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TMI Blog1986 (7) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Collector of Central Excise, Divn. IV confirmed the demand raised under the show cause notice so far as it related to the period subsequent to 19-1-76 but withdraw the demand in respect of the balance. On appeal, the Appellate Collector under his order, dated l4-5-79 set aside the order of the Assistant Collector. Subsequently, the Govt. issued a notice, dated 2-5-1980 under Section 36(2) of the Central Excises and Salt Act, mentioning that they were tentatively of the view that the order-in-appeal was not legal, proper and correct. They proposed thereunder to set aside the order of the Appellate Collector and to pass such other order as may be deemed fit. It is the proceedings so initiated that are now before us, on transfer, as Appeal No. 1138/80. 2. On 15-6-77, the Assistant Collector of Central Excise, Divn. IV issued a show cause notice to the respondents M/s. Shiv Kumar Ashok Kumar and three others. It was mentioned that M/s. Shiv Kumar Ashok Kumar had removed cotton fabrics processed by them from their premises without filing classification and price lists for such products and without determining and paying the proper central excise duty thereon and without cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducible therefrom with reference to the facts in the other appeal. 6. The contention of Shri Lakshmikumaran is that the show cause notice, dated 2- 5-1980 is governed by the provisions of proviso 3 to Section 36(2) of the Central Excises and Salt Act, as it then stood, and if the said provisions are applied the show cause notice will have to be discharged as barred by time. The provisions of Section 36(2) as it then stood are extracted below for convenience :- 36(2) : The Central Govt. may, of its own motion or otherwise, call for and examine, the record of any proceeding in which any decision or order has been passed under Section 35 or Section 35A of this Act for the purpose of satisfying itself as to the correctness legality or propriety of such decision or order and may pass such order thereon as it thinks fit : Provided that no decision or order shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence: Provided further that no proceedings shall be commenced under this sub-section in respect of any decision or order (whether such decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess of what had been demanded under the original notice itself. 9. In appreciating this contention for the Department, a few more facts are relevant. In 1964, the Collector of Central Excise, Bombay had in March of that year passed an order in the case of M/s. Niranjan Lal Dalmia that no duty was leviable on the canvas cloth manufactured by them since no power was used in the process of the said manufacture. The respondents M/s. Shiv Kumar Ashok Kumar claimed that they are the successors in interest of M/s. Niranjan Lal Dalmia and that their process of manufacture of canvas cloth is the same as of the predecessor. They had, therefore, claimed that in view of the order of the Collector passed in March, 1964, the demand of short levy as raised in the notice, dated 19-1-77 could not be enforced. The Appellate Collector had accepted this argument and had held that, in view of the said order of the Collector earlier, the Assistant Collector (who passed the order on 19-5-77) had not acted within his jurisdiction. It is for this reason that Shri Sachar had contended that the order in appeal (proposed to be set aside under the review show cause notice) did not deal with the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector did not deal with the demand for short levy or the enforceability of the demand. May be the demand was set aside on the ground that the Assistant Collector had no jurisdiction to confirm the demand in view of the earlier order of the Collector passed in 1964. It would not mean that the Appellate Collector, under his order, did not deal with the demand for short levy or the quantum thereof or the enforceability thereof. As noticed earlier, the situation in the Thiveni Sheet Glass Works case was different since neither under the order in original nor under the order in appeal was any dispute gone into with reference to any demand for payment of duty for any particular period or for any particular amount. This had been made clear in para 30 of the judgment where the High Court had observed that the order, dated 14-10-77 did not contain any direction for refunding any amount to the petitioner. They observed that the effect of the order of the Appellate Collector was merely to set aside the order of the Assistant Collector purporting to modify the price list No. 1/79 though, as a consequence of the Appellate order, it may have been necessary for the proper officer to reconside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and hence they were liable to pay normal duty and, therefore, the amount quantified by the Assistant Collector was payable as short levied duty. In the circumstances, the mere fact that the Govt. did not in so many words express that they proposed to restore the order of the Assistant Collector would not take the review notice outside the purview of the 3rd proviso. 13. The other contention of Shri Sachar, as earlier mentioned, was that the 3rd proviso will be attracted only in cases where duty in excess of the duty demanded under the original show cause notice was to be demanded under the review show cause notice. Shri Sachar is not in a position to cite any authority of a decided case in support of such a contention. It appears to us that the contention so stated would be legally untenable. The purport of a proceeding under Section 36 is to set aside the decision or order passed under Section 35 or Section 35A, on the ground that the same was not correct, legal or proper. In cases of adjudication following a notice raising a demand of duty not levied or short levied, it would not be open to the adjudicating authority to pass an order finally to confirm any demand in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not indicate any amount therefor. Hence, if penalty is enhanced under the Appellate order, it would not amount to exceeding the terms of the show cause notice itself. Even in respect of confiscation, it may be noted that the provision in the proviso to Section 35(1) speaks of enhancement of the quantum of confiscation above what had been adjudged in the order in original and not in excess of what had been indicated in the show cause notice that preceded the adjudication. In the circumstances, we are unable to accept the contention of Shri Sachar that the provisions of Section 36(2) contemplated a case wherein the Central Govt. could demand, under the said notice, any duty in excess of what had been originally demanded under the original show cause notice. 17. Another argument submitted by Shri Sachar in this connection was that the object underlying the Central Excises Salt Act is collection of revenue by way of excise duty and that levy of penalties or fines were only secondary objectives. He contended that, viewed in that background, it would be anomolous to hold that a larger period of limitation is prescribed with reference to proceedings involving levy of penalty or fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note in this connection that a similar argument had in fact been raised on behalf of the Deptt. in the case of M/s. Steel Rolling Mills of Hindustan (P) Ltd. (1984 ECR 1527) but had been rejected by the Tribunal. The Tribunal did so by following the decision of the Delhi High Court. 19. When Shri Lakshmikumaran cited the above decision, it was enquired of him whether the review show cause notice in question could not be held to be within time with reference to the extended period of 5 years mentioned in Section 11A. He submitted that such an argument will have to be rejected for the reasons mentioned in the judgment of this Tribunal in the case of M/s. Military Dairy Farm v. Collector of Central Excise, Pune (1985 Vol. 19 E.L.T. 148) and that, in any event, this question would be academic in the circumstances of the present case since the Assistant Collector himself in his order had vacated the demand except for the shorter period of six months on the ground that the facts necessary to invoke the larger period of limitation are not established. 20. Therefore, on a careful consideration of the submissions of both side we are of the opinion that in so far as the review show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the order of confiscation and levy of penalty, cannot be said to be out of time. No doubt, he claimed that he would seek to distinguish the decision but we are not convinced with such an argument. 22. Accordingly, we hold that so far as A.No. 1138/80-D is concerned, the review show cause notice concerned (dated 2-5-80) will have to be discharged as barred by limitation but that so far as appeal No. 1059/80-D is concerned, the show cause notice (dated 21-8-80) will have to be held to be hit by the bar of limitation only with reference to the portion relating to the demand for duty but that the show cause notice cannot be held to be barred by limitation with reference to other portions. 23. Accordingly, we order that appeal No. 1138/80-D be dismissed but that appeal No. 1059/80-D be posted for hearing on merits with reference to the part dealing with confiscation and levy of penalty. 24. [Order per : G. Sankaran, Vice President (T)]. - I have perused the order proposed by learned Brother Raghavachari. I feel, however, that we do not have to discuss and record a finding on the question whether the Central Government could, in a notice under Section 36(2) of the Act, demand ..... 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