Customs, Excise and Gold Tribunal - Mumbai
Collector Of C. Ex. vs Mafatlal Fine Spg. And Wvg. Co. Ltd. on 31 July, 1995
Equivalent citations: 1995ECR65(TRI.-MUMBAI), 1995(79)ELT715(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. Invoking the provisions of Section 35G of the CESA, 1944, the Excise Authority have sought reference to the High Court, on the questions as formulated by them, pleading them to have arisen out of the order No. 1999/94-WRB, dated 25-11-1994 of this Bench in Appeal No. ED (BOM) 236/86, where, Order-in-Appeal No. 1177/BD-779/85, dated 18-3-1986 of the Collector of Central Excise (Appeals) Bombay holding the demand raised against the Respondents as barred by limitation, has been confirmed.
2. Demand for Rs. 59,935.30 raised vide Show Cause Notice dated 22-4-1983 against the Respondents on the ground that they had removed powerloom cotton fabrics (grey and dyed) under bond and under cover of AR3A and GP 2 in the month of February, 1982, to their another factory but had failed to submit the proof of rewarehousing at the destination, within stipulated period of 90 days, was confirmed by the Asst. Collector, Central Excise, Div. HI Surat, by rejecting the plea of time bar as also that the provisions of Chapter VII of the Central Excise Rules, 1944, vide his Order dated 29-8-1983. The Collector (Appeals) however allowed the appeal on both the counts. In the appeal by the excise authority, before the Tribunal, it was contended that special procedure was prescribed in Rule 96D of the Central Excise Rules, 1944 for removal of cotton fabrics, and vide Sub-Rule (3) the procedure provided for in Rules 156A and 156B of the Rules, had to be followed, and Rule 156B provided special procedure for raising demand and as such the general provisions contained in Section 11A of the CESA, 1944 did not stand attracted. Referring to the judgment of the Gujarat High Court, in Torrent Laboratories Ltd. v. Union of India - 1990 (30) ECC 142 (Guj.) it was pleaded that when any special procedure for recovery was laid down, the general provisions would not apply. This Bench, however, held that the said judgment of the Gujarat High Court was in relation to modvat scheme and was even otherwise under challenge before the Supreme Court, and that Rules framed under any statute were always supplementary to the Act and could not override the statutory provisions, and when the subject demand was for duty, Section 11A of the Act stood attracted. The appeal from the department was accordingly rejected.
3. Aggrieved by the said order, the excise authority seek reference to the High Court on the following two questions :
1. Whether Chapter VII of the Central Excise Rules, 1944 can be treated at par with Chapter X of C. Ex. Rules, 1944.
2. Whether in absence of any time limit having been laid down in Rule 56B for raising demand, can the time limit of Section 11A be brought into play for raising demand under Rule 156B.
4. Mr V.K. Puri, the ld. SDR, has pleaded that for the purpose of reference, it only requires to be seen whether, the view other than the one adopted by the Tribunal is also possible or probable, and if that be so, the reference has to be allowed. In his submission besides the Gujarat High Court judgment in the Torrent Laboratories (supra), the Special Bench C of this Tribunal have in Steel Authorities of India Ltd v. Collector of Central Excise -1989 (42) E.L.T. 686 (T) held in relation to the provisions of Rule 196 of the Rules, that time limit vide Section 11A of the Act would not apply, and for that they have followed earlier decisions of the Tribunal in Bajaj Tempo Ltd. v. Collector -1984 (17) E.L.T. 205 (T) and Fertilizer Corporation of India v. Collector -1987 (31) E.L.T. 411 (T). He has also referred to yet another order from the same Bench in Indian Farmers Fertilizer Co.-Op. Ltd. v. Collector -1991 (51) E.L.T. 527 (T). He submits that thus, the issue is possible to be viewed in different way and hence, reference be made.
5. Mr. Yakundi, the ld. Advocate for the Respondents has however referred to the judgment of the Supreme Court in J.K. Spinning and Weaving Mills Ltd. v. Union of India - 1987 (32) E.L.T. 234 (SC) and more particularly the observations in para 31 of the said judgment, and also to the decision of this Bench in Hindustan Petroleum Corporation Ltd. v. Collector, 1986 (26) E.L.T. 578 (T) and has pleaded that Section 11A of the Act is applicable to all the demands of duty and view other than the one adopted by this Bench, in the impugned order which is in due conformity with the law is not... and reference as prayed for is not warranted.
6. Considering the submissions, on the factual aspect, the demand is raised on account of respondents failure to produce proof of rewarehousing of the goods removed under AR3A and GP2, at the destination within 90 days. Such removals are governed by Rule 96D of the Rules. The removal is effected in February, 1982, and period of 90 days had expired in May 1982, whereas the show cause notice is issued on 24-4-1983, which is beyond the period of six months, even on computing the period from May 1982. The procedure to be followed is the one as prescribed in Rule 156A and 156B of the Rules. No period of limitation for demanding duty in case of failure to produce the proof of rewarehousing is provided in the said Rules (i.e. Rule 96D or Rule 156A or 156B).
7. The Supreme Court have while considering the amended provisions of Rules 9 and 49 of the Rules, which have been given retrospective effect, in para 11 of their judgment observed :
"Under Section 11A (1), the Excise Authorities cannot recover duties not levied or not paid or short levied or short paid or erroneously refunded, beyond the period of six months, the provisions being applicable in the present case. Thus, though Section 51 of the Finance Act, 1982 has given retrospective effect to the amendment in para 9 and 49, yet it must be subject to the provisions of Section 11A of the Act."
They have then observed :
"If the intention of the legislature was to nullify the effect of Section 11A, in that case, the Legislature would have specifically provided for the same. Section 51 does not contain any non obstante clause nor does it refer to the provision of Section 11 A".
The ratio of the said decision is that, in absence of any specific provision to the contrary, the provisions of Section 11A of the Act would stand attracted. In the instant case, no specific provision contrary to Section 11A is pleaded to have existed.
8. The decisions cited by the Ld. SDR, related to the provisions of Rule 196 of the Rules, which provides for duty payment on the goods not duly accounted for. The said Rule falls within Chapter X which deals with "Remission of Duty on goods used for Special, Industrial Purpose". Even otherwise, with the judgment from the Supreme Court as indicated above, the law as laid down by the Supreme Court would prevail.
9. The applicants also seek reference on the issue whether provisions of Chapter VII be taken to be at par with the provisions of Chapter X. The question as formulated may not be taken to have arisen out of the impugned order on this Bench. It however appears that the said question is a prelude to the second question, for which elaborate discussion is done, and in that case, the question No. 1 becomes purely of an academic interest.
10. Thus, when the Supreme Court, have held that the time bar under Section 11A should stand attracted, and when there is no abstante clause found in the relevant provisions, no useful purpose could be achieved by referring the issue to the High Court. The application therefore stands rejected.