2023 (6) TMI 145 - HC - Central Excise

Rebate on Central Excise on excess production - demand notice barred by time limitation or not - only ground taken in the demand notice is that exemption from duty can not exceed the leviable duty itself. HELD THAT - Supreme Court in the case of Raj Bahadur 1996 (7) TMI 146 - SUPREME COURT has held that notice fails to refer to any of the acts of commission or omission enumerated in the relevant proviso to Rule 10, the notice, given more than six months after the date of the order of refund, is time-barred. Thus failure of the excise tax authority to lay out the grounds for extending the limitation period is a sufficient ground for quashing such demand notices and therefore further proceedings on the basis of such faulty notices are without jurisdiction. The judgment of the Division Bench of Bombay High Court in the case of Someshwar Sahakari Sakhar Karkhana Ltd. 1987 (11) TMI 85 - HIGH COURT OF JUDICATURE AT BOMBAY also does not hold good in the light of aforesaid judgment of Supreme Court in the case of Raj Bahadur 1996 (7) TMI 146 - SUPREME COURT Even otherwise counsel for the tax authority could not produce any final assessment before this Court. Further provisional assessment is provided under Rule 9B of the Rules of 1944. As per the same, instance of provisional assessment arises when (a) the assessee is unable to determine the value of excisable goods and (b) when the asessee is unable to determine the correct classification of the goods. Before approving the provisional assessment, the assessee is also asked to furnish a security bond. In the present case, learned counsel for the authorities could not show any such bond or order approving the provisional assessment - The demand cum show cause notice is issued under Rule 10, but there is no reference to any final assessment carried out by the authorities in support of its demand. In the case of Assistant Collector of Central Excise, Calcutta Division vs. National Tobacco Co. India Ltd. 1972 (8) TMI 45 - SUPREME COURT , a three judges bench of the Supreme Court has held that fullfilment of conditions provided in the Rule 9B of the Rules of 1944 is required to be followed for an assessment to be called as provisional assessment. The demand cum show cause notice dated 08.04.1980 is held to be time-barred and therefore impugned orders dated 26.08.1992, 08.01.1993 and 05.02.1999 passed on the basis of the said time-barred notice are hereby set aside - petition allowed.

Summary

Issues Involved:
1. Time-barred demand notice under Rule 10 of Central Excise Rules, 1944.
2. Nature of the rebate order dated 04.10.1978 - provisional or final.

Summary:

1. Time-barred Demand Notice:
The petitioner challenged the demand notice dated 08.04.1980 for being time-barred under Rule 10 of the Central Excise Rules, 1944. The petitioner argued that the demand notice was issued after eighteen months, exceeding the six-month limitation period prescribed by Rule 10. The petitioner cited the Supreme Court judgment in Raj Bahadur Narain Singh Sugar Mills Ltd. vs Union of India, which held that demand notices issued beyond the six-month period without allegations of fraud, collusion, wilful misstatement, or suppression of facts are time-barred. The Court observed that the demand notice did not reference any such allegations, making it time-barred and without jurisdiction.

2. Nature of the Rebate Order:
The petitioner contended that the rebate order dated 04.10.1978 was final, not provisional. The respondents argued that the order was provisional, thus not subject to the six-month limitation under Rule 10. The Court examined the language of the rebate order and concluded that it was final except for the condition regarding the quantity of sugar cleared. The Court noted that the respondents failed to produce any evidence of a final assessment or a security bond as required under Rule 9B for provisional assessments. Citing the Supreme Court judgment in Assistant Collector of Central Excise vs. National Tobacco Co. India Ltd., the Court emphasized that the conditions for provisional assessment were not met in this case.

Conclusion:
The demand cum show cause notice dated 08.04.1980 was held to be time-barred. Consequently, the impugned orders dated 26.08.1992, 08.01.1993, and 05.02.1999 were set aside. The writ petition was allowed, and the respondents were directed to refund the money deposited by the petitioner in accordance with the law.