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TMI Blog1996 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 48/87, dated 1-3-87. But a show cause notice dated 1-5-92 Was issued by the department to the appellant to show cause as to why block boards should not be classified as "similar laminated wood" described under heading No. 44.08 of the Central Excise Tariff liable to excise duty at the rate of 30% ad valorein under sub-heading No. 44.08.90 thereof. The appellant filed Civil Rule No. 833/92 before this Court for appropriate relief and on 20-5-92 this Court passed interim orders in the said Civil Rule allowing levy of excise duty on such block boards at the rate of 15% ad valorem pending disposal of the writ petition. The appellant again moved this Court on 26-6-92 for exemption of excise duty under notification No. 48/87, dated 1-3-87 but the Court refused to allow such exemption at the interim stage. 3. The appellant then cleared block boards from its factory paying Excise duty at the rate of 15% ad valorein during the pendency of the Civil Rule, but by judgment and order dated 6-1-93, a learned single Judge of this Court dismissed the said Civil Rule No. 833/92. Pursuant to the said judgment and order, the Superintendent Customs and Central Excise, Naharkatia Rang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be demanded and paid by the appellant under Section 11-A(1) of the Central Excise and Salt Act, 1944 (for short the "Act"). In response to the said show cause-cum demand notice, the appellant filed its reply contending, inter alia, that the show cause-cum-demand notice was barred by limitation under the provisions of sub section (1) of Section 11-A of the Act. But by order dated 27-11-95, the Assistant Commissioner, Central Excise, Debugger, held that for the period March, 1992 to January, 1993, by the communication dated 9-2-93, the concerned range Superintendent had finalised the provisional assessment as per decision dated 6-1-93 of this Court in Civil Rule 833/92 which had been affirmed by the Supreme Court, but the appellant had not adjusted the duty thereafter and hence Section 11-A(l) of the Act was not applicable before adjustment of duty of excise after such final assessment. The department then invoked the bank guarantee for Rs. 85, 00,322.00 on 29-11-95 and a bank draft for Rs. 85, 00,322.00 was issued by the State Bank of India, respondent No. 5, on 6-12-95 against the said bank guarantee by debiting the said amount to the account of the appellant. Aggrieved, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been executed by the appellant in accordance with the Rules 9B(1)(c) of the Rules binding itself for payment of the difference of duty between the amount of duty as provisionally assessed and as finally assessed. According to Mr. Gogoi, there fore, the view taken by the Assistant Commissioner of Central Excise, Dibrugarh in the order dated 27-11-95 that for the period March, 1992 to January, 1993 that there were provisional assessments was totally erroneous. 6. Mr. K.N. Choudhury, learned Senior CGSC, on the other hand, relied on the averments in the affidavit-in-opposition filed on behalf of the respondents 1, 2, 3 and 4 in the Civil Rule out of which this appeal arises and, in particular, the order dated 23-4-92 of the Assistant Collector of Customs and Central Excise, Dibrugarh, annexed to the said affidavit-in-opposition and submitted that the block boards were removed by the appellant pursuant to provisional assessments under Rule 9B of the Rules till a final decision was taken regarding classification of the said block boards cleared by the appellant. He has produced before us the R.T-12 returns for the period March, 1992 to January, 1993 to show that for each of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment to duty - (1) Notwithstanding any thing contained in these rules - (a) where the proper officer is satisfied that an assessee is unable to produce any document or furnish any information necessary for the assessment of duty on any excisable goods; or (b) where the proper officer deems it necessary to subject the excisable goods to 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 enquiry (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 inquiry, be assessed provisionally at such rate or such value (which may not necessarily be the rate or price declared by the assessee) as may be indicated by him, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional assessments have been made in accordance with the aforesaid procedure laid down in sub- rule (2A) of Rule 173B and Rule 9B of the Rules with regard to the rate of duty that is payable on block boards cleared by the appellant from its factory during the period from March/92 to January/93, on the basis of the classification list w.e.f. 1-3-92 filed by the appellant. In serials 13 to 17 of items of the said classification list, the appellant had claimed that the block boards manufactured by it fell under sub-heading No. 4410.90 but were exempted from excise duty under the notification No. 48/87, dated 1-3-87. On the said classification list w.e.f. 1-3-92 the Assistant Collector, Customs and Central Excise, Dibrugarh (for short "the Assistant Collector") passed on 23-4-92 the order in Annexure-B to the affidavit-in-opposition filed on behalf of the respondents No. 1, 2, 3 and 4 in the Civil Rule, which is extracted hereinbelow: "To. M/s. Sarda Plywood Industries Ltd. Joypore, P.C. Joypore-786614. Sub: Classification List on Plywood Products w.e.f. 1-3-92. Please refer to your letter Ref. No. Ex/289/7192, dt. 7-3-92 submitting the above classification list. 2. The above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter, a show cause notice dated 1-5-92 was issued by the department to the appellant to show cause as to why its products block boards should not be classified under sub-heading 4408.90 of the Central Excise Tariff. It is at this stage that the appellant moved this Court in Civil Rule No. 833/92 and obtained the interim order dated 20-5-92 to the effect that excise duty would be levied on the block boards cleared by the appellant at the rate of 15% ad valorem pending disposal of the writ petition. The said order dated 20-5-92 passed in Civil Rule No. 833/92 did not provide for furnishing any security by the appellant for the difference of duty between the rate of 15% ad valorem allowed by the Court and 30% ad valorem + special duty as claimed by the department and hence the department could not possibly insist on the appellant to execute any bond or to furnish any security binding itself to pay the difference of duty at the rate of 15% ad valorem as allowed by the Court and at the rate of 30% ad valorem + special duty as claimed by the department and the department instead banked upon the general bond executed by the appellant in terras of sub-rule(3) of Rule 9-B of Rules in Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Central Excise, Dibrugarh (for short "the Assistant Commissioner") in his order dated 27-11-95 that Section 11-A was not applicable to the facts of the present case was erroneous in law, Mr. Gogoi cited the judgment of the Karnataka High Court in the case of Davanagere Cotton Mills Ltd. v. Chairman, CBE C, 1991 (55) E.L.T. 295, wherein following the judgments of the Apex Court in the case of Gokak Patel Volkart Limited v. Collector of Central Excise, Belgaun, 1986 (23) E.L.T. 476 (S.C.) = AIR 1987 SC 1161 and M/s. J.K. Cotton Spg. Wvg Mills v. Union of India, 1987 (32) E.L.T. 234 (S.C.) = AIR 1988 SC 191, the Karnataka High Court has held that the mandatory provisions of Sections 11-A(1) and (2) of the Act have to be followed for recovery of any excess duty levied or short levied or not paid or short paid. Mr. Gogoi also relied on the judgment of the Apex Court in the case of Assistant Collector, Central Excise, Calcutta v. National Tobacco Company India Limited 1978 (2) E.L.T. (J 416) (S.C.) = AIR 1972 SC 2563 as well as Rules 10 and 10A of the Rules which existed prior to August, 1977 as well as Rule 10 of the Rules which came into force in August, 1977 and remained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as requirement of law and mere mechanical adjustment of duty would not amount to such assessment but a provisional collection which would become levy in the eye of law only after assessment was made. The aforesaid decision rather than supporting the contention of the appellant supports the contention of the department that duty paid without any final decision on the classification of the goods cleared by the assessee is only provisional in nature and until proper adjudication is made on the classification of goods and a final assessment is made pursuant to such adjudication and the differential duty is adjusted as per such final assessment, there was no short levy or short payment of duty. Regarding the reference made by Mr. Gogoi to the legislative history of Section 11-A of the Act and in particular old Rules 10 and 10A of the Rules, we need not take the aid the said legislative history to decide the question as to whether for recovery of differential duty pursuant to a final assessment in the case of provisional assessment, Sub-sections 1 and 2 of Section-11A have to be followed, because the legislative intent on this question would be clear from the very language used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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; (c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund." It will be clear from sub-section (1) of Section 11-A of the Act that the said sub section (1) applies to two broad types of cases (1) where duty has not been levied or paid or has been short levied or short paid, and (2) where duty of excise has been erroneously refunded. In these two types of cases, sub-section (1) of Section 11-A requires issue of a notice within six months from the "relevant date" on the person chargeable to duty requiring him to show cause as to why he should not pay the amount specified in the notice. For the purpose of Section 11-A, the meaning of "relevant date" has been given in sub-section (3) (ii) thereof. Sub-section (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as provided in sub-section (1) of Section 11-A for issue of a show cause notice will begin to run from the date of adjustment of duty after final assessment where duty has been provisionally assessed meaning thereby that there would be no limitation for recovery of such difference in duty as provisionally assessed and as finally assessed. Moreover, it will be clear from the language of sub-rule (1) of Rule 9B quoted above that provisional assessment is made in respect of either the rate of duly or the value of the goods pending final determination of such rate of duty or value of goods. In any proceedings for approval of classification of goods for the purpose of determining the rate of duty or in any proceedings for approval of the price of goods for the purpose of determining the value of goods, a show cause notice and if desired a personal hearing have to be given by the department to the assessee consistent with the principles of natural justice before an adjudication order determining the rate of duty or the value of goods is passed. Similarly, at the time of making the final assessment under Rule 173-I, the proper officer will have to follow the principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-5-96. In the said final assessment memorandum dated 29-5-96, it is stated that pursuant to an order dated 15-3-96 of the Commissioner (Appeal), Central Excise, Calcutta, the appellant was requested to submit detailed calculation of value and duty payable during the period in question for clearance of block boards during the period from March'92 to Jan'93 but the appellant failed to submit any such calculation within such stipulated time. In the said order the duty that has been finally assessed during the period from 1-3-92 to 18-1-93 under Rule 173-I of the Rules is Rs. 2,29,90,653.88 (Basic) and Rs. 52,65,675.58 (special) totalling to Rs. 2,82,56,322.46 which is the same as in the notice dated 9-2-93 of the Superintendent of Central Excise, Naharkatia-III Range to the appellant impugned in the Civil Rule. It Is thus clear from the aforesaid narration of the facts of the case on record that this is not a case where principles of natural justice have not followed or where there was no determination of the amount of duty sought to be recovered by the department by encashing the bank guarantee. 14. It was finally urged by Mr. Gogoi, learned Counsel for the appellant, that this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e counsels for the parties are extracted herein below: "We State Bank of India having a branch known as Commercial Branch, 24, Park Street, Calcutta-7000l6 do hereby guarantee the payment of Rs. 85, 00,322/- (Rupees Eighty five lacs three hundred twenty two only) to the President of India acting through the Collector of Central Excise, Shillong (hereinafter referred to as "the Central Government") in the circumstances subject to condition noted below:- Whereas, in Special leave Petition (c) No. 5280 of 1993 Sarda Plywood Industries Ltd. etc. Versus Union of India and others, Hon'ble Mr. Justice S Verma, Hon'ble Mr. Justice A.S. Anand and Hon'ble Mr. Justice S.P. Bharucha were pleased to pass an order on 10-8-93 to the effect that recovery of past arrears upto 17-3-93 from M/s. Sarda Plywood Industries Ltd. (hereinafter referred to as the petitioner") is stayed on the condition that the petitioners furnish Bank Guarantee for the amount of arrears within six weeks. And whereas the said petitioners have requested to furnish the required Bank Guarantee to the satisfaction of the Collector of Central Excise, Shillong to the President of India, hereinafter called the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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