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TMI Blog1995 (2) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice is dated 9-4-1987 and it is issued by the Respondent No. 2 in that Civil Rule. 4. In Civil Rule No. 1072 of 1987, the show cause notice is dated 9-10-1987 and it is issued by the Respondent No. 4, the Additional Collector of Central Excise and Customs, Shillong. 5. In all the Civil Rules, the show cause notice is Annexure-A to the writ application. Out of the total eight allegations made in the impugned show cause notice, first four allegations (a) to (d) pertain to the question of valuation under Section 4 of the Act and particularly the addition of certain expenses incurred by the petitioners towards the price of goods sold both at ex-factory as well as at depots/branches. The rest of the allegations i.e. (e) to (h) pertain to the classification of the goods under Section 3 of the Central Excises Act. In short, the allegations are as follows : (a) The company had charged and realised additional amount of prices in the name of consolidated amount over and above the basic prices from different independent buyers against ex-factory sales for different periods. (b) The company had charged and realised additional amount in the name of different heads, over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 by invoking Section 11A is impermissible and not maintainable as the entire matter of classification and valuation were in the thorough knowledge of the Respondents and therefore the invocation of the period of demand beyond six months of the Show Cause Notice is not legally permissible. (iii) The issuance of the Show Cause Notice is under the teeth and deliberate disregard of the consistent judicial pronouncement made by the Hon ble Supreme Court as also in wilful violation of the express statutory provisions. Once the existence of ex-factory sale is accepted, the mandate of the Apex Court is that only Section 4(1)(a) is attracted for the purpose of valuation and not Section 4(2) which had been held to be only a residuary provision. (iv) Neither in the Central Excise Act nor under the Central Excise Rules, the Respondents are empowered to issue purported Show Cause Notice as both the price lists and classification lists were approved and finalised under Rule 173B and Rule 173C after issuance of specific Show Cause Notices, granting personal hearing and adjudication orders having been passed. v(a) The disputes referred to in the said paragraphs pertain to the classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emical Test Report the matter of classification be decided. The required test was carried and samples were forwarded to the National Test House, Alipur, Calcutta, who vide its Test Report affirmed the stand of the petitioner that the product Kitply conforms to the parameters of Marine Plywood IS-7-10-1976. The whimsical allegation of mis-classification of KITPLY made in paragraph (f) of the Show Cause Notice after the aforesaid Adjudication Order/Appeal order is therefore absolutely uncalled for. v(d) The allegation of mis-classification of shuttering plywood made in sub-para (g) of the Show Cause Notice is likewise thoughtless. The said issue of classification of shuttering plywood has been adjudicated upon and all three authorities, the Assistant Collector, Collector (Appeals) and finally by the higher authority under the Central Excises Act, i.e. CEGAT vide its order No. 84/1989-D, dated 10-1-1989 has upheld the contention of the petitioner. It was declared that shuttering plywood was different from structural plywood in Trade Parlance and hence the department s case on classification is required to be dismissed. Copy of the order No. 84/1989-D, dated 10-1-1989 is enclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3rd at page 153 that the said statement of the petitioner in the price list was always in the knowledge of the department. The Break-up Statement of such expenses (statement of the consolidated charges) has been referred to at page 148. Relying on the judgment of the Hon ble Supreme Court in the Bombay Tyre International and after verifying both the factory sales bills and the bills of the Depot/Branches the matter has been decided. The petitioner company has annexed a chart as Annexure-1 page 123 and additionally an abridged chart was also submitted in the course of arguments as to how the entire issue of the valuation for the different price lists and for the different periods has been examined and adjudicated upon. It is significant to point out that the said orders were passed almost after one year of the impugned show cause in the present Writ Petition. Not only that price lists were approved and final assessments have been made on the basis of the said Adjudication Orders. (viii) In the writ petition the petitioner company has made specific pleading to this effect from paragraph 21 page 22 and referred to the said price lists which have been finally approved pursuant to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rita and incriminating documents/records were seized on 24/25-2-1984 which clearly established evasion of duty. The principal basis on which the writ petition has been structured is that the impugned show cause notice intends to re-open various issues of classification and valuation which are not res integra having been adjudicated upon and decided in favour of the assessee. The Respondents, inter alia, beg to submit as follows : (i) Before averting to the facts of the case the respondents submit that the writ petition is pre-matured in as much as, the writ petition is not maintainable. Ordinarily this Hon ble Court in exercise of its inherent power under Article 226 does not interfere with a show cause notice unless it can be shown that the authority lacks jurisdiction. It is not a case where the respondents lack jurisdiction to issue the impugned show cause notice. The basic ingredients for invoking the power under proviso to sub-section (1) of Section 11A of the Act of 1944 are, there must be wilful mis-statement and suppression of fact with an intent to evade payment of Central Excise duty. In the instant case both the ingredients being present as would be evident from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible deductions as is sought to be done in the instant case. The above view has been upheld in Bombay Tyre International case [reported in 1983 (14) E.L.T. 1896 (S.C.) = (1984) 1 SCC 467]. That apart the selling organisation through whom the assessee s goods are being sold are all `related persons within the meaning of Section 4(4)(c) of the Act of 1944 and, as such, Section 4(1)(a) is not applicable. (iii) With regard to the allegations contained in paras (e) to (h) of the impugned show cause notice the petitioner/assessee s contention is that the same pertains to classification and the same having once adjudicated upon it is not open to the revenue to reopen the same. A careful reading of the said allegations contained in paragraphs (e) to (h) would reveal that the assessee by suppressing material fact and wilful mis-statement availed exemption of duty by declaring `Kitply Marine grade as `Marine Grade Plywood . Secondly, the assessee removed shuttering plywood under the garb of Marine plywood and thereby availed concessional rate of duty applicable to Marine plywood. Thirdly, the assessee removed prime quality of Commercial Plywood under the garb of defective grades. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. v. The Collector of Central Excise, Vadodara. 11. In 1989 (40) E.L.T. 276 (SC) = (1989) 2 SCC 127 (supra) it is observed that Section 11A basically provides for recovery of duties not levied or short-levied or short-paid or erroneously refunded. The Supreme Court in paragraph 9 has pointed out as follows : In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short paid, or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability. 12. In 1988 (38) E.L.T. 573 (SC) = 1989 Supp (1) SCC 135 (supra) the Supreme Court in paragraphs 4 and 5 pointed out that - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this point is not res integra. Reference in this connection may be made to the following cases : (i) 1985 (22) E.L.T. 729 (Cal.) (Union Carbide (India) Ltd. v. Assistant Collector of Central Excise ) (ii) 1986 (23) E.L.T. 318 (Del.) (Ajanta Iron and Steel Company Pvt. Limited v. Union of India and Ors ). In 1985 (22) E.L.T. 729 (supra), a single Judge of the Calcutta High Court in paragraph 13 of the judgment has pointed out as follows : Rule 173C of the Central Excise Rules upon a proper construction is intended to give finality to an approved price list. In 1986 (23) E.L.T. 318 (supra), A Division Bench of Delhi High Court in paragraph 8 of the judgment has pointed out as follows : Once the list has been approved by one of the Assistant Collectors it becomes an approved list and accordingly the excise authorities can only take recourse to some other provisions of the Act. In the case in hand, the price list contains all the particulars, yet they were not made approved instantly. Specific particulars were additionally supplied. The show cause notices were issued and adjudication orders were passed after examination of the sale by the Excise authority in all the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnex-E/145 Information regarding marketing pattern supplied. Annex-A/46 Exact break-up was given of consolidated charges. Annex-F/152A Price list 61 (1st May, 1981) containing consolidated charges approved. Annex-F/152B - Price list 62 (1st May, 1981) containing consolidated charges approved. 16. In 1988 (33) E.L.T. 684 (Bom.) (Mahindra Re-Rolls Industries and Another v. Union of India and Ors.) a Division Bench of the Bombay High Court considered different provisions of the Act and the Rules and pointed out that once the price list is approved, the same cannot be reopened as sought to be done in the instant case. This decision is also an authority that the preliminary objection cannot be taken up by the Respondents that the writ application is not maintainable as there is alternative remedy. The Bombay High Court in paragraph 5 of the judgment pointed out as follows: The preliminary objection taken to the maintainability of the petition, is that the mere issue of a show cause did not warrant the filing of this petition. The petitioner should have replied to the notice, appeared at the enquiry and tried to convince ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for recovery of duty short levied. In interpreting a fiscal statute it is the duty of the court to examine the substance and not merely the form of the language and should mould the taxing statute so far as possible to achieve the legislative intent and also to meet with the change of social needs. It is no longer duty of the court to interpret a statute, strictly to help the evasion. Court s duty is to construe in a manner which will suppress the evasion of duty. This contention of Sri Choudhury is devoid of merit inasmuch as already I have found that the action of the Respondents does not have any support in law." 20. Under Section 11A proviso without establishing collusion or establishing intention to evade payment of duty, the Excise officer cannot invoke this proviso and this proviso is to be construed strictly and the burden to establish the situations visualised by the proviso is on the Department, to repeat the pronouncement of Supreme Court in 1994 (74) E.L.T. 9 (SC) = 1994 (4) SCALE (M/s. Tamil Nadu Housing Board v. Collector of Central Excise, Madras and Ors.) - When the law requires an intention to evade payment of duty then it is not mere failure to pay duty, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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