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TMI Blog2009 (10) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... Brief facts relevant for the decision are that the appellants were engaged in manufacture of Steel Castings falling under sub-heading No. 8607 of the Central Excise Tariff Act, 1985 at their factory situated at Birlanagar, Gwalior. Pursuant to the intelligence report that the appellants were evading the payment of excise duty on cast articles by wrongly paying concessional rate of duty under Notification No. 223/88, the premises of the appellant were inspected and the investigation was carried out pursuant thereto three show cause notices came to be issued dated 20-9-94 for the period from Nov'89 to Dec'93, another dated 25-11-94 for the period from Jan'94 to Aug '94 and third show cause notice dated 10-3-95 for the period from Sept. 94 to Nov '94. The allegation in the show cause notices against the appellants was that the investigation had revealed that the appellants were subjecting the cast articles to boring, welding, pencil grinding and gauging and therefore, they were not entitled to claim concessional rate of duty in respect of such products by taking resort to Notification No. 223/88. The proceedings were contested by the appellants. 3. After hearing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was subject matter of dispute for the relevant period and therefore, statement properly read would rather support the case of the appellants rather than that of the Department. Being so, the finding arrived at by the Commissioner regarding machining of the cast articles in relation to the product in question is totally perverse. He further submitted that in any case it is a matter of record that at the time the show cause notices were issued, the assessment was yet to be finalized in relation to the product in question and being so, no show cause notice could have been issued on the ground on which the notices in question were issued. According to the learned Advocate cause for initiating such action in terms of Section 11A could arise only after finalization of the assessment and not prior thereto. Mere provisional assessment would not entitle the department to invoke such powers. He also submitted that the appellants had been regularly submitting the returns and all the necessary information to the department regarding the manufacturing activity in the appellant's factory and therefore, the nature of the product manufactured by the appellants was within the knowledge of the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to ascertain the description thereof before removal of the goods and the goods were not produced for such inspection. In the background of these facts according to the learned DR, the Commissioner was justified in arriving at the finding that the cast articles for a relevant period were subjected to machining and therefore, were not entitled to avail the concessional rate of duty under Notification No. 223/88. From fact that undisputedly the appellants were manufacturing cast articles as well as fully machined articles and it is not in dispute that cast articles were subjected to drilling whenever required it was necessary for the appellants to produce sufficient evidence to deny the charge levelled against them and in answer to the sufficient evidence produced by the Department and they having failed to produce the same, no fault can be found with the findings arrived at by the Commissioner. He also drew our attention to the fact that Mr. Bhadoria had neither retracted his statement nor the appellants had been able to produce evidence to disprove his statement. He placed reliance in the decision in the matter of L.D.Textile Industries v. CC, Ahmedabad reported in 2005 (190) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that - "17. Section 11A deals with recovery of duty not levied or not paid or short-levied or short-paid or erroneously refunded. Proceedings under Section 11A have to be commenced with a show cause notice issued within six months from the relevant date. 'Relevant date' has been defined under sub-section 3(ii) to mean in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof. 18. After final assessment, a copy of the order on the return filed by the assessee has to be sent to him. Duty has to be paid by the assessee on the basis of the final assessment within ten days' time from the receipt of the return. No question of giving any notice under Section 11A arises in such a case. It is only when even after final assessment and payment of duties, it is found that there has been a short-levy or non-levy of duty, the Excise Officer is empowered to take proceedings under Section 11A within the period of limitation after issuing a show cause notice. In such a case, limitation period will run from the date of the final assessment. The scope of Section 11A and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot, therefore, be initiated without completing the assessment proceedings. 21. Concededly, in terms of the provisions of the Act and the Rules framed thereunder, the amount becomes payable only in the event, the assessee does not deposit the amount levied within a period of ten days from the date of completion of the order of assessment. A provisional assessment is made in terms of Rule 9B inter alia at the instance of the assessee. Such a recourse is resorted to only when the conditions laid down therein are satisfied, viz., where the assessee is found to be unable to produce any document or furnish any information necessary for assessment of duty on any excisable goods. 22. Whereas provisional duty is levied in terms of Sub-Rule (1) of Rule 9B, final assessment is contemplated under Sub-Rule (5) thereof by reason of which the duty provisionally assessed shall be adjusted against the duty finally assessed and in the event, the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee will pay the deficiency or will be entitled to a refund, as the case may be. Ultimately, thus, the liability of the assessee would depend up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was dealt with by the Larger Bench of the Tribunal in the case of L.D. Textile Industries (supra) wherein it was held that - "26. The learned Advocate for the appellants then argued that Section 28 of the Customs Act is not invokable when the assessments were provisional. It is a fact that out of three Bills of Entry presented at Veraval, two were provisionally assessed. The show cause notice issued by Collector of Customs, Gujarat seeks to demand duty under Section 28. 27. A similar question arose in the case of Reliance Industries Ltd. v. Union of India - 1988 (36) E.L.T. 49 (Bom.). M/s. RIL cleared goods under Project Import Regulations, which were assessed provisionally. Without finalizing the Bills of Entry a show cause notice was issued alleging misdeclaration and demanding differential duty. This was challenged before the Hon'ble Bombay High Court. It was argued before the Court that once the goods were cleared under Section 47 of the Customs Act, there is no scope to issue a show cause notice as such a step would amount to reviewing an order without going through the procedure laid down in Section 130 of the Customs Act. The Court rejected this contention afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be started and concluded even when the assessments were provisional. In the present case two Bills of Entry were provisionally assessed and one finally". 12. In the course of dictation of this order, learned DR drew our attention to the decision of Hon'ble Delhi High Court in Duncans Agro Industries Ltd. v. Union of India & Others reported in 1989 (39) E.L.T. 511 (Del.) wherein the grievance of the manufacturer was that the show cause notices issued alleging contravention of the provisions of Central Excise Rules for evading payment of excise duty in respect of the cigarettes manufactured and cleared from their factory at Agarpara during the period from Sept '1981 to February '83 were in excess of jurisdiction and/or without authority of law in-as-much as that the manufacturer had been paying excise duty on the basis of the provisional assessments pursuant to filing of provisional price lists and there was no finalization of the provisional assessment before issuance of such show cause notice. Dealing with the contention sought to be raised in the matter, Hon'ble Delhi High Court held that - "8. There is no inherent lack of jurisdiction on these allegations. Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the authorities under the Act. May be the provisional assessment is final in respect of some components and others which are the subject matter of the dispute before the Calcutta High Court or as a consequence of the judgments of the Supreme Court in Union of India & Ors. v. Bombay Tyres International Ltd. etc.", [(1983) 14 E.L.T. 1896 = ECR C 663 (SC)] and "Assistant Collector of Central Excise and Others v. Madras Rubber Factory Ltd. and Others", 1987 (27) E.L.T. 553, are to be reopened. It is for these reasons that we leave its determination with the adjudicating authorities, one relating to the fmalisation of the provisional assessments and the other relating to the evasion of the excise duty as detailed in the impugned show cause notices" 13. It is sought to be contended on behalf of the appellants that the law laid down by the Hon'ble Delhi High Court in Duncans Agro Inds. Ltd.'s case cannot be held to be a good law, in view of the fact that the appeal carried against the said judgment was allowed to be withdrawn by the Apex Court with liberty to raise all the contentions before this Tribunal, and that in view of the said liberty granted to the parties, the point de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to be canvassed about lack of authority to issue show cause notices on the ground of pendency of the finaiization of the provisional assessment referred to above cannot be accepted. 15. As regards the second ground which pertains to the merits of the case undoubtedly, the Department apart from the returns filed by the appellants and statement of Shri B.S. Bhadoria has not produced any other material in support of the allegation against the appellants that all the cast articles were subjected to machining during the relevant period and that therefore, they are not entitled to avail benefit of concessional rate of excise duty. 16. It is true that Shri Bhadoria was specifically asked as to whether drilling operation was done on the cast articles. In answer he had stated that whenever in the casting drilling was required, it was being done as per the drawings supplied by the railway authorities. Referring to the said statement, it was sought to be contented on behalf of the respondents that the same is a complete answer to the argument sought to be advanced on behalf of the appellants. We are afraid, the contention is devoid of substance. A testimony of a witness cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced for inspection of the authority and product so produced was cast article and authority was satisfied that it was not subjected to machining. The cross-examination of the Departmental Officer also discloses that though there was a noting under classification list dt. 6-3-92 to the effect that the manufacturer was required to present the product for inspection and though it is now sought to be alleged that the manufacturer had failed to produce such product for inspection, the concerned officer had never made any grievance of any such failure nor had taken steps to ensure production of the articles before the authority for inspection. The Department cannot be helpless if the manufacturer fails to comply with the directions issued by the department. There are sufficient provisions in law to empower the department to take appropriate steps to discourage a manufacturer from adopting modalities to avoid payment of duty. In such circumstances mere failure on the part of the manufacturer to comply with the directions of the authority cannot be sufficient in the facts and circumstances of the case to draw adverse inference against the appellants. 18. Undisputedly there is no ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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