TaxTMI 
TaxTMI 
1986 (4) TMI 70
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....em No. 18(III) of the First Schedule to the Act. The relevant entry is as follows : "18. III. Cellulosic spun yarn : yarn, in which man-made fibre of cellulosic origin predominates in weight and, in or in relation to the manufacture of which, any process is ordinarily carried on with the aid of power - not containing any (i) fibres of non-cellulosic origin.  man-made Six paise per count per Kilogram. Containing man-made (ii) of non-cellulosic origin.  fibres Eighteen rupees per Kilogram There is thus a steep increase in excise duty if the cellulosic spun yarn contains any man-made fibres of non-cellulosic origin. At the material time, the effective rate under Tariff Item 18(III)(ii) was Rs. 9/- per Kilogram by virtue of a Notification No. 75/82-C.E., dated 28-2-1982, where by excise duty in excess of Rs. 9/- per Kilogram was exempted. (c) Under Rule 173B of the Central Excise Rules, 1944 (h....
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....4s, 3/34s." The Excise officers took another sample on 22-10-1983, vide Test Memo No. 3/83 and sent it to the Chemical Examiner. His report Ex. R-4 disclosed that the sample was of spun yarn composed of man-made fibres of cellulosic and non-cellulosic origin. The results of the test conducted by the Chemical Examiner were communicated to the petitioner company. (g) On 7-2-1984, respondent No. 5 the Superintendent of Central Excise, informed the petitioner company, vide letter Ex. R-6, dated 7-2-1984, that it was evident from the test result reports received from the Chemical Examiner that yarn containing man-made fibres was being manufactured by the petitioner company and hence, excise duty under Tariff Item No. 18(III)(ii) and not under Item No. 18(III)(i) was payable by the petitioner company. The petitioner company was, therefore, directed not to clear such goods without payment of duty in accordance with Tariff Item No. 18(III)(ii). Regarding excise duty already paid on goods cleared, the petitioner company was directed to make good the deficiency in duty, forthwith. On the same day, respondent No. 5, the Superintendent, Central Excise, sent a notice Ex. R-7 to the petiti....
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....the fact that a stay order dated 9-2-1984 was passed by the High Court in Miscellaneous Petition No. 104 of 1984, recovery of the aforesaid amount would not be enforced till the stay order was operative. The Assistant Collector also passed an order Ex. R-11 on the same day in pursuance of the notice Ex. R-9 sent to the petitioner company to show cause why the approval given to the classification list be not modified. By that order, the Assistant Collector modified the approval earlier accorded to the classification list submitted by the petitioner company, holding that excise duty on the goods produced by the petitioner company was liable to be paid under Tariff Item No. 18(III)(ii). The Assistant Collector, however, directed that in view of the interim order passed by the High Court in Miscellaneous Petition No. 104 of 1984, the petitioner company would continue to make payment of excise duty at the rate, at which it was making payment till then, so long as the interim order passed by the High Court was operative. (k) Aggrieved by these two orders Ex. R-10 and R-11 passed by the Assistant Collector, the petitioner company preferred two appeals under Section 35 of the Act, befor....
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.... open to the Collector, after considering the facts and circumstances of the case, to give adequate opportunity of hearing to the petitioners including an opportunity of adducing evidence and decide the appeal on merits." (m) After the aforesaid order was passed by the High Court, the Collector proceeded to hear the appeal and fixed the appeal for hearing on 7-2-1985. A notice Ex. R-13 dated 17-1-1985 was sent to the petitioner company informing it that the appeal would be heard on 7-2-1985, when the authorised representative of the company should appear together with all evidence, documentary or otherwise, in support of the case. A number of adjournments sought by the petitioners were granted. The petitioners were given opportunity of hearing and of adducing evidence. The petitioner company, however, did not adduce any evidence but contended that the appeal had become infructuous in view of the order passed by the High Court in Miscellaneous Petition No. 104 of 1984. Ultimately, the Collector by the order annexure 'I' dated 27-5-1985 disposed of the appeal filed by the petitioners. In that order, the Collector referred to the judgment of the High Court in Miscellaneous Petit....
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....pril, 1985, be quashed. 4. A preliminary objection was raised on behalf of the respondents to the maintainability of this petition under Article 226/227 of the Constitution on the ground of existence of an alternative remedy. It was urged that the remedy of an appeal to the Appellate Tribunal, under Section 33B of the Act, was available to the petitioners. In reply, it was contended that as the order passed by the Collector was in utter disregard of the directions of this Court and the statutory provisions, the appellate Tribunal was not the proper forum where the petitioners could assail the impugned order. Now, Section 35B of the Act no doubt provides for the remedy of an appeal from an order passed by the Collector under Section 35A of the Act and the normal statutory remedy should ordinarily be pursued unless it is likely to be too dilatory to give quick reasonable relief. However, in Miscellaneous Petition No. 104 of 1984, [1985 (19) E.L.T. 329 (M.P.)], filed by the petitioners, they had obtained some relief though they had directly approached this Court. Hence, when the petitioners again directly approached this Court and their petition was entertained, at this stage when ....
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.... of the Act is mandatory if it is proposed to recover from a person any excise duty, which has not been levied or paid or has been short-levied or short-paid or erroneously refunded. A demand to pay such duty can be made only when a show cause notice, as prescribed by Section 11A(1) of the Act is given and the representation, if any, made by such person is considered. Now, the question as to whether any show cause notice, as prescribed by Section 11 A of the Act, has or has not been given, will arise only in a case, where a demand for excise duty not levied or not paid or short-levied or short-paid or erroneously refunded is being made by the Excise authorities. Let us, therefore, first examine what has been determined by the Collector by his impugned order. There were two appeals pending before him, arising out of two distinct orders passed by the Assistant Collector Ex. R-10 and Ex. R-11. By order Ex. R-10, the Assistant Collector had determined excise duty short-levied for the period from 15-8-1983 to 6-2-1984. By the other order Ex. R-11, the Assistant Collector modified the approval of the classification list submitted by the petitioner company under Rule 173B of the Rules. As....
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....ts prescribed by Section 11 A of the Act. No provision of the Act or the Rules was brought to our notice, which prescribed a particular procedure for modifying the approval of the classification list submitted by an assessee. Therefore, the order passed by the Collector affirming the order Ex. R-11 passed by the Assistant Collector cannot be struck down on the ground that the Assistant Collector or the Collector had failed to comply with the provisions of Section 11 A of the Act before modifying the approval of the classification list. 8. The next question that arises for consideration is whether before modifying an approval of the classification list, the Assistant Collector is required to give notice to the person concerned to show cause against the action proposed by him in conformity with the principles of natural justice. In our opinion, though giving of a notice is not prescribed by any provision of the Act or the Rules, the principles of natural justice require that the person to be affected by any action of a statutory authority, should have opportunity to represent his case before such action is taken. That opportunity was undoubtedly afforded in the instant case becaus....
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....o show cause against the proposed order. ... .... ... .... .... ... ..." The aforesaid provision cannot be construed to mean that before deciding any appeal from any order passed by an Excise Officer, a duty is cast on the Collector to give notice, as required by Section 11 A of the Act. The proviso to sub-section (3) of Section 35A of the Act only lays down that in deciding any appeal, if the Collector finds that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, no order requiring the appellant to pay such duty shall be passed unless the appellant is given notice, within the time-limit specified in Section 11A, to show cause against the proposed order. In the instant case, the impugned order passed by the Collector does not require the petitioners to pay any duty not levied or paid, short-levied or short-paid or erroneously refunded. The Collector has, by the impugned order, merely affirmed the order passed by the Assistant Collector modifying his approval of the classification list. In these circumstances, the contention that before deciding t....
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....ly with the directions given by the High Court, the Collector should have given a show cause notice, as is required by Section 11A(1) of the Act, before proceeding to decide the appeal and that by his failure to do so, the impugned order was vitiated. 12. To appreciate the contention advanced on behalf of the petitioners, it is necessary to briefly refer to the decision given by the High Court in Miscellaneous Petition No. 104 of 1984. In that petition as amended, the High Court was required to deal with two prayers made on behalf of the petitioners : (1) that the demand, for a sum of Rs. 26,47,749.39 P made by the Excise authorities on account of short-levy for the period 15-8-1983 to 6-2-1984 be quashed and (2) that the modification made by the Assistant Collector, vide his order Ex. R-11, in the approval of the classification list submitted by the petitioners under Rule 173B, be quashed. Now, with regard to the first prayer, the High Court held that the demand of Rs. 26,47,749.39 P could not be sustained in law. It was, therefore, observed in para 27 : "In our opinion, to that extent only, this petition deserves to be allowed." The fact that the petitioners were granted....
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.... Court in Miscellaneous Petition No. 104 of 1984, cannot be upheld. 14. On behalf of the petitioners, it was also contended that the High Court had quashed the order Ex. R-11 passed by the Assistant Collector along with the notice Ex. R-9 preceding that order, given by the Assistant Collector to the petitioners, to show cause why the approval of the classification list be not modified. It was, therefore, urged that the appeal before the Collector had become infructuous and that proceedings for modification of the approval of the classification list should have been commenced by the Excise authorities, de novo, by giving a show cause notice afresh. It is difficult to accept this contention. It cannot be lost sight of that in spite of the fact that a prayer to quash Ex. R-9 and R-11 was made by the petitioners, the High Court did not grant that relief but on the contrary, directed the Collector to dispose of the appeal pending before him from the order Ex. R-11 passed by the Assistant Collector, on merits. Had the High Court quashed the order of the Assistant Collector Ex. R-11 along with the notice, Ex. R-9, then there would have been no occasion to direct the Collector to decide....
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....al preferred by the petitioners from the order Ex. R-11 was pending. In the explanatory note, however, the order Ex. R-11 passed by the Assistant Collector modifying the approval of the classification list is quashed, with the following observations in para 8 of that note : "The orders Annexures R-10 and R-11 are quashed, so also the demand dated 7-2-1984 (Annexure 'A'). The classification lists filed by the petitioners and the approvals granted thereon shall remain intact so long as a proper opportunity of showing cause is not afforded to the petitioners and the same is not cancelled in accordance with law." 17. Now if the approval of the classification list was to remain intact and the order Ex. R-11 modifying that approval was quashed, then the appeal from the order Ex. R-11 preferred by the petitioners before the Collector had become infructuous and could not be decided on merits, as directed by the Division Bench by its order already referred to, and with which Gyani J. had expressed his concurrence. There is thus conflict between the orders, one signed by both the Judges and styled as 'the order of the Court' and the other signed by one Judge alone and styled as 'explan....
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....on that the impugned order passed by the Collector deserved to be quashed as it affirmed the order Ex. R-11, which was already quashed by Gyani J., cannot be upheld. 18. No other ground was urged to assail the order annexure 'A' passed by the Collector. In our opinion, therefore, no case has been made out for quashing the impugned order. 19. The next question that arises for consideration is whether the notice dated 6-6-1985 sent by the respondents calling upon the petitioner Company to pay differential duty from March, 1984 to April, 1985, deserves to be quashed. That demand is admittedly not preceded by any notice, as required by sub-section (1) of Section 11A of the Act. On behalf of the respondents, it was contended that in view of the interim order passed in this petition staying the operation of the order passed by the Collector in appeal, notice under Section 11 A of the Act could not be served. It is true that by an interim order passed in this petition, the operation of the order passed by the Collector was stayed. But the fact remains that the demand made by the notice dated 6-6-1985 for the amount of differential duty from March, 1984 to April, 1985 does not comply....