1995 (4) TMI 153 - AT - Central Excise

Issues Involved:
1. Competency of the Assistant Collector to issue a notice under Rule 10 for demanding repayment of an erroneous refund.
2. Classification of printed cartons as products of the printing industry for exemption under Notification No. 55/75 as amended.

Issue-Wise Detailed Analysis:

1. Competency of the Assistant Collector to Issue Notice under Rule 10:

The appellants contended that the Assistant Collector was not competent to issue a notice under Rule 10 for demanding the repayment of the erroneous refund. They argued that such an order could only be reviewed under Section 35A of the Central Excises & Salt Act, 1944. The Tribunal, however, found this contention to be without merit. It referenced the Supreme Court decision in Ballarpur Industries Ltd. v. Assistant Collector of Customs & Central Excise, which clarified that show cause notices under Rule 10 or Section 11A can be issued for recovery of duties or erroneous refunds within the prescribed time frame. The Tribunal also noted that the Larger Bench in Atma Steels held that proceedings initiated under a validly subsisting rule could continue despite its repeal or substitution. Therefore, the Tribunal concluded that there was no infirmity in the show cause notice issued under Rule 10.

2. Classification of Printed Cartons:

The second issue was whether printed cartons should be classified as products of the printing industry, making them eligible for exemption under Notification No. 55/75 as amended. This issue was referred to a Larger Bench, which found that the matter was covered by the Supreme Court decision in Rollatainers Ltd. v. Union of India. The Supreme Court had held that printed cartons are products of the packaging industry, not the printing industry. Consequently, the Tribunal upheld this classification.

Additional Arguments and Rulings:

The appellants argued that the classification once approved could only be changed through review proceedings and that the Assistant Collector could not modify the approved classification list. They cited various cases, including J.K. Synthetics Ltd. v. Union of India, to support their claim that the department cannot capriciously change its stand on classification. However, the Tribunal, referencing the Supreme Court's decision in Ballarpur Industries Ltd., rejected this argument, stating that the department could issue show cause notices for past dues under Section 11A.

The appellants also contended that Rule 10 had been deleted without a saving clause and that the General Clauses Act could not be applied to rules. The Tribunal dismissed this argument, relying on the Larger Bench decision in Atma Steels, which held that proceedings could continue despite the repeal of the original provision.

Lastly, the Tribunal addressed the appellants' claim that the show cause notice lacked reasons for the department's change in stance. The Tribunal found that the Assistant Collector had provided clarifications and communicated with the appellants, who failed to respond. Therefore, there was no violation of the principles of natural justice.

Conclusion:

The Tribunal found no merit in the appellants' contentions and upheld the orders of the Assistant Collector and the Collector (Appeals). The appeals were rejected, affirming the recovery of the erroneous refund and the duty demanded for the period from January 1979 to July 1979.

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