9911796707
TMI Blog1984 (11) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... een classifying the product by paying the duty in accordance with the Tariff Item 18-III(i) of the said Act. 3. That respondent No. 4 by a demand notice dated 7th February, 1984 (Annexure A) without any prior notice or hearing, raised a demand asking the petitioners to pay within 10 days a sum of ₹ 26,47,749.39 on the assumption that the product cleared by the petitioners during the period from 15th August, 1983 to 6th February, 1984 was covered under Tariff Item No. 18-III(ii); that on the same day i.e. 7th February, 1984 vide Annexure B respondent No. 4, Superintendent of Central Excise, Ujjain sent a memo to the effect that the product classified by the petitioners is in reality an item falling under Tariff Item No. 18-III(ii) and shall be cleared only on payment of duty accordingly. The petitioners have therefore, filed this petition challenging the said order. 4. The grievance of the petitioners has been that no prior notice or any opportunity of hearing was afforded to the petitioners before issuing the memo Annexure B and, therefore, the demand and the order applicable to future clearance is against the principles of natural justice and is clearly without jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notices on 11-2-1984 back-dating them as if they have been issued on 9/10-2-1984 and 9-2-1984 which have been annexed to the returns filed by the respondents as Annexures R. 8 and R. 9. Notices were also issued to the employees of the petitioners for recording their statements. 7. On 18-2-1984, before the time given for reply to the show cause notice has expired, petitioner No. 2, who was also served with a show cause notice applied for extension of time as per Annexure D. On 22-2-1984 the statement of petitioner No. 2 was recorded under Section 14 of the Central Excises and Salt Act. On the following day statements of the employees were also recorded. In reply to the show cause notice, the petitioners while refuting the allegation submitted that since the demand had already been issued there was no question of showing cause against its issuance and that as the matter was sub judice it would not be proper to continue the hearing on the show cause notices; that on 2-3-1984 the petitioners wrote a letter to respondent No. 3 requesting him for adjournment of personal hearing in view of the pendency of this petition in this Court or to grant time to bring a stay order from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 4 also informed the petitioners by letter dated 7-2-1984 Annexure R. 6 and thus sent a demand notice calling upon the petitioner to deposit ₹ 26,47,749.39 being the differencial amount of duty for the period 15-8-1983 to 6-2-1984. Thus, the procedural irregularity caused as a result of the demand No. 1/84 under Section 11A stood rectified with the issue of the show cause notice on 9/10-2-1984, Thus according to the respondents an appealable order having been passed by the Assistant Collector of Customs the petitioner had an alternative remedy of filing an appeal which they have not availed of and consequently the facts in question being also disputed, this writ petition deserves to be dismissed on this short ground alone as it also cannot be denied that the respondent No. 3 had the jurisdiction to entertain and decide the matter; which is based on the report of the Chemical Examiner; that the petitioners have not disputed the results of the Chemical tests. They have therefore, prayed that this petition deserves to be dismissed. 9. The learned counsel for the petitioner submitted that the respondents have made the demand for the excise duty for the period 15-8-1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No. 3 has already made up his mind on the basis of which he has made a demand for enhanced duty with retrospective effect. He also submitted that according to rule 9-B of the Rules framed under the Act, only provisional assessment of duty can be made. But once the classification has been finalised, it cannot be changed or modified in this manner. 11. He further submitted that as no chance of hearing was given to the petitioners, principles of natural justise have been violated because even though the circular issued by the Central Excise Department says that one month s time should be given to give reply to the show cause notice, the same has been flouted in the present case on the ground that the petitioners were seeking adjournment on flimsy ground to while away the time anyhow. In any case, according to the learned counsel no past levy of tax under Rule 173-B could be made as that Rule is prospective. Further according to the learned counsel for the petitioner the provisions of Rule 173-B are not at all attracted to the facts of the present case as the form submitted by the petitioner showing the ingredients of yarn was treated and classified as covering under Item 18-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Ltd. v. Assistant Collector of Central Excise, Madras); 1983 Excise Law Times, 34 (Indian Organic Chemicals Ltd. v. Union of India) , 1983 Excise and Customs Reporter, 1888 (M/s. Nuchem Plastics Ltd., Faridabad v. The Collector of Central Excise, Delhi); 1983 Excise Law Times, 84 (Cosmic Radio v. Union of India); AIR 1957 Madras 496; AIR 1958 Punjab 327; AIR 1965 SC 1375; 1959 Calcutta Weekly Notes 162 and 1963 Excise and Customs Reporter 728. 14. The learned counsel for the respondents on the other hand submitted that the Annexure R.I dated 7-7-1983 which is the form supplied by the petitioners, the word mentioned therein is waste and not man-made fibre . He, therefore, submitted that it was for the petitioners to give the necessary details in the said form about their product and as they are not in conformity with the specification given in Item 18-III-Cellulosic spun yarn the petitioners cannot be allowed to contend that the product is covered by Item 18-111(i) and not by Item 18-III (ii) and admittedly when it is not in conformity with the specification mentioned in item 18-111(i), the contention of the petitioners that waste should be treated as covering the item of ya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court. 15. So far as the principles of natural justice are concerned, he submitted that no doubt before making a modification no notice was given to the petitioners, but the mistake has been rectified by giving a show cause notice subsequently and, therefore, the petitioners now cannot be allowed to urge that no such opportunity was given to them as would be clear from the tenor of their letter addressed to respondent No. 3 and in support of his various submissions he placed reliance on the decisions reported in AIR 1963 SC 1319; 1981 (8) Excise Law Times 114 (Bawa Potteries Mehrauli v. Union of India); 1982 (10) Excise Law Times 112 (Patel Prabhudas Purshottamdas v. Union of India); 1984 Excise Law and Customs Reporter 1509 (M/s. Indian Textile Paper Company Ltd. v. The Collector of Central Excise, Madurai), 1983 (14) Excise Law Times 2506 (Ganesh Metal Corporation v. Collector of Central Excise, Madras); 1984 Excise Customs Reporter 1022 = 1984 (16) ELT 228 (Reichhold Chemical Ltd, Madras v. The Govt. of India Revenue, Ministry of Finance, New Delhi): 1979 Tax Law Reporter 2454; 1979 (4) Excise Law Times 402; and AIR 1983 SC 603. 16. The learned counsel for the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fibres of non-cellulosic origin. Six paise per count per kilogram. (ii) containing man-made fibres of non-cellulosic origin : Eighteen rupees per kilogram. origin : Eighteen rupees per kilogram. Explanation I. - Count, means the size of grey yarn (excluding any sizing material) expressed in English Count. Explanation. - For multiple fold yarn, count means the count of the basic single yarn. Explanation III. - Where two or more of the following fibres, that is to say, (a) man-made fibre of cellulosic origin; (b) cotton; (c) wool or acrylic fibre, or both; (d) silk (including Bimlipatam jute or mesta fibre); (e) jute (including Bimlipatam} (f) man-made fibre of non-cellulosic (jute or origin, other than acrylic fibre); mesta fibre; (g) flax; (h) ramie; In any yarn are equal in weight, then, such one of those fibres, the predominance of which would render such yarn fall under that sub-item or Item (hereafter in this Explanation referred to as the applicable sub-item or Item), among the sub-items and Item Nos. 18-III, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India or on excisable materials used in the manufacture of goods which are exported out of India - (ii) relevant date means :- (a) In the case of excisable goods on which duty of excise has not been levied or paid or has been short levied or short-paid. (A) where under the rules made this Act a monthly return, showing particulars of duty paid on the excisable goods removed during the months to which the said return relates, is to be filed by a manufacturer or producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed; (B) where no monthly return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (C) in any other case, the date on which the duty is to be paid under this Act or the rules made thereunder; (b) in case where duty of excise is provisionally assessed under this Act or the Rules made thereunder, the date of adjustment of duty after final assessment thereof; (c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund. Section 35E is as follows : Section 35E. Powers of Board or Collector of Central Excise t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any chemical or any other test for the purpose of assessment of duty thereon; or (c) where an assessee has produced all the necessary documents and furnished full information for the assessment of duty, but the proper officer deems it necessary to make further inquiry (including the inquiry to satisfy himself about the due observance of the conditions imposed in respect of the goods after their removal) for assessing the duty, the proper officer may, either on a written request made by the assessee or on his own accord, direct that the duty leviable on such goods shall, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally at such rate or such value (which may not necessarily be the rate of price declared by the assessee) as may be indicated by him, if such assessee executes a bond in the proper form with such surety or sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed. (2) * * * (3) The Collector may permit the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, that on account of any inquiry to be made in the matter or for any other reason to be recorded in writing there is likely to be delay in according the approval, he shall either on a written request made by the assessee or on his own accord, allow such assessee to avail himself of the procedure prescribed under rule 9B for provisional assessment of the goods. (3) Where the assessee disputes the rate of duty approved by the proper officer in respect of any goods, he may, after giving an intimation to that effect to such officer, pay duty under protest at the rate approved by such officer. (4) If in the list approved by the proper officer under sub-rule (2) any alteration becomes necessary because of - (a) the assessee commencing production, manufacture or warehousing of goods not mentioned in that list, or (b) the assessee intending to remove from his factory any non-excisable goods not mentioned in that list, or (c) a change in the rate or rates of duty in respect of the goods mentioned in that list, or, by reason of any amendment to the First Schedule to the Act, a change in the Item number and sub-item, the assessee shall likewise file a fresh list or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the subject matters of the tax and the rates at which it has to be taxed. The term assessment on the other hand is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax or duty on account of particular goods or property. 21. Section 3, which is included in Chapter II of the said Act, relate to levy and collection of duty, under the heading Duties specified in the First Schedule to be levied. Sub-section (3) of the said section provides that different tariff values may be fixed; (a) for different classes or descriptions of the same excisable goods; or (b) for excisable goods of the same class or description (i) produced or manufactured by different classes of producers or manufacturers; or (ii) sold to different classes of buyers: Provided that in fixing different tariff values in respect of excisable goods falling under sub-clause (i) or sub-clause (ii), regard shall be had to the sale prices charged by the different classes of producers or manufacturers or, as the case may be, the normal practice of the wholesale trade in such goods. This makes it clear that different tariff values may be fixed for different classes or desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... temperence exposition of an ambiguous provision in the Act especially when they are to have effect as if enacted in the Act. It is for this reason that Rule 10 has now been incorporated in the main statute as Section 11A referred to above. Levy is a word of very wide import. The term imposition is narrower and is generally used for the levy of a tax or duty by legislative provisions indicating the subject matter of the tax and the rate at which it has to be taxed. The term levy is, however, wider and includes imposition and all stages up to assessment. 25. However, in our opinion. Section 35 of the Act does not prohibit taking of original proceedings, such as proceedings for reassessment under Section 11A of the Act or proceedings for penalty under Rule 173Q on the ground that the assessee by contravening certain provisions or by false statements evaded payment of duty. The original proceedings under Section 11A and the penalty and the best judgment proceedings under Rule 173-Q can be taken even after assessment under Rule 173-1 becomes final in appeal. Therefore, it cannot be contended that once the classification is made, the Assistant Collector, Central Excise had no ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the disputed question of fact as to whether on the basis of the report of the Chemical Examiner the product manufactured by the petitioner falls under item 18-111(i), or (ii) now that the petitioners have already filed an appeal before the Collector of Central Excise, it will be open to the Collector after considering the facts and circumstances of the case, to give adequate opportunity of hearing to the petitioners including an opportunity of adducing evidence and decide the appeal on merits. The Collector of Central Excise is a high public officer. It cannot be assumed that he would be biased and would not decide the appeal in an impartial manner. At least the petitioners have no justification to assume without any reason bias at the hands of the Collector. It must be realised that when the legislature in its wisdom and with all solemnity makes statutory provisions for appeals and revisions it is the duty of the courts to respect it and enforce it. Right of the departmental appeal and revision has been provided and that remedy should not normally be by-passed. 29. In the result this petition succeeds partly and is allowed to the extent that the demand for recovery of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the Act, which in turn depends on the reports of chemical analysis and about which there is a lot of controversy, and (c) the conduct of the respondents. In my view, no doubt in a writ petition the conduct of the parties is not merely relevant but at times materially important. However, much can be said on either side. So leaving aside the question of conduct for a while, this order is essentially confined to the first facet, which is indicated above. Subsequently amended petition contains much of controversial facts, which may even necessitate recording of evidence and it cannot be disputed that where basic facts are disputed, and complicated questions of law and facts depending on evidence are involved, the Writ Court is not the proper forum for seeking the relief, but in this petition there is no dispute with regard to the basic facts. The dispute is essentially of a highly scientifically technical nature as regards the contents and components of yarn, which is again based on reports of Chemical analysis, a highly controversial fact. Therefore, without adverting to such facts, the basic facts as admitted by the respondents in their return are reproduced for facilitating ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing their actions. 34. Section 11-A, as it existed in the form of a rule. in the earlier stages before being engrafted in the Act itself, envisaged and prescribed the necessity of a show-cause notice before any action being taken thereunder. A show-cause notice is not an empty formality. A show-cause notice, as of necessity, envisages something more than a mere notice. Where the law requires giving of a show-cause notice, it postulates the opportunity of showing cause to be adequate. It is not merely enabling a party to make a mere representation, because enabling a mere representation to be made is not the same thing as giving of an opportunity of showing cause. The expression showing cause connotes an opportunity of leading evidence in support of one s allegations and contravering the charges or allegations as are made against the person called upon to show cause. A mere opportunity of submitting an explanation is not enough. Showing cause inherently involves an opportunity to lead evidence in rebuttal of the material on which the proposed action is based. Needless to add, it contemplates an opportunity of cross-examination as well. 35. A reasonable time has to be afforde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances which is the creation of the respondents in view of the finding on initiation of action. The subsequent action in issuing the demands without a show cause notice is quashed. As the right of appeal is a valuable right in the procedure laid down by the Act, the opportunity to show cause is yet another valuable right of an assessee to the excise duty. It cannot be gain-said that consideration of the rival contentions by the appellate authority would result in depriving the assessee of a valuable opportunity of showing cause to a competent officer, whose action is found to have been vitiated. It is, therefore, desirable and necessary to start the proceedings afresh with the issuance of a show-cause notice and affording an opportunity to the assessee as contemplated by Section 11A of the Act. 37. The chronology of dates and events which ultimately led to the passing of the order dated 5-3-1984 (Annexure R/11), confirming the demand dated 7-2-1984, goes to indicate how the principles of natural justice have been violated in the instant case. The classification list dated 7-7-1983 (Annexure R/4) and the approval granted by the competent officer on 30-7-1983 (Annexure R/1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailability of alternative remedy, which in the instant case was certainly not available, when the petition was presented and it was only after passing the orders, Annexures R/10 and R/11, that it can be urged that an alternative remedy was available to the petitioners. But, even then mere availability of an alternative remedy is not a bar to the maintainability of a petition under Article 226 of the Constitution of India, particularly in a writ of certiorari when the order challenged is one without jurisdiction and violates the basic principles of natural justice. This situation of an alternative remedy is a creation of the respondents subsequent to the filing of the petition. A mere reading of Section 11A of the Act goes to show that before taking any action a show-cause notice is a must. Since it was not given and subsequently issued keeping the demand alive, such a show-cause notice does not fulfil the requirements of natural justice and the action in absence of such a notice as a statutory requirement is liable to be quashed and is accordingly quashed. The orders, Annexures R/10 and R/11, are quashed. So also the demand dated 7-2-1984 (Annexure A). The classification lists, fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partem rule at the predecisional stage, a short measure fair hearing adjusted, attuned and tailored to the exigency of the situation. One should not go mere by the outward manifestation of the order but should consider the pre-order stage as well. If it involves adjudication, then hearing must be afforded even if the resultant order is purely administrative in form. (State of Assam v. Bharat Kala Bhandar, AIR 1967 S.C. 1766). There was no such urgency in the instant case. The only urgency, rather anxiety shown to have existed was the loss of revenue - but that could hardly be a ground for excluding the application of the principles of natural justice by not affording a reasonable opportunity to show cause to the petitioners, as required by Section 11A of the Act. 39. The respondents have placed strong reliance on Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 S.C. 603), on the basis that the learned counsel appearing for the department urged that in view of the alternative remedy available, this petition deserves to be dismissed. Shri Venu Gopal, learned counsel appearing for the petitioners, on the other hand has distinguished this case and has rightly shown that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
