Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Delta Paper Mills Ltd. on 3 December, 1990
Equivalent citations: 1993(67)ELT587(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. In all these appeals, common question of law arises and hence they are clubbed together for disposal as per law.
2. The Revenue filed a Review Petition before the Govt. of India under the erstwhile Section 36(2) of the Central Excises and Salt Act, 1944 which was in turn transferred to this Tribunal under forwarding letter No. T-6 of 1981 on 1-12-1982 vide Ministry's F. No. 198/4/81-Cx.V. All these transferred Revision petitions arise from orders-in-appeal passed by the Appellate Collector of Customs, Bombay Camp at Hyderabad.
3. The issue involved relates to availing exemption under Notification No. 128/77 dated 18-6-1977. The Assessees were debiting Central Excise duty on the clearances made during 1980 at the concessional rate of 50% as per the said notification. The Department issued show cause notices, demands for these periods for various amounts in the respective show cause notices. The Range Superintendent assessed the goods to duty under RT 12s and demanded the differential duty amount as per the demands confirmed in the order-in-original. Against the confirmation of the demand, the assessee went in appeal and the learned Appellate Collector has held that the assessments made by the Range Superintendent were based on a different interpretation than the correct interpretation of the notification in question and hence, he set aside the demands.
4. The Department filed a Review Petition before the Government of India under erstwhile Section 36(2) of Central Excises and Salt Act, 1944 on 9-1-1981. On examining the Review petition, the Government of India issued show cause notice dated 31-1-1981 to the assessee. The said Review petition of the Department has now been transferred and converted into appeal before this Tribunal.
5. In the grounds of appeal, the Revenue has stated that the Appellate Collector of Customs has failed to appreciate the provisions of Section 4 of Central Excises and Salt Act, 1944 for the purpose of arriving at the assessable value. The Revenue has stated that for the purpose of arriving at the assessable value under Section 4 of the Act, the only abatement that could prima facie be allowed from the selling price is the abatement of Central Excise duty actually paid and since in this case, the duty was paid at the reduced rate, the inevitable consequence that followed was, that the assessable value could be comparatively higher than the one which was arrived at after allowing the abatement of effective rate of duty in the provisions of Notification No. 178/87 were not applicable. The Revenue has submitted that the assessable value of the goods should have been arrived at as provided under the provisions of Section 4(4)(d)(ii)of the Act.
6. Shri S. Chakraborti, Departmental Representative appearing for the appellants, submitted that the assessee is not deducting the effective rate of duty as per the notification but deducting at the Tariff rate. He submitted that at the same time, the assessee was also availing of benefit of the notification which resulted in short payment and, therefore, the Department was entitled to recover the same but the learned Collector has mis-applied the provisions of Section 4(4)(d)(ii) of the Act and had set aside the order in original which was not in accordance with law. He submitted that the issue with regard to the assessable value is well settled by a number of judgments rendered by various High Courts and Tribunal which he cited before us. They are as follows -
1. Duncans Agro Industries Ltd. and Anr. v. Assistant Collector of Central Excise, Rajahmundry [1987 (32) E.L.T. 350 (A.P.)]
2. Assistant Collector of Central Excise, Rajahmundry v. Andhra Pradesh Paper Mills Ltd. Rajahmundry [1987 (32) E.L.T. 684 (A.P.)]
3. I.T.C. Ltd. and Anr. v. Union of India [1987 (30) E.L.T. 321 (Delhi)] Shri M. Chandrasekharan appearing for the respondent-assessee submitted that the position of law was quite clear in this matter but, however, he submitted that as on the date of issue of the show cause notice, Section 4 of the Act had not been amended and, therefore, the procedure followed by the assessee was correct. He submitted that the contention of the Revenue that the assessable value of the goods should have been arrived at accordingly as provided under provisions of Section 4(4)(d)(ii) of the said Act is not the correct reading in the eyes of the law that stood on the date of issue of the show cause notice. He submitted that Sub-section 4(4)(d)(ii) had been examined at length by the Single Judge of the Andhra Pradesh High Court in the case of Andhra Pradesh Paper Mills Ltd. [1980 (6) E.L.T. 210] and the Court had negatived the Revenue's contention. The Court had also held that the duty is levied by Section 3 of the Act; read with the Tariff Schedule. The exemption notification issued under Rule 8 does not take away the levy. It only grants exemption from the levy in specified circumstances and under specified conditions. In other words, because of the exemption the levy of duty is not erased. The object of the notification is to confer certain benefits upon the manufacturer or the buyers/ consumers through the manufacturer as the case may be. In other words, a part of the duty is passed on to the manufacturer or the buyer/consumer as the case may be, as an incentive whether with a view to encourage production or the consumption. Accepting Mr. Subramanyan Reddy's argument would virtually amount to adding a part of the Excise duty to the manufacturing cost and profit while arriving at the value for the purposes of duty which is not permissible. Shri M. Chandrasekharan, Advocate submitted that the assessee was correctly following the law as laid down by the Andhra Pradesh High Court till it was set aside by the Division Bench of the same High Court [1987 (32) E.L.T. 684]. He further submitted that the Division Bench had upheld the law as it stood then, when rendered by High Court judge but had to confirm the Revenue's contention, as the Section 4 was amended retrospectively. But, however, he submitted that such effect cannot be given to those, who had followed the law as it stood then. Therefore, it was his contention that Section 4 had not been amended prior to the issue of show cause notice. Hence, there was no law in existence for making a demand. The show cause notice cannot be retrospectively applied; it has no locus to stand and no foundation and, therefore, the demand was not sustainable in law. He further contended that the demands were all raised as per RT-12 returns, and even assuming that the show cause notice was followed, it was barred by time. However, he admitted that after the amendment of the law, if the principles laid down under Section 4(4)(d)(ii) of the Act were applied, then the assessee has no case on merits.
7. We have heard both the sides and carefully considered the submissions made by them. There are two issues which arise for our consideration in these appeals. These are - Whether the show cause notices issued are valid in the eyes of the law? (2) Whether the demands are time-barred? Shri M. Chandrasekharan had taken a stand that the procedure adopted by the assessee was valid by the Single Judge order of the Andhra Pradesh High Court.
8. The contention of Shri M. Chandrasehekaran that a fresh Show Cause Notice ought to have been issued after the retrospective amendment to Section 4(4)(d)(ii) of the Act does not have much force. The amendment was brought by Section 47(2) of the Finance Act, 1982 which is produced below :-
"Any action or thing taken or done or purporting to have been taken or done at any time during the period commencing on the Ist day of October, 1975 and ending with the 27th day of February, 1982 (hereafter in this Sub-section referred to as the said period) under the Central Excises Act, shall be deemed to be and to have always been for all purposes, as validly and effectively taken or done as if the amendment made by Sub-section (1) had been in force at all material times and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority :-
(a) All duties of excise levied, assessed or collected during the said period on any excisable goods under the Central Excises Act, shall be deemed to be and shall be deemed always to have been validly assessed or collected as if the amendment made by Sub-section (1) had been in force at all material times;
(b) no suit or other proceeding shall be maintained or continued in any court for the refund of and no enforcement shall be made by any court of any decree or order directing the refund of any such duties of excise which have been collected and which would have been validly collected if the amendment made by Sub-section (1) had been in force at all material times.
(c) refund shall be made of all such duties of excise which have been collected but which would not have been so collected if the amendment made by Sub-section (1) had been in force at all material times;
(d) recovery shall be made of all such duties of excise which have not been collected or, as the case may be, which have been refunded which would have been collected or, as the case may be, would not have been refunded, if the amendment made by Sub-section (1) had been in force at all material times.
Explanation - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force."
The reading of the above Section 47(2) of the Finance Act, 1982 makes it clear that any action or thing done during the period commencing on the Ist day of October, 1975 and ending with the 27th day of February, 1992, shall be deemed to be and to have always been, for all purposes, as validly and effectively taken or done as if the amendment made by Sub-section (1) had been in force at all material times, notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or other authority. Therefore, the revised show cause notice issued to the respondent by Government of India is deemed to have been issued validly. So also the demands raised in the show cause notices dated 19-1-1979 for Rs. 13,320.34 towards BED and Rs. 666.05 towards SED demanded by the Superintendent under Rule 10(2) of Central Excise Rules, 1944 for clearances made vide Gate-passes in form GPI Nos. 267/1-12-1978 to 359/31-12-1978 is valid in law. The demand raised is within 6 months and it is not hit by period of limitation. So also the show cause notice dated 17-4-1980 issued by Superintendent for Rs. 43,658.84 in respect of clearances under Form GP No. 230 to 373/31-3-1980 is also valid in law and not hit by period of limitation so also the demand made by show cause notice dated 14-3-1980 issued by Superintendent demanding Rs. 26,153.25 for clearances made by gate passes in Form GP 1 Nos. 119-228, dated 29-2-1980 is also valid and not hit by limitation.
9. In the case of Andhra Pradesh Paper Mills Ltd., Rajahmundry v. Assistant Collector of Central Excise, Rajahmundry and Anr. reported in 1980 (6) E.L.T. 210, the demands had been raised under show cause notice for duty short paid. The facts of the case are identical to the one in issue. Although, the Andhra Pradesh High Court upheld the assessee's contention but the division Bench of the same set aside the judgment and confirmed the demands as reported in Assistant Collector of Central Excise, Rajahmundry v. Andhra Pradesh Paper Mills Ltd., Rajahmundry 1987 (32) E.L.T. 684 (A.P.). The paras (4) and (5) of the Order is reproduced below :-
It is not necessary to deal with the matter in any detail as the controversy is now set at rest, after the decision of the learned Single Judge, by an Explanation inserted by Clause 47 of the Finance Act, 1982 (Act 14 of 1982) with retrospective effect from 1-10-1975. It may be useful to extract the entire explanation inserted.
"Explanation - For the purposes of this sub-clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of -
(a) the effective duty of excise payable on such goods under this Act; and
(b) the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods, and the effective duty of excise on such goods under each Act referred to in Clause (a) or Clause (b) shall be, -
(i) in a case where a notification or order providing for any exemption (not being an exemption for giving credit with respect to or reduction of duty of excise on such goods equal to, any duty of excise already paid on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with reference to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption; and
(ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods."
The above Explanation inserted with retrospective effect from 1-10-1975 makes it clear that in computing the amount of duty of excise deductible from the cum-duty price, the effective amount of duty of excise payable on the goods under assessment shall alone be taken into account. The Explanation also contains a clear elucidation of what is meant by "the effective duty". It is not denied that the above Explanation inserted with retrospective effect from 1-10-1975 applies to the present case. That being so, it is no longer possible for the assessee to contend that instead of the effective Excise duty the Excise duty payable without taking into account the exemption granted has to be excluded from the normal price. Learned counsel for the assessee fairly conceded that because of the above Explanation inserted by the Finance Act of 1982 with retrospective effect from 1-10-1975 the assessee's contention is no longer enable. It is, however, submitted that the principles of determination of the value as envisaged by Sub-clause (ii) of Clause (d) cannot be prejudicially effected by an Explanation introduced. According to the learned counsel, although the Explanation was inserted to exclude only the effective amount of Excise duty from the normal price, still the Explanation fails to achieve the purpose because it cannot override the provisions contained in Sub-clause (ii). We cannot agree. The Explanation constitutes a part of the Sub-clause (ii) inserted by the legislature and served the purpose of explaining what was required to be excluded from the normal price under Sub-clause (ii). We are unable to accept the contention of the learned counsel that the Explanation cannot override the principles otherwise set out in Sub-clause (ii). After the amendment from 1-10-1975 Sub-clause (ii) will have to be read along with the Explanation and if so read there can be little doubt that what can be deducted from the cum-duty price is the actual amount of Excise duty paid and not what is otherwise payable. We may point out that the above Explanation has been inserted after the learned Single Judge disposed of the writ petition in favour of the assessee. As the Explanation is now before us and has retrospective effect from 1-10-1975, we have to give effect to the Explanation. Doing so, we find the assessee's contention unacceptable.
5. For the aforesaid reasons, we allow this appeal and hold that in computing the amount of duty of excise deductible from the cum-duty price, the effective amount of duty of excise payable on the goods under assessment shall alone be taken into account. In the circumstances, there shall be no order as to costs."
It follows from a close reading of the above portion of the judgment that contention of Shri M. Chandrasekharan is answered.
10. Accordingly, we set aside the impugned order and restore the Assistant Collector's orders to the extent they cover demands made on the respondents following issue of show cause notice and adjudication proceedings.
11. However, it appears that certain demands were raised on the respondents on the assessment RT-12 returns without issue of show cause notices. The Collector's Order-in-Appeal No. 329/80 (pages 51-52 of the paper book) deals with these demands. As the counsel for the respondents has rightly stated demands made on RT-12 returns without issue of show cause notice and following adjudication proceedings are not valid as has been held by the Supreme Court in Collector of Central Excise, Baroda v. Kosan Metal Products Ltd., 1988 (38) E.L.T. 573 (S.C.). The demands made on RT-12 returns without issue of show cause notice cannot, therefore, be sustained and are set aside.
12. The appeals are disposed of in the above terms.