1965 (1) TMI 3 - HC - Central Excise

Summary

Issues Involved:
1. Provisional Assessment of Goods
2. Applicability of Rule 9B of the Central Excise Rules, 1944
3. Validity of Demand Notices under Rule 10 and Rule 10A of the Central Excise Rules, 1944
4. Time Limitation for Demand of Short-levied Duty

Issue-wise Detailed Analysis:

1. Provisional Assessment of Goods:
The primary question was whether the goods were assessed on a provisional basis. The petitioner company contended that the assessments were final and not provisional. The court noted that the abstracts of the Personal Ledger Accounts did not indicate that duties were imposed on a provisional basis. The court found it significant that the respondent No. 2 Inspector had marked certain A.R. 1 forms as "Provisional" after the fact, which was not originally the case. This action by the Inspector suggested an attempt to retroactively impose a provisional status on the assessments.

2. Applicability of Rule 9B of the Central Excise Rules, 1944:
The petitioner argued that Rule 9B, which deals with provisional assessment, was not applicable as there was no request for provisional assessment, nor was there any execution of a B-10 or B-13 Bond at the material time. The court examined Rule 9B and found that the circumstances required for its application-such as the assessment involving two or more alternative bases or a request for provisional assessment-were absent. The bond executed by the petitioner on September 26, 1962, was found to be irrelevant to the assessments for the period from July 1961 to April 1962.

3. Validity of Demand Notices under Rule 10 and Rule 10A of the Central Excise Rules, 1944:
The court had to determine whether the demands for differential duty could be justified under Rule 10 or Rule 10A. Rule 10 deals with recovery of duties short-levied due to inadvertence, error, or misstatement, with a time limit of three months. Rule 10A is a residuary provision for recovery of sums due to the government where no specific rule applies. The court concluded that the case fell under Rule 10 because the alleged short-levy was due to misstatements regarding the value of the goods. Therefore, Rule 10A was not applicable.

4. Time Limitation for Demand of Short-levied Duty:
The court noted that under Rule 10, any demand for short-levied duty had to be made within three months from the date the duty was paid or adjusted in the owner's account. Since the demands were made beyond this three-month period, they were not sustainable. The court referenced its previous ruling in National Tobacco Co. of India Ltd. v. Assistant Collector of Central Excise, which supported this interpretation.

Judgment:
The court made the Rule absolute, quashing the notices of demand and restraining the respondents from enforcing them. The current account of the petitioner company was to be readjusted if any debits had been made in respect of the sums covered by the notices. A Writ of Certiorari and a consequential Writ of Mandamus were issued accordingly. No order as to costs was made.