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PETITIONER: M/S. SERAI KELLA GLASS WORK PVT. LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, PATNA

DATE OF JUDGMENT:       08/04/1997

BENCH: SUHAS C. SEN, K.T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T SEN, J.      This 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.      The 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. the 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 discounts.      The 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

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direction for  provisional clearance  on furnishing  of bond given on 16.8.1979.      The 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. The assessable  value was directed to be redetermined bu the Assistant collector  in accordance with the guidelines given by the High court.      The 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. By 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 to 31.12.1983.      The appelants’ 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. The 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.      Mr. 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. Reliance 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.      In Madhumilan’s  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’.      In Gokak  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 that section.      On behalf of the Revenue, Mr. Gauri shankar Murthy drew our attention  to the  case of M/s. Samrat International (p)

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Ltd. v. collector of central Excise, Hyderabad, (1992) Supp. 1 SCC  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;      "11B. 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:           Provided that  the  limitation      of six months shall not apply where      any  duty   has  been   paid  under      protest.      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;      (f)  in 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 final assessment.      Mr. 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. The 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 off.      Rule 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 assessments.

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    Because 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.      In the  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:      Assessment 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.           (2)  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

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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. The duty has to be paid by making adjustment in the account- current which  has to  be maintained  by the assessee within ten days’ time.      Section 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 thereof.      After 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.      There is  no merit  in the  appeals. the  appeals  are, therefore, dismissed with no order as to costs.