COLLECTOR OF CENTRAL EXCISE, BARODAversusKOSAN METAL PRODUCTS LIMITED

       COLLECTOR OF CENTRAL EXCISE, BARODA
                                                                           A
                        v.
          KOSAN META.L PRODUCTS LIMITED

                         OCTOBER 26, 1988

 [SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.]

      Central Excises and Salt Act 1944/Central Excise Rules 1944--
Section 11-A/Rules 8, JO & 11-Assessee-Manufacturing .LPGF
valves and regulators-Brass rods prepared by another company-'Set-
ofj' duty availed of on the brass rods-Later found that set-off duty was
incorrectly allowed-issue of recovery notice-Validity of.
                                                                           c
       The respondent-company manufactures L.P.G.F. valves and
regulators falling under Tariff Item 68 of the Central Excise Tariff. It
was receiving brass rods manufactured by another company of Bombay
and availed of the set-off of duty as stipulated under Notification No.
178 . 77 dated 18th June, 1977. The brass rods were assessed under T.I.    D
68 during the period from 24th July, 1978 to 31st March, 1979. With
effect from !st April, 1979 brass rods manufactured by the Bombay
Company were assessed under T.I. 26A(l)(a).

      The Superintendent of Central Excise Range XV, Surat, noticed
that the respondent-company had received brass rods, the goods other E
than falling node~ Tariff Item 68 and had availed of the incorrect set-off
of duty under the said notification. The respondent-Company was
required to show cause as to why the duty amounting to Rs.51,261.88
should not be recovered from it under Rule I 0 and why penalty should
not be imposed on it under Rule l 73Q. In reply, the respoi1dent-
Company contended that the notice under Rule 10 had not been issued p
to it within time, that there had been no fraud, collusion or wilful
mis-statement or suppressio!' of facts on its part and that it had cor-
rectly availed of the 'set-off' of duty.

     The Assistant Collector confirmed the demand for duty, and the
appeals against his orders were rejected.                                  G

      The Tribunal while allowing the claim of the respondent, took the
view that the classification lists had been finalised by the Bombay Col-
lectorate, and the Assistant Collector, Surat had no authority to
re•open those assessment.
                                                                           H
                                  537
        538         SUPREME COURT REPORTS                {1988] Supp. 3 S.C.R.

              Dismissing the appeals of the Revenue, this Court,

              HELD: J. Section 11-A of the Central Excises and Salt Act,
        1944 provides that when any. duty of excise has not been levied or
        paid or has been short-levied or short-paid or erroneously refunded,
        a notice may be served on the concerned person within a period of six
    B   months. [541G]

             In the instant case, the time taken for the service of the notice is
        beyond a period of six months. Therefore, it does not appear that a
        proper notice was issued. [541Gl

             2. Merely on the ground of short-entry in RT-12, Rule 10
    c   would not he attracted. When in such circumstances, a demand is made
        under the Act for recovery theh ~uch demand must be under s. II-A of
        the Act. [540A-B}

              Good Shepherd Rubber Company's case (1978 ELT 66) aflkmed.
    D
              3. There is no ground which supports the allegation that there
        had been fraud, collusion or any wilful mis-statements or suppression of
        facts on the part of the respondent. Rule II-A, therefore, clearly applies
        to the facts of the instant case. [542BJ      ·

    E         CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
        l5i 1-72 (NM) of 1988.

                From the Order dated 17. I0.1987 of the Customs Excise and
        Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 66 &
\       (J 7 of 1987 -BI in Order No. 405 & 406 of 1984 Bl.
    F
            M.K. Banerjee, Solicitor General, R.P. Srivastava and Mrs.
        Sushma Suri for the Appellant.

              The Judgment of the Court was delivered by

    G          SABYASACiil MUKHARJl, J, These are appeals under Section
        3SL(b) of the Central Excises and Salt Act, 1944 (hereitiafter referred
        to as 'the Act') arising out of the orders dated 1th October, 1987 of the
        Customs Excise and Gold (Control) Appellate Tribunal (hereinafter
        referred to as 'the tribunal'). Revenue is the appellant herein. The
        respondent-company manufactures LP.G.F. valves and regulators
    H   falling under tariff Item 68 of the Central Excise Tariff. The res-
               COLLECTOR OF C.E. v. KOSAN METAL [MUKHARJI, J.]             539

       pondent-company was receiving brass rods manufactured by M/s. A
       Bhandary Metal Corporation, Bombay and availed set off of duty as
       stipulated under Notification No. 178/77 dated 18th June, 1977. The
       brass rods were assessed under T.I. 68 during the period from 24th
       June, 1978 to 3 lst of March, 1979. With effect from !st April, 1979
       brass rods manufactured by. M/s. Bhandary Metal Corporation,
       Bombay were assessed under T.I. 26A(l)(a), as mentioned in the B
       relevant G.P. I of the manufacturer. It was, however, noticed by the
       Superintendent of Central Excise Range XV, Surat that the res-
       pondent-company had received brass rods, the goods other than fal-
       ling under Tariff Item 68 and had availed incorrect set off of duty
       amounting to Rs.51,261.88 under the said notification issued under
       Rule 8(i) of the Central Excise Rules, 1944 ('Rules' for short) towards C
       payment of duty on excisable goods falling under Tariff Item 68 and
     · cleared during the period from 24th July, 1978 to 31st March, 1979. A
       show-cause notice dated 19th January, 1980 was issued to the
       respondent-company by the Superintendent of Central Excise Range
       XV, Surat requiring it to show cause as to why the duty amounting to
       Rs.51,261.88 should not be recovered from it under Rule 10 of the D
       Rules and as to why the penalty should not be imposed on it un1er
       Rule 1730. The notice was issued on the ground that the brass rods
       were classified under T.I. 26A(l)(a) of the Tariff and, therefore, the
       respondent-company was not eligible to set off of duty under the said
       notification. In reply, the respondent-company contended that the
       said notice under Rule 10 had not been issued to it within time and that E
       there had been no fraud, collusion or wilful mis-statement or suppres·
       sion of facts on its part and that it had correctly availed of the set off of
     duty.

           The Assistant Collector of Central Excise, Surat after consider-
     ing the matter confirmed the demand for duty by his order dated 9th F
     February, 1981. The case of the Revenue was that the respondent-
     company had utilised wrong set off of duty on the raw materials falling
     under T.I. other than Tariff Item 68 and the Range Superintendent,
     Surat had pointed out short payment of duty involving Rs.38,460.12 on
     RT -12 returns for the month of April 1979 to August, 1979. The de·
     mand of Rs.38,460.12 was confirmed by the Assistant Collector by his G
     order dated 20th February, 1981. The appeals against the aforesaid
     orders flied by the respondent were rejected. The respondent, there·
     after, filed two appeals before the Tribunal. The Tribunal referred to
     the facts of the case set out hereinbefore.

             'rhe main question that was necessary to be decided in this case    H



~1
    540        SUPREME COURT REPORTS                [1988] Supp. 3 S.C.R.

    was whether proper notice had been issued. On the facts of the case,
A
    it does not appear that proper notice was issued. Merely on the ground
    of short entry in RT-12, Rule 10 would not be attracted. The same
    view appears to have been taken by the Kerala High Court in Good
    Shepherd Rubber Company's case (1978 ELT 66). When in such
    circumstances, a demand is made under the Act for recovery then such
B   demand must be under Section 11-A of the Act. The said section
    provides as follows:

               "11-A. Recovery of duties not levied or not paid or short-
               levied or short-paid or erroneously refunded.-{!) When
               any duty of excise has not been levied or paid or has been
               short-levied or short-paid or erroneously refunded, a Cent-
c              ral Excise Officer may, within six months from the relevant
               date, serve notice on the person chargeable with the duty
               which has not been levied or paid or which has been short-
               levied or shot-paid or to whom the refund has erroneously
               been made, requiring him to show cause why he should not
D              pay the amount specified in the notice:

                     Provided that where 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 mis-statement .or suppression of facts, or contraven-
E              tion 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, (as if for the words "Central Excise Officer",
               the words "Collector of Central Excise", and) for the
               words "six months", the words "five years" were substi-
F              tuted. Explanation-Where the service of the no tic~ is
               stayed by an order of a Court, the period of such stay shall
               be excluded in computing the aforesaid period of six
               months or five years, as the case may be.

               (2) The Assistant Collector of Central Excise or, as the
G              case may be, (the Collector of Central Excise) shall, after
               considering the representation, if any, made by the person
               on whom notice is served under sub-section(!), de(ermine
               the amount of duty of excise due from such person (not
               being in excess of the amount specified in the notice) and
               thereupon such person shall pay the amount so deter-
B              mined.



                                                                                till
        COLLECTOR OF C.E. v. KOSAN METAL [MUKHARJI, J.]              541

           (3) For the purposes of this section-
                                                                            A
           (i) "refund" includes rebate of duty of excise on excisable
           goods exported out of India or on excisable materials used
           in the manufacture of goods which are exported out of
           India;
                                                                            B
           (ii) "relevant date" means,-

           (a) in the case of excisable goods on which duty of excise
           has not been levied or paid or has been short-levied or
           short-paid-

           (A) where under the rules made under this Act a monthly C
           return, showing particulars of the duty paid on the excis-
           able goods removed during the month to which the said
           return relates, is to be filed by a manufacturer or producer
           or a licensee of a werehouse, as the case may be, the date
           on which such return is so filed;                            D

           (B) Where no monthly return as aforesaid is filed, the last
           date on which such return is to be filed under the said rules;

           (C) in any other case, the date on which the duty is to be
           paid under this Act or the rules made thereunder;          E

           (b) in case where duty of excise is provisionally assessed
           under this Act or the rules made thereunder, the date of
           adjustme11t of duty after the final assessment thereof;

           (c) in the case of excisable goods on. which duty of excise F
           bas been erroneously refunded;. the date of such refund." ·

      The said section provides that when any duty of excise has not
been levied or paid or has been short-levied or short-paid or erron-
eously refunded, a notice may be served on the concerned person
within a period of six months. In the instant case, the time taken for G
the service of the notice is beyond a period of six months. The Tribunal
took the view that the classification lists had been finalised by the
Bombay Collectorate and the Assistant Collector, Surat had no
authority to re-open those assessments. It referred to a decision of it in
Mis. Jay Industries, Hyderabad v. Collector of Central Excise,
Hyderabad, (1984] SCR 100. In the aforesaid view of the matter, the H
    542        SUPREME COURT REPORTS                 [1988] Supp. 3 S.C.R.

A   Tribunal all~wed the claim of the respondent.·

          We have considered the contentions urged and do not find any
    ground which supports the allegation that there had been fraud collu-
    sion or any wilful mis-statement or suppression of facts on th'< part of
B   the respondent. Therefore, section 11-A clearly applies to the facts of
    the instant case. In that view of the matter, the appeals were correctly
    allowed by the Tribunal. On careful examination of the facts of the
    case and the contentions raised, we are of the opinion ihat there is no
    merit in the appeals before us. The appeals, therefor~, fail and are
    accordingly dismissed. However, in view of the facts and the circum-
    stances of the case, there will be no order as to costs.
c
    A.P.J.                                               Appeals dismissed.


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