an approved classification and this notice could not be treated as a notice issued under Section 11 of the Act, as the essential attributes of such a notice viz. specifying the period of short levy and quantifying the duty short levied ere found missing. The second notice also suffers from the same infirmity, except that it conveyed to appellants the decision of the Asstt. Collector to drop further proceedings in respect of 41 items. Hence, this notice also could not be considered as a notice for short levy. The third notice hich as issued on 23-5-1983, proposed reclassification of all the 62 items under Rule 173-B(4)(c) and strangely demanded duty under Rule 9(2) of the Central Excise Rules, 1944. This notice also did not contain the essential attributes of a demand for short levy. On the contrary, it demanded duty under Rule 9(2) of the Central Excise Rules, hich as at variance ith the proposal to reclassify the disputed items under Rule 173-B of the Central Excise Rules. Hence, this notice also has to be held as lacking in the essential attributes of a demand for duty, short levied or short collected. It as only on 13-10-1983 the department specifically invoked Section 11A of the Act and quantified the amount short levied and this notice as issued, after appellants ere heard in person by the Asstt. Collector. The case records clearly indicate that the Asstt. Collector noticed for the first time that the earlier notices did not invoke the correct provisions of Central Excise la and that the duty hich as sought to be demanded, had not been quantified and that proceedings in respect of some of the items had been dropped by the predecessor. Therefore, it has to be held that a proper demand alleging short levy as made for the first time by the department only on 10-10-1983 and therefore, the demand has to be restricted to a period of six months prior to the service of this notice dated 19-10-1983 and the relevent date has to be determined in accordance ith the provisions of Section 11 of the Act and all clearances effected during a period of six months prior to the service of the notices ith reference to this relevant date, ould be covered by the notice issued on 19-10-1983.
(ii) Even in respect of this demand notice issued on 10-10-1983, appellants contend that the Asstt. Collector had no authority to include the 47 items, in respect of hich proceedings had been dropped by her predecessor. The Superintendent had categorically indicated in the notice issued on 4-5-1982 that the Asstt. Collector had dropped proceedings in respect of 41 items. hile prima facie, this argument of the advocate has considerable force, I observe that the correct demand for short levy as issued by the department only on 19-10-1983 and therefore any decision of the Asstt. Collector dropping the proceedings ould only mean that the proceedings for reclassification ere ithdra n. hereas the notice issued on 19-10-1983 as a notice of demand for short levy and this notice could cover all the disputed items, since earlier proceedings ere not proceedings in hich a demand for duty short levied as made by the department only on 19-10-1983 logically this demand ould cover all the 62 items, including 41 items in respect of hich proceedings for reclassification ere dropped by the predecessor Asstt. Collector."
6. We have heard Shri J. Nair, learned DR for the Revenue and Shri V. Sridharan, learned advocate for the assessee. Shri Nair submitted that the fresh sho cause notice dated 30-6-1981 as issued suggesting reclassification of 62 items as they performed fixing function, the party had submitted their reply. The department again issued a revised sho cause notice dated 4-5-1982 suggesting reclassification of 21 items out of 62 proposed earlier. The party again submitted their reply. On 25-3-1985, another sho cause notice as issued invoking all the 62 items earlier proposed for reclassification under TI 52. By corrigendum sho cause notice dated 19-10-1983, duty as specifically computed and a demand as raised on the basis of reclassification suggested in respect of 62 items in the fresh sho cause notice demanding duty for Rs. 16,36,382.56 P. under Section 11A of the Central Excises and Salt Act, 1944. The Asstt. Collector confirmed the demand for a period of 6 months upto 30-6-1981 for 21 items. The learned Collector had held that it is only the third sho cause notice dated 19-10-1983 hich is a correct sho cause notice and the previous sho cause notice has no force and therefore, the demand has to be restricted for 6 months prior to 19-10-1983. Ho ever, the Collector (Appeals) has held the earlier notices to be valid for the purpose of reclassification but so far as the issue of duty is concerned, he has held the notice to be bad in la . Therefore, Shri Nair submitted that the learned Collector is not correct in his reasoning as the first sho cause notice dated 30th June 1981 has saved the Limitation and hen the Collector holds the notice to be valid for reclassification, then the consequence of reclassification is the confirmation of demand and therefore, the Asstt. Collector had rightly confirmed the demand for 21 items for 6 months prior to the sho cause notice dated 30th June 1981. In this connection, the learned DR has relied on the follo ing rulings -
Tata Iron & Steel Co Ltd. v. Union of India & Ors. [1988 (35) E.L.T. 605] Union of India & Ors. v. Madhumilan Syntex P Ltd. [1988 (35) E.L.T. 349] T.I. Miller Ltd. v. Union of India [1991 (53) E.L.T. 214] Gurupriya Tele Auto P. Ltd. v. Superintendent of Central Excise -1992 (37) ECC 62] Shyam Sunder Nichani v. Asstt. Collector of Central Excise, Bangalore - 1991 (33) ECC 246 Kar.] Elson Machines (P) Ltd. v. C.C.E. - 1989 19 ECC (80) S.C.] He further submitted that non-mention of amount in the sho cause notice ill not vitiate the demands as held by the Delhi High Court in the case of Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise [1981 (8) E.L.T. 642]. Shri Nair submitted that the order of the Asstt. Collector confirming duty in respect of 21 items prior to the first sho cause notice and 41 items prior to third sho cause notice is valid and correct in la .
7. Shri V. Sridharan, learned advocate, hile arguing this case, submitted that notice under Section 11A of the Central Excises and Salt Act can be issued only under an approved classification list. He contended that notice under Section 11A can be issued for short levy demanding duty for 6 months or in circumstances described in proviso of Section 11A for 5 years. He contended that Section 11A contemplated issue of notice ithin six months and the notice should be served ith the demand on the person liable to pay and the notice should clearly specify the amount that is to be recovered. He further contended that proviso 2 of Section 11A clearly states that the Asstt. Collector shall after considering their representation, determine the rate of duty of excise due from such person, therefore, the order should specify the amount hich should not be more than the amount specified in the sho cause notice. Therefore it is his argument that the sho cause notice should specify the amount hich is a vital ingredient and not an empty formality. There should be a plea of short levy. The first sho cause notice did not specify the rate of valuation and therefore, it is not a sho cause notice under Section 11A of the Act. The sho cause notices issued on 30-6-1981 and 25-3-1983 did not specify the attributes of Section 11 A. Therefore, the learned Collector after analysis of the sho cause notices has held that the corrigendum sho cause notice dated 19-3-1983 is a valid sho cause notice and duty demanded for 6 months from this date is not recoverable and the rest is time-barred. He contended that the particulars for orking out should be specified in the sho cause notice like rate, value and period. In support of his contention, he relied on the ruling of the case of JBA Printing Inks v. C.C.E. [1980 (6) E.L.T. 121]. It is his contention that notices issued on 30-6-1981, 4-5-1983 and 25-3-1985 are not proper notices. They are notices only for the purpose of reclassification and not for the purpose of demand of duty under Section 11A of the Act as the notices did not deal ith the vital ingredients as stated by him. He further contended that notice dated 30-6-1981 is not a notice under Section 11A of the Act but it is under Rule 10 of Central Excise Rules and no demand of duty had been made therein. The notice dated 19-10-1983 had borro ed the averments of notice dated 30-6-1981 and therefore, it is a notice under Section 11A of the Act.
8. Shri Sridharan, learned advocate stated that a number of judgments have been pronounced in identical cases as under -
Travancore Rayons v. Collector of Central Excise (Order No. 582/84-C, dated 24-8-1984) Merck Sharp v. Collector of Central Excise (Order No. 589/84-C, dated 16-8-1984) Collector of Central Excise v. Steel Authority of India Ltd. (Order No. 608/88-C) Bramec Suri (P) Ltd. v. C.C.E. [1986 (25) E.L.T. 79 (Tri.)] Anna Sahib v. Collector of Central Excise [1986 (24) E.L.T. 567] Collector of Central Excise v. Sun Paper Mills Ltd. [1985 (20) E.L.T. 120] He contended that the ruling of the Delhi High Court in the case of Hindustan Aluminium Corporation is a distinguishable one. He submitted that the Delhi High Court had ith the ruling rendered in the case of JBA Printing Industries. He contended that the sho cause notice does not even specify the ratio of the ruling rendered by the Delhi High Court ith that of Hindustan Aluminium Corp. Ltd.
9. Shri Nair, countering the arguments of the learned advocate, contended that the first sho cause notice as a proposal for reclassification and the party had been put on notice. Therefore, the consequence of revision of reclassification of the sho cause notice ould be confirmation of demand for 6 months.
The same has been upheld by the Supreme Court in the rulings cited by him and therefore, the Asstt. Collector's order is a just and legal order. He fully relied on the ruling rendered in the case of Hindustan Aluminium Corp. Ltd. and also in the case of Industrial Coatings [1988 (36) E.L.T. 693]. Sh. V. Sridharan submitted that the ratio of the Industrial Coatings case is distinguishable.
10. We have carefully considered the submissions and perused the records. By the corrigendum dated 19-10-1983 to the sho cause notice dated 23-5-1983, the appellants ere asked to sho cause hy a duty amount of Rs. 16,65,382.56 P. should not be collected under Section 11A and payments paid under protest (since 3-7-1981) should not be vacated. The duty demanded as computed by demanding duty for the period 1-1-1981 to 30-6-1981 for 21 items and for 41 products for the period 24-11-1982 to 23-5-1983. The 21 items comprised the 20 hub bolts and nuts and the Banjo bolt. The 41 items ere 37 items adjudicated previously by the Asstt. Collector and 2 adjusting scre s and 2 bleed scre s. The appellants had pointed out that by the revised sho cause notice dated 4-5-1982, it had been held that 41 items ere classifiable under TI 68. That apart, the Asstt. Collector had previously approved the classification list of the 62 items made under TI 68 and there ere no ne facts or changes in the Statute to arrant reclassification of the goods. They had further contended that the proper course as to invoke the po ers of revie by the competent authority. It as stated by them that the competence of the Superintendent of Central Excise to decide about reclassification of goods under TI 52 as not legal. They further contended that Rule 173B(4)(c) of Central Excise Rules could not be invoked for reclassification, since only change as that the items became unspecified motor vehicles parts and ere classifiable under TI 68 and also the proposed levy of duty could not be extended to a period beyond six months of 19-10-1983. The Assistant Collector in the order-in-original has held that as a proper officer, for approving a classification list, she has also po er to revise a classification list and the earlier classification list had not been approved by any quasi-judicial order. She has held that -
"the classification lists had been approved, classifying the product under TI 68. Moreover, the classification list has been approved ith an endorsement in the Memorandum stating that the classification is approved until further orders. Under Rule 173B(5) the Asstt. Collector is empo ered to carry out necessary modifications and revise the classifications under Section 11A, the Asstt. Collector is empo ered to collect short levy. A short levy might have occurred either due to approval of a rong rate of duty or due to approval of rong assessable value. Hence, the Asstt. Collector has authority to change the classification and demand duty under Section 11A ithin the time limit specified in Section 11A. In the instant case, demand raised has been confirmed to six months prior to the issue of sho cause notice dated 30-6-1981 in the case of 21 items and six months prior to the issue of sho cause notice dated 23-5-1983 in the case of 41 items. The corrigendum to the sho cause notice only specifies the quantum of duty to the demand. The principles on hich it is proposed to be demanded, has already been specified in the t o sho cause notices dated 30-6-1981 and 25-5-1983. The contention of the assessees that the demand has to be restricted to six months prior to the issue of corrigendum of sho cause notice is therefore, not correct."
The Corrigendum dated 19-10-1983 is reproduced belo -
"Corrigendum to sho cause notice C No. 458/83 dated 23-5-1983 issued by the Supdt. of Central Excise, Range-VI A C No. V/52/30/8/81 19-10-1983 Sub : C. Exise BNS Manufactured by M/s. Sundaram Fasteners Ltd. - Revie of classification items - Reg.
In para 3 of the above sho cause notice for the line "and hy duty should not be collected under rule 9(2) of the said Rules", the follo ing may be substituted :
"and hy duly of Rs. 16,65,382.56 P. as detailed in the annexure enclosed should not be collected under section 11A of the said Act and as to hy the protest lodged in this regard from 3-7-1981 should not be vacated"
"In vie of the above corrigendum, you may make further submissions, if any, ithin 7 days from the date of receipt of this corrigendum.
Sd/- 29-10-1983 Supdt. Tech.
To M/s. Sundaram Fasteners Ltd. (Annexure to the corrigendum to the sho cause notice dated 25-5-1983 is not reproduced here)."
Therefore, as can be seen from these facts, the corrigendum dated 19-10-1983 is not a sho cause notice but it brought correction to the sho cause notice dated 23-5-1983 to specify the amount of duty and specify the provision of la . Therefore, the sho cause notice dated 23-5-1983 is a valid notice for recovery of demands for 6 months prior to this date i.e. 23-5-1983 in respect of 41 items. The sho cause notice dated 30-6-1981 is for reclassification issued under Rule 173B(4)(c). It is a valid sho cause notice for reclassification as held by the Collector (Appeals) himself. The Asstt. Collector has held that the earlier classification list had not been approved and hence the revised classification sho cause notice dated 30-6-1981 for 21 items as given. This sho cause notice dated 30-6-1981 has been a valid notice and duty for six months for 21 items prior to this is recoverable. Further, these notices ere neither ithdra n nor dropped. Therefore, the contention of the learned advocate that the sho cause notice dated 30-6-1981 and 23-5-1983 is not sustainable and demands prior to 6 months is not recoverable is not a valid and tenable contention. The Collector (Appeals) has erred in considering the corrigendum dated 19-10-1983 as a sho cause notice. It is not a sho cause notice but it gave the duty details and mentioned the provision of Section 11A. The assessees have been paying the duty under protest from 3-7-1981. There has been provisional assessments as can be seen. It is not the assessees' case that RT- 12 return had been approved but they categorically state that they had been paying duty under protest and sho cause notice dated 19-10-1983 clearly calls upon them to explain as to hy the protest should not be vacated. It follo s that the assessment has been provisional from 30-6-1981. As can be seen from the Asstt. Collector's order the earlier classification list has also not been approved specifically. The assessee is not disputing these facts. They are challenging the po er of the Assistant Collector to reopen classification under Rule 173B(4) of the rules. This aspect of the matter has no been fully settled by a large number of decisions.
11. The aspect pertaining to reopening of classification and confirmation of short levy has been gone into in great detail and Rules 52, 173B(ii), 173C, 173G(iii), 173-1 of the Central Excise Rules, have been examined in great detail by the Karnataka High Court in the case of Gurupriya Tele Auto P. Ltd. v. Superintendent of Central Excise, Bangalore (supra). The Hon'ble High Court has examined several rulings as ell as its o n earlier ruling rendered in the case of Shyam Sunder Nichani v. Assistant Collector of Central Excise, Bangalore & Anr. (supra). After a detailed analysis of the provisions of la vis-a-vis the citation, the Hon'ble High Court has concluded that the Revenue has po ers to reopen the classification and recover the short duty. The contentions raised by the appellants in this appeal are similar to the one as in the case of Gurupriya Tele Auto P. Ltd. and therefore, the ruling of this High Court ould apply to the facts of the case.
12. The reopening of the classification and recovering duty 6 months prior to this period of issue of sho cause notice under Rule 173B(4)(c) of Central Excise Rules and demanding duty under Rule 9(2) has been upheld by the Supreme Court in several rulings - Shri Jaishree Engg. Co. P. Ltd. - 1989 (40) E.L.T. 214 (S.C.)=1989 (21) ECC 166 (S.C.): Tata Iron and Steel Co. v. Union of India & Ors. - 1988 (35) E.L.T. 605 (S.C.) - (supra) ; Elson Machines (P) Ltd. v. Collector of Central Excise -1989 (19) E.C.C. 80 (SC) (supra). Therefore, the contention of the appellants that the amounts are time barred is ithout any merits as in the present case, the sho cause notice dated 19-10-1983 is a mere corrigendum to mention the duty amount and to mention Section 11A of Central Excises and Salt Act and it is not a fresh sho cause notice. Further, the corrigendum sho cause notice dated 19-10-1983 is not a replacement or substitution of sho cause notice dated 23-5-1983 and as such, the learned Collector's finding that 6 months has to be computed from 19-10-1983 is not a correct finding. Therefore, the ruling cited by the learned advocate in the case of Industrial Coatings and Wax P. Ltd.; Bramec Suri (P) Ltd. v. Collector of C. Excise, Kanpur (supra); Sun Paper Mills Ltd. (supra) Anna Sahib Bapu Bhagat (supra) is not applicable to the facts of the case as in these cases, the sho cause notice issued initially is not amended but replaced and substituted by another; and therefore, the Bench had held that limitation for demand ill start from the subsequent sho cause notice and not former sho cause notice. This is not the situation in the present case as noted by us. The learned advocate had also cited t o unreported orders in the case of Travancore Rayons and Merck Sharp (supra). Ho ever, he has not furnished the copies of the same for our examination.
12A. The learned Advocate had contended that the sho cause notice dated 30-6-1981 is not a proper sho cause notice and in his support, he has relied on the ruling rendered by the Bombay High Court in the case of JBA Printing Inks P. Ltd. Ho ever, the observation of this decision has not been accepted by the Hon'ble Delhi High Court in the case of Hindustan Aluminium Corporation (supra). The learned advocate had tried to distinguish the ruling of Hindustan Aluminium Corporation. e do not find any reason to distinguish the same. e are inclined to follo the rulings of the Delhi High Court rendered in the case of Hindustan Aluminium Corp.
13. The learned Counsel had submitted that the sho cause notice had not mentioned the amount in the provision of la and hence the amount is not recoverable as the assessee ill not get an opportunity to contest the correctness of the amount. This contention is not tenable. The Hon'ble Supreme Court in the case of N.B. Sanjana, Asstt. Collector of Central Excise, Bombay & Ors. v. The Elphinstone Spinning & eaving Mills Co. Ltd. [1978 (2) E.L.T. {J 399)] in para 23 has held as follo s -
"Applying the above principles to the case on the hand, the expression 'paid' in Rule 10 can be reasonably read as "ought to have been paid". Similarly even in cases here there has been a nil assessment due to one or other of the circumstances mentioned in Rule 10 and if subsequently it is found that duty is payable, then the entire amount of duty should be considered to have been short levied. The literal meaning of the expression 'paid' as actually paid in cash has again not been adopted by the Court of Appeal in [(1968) 1 QB 487]. Having regard to the context in hich the said expression appeared in the particular provision hich came up for interpretation, the Court of Appeal construed the expression to mean "contracted to be paid". Therefore, the contention of Mr. Daphtary that the expression 'paid' should be construed as 'ought to have been paid and even hen no duty has been assessed, the entire duty hen subsequently assessed ill be a short levy, hich is also supported by the decision of this court in (1963 3 SCR 893)=( AIR 1963 SC 1062), has to be accepted. It follo s that in order to attract Rule 10, it is not necessary that some amount of duty should have been assessed and that the said amount have also been actually paid. That provision ill apply even to cases here there has been a nil assessment in hich case the entire duty later on assessed must be considered to be the duty originally short-levied. There is also no difficulty in calculating the period of three months. As pointed out above, the Act and the Rules provide very elaborately the stage and the time hen the duty is to be paid and if that is so, that must be considered to be the stage or time hen the duty ought to have been paid and if so, the period of three months ill run from the time hen the duty ought to have been paid."
A reading of the above paragraph ould apply to the facts of the case to ans er the point of the learned advocate. The observation made by the Hon'ble Supreme Court in the case of J.K. Steel Ltd. v. Union of India & Others [1978 (2) E.L.T. (J 533)] ith regard to the contention raised pertaining to the sho cause notice issued citing rong rule and its validity, at para 45 is valid and applicable to the facts of this case also. The said observation is noted belo -
"I shall no take up the question of limitation. The ritten demand made on March 21, 1963 purports to have been made under Rule 9(2) of the rules. Therein the assessing authority demanded steel ingot duty hich according to it the assessee had failed to pay. Quite clearly Rule 9(2) is inapplicable to the facts of the case. Admittedly the assessee had cleared the goods from the arehouse after paying the duty demanded and after obtaining the permission of the concerned authority. Hence, there is no question of any evasion. Despite the fact that the assessee challenged the validity of the demand made on him, both the Assistant Collector as ell as the Collector ignored that contention; but hen the matter as taken up to the Government it treated the demand in question as a demand under Rule 10. The Government confined the demand to clearance affected after December 21, 1962. The demand so modified is in conformity ith Rule 10. But the contention of the assessee is that the demand having been made under Rule 9(2) and there being no indication in that demand that it as made under Rule 10, the Revenue cannot no change its position and justify the demand under Rule 10 at any rate by the time the Government amended the demand, the duty claimed became barred even under Rule 10. e are unable to accept this contention as correct. There is no dispute that the officer ho made the demand as competent to make demands both under Rule 9(2) as ell as under Rule 10. If the exercise of a po er can be traced to a legitimate source, the fact that the same as purported to have been exercised under a different po er does not vitiate the exercise of the po er in question. This is a ell settled proposition of la . In this connection, reference may usefully be made to the decisions of this court in P. Balakataiah v. The Union of India (1958 SCR 1052) = (AIR 1958 SC 232) and Afzal Utah v. State of UP (1964 4 SCR 991) = (AIR 1964 SC 264). Further a common form is prescribed for issuing notices both under Rule 9(2) and Rule 10. The incorrect statements in the ritten demand could not have prejudiced the assessee. From his reply to the demand, it is clear that he kne as to the nature of the demand. Therefore, I find no substance in the plea of limitation advanced on behalf of the assessee."
14. The Tribunal in the case of Tinplate Co. Pvt. Ltd. v. Collector of Central Excise, Patna [1983 (14) E.L.T. 1807 (CEGAT) ], has also held that sho cause notice is not invalid if specific amount of demand is not indicated provided period of demand, quantity of goods and rate of duty is specified, as held in para 7 hich is noted belo -
"As regards the controversy regarding the amount of the demand, e agree ith the Departmental Representative that in vie of the later Delhi High Court judgment [1981 (8) E.L.T. 642], mere non-indication of the amount could not invalidate the sho cause notice. Further, in this case, the sho cause notice clearly mentioned the three material factors - the period of the demand (1-4-1979 to 31-3-1980), the quantity of the goods involved (96.32 MT) and the rate of duty applicable (as under Item 28 of the tariff). ith this information specified, calculation of the demand amount as just a matter of simple arithmetical calculation. As such, the appellants can hardly claim ith fairness that they ere left in uncertainty in regard to the size of their liability. As regards increase in the amount of the demand through a corrigendum, hen the calculation mistake involved in the earlier amount as explained to the appellants, they did not seriously press for this objection".
Therefore the contention that the sho cause notice did not mention the amounts and hence the sho cause notice is bad in la is a untenable contention in the facts and circumstances of the present case, and in the light of the rulings noted above and relied by us.
15. In the result, the appeal filed by the assessee bearing No. 2863/84-D is dismissed follo ing the ruling rendered by the Supreme Court on merits in the case of Plasmac Machine Mfg. Co. Pvt. Ltd. (supra) and the appeal filed by the Revenue bearing No. 3047/84-D is allo ed for the reasons stated by us above.
K.S. Venkataramani, Member T
16. I am in respectful agreement ith Hon'ble Member (Judicial). The case la relating to Collector of C. Excise, Bhubaneswar v. SAIL Order No. 608/88-C, dt. 11-7-1988, Merck Sharp & Dhome v. Collector of C. Excise - Order No. C-589/84 dt. 16-8-1984, Travancore Rayons v. Collector of C. Excise, Cochin - Order No. 582/84-C dt. 24-8-1984 have been furnished by the Ld. Counsel mean hile. In the case of SAIL, the Tribunal had held that a notice pertaining to demand of duty has to be considered on its own apart from proceedings in respect of classification. The decision in the case of Merck Sharp & Dhome says that a letter from the Deptt. conveying a threat of demand of duty is not to be construed as a demand under the law, which should be one ith cause to be sho n to the competent authority and also should specify the amount. It is not a decision to say that non-specification of amount of duty per se vitiates the demand. The ratio of the Travancore Rayons case relating to demand under Rule 9(2) already has been dealt ith in the facts of the present case by Ld. Member (J). It is also not as if in the absence of amount being specified in the demand notice the appellants ere not in a position to ascertain their duty liability. It is seen that they had opted to pay duty under protest at one stage implying that they kne the extent of liability and expressing no difficulty in this regard. In the circumstances, the appeal of the assessee is dismissed and the appeal, by the Revenue, is allowed.