1989 (1) TMI 365 - AT - Central Excise

Summary

Issues Involved:
1. Limitation in respect of demands for duty.
2. Validity and effect of retrospective amendments to Central Excise Rules 9 and 49.
3. Provisional assessments and their finalization.
4. Appropriation of payments made under court orders.

Issue-wise Detailed Analysis:

1. Limitation in Respect of Demands for Duty:

The primary issue was whether the demands made by the Department were within the limitation period as prescribed under Section 11A of the Central Excises and Salt Act. The appellants argued that the demands were time-barred, while the Department contended that the period during which the High Court's stay order was in effect should be excluded.

Analysis:
- The appellants stopped paying excise duty on yarn captively consumed following the Delhi High Court's judgment dated 16.10.1980, which held that no excise duty could be levied on such yarn.
- The Department issued show cause notices dated 4.5.1981 and 5.6.1982 demanding duty for periods from 6.11.1980 to 31.3.1981 and 6.11.1980 to 19.2.1982, respectively.
- The Tribunal held that the show cause notices dated 4.5.1981 were within the limitation period and did not lapse with the issuance of the 5.6.1982 notice. The notices were valid and effective as if the amendments to Rules 9 and 49 were in force during the material period.
- The Tribunal also held that the Delhi High Court's interim order dated 12.8.1981 restrained the Department from levying and collecting duty, and thus the period of such stay should be excluded in computing the limitation period under Section 11A.

2. Validity and Effect of Retrospective Amendments to Central Excise Rules 9 and 49:

The Supreme Court upheld the retrospective amendments to Rules 9 and 49 by Section 51 of the Finance Act, 1982, which made excisable goods removed for captive consumption liable to duty.

Analysis:
- The Supreme Court's judgment in J.K. Spinning & Weaving Mills Ltd. upheld the retrospective amendments, making the goods captively consumed within the factory liable to duty.
- The Tribunal noted that the amendments were given retrospective effect from 28.2.1944, and any action taken before 20.2.1982 under the Central Excises Act and Rules was deemed valid.
- The Tribunal held that the retrospective amendments were subject to the provisions of Section 11A, meaning demands for duty had to be made within the prescribed limitation period.

3. Provisional Assessments and Their Finalization:

The appellants contended that the assessments during the period from 1.4.1981 to 5.12.1981 were not provisional as there was no order for provisional assessment or bond executed under Rule 9B.

Analysis:
- The Tribunal found that there was no order of provisional assessment or bond executed as required under Rule 9B.
- The endorsements on RT 12 returns did not make the assessments provisional, and a post facto endorsement in 1985 could not retroactively make past assessments provisional.
- The Tribunal held that the assessments were not provisional, and the show cause notice of 5.6.1982 was not barred by limitation for the period from 1.4.1981 to 5.12.1981.

4. Appropriation of Payments Made Under Court Orders:

The appellants argued that the payments made in compliance with the Supreme Court's interim order dated 15.3.1983 should not be appropriated against time-barred demands.

Analysis:
- The Tribunal held that the amounts paid by the appellants in compliance with the Supreme Court's order were not to be arbitrarily adjusted against earlier periods.
- The payments made for the period from 20.2.1982 to 15.3.1983 were correctly made and should not be adjusted against dues for earlier periods.
- The orders of the lower authorities directing the apportionment of payments for earlier periods were quashed, and the amounts were to be treated as payments for the period 20.2.1982 to 15.3.1983.

Final Orders:
- Appeal No. E/2353/88-D: Dismissed.
- Appeal No. E/2354/88-D: Dismissed.
- Appeal No. E/2355/88-D: Allowed.
- Appeal No. E/2356/88-D: Allowed in terms of para 73(d).