Kella Glass Work Pvt. Ltd. Vs. Collector of Central Excise, Patna  INSC 411 (8 April 1997)
C. SEN, K.T. THOMAS
case is a good illustration of why the High court should not intervene in
revenue matter in exercise of writ jurisdiction where adequate alternative
statutory remedies are available. In the instant case, complications have
arisen because of the directions given by the Patna High court on 15.9.1982
after quashing the various notices and orders in course of proceedings under
the Central Excise and Salt Act.
appellants are manufacturers of sheer glass which at the material time was
chargeable to Central Excise duty on ad valorem basis. The appellants used to
file their price lists in accordance with the procedure prescribed by the
central Excise Rules (hereinafter referred to as the "Rules") and pay
duty according to their calculations. The trouble in this case arose with the
price list No. 38/1979 which was filed on 4.7.1979. A show cause notice dated
7.71979 was issues by the Assistant Collector of central Excise calling upon
the assessee to explain as to why certain deductions claimed by them should not
be added back to the excisable value of the goods. this was following up by
another show cause notice dated 16.8.1979 directing the appellants to follow
the provisional assessment procedure prescribed under Rule 9B of the Rule and
execute bonds for the purpose of effecting further clearances. On 5.9.1979.
superintendent of central Excise issued yet another show cause notice calling
upon the appellants to explain as to why differential rate of duty should not
be demanded under Rule 10 of the Rules w.e.f. 20.6.1979 and why penalty should
not be imposed on them under Rule 1730 of the Rule. by another order dated
21.3.1980 the Assistant collector modified the price list filed by the
appellants and disallowed all the deductions claimed by them except for trade
appellants filed a writ petition in the High court challenging the aforesaid
orders passed by the superintendent of central Excise. Ultimately on 15.9.1982
by the Assistant collector of central Excise disallowing the claim for ht
deductions made by the appellants and also the direction for provisional
clearance on furnishing of bond given on 16.8.1979.
High court however, remanded the case back to the assistant collector to
ascertain the element which will constitute post-manufactural expenses which
according to the High court could not be included in the assessable value.
value was directed to be redetermined bu the Assistant collector in accordance
with the guidelines given by the High court.
Central Excise authorities did not prefer any appeal against the order of the
High court. on 7.3.1983, the assistant collector issued another show cause
notice ass to why claims for various deductions should not be disasllowed.
final order dated 6.9.1984, the Assistant collector rejected the claims for
deduction following the law laid down by this court in the case of union of
India v. Bombay Tyres International Ltd. & ors. (1983) 4 SCC 210. A sum of Rs.
4,61,09,242.28p. was demanded for the period from 20.6.1979 to 30.7.1983. By a
further order dated 17.10.1984, the Assistant collector made another demand for
differential duty amounting to Rs. 27,81,826.87p for the period from 1.8.1983
contention is that these two orders were not preceded by any show cause notice
under section 11A of the central Excise and salt Act. This according to the appellants,
was mandatory and failure to give such a notice made these two order ab initio
void and of no legal effect.
appeal against the orders of the Assistant collector was dismissed by the
collector (Appeals). A further appeal was preferred to customs, Excise and Gold
(control) Appellate Tribune. The tribunal did not agree with the assessee's
contention that because no show cause notice under section 11A was given to the
appellants by the excise authorities the orders making demands by the excise authorities
the orders making demands by the Assistant collector of central Excise were
void and had to be quashed.
Dave on behalf of the appellants has contended that the demand for duty under
the central Excise Act could only be effected by issuing a show cause notice
under section 11A except in a case where clearance was provisional under Rule
9A in which case on finalisation of assessment. differential duty could be
determined as payable by the assessee.
was placed for this proposition on the decision of this court in the case of
union of India and others v. madhumilan Syntex pvt.
Ltd. and another, (1988) 3 SCC 348.
case, an approved classification list was in force. A demand was made without
issuing a notice modifying the classification list. In the instant case,
however, there was a series of notices issued by the excise authorities. although
show cause notice dated 5.7.1979 was quashed by the Patna High court, the other
notice had not been quashed. In any event, the Tribunal has pointed out that
the excise authorities wrote to the appellant repeatedly for production of the
bills and account books for the purpose of "determination of duty
liability". The Tribunal held that the Assistant collector's letter dated
5.12.1983 was nothing but a notice for levy of 'differential duty'.
Patel Volkart Limited v. Collector of Central Excise, Belgaum, (1987) 2 SCC 93,
it was held by this court that issue of show causes notice under subsection (1)
of section 11A was a condition-precedent to a demand under sub- section (2) of
behalf of the Revenue, Mr. Gauri shankar Murthy drew our attention to the case
of M/s. Samrat International (p) Ltd. v. collector of central Excise,
Hyderabad, (1992) Supp.
293, where this court held that when the assessee cleared the goods by
determining the duty himself and debiting the amount to personal ledger
account, the duty was provisional and subject to final approval by the Excise
officer concerned. In such situations, para(B), clause (e) of the Explanation
to section 11B at apply. The relevant provisions of section 11B at the material
time were as under;
Claim for refund of duty.-(1) Any person claiming refund of any duty of excise
may make An application for refund of such duty to the Assistant collector of
Central Excise before the expiry of six months form the relevant date:
that the limitation of six months shall not apply where any duty has been paid
X X X
Explanation.- For the purpose of this section,- (A) X X X (B) "relevant
date" Means,- (a) to (d) X X (e) in a case where outy of excise is paid
provisionally under this Act or the rules Made thereunder, the date of
adjustment of duty after the final assessment thereof;
any other case, the date of payment of duty." It was argued that Section
11A and 11B are similarly worded and the scheme of the two sections is the
same. In one case the assessee can alaim refund, in the other, the department
can realise tax which was not levied or short- levied. Under Section 11A, The
period of limitation has to be calculated from the 'relevant date' as defined. the
important point is that this court recognised that in a self assessment scheme,
where the assessee calculated and paid the amount of duty, nothing but a
provisional assessment had taken place which was subject to final assessment.
The period of limitation in such case will run from the date of making of the
Dave drew our attention to the case of collector of central Excise, Baroda v.
M/s. Kosan Metal Product Ltd., (1989) Supp. (1) SCC 135. In that case, brass
rods were assessed under TI 68 during the period from 24.4.1978 to 31.3.1979
and under TI 26-A(1) (a) with effect from 1.4.1979. Thereafter, it was noticed
by the superintendent of central Excise that the assessee had availed of the
incorrect set off of duty and a notice for imposition of penalty was issued
under Rule 173 q. It was alleged in the notice that the company was not
eligible to set off of duty.
case of the company was that no notice under Rule 10 was issued to it within
the time and there had been no fraud, collusion, wilful Misstatement of
suppression of facts on its part and that it had correctly availed this set
10 has now been repealed and the provisions of it have been incorporated in
section 11A of the Act. But, in that case the Tribunal found that the
classification lists had been finalised by the Bombay collectorate. The Assistant collector, Surat, had no authority to reopen those
the assessments had not been levied or paid or short-levied or short-paid, a
notice had to be issued under section 11A to realise the amount which had been
short- levied. The notice has to be issued normally within a period of six
months of completion of final assessment. This case does not in any way give
any support to the contention made by Mr. Dave.
instant case, the High Court after quashing the provisional assessment,
directed the assessments to be made afresh in accordance with the guidelines
given by it. No question of giving any notice under section 11A arises at this
stage. The provisional assessment was quashed by the High court and direction
was given to recompute the value of the excisable goods. This could only be
done in accordance with the substantive provisions of section 4 and in
accordance with the procedure laid down in Rule 173 I which at the material
time stood as under:
by proper officer. (1) The proper officer shall on the basis of the information
contained in the return filed by the assessee under sub-rule (3) of rule 1736
and after such further inquiry as he may consider necessary, assess the duty
due on the goods removed and complete the assessment memorandum on the return. a
copy of the return so completed shall be sent to the assessee.
The duty determined and paid by the assessee under rule 173F shall be adjusted
officer under sub-rule (1) and where the duty so assessed is more than the duty
determined and paid by the assessee, the assessee shall pay the deficiency by
making a debit in the account-current within ten days of receipt of copy of the
return from the proper officer and where such duty is less, the assessee shall
take credit in the account- current for the excess on receipt of the assessment
order in the copy of the return duly countersigned by a superintendent of
central Excise." The assessee is entitled under Rule 173F to determine his
liability for duty on the excisable goods manufactured by him and to remove
such goods on payment of duty on self assessment in accordance with the
provisions laid down in the Rules. But this is only the first step in making of
the assessment. The proper officer is empowered to assess the duty on the goods
so removed by the assessee and complete the assessment on the return filed by
the assessee. A copy of the return so computed by the proper officer has to be
sent to the assessee. The duty assessed and paid by the assessee on self
assessment will be set off against the duty assessed by the proper officer. If
the duty paid by the proper officer on final assessment is more than the duty
determined and paid by the assessee, the assessee has to pay the deficiency by
making a debit in the account-current within ten days of the receipt of the
copy of the return from the proper officer. If the duty on final assessment
payable by the assessee is less than what he has actually paid, the assessee is
entitled to take credit in the account-current for the excess payment. No.
question of any show cause notice under section 11A arises at this stage.
duty has to be paid by making adjustment in the account- current which has to
be maintained by the assessee within ten days' time.
11A deals with recovery of duty not levied or not paid or short-levied or
short-paid or erroneously refunded. Proceedings under section 11A have to be
commenced with a show cause notice issued within six months from the relevant
date. 'Relevant date' has been defined under sub- section 3(ii) to mean in a
case where duty of excise is provisionally assessed under this Act or the rules
made thereunder, the date of adjustment of duty after the final assessment
final assessment, a copy of the order on the return filed by the assessee has
to be sent to him. Duty has to be paid by the assessee on the basis of final
assessment within ten days' time from the receipt of the return. No question of
giving any notice under section 11A arises in such a case. It is only when even
after final assessment and payment of duties, it is found that there has been a
short- levy or non-levy of duty, the Excise officer is empowered to take
proceedings under section 11A within the period of limitation after issuing a
show cause notice. In such a case, limitation period will run from the date of
the final assessment. The scope of section 11A and Rule 173 I are quite
different. In this case, the provisional assessment earlier made the final
assessment. No question of failure of issuance of show cause notice under
section 11A arises in this case. Even otherwise, we do not find any infirmity
in the order of the Tribunal.
is no merit in the appeals. the appeals are, therefore, dismissed with no order
as to costs.
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