Jharkhand High Court
Bharat Coking Coal Limited vs Union Of India Through Department Of ... on 11 February, 2020
Author: Ravi Ranjan
Bench: Chief Justice, Sujit Narayan Prasad
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(T) No. 3856 of 2015
Bharat Coking Coal Limited, a Company incorporated under the Companies
Act, having its registered Office at Koyla Bhawan, Koyla Nagar, P.O. BCCL
Township, District-Dhanbad-826005, Jharkhand, through its Head of
Departmental (Legal) Dr. Harendra Kishore, son of Late Dhar Sharma,
residing at P.O-Kusum Vihar, Koyala Nagar, P.O & P.S-Koyala Nagar,
Dhanbad (Jharkhand). ....... Petitioner
Versus
1.Union of India through Department of Central Excise and Service Tax,
New Delhi, P.O. & P.S-New Delhi, District-New Delhi.
2.Commissioner, Central Excise and Service Tax, Central Revenue
Building, 5A Main Road, P.O-Ranchi, P.S-Chutia, District-Ranchi
(Jharkhand).
3.Assistant Commissioner, Central Excise and Service Tax, Division-I,
Dhanbad, HE School Road, Vistipara, P.O & P.S-Dhanbad, District-
Dhanbad (Jharkhand).
4.Superintendent, Central Excise and Service Tax, Range-I, HE School
Road, Vistipara, P.O & P.S-Dhanbad, District-Dhanbad (Jharkhand).
5. Superintendent, Central Excise and Service Tax, Range-II, HE School
Road, Vistipara, P.O & P.S-Dhanbad, District-Dhanbad (Jharkhand).
...... Respondents
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CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
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For the Petitioner : Mr. Amit Kumar Das, Advocate
For the Respondents : Mr. Ratnesh Kumar, Advocate
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Oral Judgment:
Order No.16/Dated: 11th February, 2020
1. The instant writ petition is under Article 226 of the Constitution of India, wherein the communication dated 13.03.2015 issued by the Superintendents, Central Excise & Service Tax, Range-I, Dhanbad addressed to the General Manager, M/s Bharat Coking Coal Ltd., the petitioner herein, making request to deposit the Short payment of Excise duty amounting to Rs.33,68,536/- as detected by the auditor and also to pay the interest amount as applicable to this office has been assailed.
2. The brief facts of the case as per the pleadings made in the writ petition that the writ petitioner, the company, is engaged in the business of mining and sale of coal for which it has several collieries divided into various 2 areas and one such area is Sijua Area. The Central Excise duty was initially not applicable on coal, however, the same was introduced for the first time on coal with effect from 01.03.2011. The petitioner-Company had been discharging its liability towards Central Excise duty, however, during the period 2011-12 for few months there was certain short payment and for rest of the months some excess payments were made. The respondent authority vide letter dated 01.07.2013 directed the petitioner to pay an amount of Rs.33,68,536/ along with interest of Rs.19,69,276/- on the ground that there is no provision under the Central Excise law to adjust the excess payment amount of duty against short payment. The aforesaid letter is in question in the present writ petition, inter alia, on the ground that the authorities while calculating the aforesaid duty amount held to be short paid, the department has not considered that for the month of September, 2012, an amount of Rs.6,76,97,656.00 was paid against the liability of Rs.1,81,34,370/- which was actually payable resulting into an excess deposit of Rs.4,95,63,286/- and thus, the excess amount since was adjustable against the previous as well as future dues.
Similarly for the period 2011-12, a net excess payment of Rs.57,53,234/- was made against short payment of Rs.33,68,536/- as demanded by the department.
The writ petitioner after receipt of the letter dated 01.07.2013 has given detailed reply vide letter dated 26.07.2013 explaining the amount being not payable along with the detailed calculation made therein. The writ petitioner has further clarified vide letter dated 24.12.2013 explaining therein the levy of Central Excise duty on coal being totally a new phenomenon, it was impossible for BCCL to comprehend the exact effect of newly applied Central Excise law on different aspects of its typical and complicated coal 3 mining activity within such a short period of time, however the aforesaid letter has not been recalled. It is the further ground that no show cause notice has been issued while making such request bearing impugned communication and hence the impugned communication is in violation to the cardinal principles of natural justice and as such, the same is not sustainable.
3. Per Contra, Mr. Ratnesh Kumar, learned counsel appearing for the Central Excise and Service Tax, has contended that however the statute does not provide any opportunity to be given if any demand is being raised under the provision of Section 11A of the Central Excise Act, 1944 but, however, so far as cardinal principle of observance of principle of natural justice is concerned, there is no denial of the fact that if any adverse decision is being taken against any concerned, the aforesaid cardinal principle of providing an opportunity of hearing is required to be provided. According to him, admittedly while issuing the impugned communication, no such opportunity has been provided.
4. This Court having heard learned counsel for the parties and on appreciation of the rival submissions, has gathered from the material available on record that it is in admission on the part of the petitioner that for the year 2011-12 for few months there was certain short payment and for the rest of the months some excess payments were made.
It is further admitted that the excess amount so paid is adjustable against the short paid excise duty. In this pretext, writ petitioner has questioned that when the short paid excise duty has been adjusted by the amount which have been paid excess to the assessed excise duty, therefore, such communication ought not to have been issued by the respondent authorities, that too without issuing any notice to the petitioner so that he may be provided with an opportunity to satisfy the authority. 4
The aforesaid ground has seriously been objected by the learned counsel appearing for the respondents, in the background that there is no provision of adjustment of excise duty. He has made reference of the provision of Section 11 and 11A of the Central Excise Act, 1944 as also the provision of Rule 4, Rule 6 and Rule 8 of the Central Excise Rules, 2002. In order to substantiate his argument submitted that there is no stipulation under the aforesaid provision for giving notice in such circumstances.
5. This Court in order to appreciate the aforesaid stand, deem it fit and proper to refer the provision of Section 11 and 11A of the Central Excise Act, 1944 as also Rule 4, 6 and 8 of the Central Excise Rules, 2002, which reads hereunder as:
"11. Recovery of sums due to Government.- [(1)] In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made thereunder, [including the amount required to be paid to the credit of the Central Government under Section 11-D] the officer empowered by the [Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] to levy such duty or require the payment of such sums [may deduct or require any other Central Excise Officer or a proper officer referred to in Section 142 of the Customs Act, 1962 (52 of 1962) to deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control or may be in the hands or under disposal or control of such other officer, or may recover the amount] by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrear of land revenue:
[Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as 5 specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the [Principal Commissioner of Central Excise or Commissioner of Central Excise], for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.] [(2)(i) The Central Excise Officer may, by a notice in writing, require any other person from whom money is due to such person, or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held, or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;
(ii) every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary;
(iii) in a case where the person to whom a notice under this sub-
section has been issued, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be a person from whom duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or the rules made thereunder have become due, in respect of the amount specified in the notice and all the consequences under this Act shall follow.] 6 [11-A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.- (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,-
(a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-
levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;
(b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of,-
(i) his own ascertainment of such duty; or
(ii) duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under Section 11-AA.
(2) The person who has paid the duty under clause (b) of sub- section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunder.
(3) Where the Central Excise Officer is of the opinion that the amount paid under clause (b) of sub-section (1) falls short of the amount actually payable, then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of [two years] shall be computed from the date of receipt of information under sub- section (2).
(4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful misstatement; or 7
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11-AA and a penalty equivalent to the duty specified in the notice.
[(7-A) Notwithstanding anything contained in sub-section (1) or sub-section (3) or sub-section (4), the Central Excise Officer may, serve, subsequent to any notice or notices served under any of those sub-sections, as the case may be, a statement, containing the details of duty of central excise not levied or paid or short-levied or short-paid or erroneously refunded for the subsequent period, on the person chargeable to duty of central excise, then, service of such statement shall be deemed to be service of notice on such person under the aforesaid sub-section (1) or sub-section (3) or sub-section (4), subject to the condition that the grounds relied upon for the subsequent period are the same as are mentioned in the earlier notice or notices.] [(8) Where the service of notice is stayed by an order of a court or tribunal, the period of such stay shall be excluded in computing the period of [two years] referred to in clause (a) of sub-section (1) or five years referred to in sub-section (4), as the case may be.] (9) Where any appellate authority or tribunal or court concludes that the notice issued under sub-section (4) is not sustainable for the reason that the charges of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty has not been established against the person to whom the notice was issued, the Central Excise Officer shall determine the duty of excise payable by such person for the period of [two years], deeming as if the notice were issued under clause (a) of sub-section (1).
(10) The Central Excise Officer shall, after allowing the concerned person an opportunity of being heard, and after considering the representation, if any, made by such person, 8 determine the amount of duty of excise due from such person not being in excess of the amount specified in the notice.
(11) The Central Excise Officer shall determine the amount of duty of excise under sub-section (10)-
(a) within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1);
(b) within [two years] from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4). (12) Where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer under sub-section (10), then the amount of penalties and interest under this section shall stand modified accordingly, taking into account the amount of duty of excise so modified.
(13) Where the amount as modified by the appellate authority or tribunal or court is more than the amount determined under sub- section (10) by the Central Excise Officer, the time within which the interest or penalty is payable under this Act shall be counted from the date of the order of the appellate authority or tribunal or court in respect of such increased amount.
(14) Where an order determining the duty of excise is passed by the Central Excise Officer under this section, the person liable to pay the said duty of excise shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately.
(15) The provisions of sub-sections (1) to (14) shall apply, mutatis mutandis, to the recovery of interest where interest payable has not been paid or part paid or erroneously refunded.
[(16) The provisions of this section shall not apply to a case where the liability of duty not paid or short-paid is self-assessed and declared as duty payable by the assessee in the periodic returns filed by him, and in such case, recovery of non-payment or short-payment of duty shall be made in such manner as may be prescribed.] Rule 4. Duty payable on removal.-(1) Every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in rule 8 or under any other law, and no excisable goods, on which any duty is payable, shall be 9 removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided:
[(1A) Notwithstanding anything contained in sub-rule (1), every person who gets the goods, falling under Chapter 61 or 62 or 63 of the First Schedule to the Tariff Act, produced or manufactured on his account on job work, shall pay the duty leviable on such goods, at such time and in such manner as is provided under these rules, as if such goods have been manufactured by such person:
Provided that where any person had, instead of paying duty, authorized job worker to pay the duty leviable on goods manufactured in his behalf under the provisions of sub-rule (1A) as it stood prior to the publication of this notification, he shall be allowed to obtain registration and comply with the provisions of these rules within a period of thirty days from the date of publication of this notification in the Official Gazette.] (2) Notwithstanding anything contained in sub-rule (1), where molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty leviable on such molasses, in the same manner as if such molasses have been produced by the procurer.
(4) Notwithstanding anything contained in sub-rule (1), Commissioner may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods in any other place outside such premises, without payment of duty subject to such conditions as he may specify.
Rule 6. Assessment of duty.- The assesse shall himself assess the duty payable on any excisable goods:
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Provided that in case of cigarettes, the Superintendent or Inspector of Central Excise shall assess the duty payable before removal by the assesse.
Rule 8. Manner of payment.-The duty on the goods removed from the factory or the warehouse during a month shall be paid by [the 6th day of the following month, if the duty is paid electronically through internet banking and by the 5 th day of the following month, in any other case]:
Provided that in case of goods removed ruing the month of March, the duty shall be paid by the 31st day of March: Provided further that where an assessee is eligible to avail of the exemption under a notification based on the value of clearance in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6 th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5 th day of the month following that quarter, except in case of goods removed during the last quarter, starting from the 1 st day of January and ending on the 31st day of March, for which the duty shall be paid by the 31st day of March.
Provided also that an assessee, who has paid [total duty of Rs.ten lakh or more including the amount of duty paid by utilization of CENVET credit in the preceding financial year], shall thereafter, deposit the duty electronically through internet banking.] Provided that where an assessee in the State of Gujarat is availing of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during the month of February, 2002 shall be paid by the 31 st March, 2002.
(2) The duty of excise shall be deemed to have been paid for the purposes of these rules on the excisable goods removed in the manner provided under sub-rule (1) and the credit of such duty allowed, as provided by or under any rule.11
[(3) If the assesse fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under [section 11AA] of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount.] [(3A) If the assesse defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub- rule (4) of rule 3 of CENVET Credit Rules, 2004, the assess shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVET credit till the date of assesse pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.] [(4) The provisions of section 11 of the Act shall be applicable for recovery of the duty as assessed under rule 6 and the interest under sub-rule (3) in the same manner as they are applicable for recovery of any duty or other sums payable to the Central Government.] It is evident from the provision of Rule 4, which is provision of Duty payable on removal while Rule 6 stipulates about assessment of duty under which it has been provided that in a case when the assesse himself has assessed the duty payable on excisable goods provided that in case of cigarettes, the Superintendent or Inspector of Central Excise shall assess the duty payable before removal by the assessee.
Rule 8 (4) contains a provision about applicability of the provisions of Section 11 of the Act, 1944 for recovery of the duty as assessed under Rule 6 and the interest under sub-rule (3) in the same manner as applicable for recovery of any duty or other sums payable to the Central Government. 12
It is thus, evident from bare perusal of the aforesaid rules that in case of self-assessment by the assessee, the duty would be recovered under the provisions of Section 11, meaning thereby, in case of no dispute about the assessment by the assessee, the provision of Section 11 of the Act, 1944 speaks about recovery of sums by the Government while Section 11A states about recovery of duties not lelvied or not paid or short paid or erroneously refunded. Under the said provision, there is no reference of issuance of any notice to the assessee.
6. This Court, therefore, after going through the provisions of Rule 6 and Rule 8 read with Section 11 and 11A, is of the view that in case of assessment if made by the assessee, the recovery will be made under the provision of Section 11 or 11A. The statute does not contain any provision about providing an opportunity of hearing, it is for the reason that the recovery under the said provision of Section 11 and 11A is to be made in a situation of assessment made by the assessee, meaning thereby the assessment is not in dispute.
Here in the facts and circumstances of the case, the admitted fact is that the excise duty for the financial year 2011-12 for some months has been paid less than which was to be paid and for some month excess than what was to be paid, according to the petitioner the excess payment has been adjusted vis-à-vis the less payment and therefore, there is no liability upon the writ petitioner.
It has also been contended by the learned counsel for the petitioner that as on date the writ petitioner is not liable to make payment of any further excise duty, this contention does suggest that the assessment is under dispute by the assesse and if in such situation when the assessment is in dispute, the provision of Rule 6 read with Rule 8 will not be applicable since this 13 provision will only be applicable when the assessment made by the assessee is in admission by the assessee under the aforesaid provision and if the excise duty has not been paid, the recovery would be made under the provision of Section 11 or 11A of the Central Excise Act, 1944.
But the question herein is even accepting that there is no provision under Section 11 or 11A to provide an opportunity before making any remand in case of dispute with respect to quantum of the assessment of the excise duty, whether the assessee is entitled to get an opportunity of hearing or not.
This Court in order to answer the issue, deem it fit and proper to refer the judgment of the Constitution Bench of the Hon'ble Apex Court rendered in the case of Maneka Gandhi vs. Union of India reported in (1978) 1 SCC 248, wherein Section 10 of the Indian Passport Act was under challenge on the ground that the said provision does not contain any provision to provide an opportunity of hearing before impounding the passport but the Hon'ble Apex Court has declined to interfere so far as vires of aforesaid provision is concerned, but has laid down rule that if by virtue of a decision which is going to adversely affect the concerned, the cardinal principle of natural justice is to be observed.
7. This Court, keeping in view the proposition of law as above, is of the view that in the present case since the assessee is disputing demand, therefore, the cardinal principle of natural justice is required to be observed.
Coming to the impugned communication dated 13.03.2015, it is evident therefrom that the question of adjustment against the short paid excise duty to that of excess payment of duty has been said to be without any authority and therefore, the request to deposit the short payment of excise duty i.e. Rs.33,68,536/- has been detected by the auditor and also to pay the 14 interest amount as applicable to the office, the content of the aforesaid communication explicitly clarifies that some demand has been made indicating the action of the assessee with respect to assessment of the excess payment of duty against the short paid excise duty, therefore, according to our considered view the cardinal principle of natural justice is required but having not done so the impugned communication cannot be approved.
8. In view thereof, the communication dated 13.03.2015 is held to be not sustainable being violative of principle of natural justice, accordingly, the same is quashed and set aside.
In consequence thereof, the matter is remitted before the competent authority to take a decision in accordance with law after providing an opportunity of hearing to the writ petitioner within a period of eight weeks from the date of receipt of copy of the order.
The consequence will depend on the final decision of the authority as directed above.
9. With the aforesaid observation and direction, the writ petition stands disposed of.
(Dr. Ravi Ranjan, C.J.) (Sujit Narayan Prasad, J.) Saket/-
A.F.R.