2013 (8) TMI 269 - HC - Central Excise

Court clarifies application of Sections 11-A and 11-D in duty assessment cases

Commissioner Of Central Excise Versus Standard Niwar Mill

The court concluded that Section 11-A, and not Section 11-D, was applicable to the case. It emphasized that the assessment or determination of duty is a ... Limitation period for issue of recovery notice under section 11D of the Central Excise Act, 1944 - Respondent mill is engaged in the manufacture and clearance of made up textile articles and processed textile - Respondent has charged and collected the Central Excise Duty in respect of supply of certain 'towels hand white' ,but has failed to deposit the Central Excise Duty - The period for which the duty has not been paid on the goods i.e. hand towels is April, 1996 to June, 1996. The show-cause notice is dated 6th of March, 2003 and was served on 3rd of February, 2004, beyond the maximum prescribed period of limitation under section 11A of the Central Excise Act, 1944 – Held that:- Section-11A is very widely worded and provides for recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. All possible eventuality of loss of revenue to the Central Government is comprehended therein - Taking that it is a case of recovery of duty either not levied or not paid even though the prescribed period of limitation in such cases is five years from the relevant date - The show-cause notice was issued and served beyond the extended period of five years, the action of the appellant is clearly barred by time. Section 11A covers the field of any duty of excise not levied or not paid or has been short levied or short paid etc - It is section 11A which is attracted and not section 11D of the Act – Decided against the Revenue. Issues Involved:1. Interpretation of Section 11-D and Section 11-A of the Central Excise Act.2. Applicability of the limitation period under Section 11-A to Section 11-D.3. Requirement of duty assessment or determination for invoking Section 11-D.4. Alleged unjust enrichment by the respondent manufacturer.Issue-wise Analysis:1. Interpretation of Section 11-D and Section 11-A of the Central Excise Act:The core issue was whether the provisions of Section 11-D are independent of Section 11-A and whether the specific period of limitation in Section 11-A could be imported into Section 11-D. The court observed that Section 11-D requires the amount collected in excess of the duty assessed or determined to be paid to the Central Government. It emphasized that the determination or assessment of duty is a prerequisite under Section 11-D, and without such assessment, the excess collection of duty cannot be established. The court concluded that Section 11-D is a machinery provision for the provisional deposit of duty collected from buyers and does not independently provide for the recovery of duties not paid or short-paid, which falls under Section 11-A.2. Applicability of the limitation period under Section 11-A to Section 11-D:The court held that the extended period of limitation of five years provided in Section 11-A cannot be imported into Section 11-D. It emphasized that Section 11-A specifically deals with the recovery of duties not levied, not paid, short-levied, short-paid, or erroneously refunded, and prescribes a maximum limitation period of five years. The court found that the show-cause notice issued to the respondent manufacturer was beyond this period, making the action time-barred. Consequently, the court ruled that Section 11-D could not be used to bypass the limitation period prescribed under Section 11-A.3. Requirement of duty assessment or determination for invoking Section 11-D:The court noted that Section 11-D requires the duty collected to be in excess of the duty assessed or determined and paid. It clarified that unless there is an assessment or determination of duty, it cannot be said that the duty collected by a manufacturer is in excess of the duty assessed or determined. The court rejected the argument that self-assessment by the manufacturer could be considered an assessment under the amended definition of 'assessment' in the Central Excise Rules, as the amendment came into force after the relevant period (April 1996 to June 1996). The court emphasized that any dispute regarding self-assessment should be adjudicated by a competent authority, and without such adjudication, self-assessment cannot be treated as final.4. Alleged unjust enrichment by the respondent manufacturer:The department argued that the respondent manufacturer had unjustly enriched itself by collecting excise duty but not depositing it with the Central Government. The court acknowledged the doctrine of unjust enrichment, which prevents a person from retaining a benefit unjustly. However, it clarified that this doctrine does not allow the state to recover amounts without statutory provisions. The court noted that Section 11-A comprehensively covers the recovery of duties not levied or paid and prescribes a limitation period. Since the show-cause notice was issued beyond this period, the court ruled that the recovery of the alleged duty under Section 11-D was not permissible.Conclusion:The court concluded that the Tribunal was correct in holding that Section 11-A, and not Section 11-D, was applicable to the case. It emphasized that the assessment or determination of duty is a prerequisite for invoking Section 11-D and that the extended limitation period of Section 11-A could not be applied to Section 11-D. The appeal was dismissed, and the court upheld the Tribunal's decision in favor of the respondent manufacturer.