http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: M/S. GUJARAT MACHINERYMANUFACTURERS LTD.

       Vs.

RESPONDENT: COLLECTOR, CENTRAL EXCISE, BARODA.

DATE OF JUDGMENT:       11/09/1996

BENCH: BHARUCHA S.P. (J) BENCH: BHARUCHA S.P. (J) VENKATASWAMI K. (J)

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      We are concerned in this appeal against an order of the Customs, Excise  and Gold  (Control) Appellate Tribunal (the "Tribunal")  with   a  commodity   called  frit,   which  is manufactured by the appellants.      With the  introduction into  Tariff Item 23-A(4) of the words "glass  and",  it  read  "other  glass  and  glassware including tableware".    The  Collector  of  Central  Excise issued to  the appellants a notice under Section 45-A of the Central Excise  and Salt  Act on  4th November, 1981, asking them to  show cause  why frit should not be classified under sub-item (4) of Item  23-A with effect from 1st March, 1979, and the  order of  the Assistant  Collector  accepting  that classification  under   the  general   Item  68  be  revised accordingly.  The appellants showed cause.  The Collector by his order  dated 3.12.1981  made the notice absolute. He set aside the Assistant Collector’s order.  Th ordered that frit is hereby  classified as  other  glass  falling  within  the purview of  Item 23-A(4) of the First Schedule’.  He further ordered that  the appellants shall pay the duty of excise at the appropriate leviable rate on frit glass manufactured and cleared by  them as  applicable to  Item 23-A(4) of the said First Schedule  or the  difference in  duty, as the case may be’.      The appellants  preferred a revision application to the Central Government  which came  to  be  transferred  to  the Tribunal when  it was  constituted.  The Tribunal considered the  evidence   that  had  been  placed  on  record  by  the appellants and  upheld the  classification of frit as "other glass" within  the meaning of Item 23-A(4). It was contended before the  Tribunal that  no notice  had been issued to the appellants in  regard to  the recovery  of any  short-levied duty pursuant to such re-classification and that, therefore, no demand  in this behalf could have been made or sustained. The Tribunal  stated that  the show-cause  notice dated  4th November, 1981,  no  doubt,  did  not,  in  terms,  ask  the appellants to  show cause  why recovery  of the short-levied

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

duty should not be made, but, once the Collector came to the conclusion and  ordered the  re-classification of frit under Item 23-A(4),  he was  right in  demanding  the  payment  of differential duty.   However,  the recovery thereof could be made only  in respect  of the period of six months preceding the date of the order, i.e., 30th April, 1982, as determined with regard  to the  provisions of  Rule 11  or Section 11A. The Excise  authorities were  directed to  re-calculate  the amount of  the short  levy in  the light  of the  Tribunals’ order  the   communicate  the   appropriate  figure  to  the appellants.      It  is   unnecessary  to   go  into   the   aspect   of classification because the new Tariff expressly provides for the classification  of frit  and because  we are of the view that no  notice for  the recovery  of short-levied  duty  as required by Section 35A was given to the appellants.      The relevant provisions of Section 35A read thus:-      "S.35A.-  Revision   by  Board   or      Collector.-      1..................................      ......      2. The  Collector of Central Excise      may,   of   his   own   motion   or      otherwise, call for and examine the      record of  any proceeding  in which      any  decision  or  order  has  been      passed under  this Act or the rules      made thereunder by a Central Excise      Officer  subordinate  to  him  (not      being a decision or order passed on      appeal under  Section 35)  for  the      purpose of satisfying himself as to      the   correctness,    legality   or      propriety of such decision or order      and may  pass such order thereon as      the thinks fit.      3(a) No  decision  or  order  under      this section  shall be varied so as      to prejudicially  affect any person      unless  such   person  is  given  a      reasonable opportunity  of making a      representation  and,   if   he   so      desires,  of  being  heard  in  his      defence.      (b) Where the Board or, as the case      may be,  the Collector  of  Central      Excise is  of opinion that any duty      of excise  has not  been levied  or      has    been     short-levied     or      erroneously  refunded,   no   order      levying or  enhancing the  duty, or      no order  requiring payment  of the      duty so  refunded,  shall  be  made      under  this   section  unless   the      person  affected  by  the  proposed      order is given notice to show cause      against it  within  the  time-limit      specified in Section 11A.      Sub-section (2)  of Section 35A empowers a Collector of Central  Excise,  suo  motu  or  otherwise,  to  revise  any decision  or   order  made   by  a  Central  Excise  officer subordinate  to   him.    If  he  is  satisfied  as  to  its incorrectness, illegality  or impropriety,  he may pass such order thereon  as he  thinks fit. By reason of clause (a) of sub-section (3), no decision or order may be so varied as to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

prejudicially affect  any person unless that person has been given a  reasonable opportunity  of making  a representation and, if  so desired,  of being  heard.   Clause (b)  of sub- section (3)  applies when  duty which has not been levied or has been  short-levied or  has been  erroneously refunded is ought to  be recovered.   In  such event,  no order  in this behalf can  be made  unless the person who would have to pay is a)  given notice  to show  cause against  "it", that  is, against being  required to  pay; and  b) the notice is given within the time limit specified in Section 11A.      The order  of the  Collector under  Section 35A gave to the   appellants no notice that he proposed to make an order that would require them to pay the duty which might be found to have  been short-levied  if the  frit  was  found  to  be classifiable  under   Item  23-A(4).    The  orders  of  the Collector and  of the Tribunal, insofar as they required the appellants to pay the short-levied duty, even though limited to the  period of six months prior to the date of the notice by the Tribunal, are bad in law.      In the result, the appeal is allowed.  The order of the Tribunal is  set aside  insofar as  it directs  the  Central Excise authorities  to recalculate  the amount  of the short levy in  the light  of its  observation that recovery of the short levied  duty could be made in respect of the period of six months  preceding the  date of the Collector’s order and requires the  appellants to pay such sum.  In the event that any part  of such  sum has been recovered, the same shall be returned to the appellants.      There shall be no order as to costs.