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PETITIONER: COLLECTOR OF CENTRAL EXCISE, BARODA

       Vs.

RESPONDENT: KOSAN METAL PRODUCTS LIMITED

DATE OF JUDGMENT26/10/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1989 AIR  265            1988 SCR  Supl. (3) 537  1989 SCC  Supl.  (1) 135 JT 1988 (4)   526  1988 SCALE  (2)1442

ACT:     Central  Excises and Salt Act 1944/Central Excise  Rules 1944-- Section 11-A/Rules 8,10 & 11--Assessee--Manufacturing LPGF  valves and regulators--Brass rods prepared by  another company--‘Set- off duty availed of on The brass  rods--Later found  that set- off duty was incorrectly allowed--Issue  of recovery  notice--Validity  of.

HEADNOTE:     The respondent-company  manufactures L.P.G.F. valves and regulators  falling  under  Tariff Item 68  of  the  Central Excise Tariff. It was  receiving brass rods manufactured  by another company of  Bombay and availed of the set-off of duty as  stipulated  under  Notification No.  178/77  dated  18th June,  1977.  The brass rods were assessed   under  T.I.  68 during the period from 24th July, 1978 to 31st March,  1979. With effect from 1st April, 1979 brass rods manufactured  by the  Bombay Company were assessed under T.I. 26A(1)(a).     The  Superintendent  of Central Excise Range  XV  Surat, noticed that the respondent-company had received brass rods, the   goods other than falling under Tariff Item 6X and  had availed  of  the  incorrect set-off of duty under  the  said notification.  The respondent-Company  was required to  show cause as to why the duty amounting  to  Rs.261.88 should not be  recovered from it under Rule l0 and why  penalty  should not  be  imposed  on  it under  Rule  173Q.  In  reply.  the respondent- Company contended that the notice under Rule  10 had not been  issued to it within time, that there had  been no  fraud collusion or  wilful mis-statement or  suppression of  facts on its part and that  it had correctly availed  of the ‘set-off’ of duty.     The  Assistant Collector confirmed the demand for  duty, and the appeals against his orders were rejected.     The Tribunal while allowing the claim of the respondent, took  the  view  that  the  classification  lists  had  been finalised  by  the  Bombay Collectorate, and  the  Assistant Collector,   Surat  had  no  authority  to   re-open   those assessment.                                                   PG NO 537                                                   PG NO 538     Dismissing the appeals of the Revenue, this Court,

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   HELD:  1. Section 11-A of the Central Excises  and  Salt Act, 1944 provides that when any duty of excise has not been levied  or  paid or has been short-levied or  short-paid  or erroneously   refunded,  a  notice  may  be  served  on  the concerned person within a  period of six months. [541G]     In  the instant case, the time taken for the service  of the notice beyond a period of six months. Therefore, it does not appear  that a proper notice was issued. [541G]     2.  Merely on the ground of short-entry in RT- 12,  Rule 10  would  not be attracted. When in  such  circumstance,  a demand   is made under the Act for recovery then such demand must be under s.  11-A of the Act. [540A-B]     Good  Shepherd  Rubber  Company’s  case  (1978  ELT  66) affirmed.     3. There is no ground which supports the allegation that there had been fraud, collusion or any wilful mis-statements or  suppression of facts on the part of the respondent. Rule 11-A.  therefore,   clearly  applies to  the  facts  of  the instant case. [542B]

JUDGMENT:     CIVIL  APPELLATE JURlSDlCTlON: Civil Appeal  Nos.  1571- 72(NM)of 1988.     From  the Order dated 17.10.1987 of the  Customs  Excise and  Gold (Control) Appellate Tribunal, New Delhi in  Appeal No.  66 & 67 of 1987-BI in Order No. 405 & 406 of 1984 BI.     M.K.  Banerjee  Solicitor General, R.P.  Srivastava  and Mrs.Sushma Suri for the Appellant.     The Judgment of the Court was delivered by     SABYASACHI MUKHARJI, J. These are appeals under  Section 35L(b)   of   the  Central  Excises  and  Salt   Act,   1944 (hereinafter  referred  to as the Act ) arising out  of  the orders  dated 7th October,  1987 of the Customs  Excise  and Gold (Control) Appellate Tribunal  (hereinafter referred  to as  the  Tribunal’). Revenue is the  appellant   herein  The respondent-company   manufactures   L.P.G.F.   valves   and regulators  falling  under  Tariff Item 68  of  the  Central Excise  Tariff  The respondent  company was receiving  brass                                                   PG NO 539 rods  manufactured  by  M/s.  Bhandary  Metal   Corporation, Bombay  and  availed  set off of duty  as  stipulated  under Notification  No. 178/77 dated  18th June, 1977.  The  brass rods  were  assessed under T.I. 68 during  the  period  from 24th June, 1978 to 31st of March, l979. With effect from Ist April, 1979 brass rods  manufactured by M/s. Bhandary  Metal Corporation, Bombay were assessed under T.I.  26A(1)(a),  as mentioned in the relevant G.P.1 of the manufacturer. It was, however.   noticed by the Superintendent of  Central  Excise Range  XV. Surat that the respondent  company  had  received brass  rods, the goods other than falling under Tariff  Item 68   and had availed incorrect set off of duty amounting  to Rs.51,261.88 under the said  notification issued under  Rule 8(i) of the Central Excise Rules, 1944 (‘Rules’ for   short) towards  payment  of duty on excisable goods  falling  under Tariff  Item  687 and  cleared during the period  from  24th July, 1978 to . Ist March, 1979. A show-cause  notice  dated 19th  January, 1980 was issued to the respondent-company  by the   Superintendent  of  Central  Excise  Range  XV,  Surat requiring it to show cause as to why  the duty amounting  to Rs.51.261.88  should not be recovered from it under Rule  10 of   the  Rules  and as to why the  penalty  should  not  be imposed on it under Rule 173Q. The  notice was issued on the ground  that  the  brass rods  were  classified  under  T.I.

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26A(1)(a)  of  the  Tariff and  therefore.  the  respondent- company was not eligible to set  off of duty under the  said notification.  In  reply, the  respondent-company  contended that the said notice under Rule 10 had not been issued to it within time and that  there had been no fraud, collusion  or wilful  mis-statement or suppression of facts on   its  part and that it had correctly availed of the set off of duty .     The Assistant  Collector of Central Excise, Surat  after considering the matter confirmed the demand for duty by  his order dated 9th February, 1981. The case of the Revenue  was that  the respondent- company had utilised wrong set off  of duty  on  the raw materials falling under  T.I.  other  than Tariff  Item  68  and the Range  Superintendent,  Surat  had pointed out short payment of duty involving Rs.38,460.12  on RT-12  returns for the month of April 1979 to August,  1979. The  demand of Rs.38,460.12 was confirmed by  the  Assistant Collector  by  his  order dated  20th  February,  1981.  The appeals against the aforesaid orders filed by the respondent were rejected. The respondent. thereafter, filed two appeals before  the Tribunal. The Tribunal referred to the facts  of the case set out hereinbefore.     The  main question that was necessary to be  decided  in this case was whether proper notice had been issued. On  the                                                   PG NO 540 facts  of  the case, it does not appear that  proper  notice was  issued. Merely on  the ground of short entry in  RT-12, Rule  10 would not be attracted. The  same view  appears  to have  been taken by the Kerala High Court in  Good  Shepherd Rubber   Company’s  case  (1978  ELT  66).  When   in   such circumstances,  a demand is made under the Act for  recovery then such demand must be under Section 11-A of the Act.  The said  section provides as follows:     "11-A.  Recovery  of duties not levied or  not  paid  or short-  levied or short-paid or  erroneously  refunded.--(1) When  any duty of excise has not been levied or paid or  has been  short-levied or short-paid or erroneously refunded,  a Central  Excise  Officer  may, within six  months  from  the relevant  date, serve notice on the person  chargeable  with the duty which has not been levied or paid or which has been short-  levied  or  shot-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:     Provided  that  where any duty of excise  has  not  been levied  or  paid or has been short-levied or  short-paid  or erroneously  refunded by reason of fraud, collusion  or  any wilful   mis-statement   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, by  such  person or his agent the provisions  of  this  sub- section  shall  have effect (as if for  the  words  "Central Excise Officer, the words -Collector of Central Excise, and) for  the  words  six months", the words  "five  years"  were substituted. Explanation--Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six  months or five years, as the case may be.     (2) The Assistant Collector of Central Excise or, as the case may be, (the Collector of Central Excise) shall,  after considering  the representation, if any, made by the  person on  whom notice is served under sub-section  (1),  determine the amount of duty of excise due from such person (not being in  excess  of  the  amount specified  in  the  notice)  and thereupon such person shall pay the amount so determined.                                                   PG NO 541     (3) For the purposes of this section--

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   (i)  "refund"  includes  rebate of  duty  of  excise  on excisable  goods  exported  out of  India  or  on  excisable materials  used  in  the  manufacture  of  goods  which  are exported out of India;     (ii) "relevant date" means,--     (a)  in  the case of excisable goods on  which  duty  of excise has not been levied or paid or has been  short-levied or short-paid--     (A) where under the rules made under this Act a  monthly return,  showing  particulars  of  the  duty  paid  on   the excisable  goods removed during the month to which the  said return relates, is to be filed by a manufacturer or producer or  a licensee of a werehouse, as the case may be, the  date on which such return is so filed;     (B)  Where no monthly return as aforesaid is filed,  the last date on which such return is to be filed under the said rules;     (C) in any other case, the date on which the duty is  to be paid under this Act or the rules made thereunder;     (b)  in  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;     (c)  in  the case of excisable goods on  which  duty  of excise   has  been erroneously refunded, the  date  of  such refund."     The  said section provides that when any duty of  excise has  not  been levied or paid or has  been  short-levied  or short-paid  or erroneously refunded, a notice may be  served on the concerned person within a period of six months In the instant case, the time  taken for  the service of the notice is beyond a period of six months  The Tribunal took the view that  the  classification lists had been  finalised  by  the Bombay  Collectorate and the Assistant Collector, Surat  had no authority to re-open those assessments. It referred to  a decision  of  it  in  M/s.  Jay  Industries,  Hyderabad   v. Collector of Central  Excise, Hyderabad, [1984] SCR 100.  In the aforesaid view of the  matter, the Tribunal allowed  the claim of the respondent.                                                   PG NO 542     We have considered the contentions urged and do not find any ground which supports the allegation that there had been fraud  collusion or any wilful mis-statement or  suppression of facts on the  part of the respondent. Therefore,  section 11-A  clearly applies to  the facts of the instant case.  In that view of the matter, the appeals  were correctly allowed by the Tribunal. On careful examination of the facts  of the case and the contentions raised, we are of the opinion  that there  is  no merit in the appeals before us.  The  appeals, therefore, fail  and are accordingly dismissed. However,  in view of the facts and the  circumstances of the case,  there will be no order as to costs. A.P.J.                           Appeals dismissed.