1983 (8) TMI 63 - HC - Central Excise

Revision of Appellate order justified, if it was not based on reasons but was passed in a cavalier fashion - Strictures against the Appellate Collector

Summary

Issues Involved:
1. Jurisdiction under review and scope of reclassification.
2. Demand for excise duty between 16-12-1967 and 5-4-1968.
3. Applicability of Section 11A for limitation period.

Issue-wise Detailed Analysis:

1. Jurisdiction under Review and Scope of Reclassification:
The petitioner argued that the review jurisdiction under Section 36(2) of the Central Excises and Salt Act, 1944, does not extend to a complete reconsideration of the matter afresh. The primary question was whether the exemption under Notification No. 156 of 1965 was applicable. The petitioner contended that the Government of India improperly extended its review jurisdiction by classifying the products as 'synthetic resins,' which was not the original issue. The court noted that the Government of India's review was within its jurisdiction as it pertained to the classification of the products under Item 15A(i) of the Central Excise Tariff. The court found that the Government of India was correct in its classification of the products as synthetic resins, thus making them ineligible for the exemption.

2. Demand for Excise Duty Between 16-12-1967 and 5-4-1968:
The petitioner contended that there should be no demand for excise duty for the period between 16-12-1967 and 5-4-1968, as the Assistant Collector's initial order allowed the clearance of goods free of duty. The court agreed with the petitioner, noting that the Assistant Collector's subsequent order on 5-4-1968, which raised the demand, did not appropriately address the earlier exemption. The court held that the petitioner was not liable for excise duty for the goods cleared during this period due to the Assistant Collector's failure to follow proper legal procedures.

3. Applicability of Section 11A for Limitation Period:
The petitioner argued that if the case involved a fresh assessment, Section 11A of the Act, which prescribes a limitation period, should apply. The court clarified that the Government of India was not introducing a new ground but was merely classifying the petitioner's products under the correct category. However, the court noted that the Assistant Collector's failure to exercise proper legal procedures resulted in the petitioner not being liable for excise duty for the goods cleared between 16-12-1967 and 5-4-1968. The court emphasized that the negligence of the Assistant Collector led to the loss of revenue and that the petitioner's argument regarding the limitation period under Section 11A was not applicable in this context.

Conclusion:
The court concluded that the Government of India acted within its jurisdiction in classifying the petitioner's products as synthetic resins, making them ineligible for the exemption under Notification No. 156 of 1965. However, the petitioner was not liable for excise duty for the goods cleared between 16-12-1967 and 5-4-1968 due to the Assistant Collector's procedural errors. The writ petition was allowed only to the extent of exempting the petitioner from excise duty for this specific period, and in other respects, it was dismissed.