Customs, Excise and Gold Tribunal - Mumbai
Collector Of Central Excise vs Zenith Dyes And Chemicals And Ors. on 28 September, 1990
Equivalent citations: 1990(31)ECR680(TRI.-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. All the aforesaid 4 appeals have been brought forth by the Collector of Central Excise, Vadodara against the orders of the Collector of Central Excise (Appeals), Bombay allowing the appeals of the respondents and setting aside the order of the Asstt. Collector on the ground that the demands for recovery of Modvat credit issued in pursuance of Rule 57I are beyond the period prescribed under Section 11A of the Central Excises & Salt Act. It is needless to set out the facts of these cases in details since the only issue involved which is required to be considered in these appeals is whether during the period when Rule 57I did not prescribe any time limit for recovery of Modvat credit irregularly availed of, time prescribed under Section 11A would be applicable ? Both the sides agreed that in all these cases, notices for recovery have been issued beyond the period of six months and in these cases applicability of the extended period prescribed under Section 11A is not the issue. Only in the case of appeal No. E/851/89-BOM. (Respondents Zenith Dyes & Chemical) apart from demand of duty, a penalty of Rs. 100/- is also imposed. This penalty has been imposed for over-drawal in the PLA to the extent of Rs. 788/-. Shri Mondal contended that in the case of this respondent, the Collector (Appeals) while setting aside the demand on the ground of time but has adduced no reason for setting aside the order of penalty. Thereafter, he adduced common arguments in respect of the appeals, since the issue involved is one and the same.
2. Shri Mondal fairly conceded that this issue has been already decided by this Bench in a number of cases against the revenue. It has been held by the Bench consistently that during the period, when no time limit was prescribed under Rule 571, it is subject to the time limit prescribed under section HA of the Central Excises Act. Though Shri Mondal agreed with this, he submitted that certain other aspects are required to be considered and hence he made a written submission and also argued on the basis of the written submission to persuade us to change the view already taken in a number of cases. His main arguments were as below:
(i) While Section 11A provides for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded, Rule 571 (as amended) provides for recovery of credit (of duty paid on inputs) wrongly availed of or utilised in an irregular manner.
(ii) A simple reading of the above two provisions will make it clear that they are completely independent and not complimentary to each other as the situations under them are quite distinct and different;
(iii) Further, as per provisions of Section 11A, for recoveries of duties, a notice has to be served on the assesses within six months or within 5 years, as the case may be from the relevant date as indicated in Clause (ii) of Sub-section (3) of Section 11 A. On the other hand, under the provisions of Rule 57-I for recoveries of credit, a notice has to be served on the assessee within 6 months or within 5 years, as the case may be, from the date of such credit i.e. from the date the credit has been taken;
(iv) Adjudged from the view point of relevant date as indicated above, it becomes further clear that the provisions under Section 11A and under Rule 57-I are distinct and different. In other words, they are independent of each other. Therefore, even during the period when Rule 57-I remained unamended the time limit prescribed Under Section 11A cannot be made applicable to Rule 57-I for recovery of wrongly availed credit as it cannot be equated with non-levy or nonpayment or short-levy or short payment of duty. Hence, the natural conclusion that emerges is that time-limit under the General Law of Limitation has to be applied for recovery of wrongly availed credit when Rule 57-I remained unamended.
(v) It was also urged by him that the East Regional Bench in the case reported in 1990 (26) ECR 398 had an occasion to consider the limitation vis-a-vis the relevant date prescribed Under Section 11B of the Central Excise Act. That Bench held that the date of payment by debit entry in PLA is not the relevant date for the purpose of calculating time-limit under Section 11B, and held that in the facts of the case, Rule 173-I applies. Considering the view taken by the Tribunal in the aforesaid case, he argued that taking credit in R.G. 23A Part-I or utilisation thereof by taking a debit entry in that record cannot be applied to the situation as provided under Section 11A of the Central Excise Act and this is required to be few it under Rule 57-1 independently.
3. Shri Pikale, on behalf of M/s. Mahindra & Mahindra Ltd. referred to the case of Agro Transformers Co. (P) Ltd. reported in 1990 (16) ETR 317 to point out that the same Departmental representative had agreed that the demand for recovery of Modvat credit has to be issued within a parametres laid down under Section 11A and in that case he argued that the date of filing the relevant RT-12 returns is the criterion and judged by this date, demand is within the period. He also referred to the decision of the East Regional Bench on the very same issue pointing out that even the Collector's Conference had held the same view which was taken by the Bench. Even the Reference Application filed against the decision of the East Regional Bench has been turned down by that Bench. In this connection he referred to the order No. 251/Cal./l990/251/East Regional Bench In view of this position, he contended that the consistent view taken by this Bench and also by the East Regional Bench in the case of Telco does not call for a second look.
4. Shri W. Christian and Shri Bapat, advocates also supported the aforesaid arguments. The respondents, M/s. Zenith Dyes & Chemicals only made a written statement referring to the decision of this Bench in the case of Mahindra & Mahindra Ltd. reported in 1990 (28) ECR 564 (Cegat WRB) to urge that the demand is to be issued within the purview of time limit prescribed under Section 11A.
5. After considering the argument of both the sides, we find that there are no compelling reasons to have a second look at the decision already taken in this regard by this Bench. Even the Department have not chosen to make a reference application in regard to the decision made by this Bench. It is also observed that a Reference Application has been made in regard to the decision taken by the East Regional Bench, which has also been turned down by that Bench. In any case, while the position is like this, for the purpose of record, we set out the arguments made by the learned SDR for disposal. It is not disputed by him that Rule 57I providing for recovery of Modvat credit in respect of duty paid on inputs is part of the Central Excise Rules Section 11A provides for recovery of duty not levied, not paid or has been short-levied or short-paid or erroneously refunded. When the credit is taken and duty debit in respect of final product it made from that credit, if the basis of that credit to be disturbed, it will in any case result in short-levy or non-levy, which is specifically provided for under Section 11A. There is no need to go to the general law of limitation for this purpose when the Central Excise enactment itself provides for recoveries in such a situation Moreover, merely because by a subsequent amendment to Rule 57J, provisions have been made prescribing the time limit in that Rule itself, it cannot be construed that Rule 57I has to be interpreted in isolation without recourse to Section 11A during the period, when seperate time limit has not been prescribed under Rule 57I. Erroneous Modvat credit always results in erosion in the duty payment on the final product and if the erroneous Modvat credit is to be recovered, it has to be done within the purview of Section 11A even during the period, when no time limit has been prescribed under Rule 57I.
6. Shri Mondal's argument citing the decision of the East Regional Bench in the case reported in 1990(26) ECR 398 is not directly on the issue. It is with regard to the interpretation of time limit prescribed under Section 11B. Without expressing any opinion on this judgment of the East Regional Bench, we cannot but take note of the decision of the very same Bench on this very issue in the Telco case where the Bench has held the same decision as ours on the issue.
7. In view of the aforesaid position, the arguments of the learned SDR which have now been advanced, have already been considered by us and we feel there are no compelling reasons to take a view different from the one already taken by us.
8. In the result all the 4 appeals filed on behalf of the Collector are required to be dismissed as regards duty demand.
9. Before parting, we agree with Shri Mondal that in the case of Respondent, M/s. Zenith Dyes & Chemicals, the Collector (Appeals) has not given any reason for setting aside the order imposing penalty of Rs. 100/-, on the Respondents on account of overdrawal from PLA. Only to this extend, the appeal from the Department can be accepted. In other words, on the question of penalty of Rs. 100/- for overdrawal in the case of Zenith Dyes & Chemicals, the order of the Asstt. Collector restored setting aside the order of Collector (Appeals) and on the ground of time bar in all the cases of 4 appeals the orders of the Collector (Appeals) are sustained.