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TMI Blog1983 (10) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... ther and the materials input and output at each shop. This process sheet is reproduced at the end. It shows the inputs and outputs in the coke oven battery, the blast furnace Bessemer Converter, and the rolling mill complex. These different shops of the steel plant take inputs and yield the outputs shown on the right against each shop. It will be seen from this that it is a continuous process each leading to the next till the finished goods steel ingots/steel products are obtained. The learned Counsel for the appellant said that these products have been obtained and have been emerging in the steel plant for years and this fact was well known to the Central Excise authorities, who had their own office in the plant. They were even informed on 18th March, 1976 by a letter from the Assistant Collector of Central Excise, Asansol Division, Burdwan that the coke fell outside the purview of Tariff Item 68 and therefore the question of maintenance of R.G. 1 did not arise. This letter itself was a reply to a query from the steel plant regarding the status of coke and whether any action was needed by the steel plant under the Central Excise laws in respect of that product. It is therefore wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1976. They issued the show cause notice only on 16-11-1977 but purporting to demand duty under Rule 9(2). The facts, however, are against a demand under Rule 9(2) because such demands must be only in respect of clearances made in contravention of Rule 9(1) of the Central Excise Rules. The Central Excise cannot suggest that there has been contravention of Rule 9(1) because the removal and use of the burnt dolomite, blast furnace slag, coke oven gas and others were well-known to Central Excise not only after Item 68 appeared on the tariff on 1-3-1975 but much before that. After all, the processes in which the dolomite, slag, etc. are created and are used in the steel plant were the same from the beginning and were not new phenomena that appeared only on 1-3-1975. The removal therefore cannot be said to have been in contravention of Rule 9(1) and therefore Rule 9(2) cannot be enlisted to help in the recovery of the duty. 4. The learned Counsel for the Department argued that the goods are not intermediates nor are the finished goods assessable under Item 68. Therefore, till the appearance of Notification No. 118/75-C.E. exemption will have to be given only to intermediate goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monthly returns were submitted on 20-2-1976 i.e. within the period as prescribed for assessing the duty on quantity cleared during the period as aforementioned under the provision of Rule 173PP and Rule 9(1) is not applicable in their case. We can take it as a fact, therefore, that the factory submitted its return on 20-2-1976 as claimed. The Assistant Collector however held that Rule 173 PP was only procedural and would not interfere with the provision of Rule 9(1) which prescribes the time and manner of payment of duty for excisable goods removed as also that of 173F and 173G(1) . He ruled that 173PP was for assessment purposes and not with regard to payment of duty. He came to the conclusion that rule as 9(1) was applicable and that this rule prescribes no time-limit for raising the demand and that accordingly, the demands raised under 9(2) were correct in law. However, towards the end of his order, the Assistant Collector says - But considering the facts and circumstances I find that the assessee had cleared those goods with a mistaken conception about the intention of Notification No. 58/75-C.E., dated 1-3-1975 as amended by Notification No. 77/75-C.E., dated 6-3-197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Collector, to which we have already referred. We are not satisfied that there has been removal and clearances in contravention of Rule 9(1) for Central Excise to employ Rule 9(2) to recover the duty. The department is therefore left with only Rule 173PP(10). The close of the financial year for the assessment of these goods was 31-3-1976 and according to the rule, the demand should have been issued not later than 31-3-1977. This demand was issued on 16-11-1977 nearly two years after the close of the accounting year : by any account barred by limitation. Nor can we agree that a demand can be issued only after assessment is made and that the time-limit should be reckoned only from that date. That is to forget that the assessing officer has been given one full year (or six months, if we go by the amendment of August, 1977) within which to assess and, should such assessment make it necessary, to issue a demand. It would be giving too much latitude to the executive officers to say that they can delay the assessment for, say, 10 months whereupon they would start recovery proceedings at any time within one year from such assessment if they discover a short payment. Such a proced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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