Statutory appointment and limitation defeated a differential cess demand for short levy under the applicable excise rule.

A demand for cess could not be enforced through Central Excise officers where the Produce Cess Act required levy and collection by a properly appointed Collector, and the necessary statutory appointment had not been made at the relevant time. The later notification confirmed that such appointment was essential for lawful enforcement. The demand for differential cess was also time-barred because it related to short levy and fell under Rule 10 of the Central Excise Rules, which prescribed a three-month limitation period from the relevant date; Rule 10A did not apply on these facts. The assessee therefore succeeded on both statutory authority and limitation.

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Issues: (i) Whether, in the absence of a proper appointment of the Collector under the Produce Cess Act, the demand for cess could be enforced through Central Excise officers; and (ii) whether the demand for differential cess was barred by limitation under Rule 10 of the Central Excise Rules rather than governed by Rule 10A.

Issue (i): Whether, in the absence of a proper appointment of the Collector under the Produce Cess Act, the demand for cess could be enforced through Central Excise officers.

Analysis: The Act contemplated appointment of the Collector for levy and collection, and the procedural provisions could not be used to dispense with that statutory requirement. Section 15 dealt only with procedure for levy and collection, while the Central Government had not framed the necessary rules at the relevant time. The later notification appointing officers under the Act showed that such appointment was required for lawful enforcement.

Conclusion: The demand could not be sustained on the basis of unauthorised officers, and the contention of the assessee on this issue succeeded.

Issue (ii): Whether the demand for differential cess was barred by limitation under Rule 10 of the Central Excise Rules rather than governed by Rule 10A.

Analysis: The cess was treated as short-levied, and the demand related to an alleged short levy arising from error or inadvertence. In such a situation, Rule 10 applied and prescribed a limitation period of three months from the relevant date. The demand, having been made beyond that period, was time-barred. Rule 10A was not the governing provision on these facts.

Conclusion: The demand was barred by limitation, and the contention of the assessee on this issue also succeeded.

Final Conclusion: The impugned demand of differential cess was unsustainable both for want of proper statutory appointment and on limitation, so the assessee obtained complete relief in the appeal.

Ratio Decidendi: Where a statute requires a duly appointed authority for levy and collection, demands made without compliance with that requirement are invalid, and a demand for short-levied duty or cess must be pursued within the limitation prescribed by the specific rule governing short levy.

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