TaxTMI 
TaxTMI 
2007 (8) TMI 284
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....tion situated at Paravai Village, Madurai. The company requires Low sulphur Heavy Stock (LSHS) for using the same as the primary fuel in the generation of electricity. Notification No. 3/2001 came to be issued under Section 5-A(1) of the Central Excise Act, 1944 whereby Low Sulphur Heavy Stock (LSHS) and Furnace Oil (FO) were exempted from excise duty for the use of power generation by the electricity undertakings owned by or controlled by the Central Government, or any State Government or any State Electricity Board or any Local Authority or a person licensed under Part II of Indian Electricity Act, 1910, to supply electrical energy or a person who has obtained sanction under Section 28 of Indian Electricity Act, 1910, to engage in the business of supplying electrical energy, except those who produce electrical energy not for sale, but produce it for their own consumption. The petitioner-company applied for exemption from duty under the said Notification and a Registration Certificate was issued by the Competent Authority for procurement of LSHS at concessional duty for generating electricity in favour of The petitioner vide Registration No. AACCM7661 CX M0001 (RC No.1/2001) dated....
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....n the LSHS procured by the petitioner, as detailed in Annexure-B to show cause notice, should not be demanded from the petitioner-company under the provision to sub-section (1) of Section 11-A of the Central Excise Act, 1944 for the period from July 2001 to August 2002. The legality and propriety of the show cause notice is questioned by the petitioner-company in the present writ petition on the ground that the same is arbitrary, illegal and wholly without jurisdiction. It is also alleged by the petitioner that the notice has been issued in mala fide exercise of power only with a purpose of meeting the revenue target on the basis of totally absurd view of the legal position especially when no decision has been taken on the earlier show cause notices issued to the petitioner. 4. W.P. Nos. 40902 of 2005, 40903 and 40904 of 2005 are filed by Samalpatti Power Company (Pvt.) Limited and GMR Power Corporation (Pvt.) Limited respectively. Both the companies are involved in generation of electricity and have been issued Registration Certificates for procurement of LSHS for generation of electricity on concessional duty. Based on the Annexure-I certificate, the companies have been procur....
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....ication dated 30-3-1992 and the entire electricity generated by the petitioners is to be supplied to the Tamil Nadu State Electricity Board (for short TNSEB). 6. The case of the petitioners is that the generation of electricity by the petitioner companies is fully controlled by the TNSEB, inasmuch as the petitioner companies cannot generate electricity, except in terms of the PPAs and in terms of Section 18 of the Electricity Supply Act, 1948, the statutory control regarding operations of generating stations vests with the respective state Electricity Boards. Even the location of the petitioner-companies is stipulated by the TNSEB. The projects of the petitioner-companies have been approved by the TNSEB and in terms of the PPAs, the Government of Tamil Nadu has guaranteed to the companies the dues of the TNSEB under the said projects. The maintenance and unit-wise closure of the units are controlled by the TNSEB and there is no permission to the petitioners to generate and supply to others, except TNSEB as per the PPAs at the expiry of the PPA period, the petitioners' generating companies shall be made over only to the TNSEB. The petitioners, therefore, contend that they are und....
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....48. On the other hand, a careful reading of the said section would disclose that the petitioner-companies are exempted from obtaining licence from the authority appointed under Indian Electricity Act, 1910 by virtue of having drawn the authority directly from another Act of the Parliament namely Electricity Supply Act, 1948. Therefore, it cannot be contended that the petitioner-companies are "deemed licensees" under the State Electricity Board. It is, further, contended that the petitioner-companies are not owned by the Central Government/State Government/Local Authority/State Electricity Board. The petitioners are private limited companies. Neither the Central Government/State Government nor any Local Authority or Tamil Nadu State Electricity Board has any shareholding in the petitioner-companies and therefore, it does not have any control over the companies as such and in terms of PPAs the petitioners are being merely regulated by the TNSEB in respect of power supply to TNSEB. It is contended that the words "controlled by" is preceded by the words "owned by" in the said notification and it has to be construed that the word "controlled" must have a similar meaning to that of the w....
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....Collector of Central Excise, Baroda v. Cotspun Limited, 1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633 the power has been given to the authorities to issue show cause notices, despite the fact that non-levy or non-payment or short levy was on the basis of any approval, acceptance or assessment obviating the need to have the earlier order set aside before issuing the show cause notices. Therefore, the terms of Section 11A as it now stands, will be a complete answer to the petitioners, objection and the validity of Section 11A has not been questioned. He submitted that even otherwise Section 11A and Section 35E(2) are two separate fields and are intended for different purposes. The object of Section 11A is to enable recovery of dues for the period during which, the assessee had cleared the goods on the basis of the approved classification list/price list or on the basis of any approval/acceptance or assessment. As far as Annexure-l certificate is concerned, he submitted that the authorities are required to find out as to whether the same is in the prescribed form, requisite bond had been given and declarations and undertakings were made. The self-assessment procedure and the Annexur....
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....tion 35E and both sections have to co-exist and read harmoniously. It is only where short-levy, short payment, non-levy or non-payment occurs either on account of the approvals relating to rate of duty or valuation, demands can be sustained under Section 11A itself without having recourse to Section 35E. So far as 2001 Rules are concerned, recovery can be made if there is misuse of goods and does not concern with the person who has purchased the goods. 12. In Collector of Central Excise, Baroda v. Cotspun Limited (supra), the Constitution Bench of the Supreme Court held as follows :- "The levy of excise duty on the basis of an approved classification list is the correct levy, at least until such time as to the correctness of the approval is questioned by the issuance to the assessee of a show-cause notice. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such. The levy of excise duty on the basis of an approved classification list is not a short levy. Differential duty cannot be recovered on the ground that it is a short levy. Rule 10 has then no application." 13. Parliament has amended Section 11A of the Ce....
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....ary to overcome certain judicial pronouncements." 15. Further, Section 110 of the Finance Act validating actions taken under Section 11A provides as under : "110. (1) Any notice issued or served on any person under the provisions of Section 11-A of the Central Excise Act during the period commencing on and from the 17th day of November, 1980 and ending on the date on which the Finance Act, 2000 receives the assent of the President (hereinafter referred to as the said period) demanding duty on account of non-payment, short payment, non-levy, short-levy or erroneous refund within a period of six months or five years, as the case may be, from the relevant date as de fined in clause (ii) of sub-section (3) of that section shall be deemed to be and to always have been, for all purposes, validly and effectively issued or served under that section, notwithstanding any approval, acceptance or assessment relating to the rate of duty on or value of, the excisable goods by any Central Excise officer under any other provision of the Central Excise Act or the Rules made thereunder. (2) Any action taken or anything done or purporting to have been taken or done under Section 11-A of the ....
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.... therefore, not correct to contend that the word "such" indicates only such short-levy which has been held to be non-existent in Cotspun having regard to Rule 173B. Such short-levy or non-levy may be on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods. Thus, any approval made in terms of Rule 10, in the event, any mistake therein is detected, would also come within the purview of the expression "such short-levy or short-payment". Such notice is to be served on the person chargeable with the duty which inter alia has been short-levy or short-paid. 51. The procedure laid down under Rule 173B of the Rules has specifically been included in the Act. Furthermore, by reason of the amended Act a provision has been made for reopening the approved classification lists. It is a procedural provision in terms whereof statutory authorities are required to determine as to whether the earlier classification was correctly done or not. The said authority upon giving an opportunity of hearing the parties may come to the conclusion that decision on the approval granted need not be reopened and even if the same is reopened, the reaso....
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....en if there is non-levy, non-payment or short-levy or short-payment or erroneous refund on the basis of any approval, acceptance or assessment. The basic period is increased from six months to one year and the larger period continues to be five years for fraud, suppression, wilful misstatement etc. The intention of the Legislature was that recovery can be enforced for a period of one year or 5 years as the case may be notwithstanding any approval, acceptance or assessment of duty under the provisions by the Assessing Officer. It is well settled that the statute has to be read as a whole to find out the real intention of the Legislature. In Sultana Begum v. Prem Chand [1977 (1) SCC 373] two Judge Bench of the Supreme Court held as follows : "On a conspectus of the case-law indicated above, the following principles are clearly discernible : (1) It is the duty of the Courts to avoid a head-on clash between two sections of the Act and to construe the provisions which appear to be in conflict with each other in such a manner as to harmonise them. (2) The provisions of one section of a statute cannot be used to defeat the other provisions unless the court, in spite of its effort....
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.... (S.C.) = 2002 (9) SCC 515] the Supreme Court has observed that Sections 35E and 11A operate in two different fields and are invoked for different purposes. Different time limits are, therefore, set out therein. Therefore, the Court rejected the contention that recovery of excise duty cannot be made pursuant to an appeal filed after invoking the provisions of Section 35E, if the time limit provided in Section 11A has expired. It was observed that to so read the provisions, would be to render Section 35E virtually ineffective, which would be impermissible. 22. In Commercial Taxation Officer v. Rajasthan Taxchem [2007 (209) E.L.T. 165 (S.C.) = 2007 (2) SCALE 120], the respondent was engaged in the business of manufacture of polyester yarn and for the said purpose, it purchased diesel and used it for manufacturing electricity by D.G.-sets. The respondent claimed a benefit under Section 10(1) of Rajasthan Sales Tax Act, 1994 claiming that diesel purchased is a raw material for the manufacture of the ultimate final product-polyester yarn. Under the notification issued under Section 10(1) of the said Act, purchase of raw material for manufacture of final product is entitled to a conce....
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....ed or rejected by the competent authority, by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices are without jurisdiction and is liable to be struck down. 24. As regards, the issue of limitation, the question is whether the benefit of longer period of limitation under the proviso to Section 11A is available to the Department. In order to avail the benefit of longer period of limitation, the department has to establish wilful suppression of fact. Proviso to Section 11A reads as under :- "Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid 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, Collector of Central Excise five years." 25. From the admitted facts of this case, there can be no doubt that none of the requirem....