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TMI Blog1987 (12) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... he had held that the Collector had jurisdiction to issue the Show Cause Notice demanding duty from the appellants for a period March 1979 to May 1981 and the same is not hit by limitation. 4. The appellants are manufacturers of Hydrochloric Acid which was liable to excise duty under the erstwhile Central Excise Tariff Item 14G. The origin of the dispute is a Show Cause Notice issued on 12-5-1983 by the Superintendent of Central Excise (Technical) Madurai, asking the appellants to show cause to the Collector as to why the assessable value of hydrochloric acid as approved for another manufacturer viz. Mettur Chemicals Industrial Corporation Limited, Mettur Dam, should not be adopted for the hydrochloric acid produced and consumed by the appellants during the period 1-3-1979 to 30-11-1982 and why the differential duty amounting to Rs. 36,18,045.40 for the above period should not be demanded from the appellants under Rule 9(2) of the Central Excise Rules Wt read with Section 11A of the Central Excises Salt Act, 1944 and why a penalty should not be imposed on the appellants under Rule 9(2) and 173 Q of Central Excise Rules 1944 for the contravention of the provisions of Rule 9(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d). It was the appellants contention that this letter was in fact a decision, and since it decided the question of demand over the period specified therein in the Show Cause Notice, the Collector cannot for the same period issue Show Cause Notice. By his letter dated 3-2-1982 concluding the adjudication proceedings the Assistant Collector not only determined the enhanced duty liability for the period 1-3-1979 to 31-5-1981, but also determined the prospective liability from 1-6-1981 onwards. The letter of the Assistant Collector dated 3-2-1982, though described by the Collector in the impugned order as a simple letter, must really be treated and considered as an adjudication order/decision determining the rights of parties, and, according to the appellants, it will necessarily constitute the starting point for any time limit to operate from that date. In such circumstances there cannot be a fresh adjudication on the same issue by the Collector. He can only exercise the powers for review of the Assistant Collector s order. The time limit for such a review was only one year, and the Show Cause Notice issued by the Collector is beyond that period. The learned Counsel further contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Show Cause Notice but had merely accepted the offer of the appellants to pay the amount demanded in settlement in order to keep up good relations. Therefore, the letter of the Assistant Collector is not an adjudication order. Reliance was placed for this purpose in the case of Jaswant Sugar Mills A.I.R. 1963 S.C. 677 wherein the Supreme Court had laid down the criteria to determine whether the order is judicial order or decision. None of this criteria is satisfied by the Assistant Collector s order. There was also no infirmity in the Show Cause Notice issued by the Collector, as by the time the case actually came up for adjudication, the amendment to the Central Excises and Salt Act in December 1985 that only the Collector has the power to invoke the longer period for demanding duty under Section 11A had come into force. Even otherwise, according to the learned S.D.R., it cannot be accepted that prior to amendment of the Act, only the Assistant Collector could determine the demand for duty under Section 11A for a longer period. Such a view would militate against the provisions of Section 33 of the Central Excises Salt Act, 1944 which defines the powers of adjudication of variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, the learned Counsel pointed out, that the position-was rectified by an amendment in 1985 by insertion of Section 12A which is analogous to Rule 6. Therefore, until then provisions of Rule 6 cannot come to the aid of the Department to justify action by Collector instead of the Assistant Collector under proviso to Section 11A. Nor can it be said, according to the Counsel that the proceedings would be covered by the transfer provisions brought out at the time of amendment of Section 11A. Section 8 of the Central Excises and Salt (Amendment) Act, 1985, provides for transfer of pending proceedings before Assistant Collector only to the Collector. In this case, the proceedings were not pending before the Assistant Collector. When it was put to the Counsel that if only the Assistant Collector could act under proviso to Section 11A prior to amendment, and that too only with respect to determination of short levied duty, and if the penalty aspect for contravention were to be adjudicated upon separately, then it may lead to certain anomalies, the reply was that such anomalies might occur in the operation of a statute, and in this connection reference was made to the provisions of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assistant Collector s letter of 3-2-1982, and goes on to state that even while accepting their offer certain investigations had been undertaken by the Assistant Collector regardding the correctness or otherwise of the valuation of Hydrochloric acid produced by the appellants, and that as a result of the investigations conducted, certain points had come to light which had revealed that the appellants had been short accounting the production in the statutory Central Excise accounts and the Show Cause Notice alleges, It is significant to mention here that the assessees voluntarily paid the differential duty on the 1/3rd quantity of hydrochloric acid produced from 1-3-1979 to 31-5-1981 on par with the rate approved for M/s. The Mettur Chemicals Industrial Corporation Limited, Mettur, only with the idea of escapement of duty on the 2/3rd quantity of hydrochloric acid produced, consumed and not shown in the Central Excise records. The Show Cause further contains other charges of wilful mis-statement and goes on to demand duty from the appellants under Rule 9(2) of Central Excises Rules, 1944 read with Section 11A of the Act and for imposing penalty on them inter alia under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if they were in the Act and are to be of the same effect as if contained in the Act. The Tribunal observed in paras 58, 59 60 of the order : The peculiar features of the Central Excises Act further strengthen the view that in the setting of this Act, rules were meant to enjoy a very crucial and significant position. A reading of the Act reveals that it only provided a broad framework and almost all details, and very significant ones at that, were left to be filled up by the Rules, and came into force along with the Act................We further find that Section 37 itself which confers the ruie-making power on the Central Government specifies such important matters to be regulated by the Rules, as ............... provide for remission of duty on any excisable goods, and most significant of all, to exempt and goods from the whole or part of the duty imposed ............... Thus apart from unreserved powers of rule-making conferred by sub-section (2) is even more revealing of the intention that matters of great consequence were left to be determined, governed and regulated by the Rules. It is, therefore, difficult to comprehend that when Rules have been given such immense scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the incorporation, the demands under Rule 9(2) were governed by no time limit; with the incorporation of Section 11A such demands are required to be made within the period specified in Section 11A of the Act by the Proper Officer. It is that the demand should be made within the time limit prescribed by Section 11A - not the process developed in Section 11A that should be followed. Similar views were expressed by this Bench of the Tribunal in the case of Cheran Engineering Corporation v. Collector of Central Excise cited by the learned SDR wherein the Bench observed, There is no doubt a reference to Section 11 A in Rule 9 but that reference is for the limited purpose of specifying the period within which a demand can be made even under Rule 9(2) - in ordinary cases it will be six months from the relevant date as defined in Section 11 A and in cases of suppression etc. it will be 5 years. This is a far cry from the proposition that power exercised under Rule 9(2) is in fact one exercised under Section 11 A. As we have seen the Show Cause Notice dated 12-5-1983 issued to show cause to the Collector is one wherein Rule 9(2) read with Section 11A have been cited. Apart fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , prior to the amendment, by the Superintendent asking the appellants to show cause to the Collector. A further argument has also been put forth by the appellants that the exercise of power for demanding short levy under Section 11A is separate from adjudication proceedings for imposition of penalty and that there could be two separate proceedings for these two separate purposes. If this argument were to be accepted, it would lead to an incongruous position, for example, if in a case the duty as determined by the Asstt. Collector were to go in appeal and decision taken by the Collector (Appeals), and if in the same case, the penalty adjudicated upon by the Collector were to go before the Tribunal, and if a decision contrary to that of the Collector (Appeals) were to be arrived at by the Tribunal, then it would lead to a situation where while the penalty may be confirmed for the offence of evasion of duty by one Appellate authority the demand for duty itself may be set aside by another appellate authority. Surely then such an interpretation has to be avoided. The analogy of the provisions of the Income-Tax referred to by the appellants also would only show that those provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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