TaxTMI 
TaxTMI 
2019 (12) TMI 474
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....Ors. vs. Union of India & Ors. 1981 (8) ELT 887 (Del.), the appellant filed two writ petitions under Article 226 of the Constitution of India before the High Court of Delhi being Civil Writ Petition Nos. 1234/1981 and 1235/1981. The reliefs claimed in both petitions are identical except that they pertain to separate periods. We may reproduce the reliefs claimed in Writ Petition No. 1235/1981, for the sake of convenience. The same read thus: "(a) Issue a suitable writ, order or direction declaring that duty of excise is not payable in respect of yarn (Cotton and man made) processed further in the petitioner's composite mills in the manufacture of fabrics: (b) Issue writ of certiorari or any other suitable writ, order or direction in the nature thereof quashing and setting aside the decisions and directives of the Central Board of Excise, respondent No.2, contained in circular letters dated 6.10.1976 (Annexure A), 24.9.1980 (Annexure B) and to quash the notices dated 23.4.1981 (Annexure C) and all similar notices referred to in the statement (Annexure D), dated 7.1.1981 (Annexure G) and dated 9.3.1981 (Annexure H): (c) Issue a writ of mandamus or a....
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....of excise in respect of yarn processed within the petitioner's composite mills on the basis of the weight of yarn after sizing thereof. (h) To pass such other and further orders as may be deemed just and proper in the facts and circumstances of this case; and (i) Award costs of the writ petition in favour of the petitioner." 2. During the pendency of the aforementioned writ petitions, the appellant filed Civil Miscellaneous Petition Nos. 1698/1981 and 1699/1981 in the concerned writ petitions, praying for interim reliefs. For the sake of convenience, the reliefs claimed in Civil Miscellaneous Petition No. 1699/1981 filed in Writ Petition No. 1235/1981 are reproduced below: "(a) grant order of stay permitting the petitioners forthwith to further process and use cellulose and non-cellulosic spun yarn, manmade filament yarn and cotton yarn in its composite mill in the manufacture of manmade fabric, cotton fabric and woollen fabric at nil rate of duty and to clear cotton fabrics forthwith upon payment of duty in respect of cotton fabric only (without payment of duty on cotton yarn) upon the petitioners undertaking to furnish the requisite bond in Form B-13....
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....e 20th February, 1986. There arrears of disputed duty which are required to be paid is only in respect of unsized yarn. Any duty claimed on sized yarn will not be paid by virtue of this order. There will be no duty payable on the sized yarn even for future till disposal of the writ petition. If any payments have been made through disputed, the same would be adjusted in accordance with what is provided in the order passed by us today......" 4. Pursuant to the modified interim relief, the appellant deposited 50% of its liability towards central excise duty in installments and continued to make future payments. The writ petitions were eventually disposed of on 10/12.3.1993 in the following terms: " Counsel for the parties are agreed that this case is covered by the orders and directions issued by the Supreme Court in Civil Miscellaneous Petitions No.8869 of 1988 and others in Civil Appeals Nos.323 of 1984 and others in Rohit Mills Ltd. v. Union of India, dated 28th April, 1988 and it will be open to the petitioner to raise such other contention available to it before the adjudicating authority in response to the show-cause notices. Accor....
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....t of India restraining the department from levying and recovering the disputed portion of the duty of excise on the condition that petitioners of the case shall furnish the bank guarantee. The Bank guarantee was furnished and the writ petition was dismissed by the Hon'ble Supreme Court of India on 4.11.88. Thereafter the department asked the petitioners to take steps to enforce the Bank guarantee. Aggrieved with this action, they filed a Miscellaneous Writ Petition before Supreme Court of India stating that since no Show Cause cum Demand Notice was issued under Section 11A, no recovery beyond the period of 6 months can be effected. The above petition of M/s. Bhilwara Processors Ltd. was dismissed by Hon'ble Supreme Court of India by its order dated 29.11.88 (reported in Judgment Today Vol. (4) November Part 1988 (83) 330). The similar order was passed by Rajasthan High Court vide order dt. 9.12.1988 in C.W.P. No.4441/88. In this case under similar circumstances, M/s. Modern Suitings also made the same grievances before Rajasthan High Court. The Hon'ble Rajasthan High Court placing reliance on the order dt. 29.11.1988 passed by the Hon'ble Supreme Court of India in the case....
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....ight of the decision of this Court dated 28.4.1988 in Rohit Mills Ltd. & Ors. vs. Union of India & Ors. 1988 (18) ECR 17 SC The said communication reads thus: " OUR RE. NO. SM/E1 11th May, 1993 The Assistant Collector of Central Excise, Division F1, IInd Floor, Madhu Industrial Estate, P.B. Marg, Worli, Bombay-400013. Dear Sir, Your Ref. F.No.IV/CLVI/ 3084/ FI/93/2295 Dated 2nd April, 1993. Sub: Delhi High Court Writ Petition No.1235/1981 Bombay Dyeing & Mfg. Co. Ltd.(Spring Mill Unit) Vs. UOI & Ors. 1. This has reference to your above letter whereby you have intimated the date of hearing for finalizing the classification list in respect of cotton yarn and man made Yarn. Your attention is also drawn to your earlier letter F.No.FI/PI/V(18)3/ 81/1705 dated 26.3.1993, whereby you desired us to intimate whether your would like a show cause notice to be issued u/s 11A of the Act. 2. We would draw your kind attention to the order passed by the Hon'ble High Court of Delhi dated 10.3.1993 whereby the above writ petition was disposed of on the basis of the order passed by the Hon'ble Supreme Court in the case of Rohit Mills Ltd. For your ready....
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....he first place, as per the directions of the Hon'ble High Court, adjudication has now to be done on the basis of show cause notice under Section 11A of the Act. Secondly for the reason that the provisionally if any, was in relation to dutiablity of yarn at the stage and the condition after sizing and did not relate to unsized yarn. In any event, the assessment has now to be done in terms of the directions of the Hon'ble High Court, after issuing a show cause notice under Section 11A of the Act. The adjudication can only be gone in accordance with the directions of the Hon'ble High Court. 6. We may mention here that although our contentions would be raised as and when a show cause notice is received, we may indicate that in any event, no duty of excise is payable in respect of the yarn obtained at the intermediate stage which is further processed within the factory, since it is not obtained at that stage in a marketable condition. We have already paid certain amounts towards duty of excise in respect of such yarn under protest during the pendency of the writ petition and upon decision of this issue, we would be entitled to claim refund thereof. 7. Further contentio....
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....ithin ten days, failing which the Department would take necessary steps to enforce the bank guarantees and recover the dues from the appellant. 9. Subsequent to the above notice, an opportunity of personal hearing was also given to the appellant on 19/20.10.1993 with respect to the recovery of dues. It appears that during the hearing, the appellant reiterated its stand that the Show Cause Notice under Section 11A of the Act was essential, including in terms of the order of the High Court of Delhi, dated 10/12.3.1993. The Assistant Collector of Excise, however, vide Order-in-original dated 7/15.12.1993, confirmed the demand of excise duty. He held that in the present case, the duty liability itself was in dispute and the assessment could be made final only when the question of duty liability was decided by the High Court of Delhi, and once that issue was resolved, the question of issuing notice under Section 11A of the Act does not arise, especially when the appellant itself had voluntarily executed B-13 bonds and the assessments were treated as provisional, as evinced from the endorsements on monthly RT-12 returns in that behalf. 10. The appellant carried the matter in appeal....
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....ties have ignored the binding directions of the Hon'ble High Court of Delhi vide its Order dated 12.03.1993 to hold that no Show Cause Notice (SCN) was required in the present case as the assessments in question were provisional?" 15. It is urged that the purport of the order dated 10/12.3.1993 passed by the High Court of Delhi, while disposing of the writ petitions filed by the appellant clearly obliged the Department to issue a Show Cause Notice under Section 11A of the Act and to proceed against the appellant only in the manner permissible under the said provision in light of the dictum of this Court in Rohit Mills Ltd. (supra). It is urged that the dictum in Rohit Mills Ltd. (supra) formed part of the subject order of the High Court of Delhi and for which reason, it was not open to the Department to take a contrary stand. The approach of the authorities in not complying with the said obligation cannot stand the test of judicial scrutiny. On the other hand, if the authorities were to follow the direction given by the High Court of Delhi, the demand for central excise duty for the period starting from 25.5.1981 to 13/14.5.1985 would be clearly barred by limitation. It is then ....
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....ordance with law. At best, the tenor of the order would suggest that if a Show Cause Notice is required to be issued and has not been so issued, authorities were free to issue such a notice and take decision thereon, after giving opportunity of hearing to the assessee. No more and no less. The High Court of Delhi could not have issued any other direction against the respondent, which would be in the nature of prohibiting the statutory functionary from discharging its statutory functions and obligations nor to absolve the appellant of its statutory obligation to pay excise duty, which otherwise was payable by the appellant but for filing of the writ petitions. Admittedly, the interim protection given to the appellant was conditional and the appellant, acting upon the same, had submitted B-13 bonds, which presupposes that it was a case of provisional assessment and could be proceeded further as per law, after the disposal of the writ petitions. In that, it was not a case referable to Section 11A of the Act. The respondent is placing heavy reliance on the decision of the Division Bench of the High Court of Judicature at Bombay in the case of The Jam Shri Ranjitsinghji (supra), which h....
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.... B-13 referable to Rule 9B supported by bank guarantee for an amount equivalent to specified differential duty in respect of the yarn in question. The said interim relief was then modified on 14.5.1985. The fact remains that the appellant voluntarily furnished requisite bonds in Form B-13 referable to Rule 9B supported by bank guarantee for equivalent amount of the differential duty. It is not an undertaking filed pursuant to the order of the Court. Concededly, the order disposing of the writ petitions does not absolve the appellant from the said bonds; nor the endorsements made thereon and on the monthly RT-12 returns, indicating that it was a provisional assessment have been ordered to be effaced. Suffice it to observe that the order dated 10/12.3.1993 passed by the High Court of Delhi, disposing of the writ petitions filed by the appellant in no way extricate the appellant from the process to which the appellant had voluntarily submitted itself at its own volition, namely, under Rule 9B of the Rules. Thus, it was not a case of duty not levied or not paid or shortlevied or shortpaid. The understanding of the parties was absolutely clear that the appellant was liable to pay excise....
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....een levied or paid or has been shortlevied or shortpaid or erroneously refunded by reason of fraud, collusion or any wilful misstatement 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 subsection shall have effect, as if for the words one year, 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 one year or five years, as the case may be. (1A) When 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 misstatement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, by such person or his agent, to whom a notice is served under the proviso to subsection (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon u....
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....al Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under subsection (1) in respect of the duty so paid: Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "one year" referred to in subsection (1) shall be counted from the date of receipt of such information of payment. Explanation 1. -Nothing contained in this subsection shall apply in a case where the duty was not levied or was not paid or was shortlevied or was shortpaid or was erroneously refunded by reason of fraud, collusion or any wilful misstatement 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. Explanation 2. -For the removal of doubts, it is hereby declared that the interest under section 11AB shall be payable on the amount paid by the person under this subsection and also on the amount of shortpayment of du....
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....to subject the excisable goods to any chemical or any other test for the purpose of assessment of duty thereon; or (c) where an assessee has produced all the necessary documents and furnished full information for the assessment of duty, but the proper officer deems it necessary to make further inquiry (including the inquiry to satisfy himself about the due observance of the conditions imposed in respect of the goods after their removal) for assessing the duty; the proper officer may, either on a written request made by the assessee or on his own accord, direct that the duty leviable on such goods shall, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally at such rate or such value (which may not necessarily be the rate or price declared by the assessee) as may be indicated by him, if such assessee executes a bond in the proper form with such surety or sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed. (2)....
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....osal of the writ petitions. It is also noticed that the authorities have later on passed the final order after the disposal of the writ petitions. 25. A priori, the authorities have not violated any stipulation or direction contained in the order dated 10/12.3.1993 passed by the High Court of Delhi and for having proceeded in accordance with law for the period between 25.5.1981 to 13/14.5.1985. 26. Reverting to the decision of the Division Bench of the High Court of Judicature at Bombay in The Jam Shri Ranjitsinghji (supra), similar argument was considered and the High Court, after detailed analysis, concluded that in a case such as the present one, it is not open to the assessee to insist for a notice under Section 11A of the Act, which has no bearing in cases of provisional assessment. The High Court of Judicature at Bombay, while dealing with similar arguments, observed thus:" 33. The question, therefore, to be considered is, firstly, whether circumstances for making provisional assessment existed in the present case and secondly, whether a provisional assessment order was made before clearance of the yarn for captive consumption? 34. With reference to the first cont....
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....ase of the appellant that B-13 bond was executed inadvertently or by mistake. Therefore, having consciously cleared the yarn for captive consumption on provisional assessment basis by executing B-13 Bond as directed by the excise authorities, it is not open to the appellant to contend that there was no order/directions to clear the yarn on provisional assessment basis." 27. The decisions of this Court, to which our attention has been invited by the learned counsel for the appellant, have been considered by the High Court of Judicature at Bombay. The High Court rightly observed that the said decisions have no application to case of provisional assessment followed by a final assessment. While dealing with those decisions, the Court observed thus: " 39. At the outset, it may be noted that the observations made by the Apex Court in all the above cases regarding the issuance of notice under Section 11A of the 1944 Act was in the context of the excise duty that became payable on account of the Apex Court upholding the validity of the amendment to Rule 9 and 49 of the 1944 Rules with retrospective effect from 28.2.1944. Obviously, the said observations were meant to apply to c....
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....asons indicated hitherto, in our opinion, the basis of this submission is illfounded. The authorities have not been nor could be prohibited by the High Court of Delhi from proceeding with the matter in accordance with law. In the present case, all that the authorities have done is to follow the procedure consequent to provisional assessment, by passing a final order and raising demand on the basis of that order. The appellant, as a matter of fact, in terms of the conditional interim order is obliged to discharge its obligation in terms of the bonds executed in Form B-13 and the monthly RT-12 returns filed from time to time for the relevant period. 30. It is not necessary for this Court to dilate on the other observations in the decision of the High Court of Judicature at Bombay in The Jam Shri Ranjitsinghji (supra). For the same reason, it is not necessary for us to deal with the exposition in Metal Forgings (supra). That decision has been pressed into service to assail the finding of the Commissioner of Central Excise (Appeals), who had observed that the order passed to finalize the assessment based on the RT-12 returns itself be treated as Show Cause Notice. It is not necessar....