1991 (1) TMI 137 - SC - Central Excise

Whether Rule 10 or Rule 10A of the Rules was applicable? Held that - In view of the procedure adopted by the appellant in the instant case and the law laid down by this Court in the case of National Tobacco Co. of India Ltd. 1972 (8) TMI 45 - SUPREME COURT OF INDIA it is not possible to take any exception to the finding of the Division Bench in the judgment appealed against that it was a case which fell within the purview of Rule 10A and not Rule 10 of the Rules. In the result we find no merit in this appeal

Summary

Issues:
1. Interpretation of Rule 10 and Rule 10A of the Central Excise Rules, 1944.
2. Determination of whether the case falls under Rule 10 or Rule 10A based on the facts and procedure followed by the appellant.
3. Analysis of the High Court's decision in quashing the order dated 26th August, 1968, and the subsequent appeal.

Analysis:

The Supreme Court analyzed the appeal against the judgment of the Calcutta High Court regarding the recovery of excise duty by the Appellant-Company. The Appellant was accused of maintaining two sets of bills with different discount rates, leading to a discrepancy in excise duty payment. The Assistant Collector issued a notice demanding the recovery of duty based on the actual selling prices of the goods. The Appellant contended that Rule 10, not Rule 10A, applied to the case, arguing that the duty was short-levied due to misstatement. The Single Judge initially quashed the order, but the Division Bench reversed this decision, applying Rule 10A, leading to the appeal before the Supreme Court.

In the appeal, the main contention was whether the case fell under Rule 10 or Rule 10A. The Appellant argued that the duty was short-levied due to misstatement, falling under Rule 10. However, the Division Bench, considering the facts and procedure followed by the Appellant, concluded that Rule 10A was applicable. The Court referred to the N.B. Sanjana case to establish that Rule 10A applies when Rule 10 does not. The Division Bench's decision was based on the understanding that the Appellant's procedure involved a mechanical settlement of duties, not a final assessment, as seen in the National Tobacco Co. of India Ltd. case.

The Supreme Court upheld the Division Bench's decision, stating that the Appellant's procedure indicated a case falling under Rule 10A, where duty was to be paid based on subsequent verification. The Court emphasized that the process was a mechanical adjustment, not a final assessment, as required by Rule 10. Therefore, the appeal was dismissed, affirming the application of Rule 10A and upholding the recovery of duty.