Customs, Excise and Gold Tribunal - Delhi
Brite Automotive And Plastics Ltd. vs Collector Of C. Excise on 29 November, 1994
Equivalent citations: 1995ECR717(TRI.-DELHI), 1995(75)ELT793(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. M/s. Brite Automotive & Plastics Ltd. (Brite for short, hereinafter) have filed their appeal registered as E/2303/90-NRB against the order in appeal No. 210/CE/A APPL/ IND/89/1322, dated 2-3-1990 passed by the Collector of Central Excise (Appeals), Delhi whereby he had rejected their appeal filed before him by upholding the decision of the Assistant Collector of Central Excise, Indore that they were not eligible for Modvat Credit in respect of inputs used by them in the manufacture of their final products which had not been mentioned by them in their declaration filed under Rule 57G(1) of the Central Excise Rules, 1944. He had, however, allowed their appeal partly by setting aside "the demand for the period beyond six months from the date of credit". This latter finding has, in turn, been assailed before us by the Collector of Central Excise, Indore. That appeal is registered as E/2429/90-NRB. As both the appeals arise from the same order-in-appeal and as both the appeals were argued together before us by the respective counsels, we are passing this combined order. A miscellaneous application was filed by Brite before the Honourable President of the Tribunal for constitution of Larger Bench for deciding the question of jurisdiction as they were aggrieved with the Miscellaneous Order No. Misc./261/91-NRB, dated 26-7-1991 holding that the notice issued under Rule 57-1 of the Central Excise Rules after its amendment on 6-10-1988 was within the powers of the Superintendent and had been rightly adjudicated by the Assistant Collector.
2. The matter had been considered by the President of the Tribunal. Initially these two appeals had been included in a list of cases referred to the Larger Bench. That list was actually of cases on the Customs side on the jurisdiction of Benches to deal with appeals relating to inputs under REP licences. The earlier order dated 21-6-1993 of the President which included these cases for the Larger Bench reference was withdrawn by him vide his Order dated 27-4-1994 for these two Excise Appeals. It was also observed by him that it will be proper to constitute a Larger Bench only on the recommendation of a Bench hearing the matter. The matter was directed to be listed before the Bench. The appeals have accordingly come up before us for hearing.
3. Shri D.N. Mehta, learned advocate appeared for Brite. A written note of "Additional grounds for final hearing of the Appeal" dated 11-6-1994 was also submitted. Shri Mehta reiterated the points submitted by them in their application as well as in their appeal that the notice issued by the Superintendent suffered from lack of jurisdiction as he was not the competent officer to issue the notice when the longer period of limitation is involved. The provisions of Section 11A will automatically come into play which requires that only the Collector should issue the notice. He referred to the Tribunal decision in Reine Chemicals v. Collector of Central Excise, Baroda reported in 1994 (52) E.C.R. 467 and Synpack (P) Ltd. v. Collector of Central Excise, Bombay-II, reported in 1994 (71) E.L.T. 98.
4. After these submissions on the preliminary issue of applicability of Section 11A and the invalidity of the notice issued by the Superintendent, Shri Mehta proceeded to argue the case on merits. He contended that the non-declaration of the input is not fatal to their availment of Modvat credit. He referred to the following decisions which, he submitted, would support their case :-
1994 (69) E.L.T. 521 (Tribunal) - Kissan Products Ltd. v. Collector of Central Excise, Bangalore.
1994 (69) E.L.T. 222 - Gilfpack Ltd. v. Assistant Collector of Central Excise, Indore.
1990 (47) E.L.T. 292 (Tri.) Madras Fabricators v. Collector of Central Excise, Madras.
1991 (53) E.L.T. 103 - Spring Industries v. Collector of Central Excise.
1989 (22) ECR 367 - Prameela Plastics Pvt. Ltd. v. Collector of Central Excise, Bangalore.
Shri Mehta concluded his arguments with the plea that the appeal may be allowed not only on the question of lack of jurisdiction of the Superintendent to issue the notice but also on merits.
5. Shri K.N. Gupta, learned Senior Departmental Representative appeared for the respondent Collector. He submitted that unlike the cases cited by the learned counsel where some declaration giving broad descriptions had been filed and the variation in Tariff classification was noticed which was held to be not fatal to the availment of Modvat credit, the present case is one where the final products in question had not been mentioned by them at all in the declarations. He relied upon the Tribunal decision in Collector of Central Excise, Bangalore v. Brindavan Alloys Ltd., reported in 1994 (69) E.L.T. 764 wherein it was held that declaration under Rule 57G in respect of Graphite Nipples having not been filed, Modvat credit was not available. As regards the contention raised in the appeal about the applicability of Section 11A to the exclusion of Rule 57-1 and the consequent lack of jurisdiction of the Superintendent for issue of the notice, Shri Gupta submitted that Rule 57-1 is a self-contained and specific provision for regulating cases of Modvat credit wrongly availed. Under the said provision, the notice is to be issued by the proper officer. Superintendent of Central Excise is the proper officer and unlike the proviso to Sub-section (1) of Section 11A, Collector has not been mentioned as the officer to issue the notice. The action taken in the matter is in order.
6. Shri Gupta then took up the appeal filed by the Collector against that part of the order in appeal holding the notice to be time barred for the period earlier than six months from the date of issue of the notice. As stated, in the appeal, modvat credit had been wrongly availed during the period when Rule 57-1 did not have any time-limit provision which came to be introduced therein only after the amendment dated 6-10-1988. Hence, the order of Collector (Appeals) to the extent he held part of the demand to be time barred is not legally in order and hence the same needs to be set aside. He made such a plea.
7. The argument was opposed by Shri Mehta who referred to the cross objection filed by Brite. As pointed out therein, the impugned portion of the order holding the demand to be partly time barred is legally correct and deserves to be upheld. He, however, reiterated this plea that the other part of the order, appealed against by them and for which he had made his submissions, may be set aside by allowing their appeal.
8. We have carefully considered the submissions. We have gone through the record including the written note of "additional ground" submitted by Brite. The miscellaneous application for reference of the matter to a larger Bench stands rejected. The said application had been filed challenging the miscellaneous Order dated 26-7-1991 passed by the Bench rejecting their preliminary contention that the notice issued by the Superintendent of Central Excise, invoking the larger period of limitation, could be issued only by the Collector. Their grievance is that they would be left with no remedy against that order as neither a Reference Application nor a rectification application would be available to them. This objection is untenable. The objection in question taken by them about jurisdiction is one of the grounds raised by them in their appeal. When this is decided alongwith the other issues raised and a final order is passed it will be open to them, if necessary, to take appropriate action as provided in law. The need for a reference to the President for constitution of a Larger Bench will arise if the Bench hearing a matter holds a view different from what was held in an earlier decision or decisions of the Tribunal and makes out a case for such reference to the Larger Bench to resolve the issue; such a situation has not arisen in the present case. We accordingly proceed to deal with the appeal in all its aspects.
9. The preliminary point about lack of jurisdiction on the part of the Superintendent to issue a notice for the longer period beyond six months has been disposed of in terms of the miscellaneous order dated 26-7-1991. We agree with the views expressed therein. The notice in the present case has been issued after the amendment of Rule 57-1 which specifically provides for the issue of notice in cases of wrong taking of modvat credit and wrong utilisation of modvat credit. The notice may be issued by the proper officer. The notice in the present case has been issued by the Superintendent in terms of this Rule and Section 11A, had not been referred to. It is the contention of the appellants that whether Section 11A has been referred to or not in the notice that Section will come into play as substantive law will have precedence over the subordinate legislation. Accordingly, it will be the Collector who will be the officer for issue of notice for the longer period. This contention is not correct. Rule 57-1 is a specific provision dealing with Modvat cases for issue of notice where Modvat credit has been wrongly taken or where such credit had already been utilised, an amount equivalent to such credit is to be recovered. Section 11A deals with cases of short levy or non-levy or erroneous refund. It is the specific provision that will prevail over the general one. The decisions cited by the appellants for supporting their contention that it is Section 11A that will prevail over Rule 57-1 had been rendered in the context of the unamended Rule 57-1 where the department had applied the extended period. It was held in those decisions that the time-limit under Section 11A will apply notwithstanding the absence at that time of a time-limit stipulation in the specific Rule 57-1. Applying the time-limit stipulation as in Section 11A as done in these cases is not the same as seeking the assistance thereof, as claimed by the appellants, for the proposition that only Collector will be the competent authority for issue of the notice. Whether Collector issues the notice or another officer is a matter of procedure and there is no right vested in this case with the appellants that the notice should be issued by the Collector only. When the specific Rule for dealing with recovery of amount equivalent to Modvat credit wrongly taken and utilised lays down that the notice may be issued by the proper officer as distinct from the language of Section 11A which specifically requires that Collector should issue notice for the longer period beyond six months, it was in order for the Superintendent, to issue the notice. Having thus disposed of the preliminary point agreeing with the view taken in the Miscellaneous Order dated 26-7-1991, we have to take note of the next submission of Brite that a notice issued by the Superintendent for the longer period is illegal in its entirety. We do not agree. Unlike the proviso to Sub-section (1) of Section 11A, as it stood at the material time, it was not necessary that a notice under Rule 57-1 should have been issued by the Collector. The notice issued by Superintendent was not invalid on that score. Its validity on merits and on the question of limitation have to be determined. We shall deal with the same. It has been submitted in the appeal that there was some confusion about the correct classification of their final products. The classification claimed by them was changed by the department. Pending the finalisation and final approval of the classification list, they could not have declared the final products and their classification in the modvat declaration. We do not accept the argument that because of this, their non-inclusion of the final products should not be held out against them for grant of Modvat benefit. We do not agree. Even if there was any doubt about the classification of their final product they could have furnished the description of the final product and the classification claimed by them in the declaration. If the Department changed the classification that is a matter which would not have affected their Modvat eligibility unless the changed classification took the products outside the purview of the Modvat Notification. The plea raised that they did not mention these final products in their declaration because of the doubt about the correct classification of the said goods is rejected.
10. The declaration filed under Rule 57G by the appellants specified their final products as parts of Two Wheeler Motor Vehicles, parts of Four Wheeler Motor Vehicles and parts of Radio, T.V., Two-in-one etc. The final products which were manufactured by them in respect of which utilisation of Modvat credit has been [sic] to be inadmissible were parts of Cooling Towers and of photocopiers. Several inputs have been mentioned in the declaration. The dispute has arisen not with reference to the inputs but in respect of the final products. Cases had been cited by both the sides in support of their respective stand. All these decisions related to inputs. In the decisions favouring the assessees, the declarations indicating the general description of the inputs were held, in the facts of the particular cases, to be sufficient for the purpose of Rule 57G. Discrepancies in respect of Tariff Headings of the inputs were held to be not material where the description was properly given. In the case cited by Shri Gupta, learned Departmental Representative, the benefit of Modvat credit was held to be not admissible in respect of an input which had not been included in the declaration. The present case could be more appropriately compared to this last mentioned matter. The declaration to be given by a manufacturer under Rule 57-G should indicate the description of the final products and the inputs intended to be used in each of the said products. More importantly, Sub-section (3) [sic] of Rule 57F specifically lays down that credit of duty allowed in respect of any inputs may be utilised towards payment of duty on any of the final products in or in relation to the manufacture of which such inputs are intended to be used in accordance with the declaration filed. This settles the case against the appellants as far as the admissibility of Modvat credit for payment of duty on parts of Cooling Towers and of Photocopying machines is concerned. Hence, the demand of duty for the period falling within the normal period of six months is in order as has been correctly held by the Collector (Appeals) in his impugned order. The appeal of Brite on the question should, therefore, fail. We order accordingly and dismiss their appeal.
11. We then proceed to take up the appeal filed by the Collector challenging the decision of Collector (Appeals) allowing the appeal of Brite filed before him to the extent of the demand pertaining to the period beyond the normal period of six months. This extended period would be attracted where the credit had been taken on account of wilful mis-statement, collusion or suppression of facts. In the present case while the final products in question had not been declared and, on that score, the Modvat credit has been held to be not admissible, it is certainly not a case involving the factors mentioned above to attract the extended period. The non-declaration of these final products in their declaration under Rule 57G was in the knowledge of the Department. When duty thereon was paid through debit to the RG 23A Part II account and the same was disclosed by Brite in their R.T. 12 return with the enclosed RG 23A Part II statements, the department should have noticed the wrong and inadmissible utilisation of credit. It was not a case where the notice could be issued for the longer period. The other point urged in the appeal by the Collector is that the wrong availment of credit pertained to the period prior to the amendment of Rule 57-1 and hence the provision that would be applicable would be unamended Rule 57-1 which contained no time-limit for issue of the demand. We do not agree. The provision that would govern a notice is the one in force at the time of its issue. That is as per the Larger Bench decision in Atma Steel (P) Ltd. v. Collector of Central Excise, Chandigarh, reported in 1984 (17) E.L.T. 331. Paras 80,81 and 82 of the said order of the Tribunal wherein two Supreme Court decisions had been referred to are extracted below :-
"80. The case law on the point that law of limitation is procedural, and operates retrospectively, and that the period prevailing on the date when the relief is claimed, and not when the cause of action arises, is furnished amply by some of the authorities noted below.
81. For instance, Supreme Court in case : Memon Abdul Karim Haji, Tayab v. Deputy Custodian General, New Delhi and Ors., (AIR 1964 S.C. 1256) laid down in clear and categorical terms that procedural amendments to a law, in the absence of anything to the contrary, operate retrospectively in the sense that they apply to all actions after the date they come into force, even though ... the claim on which the action may be based may be of a anterior date. This case has dealt with the actionability of claims contemplated by administration of Evacuee Property Act (1950) which was amended by Act 91 of 1956. It is noteworthy that the relevant provisions which were subject matter of consideration in the said case and which were held to be of procedural nature, were analogous to that of provisions as to limitation.
82. Similarly, in another case : C. Beepathuma and Ors. v. Velasari Shankaranarayana Kadambolithaya and Ors., AIR 1965 S.C. 24, it was held that the law of limitation is a procedural law and the provisions existing on the date of suit apply to it."
This Larger Bench decision has been followed by the Tribunal in a number of cases including some relating to the very issue involved in the present matter namely the statutory provision applicable to the demand notice issued after amendment in the statute though the cause of action had arisen during the pre-amendment period. Two such decisions were in Collector of Central Excise v. Sreeram Drinks P. Ltd., reported in 1993 (66) E.L.T. 128 and Indian Linoleums Ltd. v. Collector of Central Excise, reported in 1993 (67) E.L.T. 678. In both these cases the reference applications filed by the Department had also been dismissed. In line with these decisions, we dismiss the present appeal of the department.
12. The cross objection filed by Brite seeks the dismissal of the department's appeal. Reference has also been made to their order in appeal while opposing the department's stand taken on its appeal. Since both these appeals have been dismissed by us, the cross objection automatically gets disposed of.