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TMI Blog2019 (12) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... onal assessment have been ordered to be effaced. Suffice it to observe that the order dated 10/12.3.1993 passed by the High Court of Delhi, disposing of the writ petitions filed by the appellant in no way extricate the appellant from the process to which the appellant had voluntarily submitted itself at its own volition, namely, under Rule 9B of the Rules. Thus, it was not a case of duty not levied or not paid or shortlevied or shortpaid. The understanding of the parties was absolutely clear that the appellant was liable to pay excise duty, but for the exposition of the High Court of Delhi in J.K. Cotton Spinning Weaving Mills Co. Ltd. Ors. [ 1980 (10) TMI 71 - HIGH COURT OF DELHI ]. Understood thus, the appellant is obliged to fulfill its statutory obligations including those arising from the undertaking/bonds in Form B-13 and cannot resile from the process to which it had submitted itself without any demur, namely under Rule 9B of the Rules. Section 11A of the Act as applicable at the relevant time, would apply to cases of recovery of duties not levied or not paid or short levied or short paid etc. - The case at hand, however, would come within the dispensation predicated by Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities, it is not open to the appellant to contend that there was no order/directions to clear the yarn on provisional assessment basis. The appellant cannot be allowed to approbate and reprobate for inviting the High Court of Delhi to pass interim order stipulating that the appellant would execute bonds in Form B-13 referable to Rule 9B of the Rules and continue to file monthly RT-12 returns from time to time, on which endorsements have been made indicating that it is a case of provisional assessment. The appellant cannot now be permitted to urge that it had not submitted to the process of provisional assessment as such for lack of a specific order of the concerned authority in that behalf. Appeal dismissed. - A. M. Khanwilkar And Dinesh Maheshwari, JJ. For the Petitioner : Manik Karanjawala For the Respondent : B. Krishna Prasad, B. V. Balaram Das JUDGMENT A. M. Khanwilkar, J. 1. This appeal is directed against the judgment and order dated 13.9.2007 passed by the High Court of Judicature at Bombay in Central Excise Appeal No. 237 of 2006. Briefly stated, the appellant is engaged in manufacture of cotton and manmade fabrics. According to the appellant, the fabric manufactured by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of prohibition or any other appropriate writ, order or direction in the nature therefore, restraining the respondent from collecting duty of excise on yarn obtained by the petitioner in its composite mill which is further processed in the manufacture of fabrics. (e) Issue appropriate writ, order or direction directing the respondent to refund the amount of duty illegally recovered from the petitioner in respect of yarn obtained in the petitioner s composite mills and further processed in the manufacture of fabrics for the period commencing from 15.7.1977 in respect of cellulosic spun yarn and non-cellulosic spun yarn and from 17.3.1972 and in respect of cotton yarn and from 15.7.77 upto the date of disposal of the present writ petition and in particular the amounts referred to in statement (annexure E) together with interest at the rate of 12% p.a. and in the alternative to direct Respondents No.3 and 4 to grant the refund as per refund claims dated 13.5.1981 (colly.); (f) In the alternative and without prejudice to the aforesaid prayers, to issue a writ of mandamus or any other writ, order or direction in the nature thereof direction the respondent not to collect duty of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished an undertaking dated 2/10.3.1983 in order to secure the payment of differential tax to the Department of Revenue, Ministry of Finance (for short, the Department ) in the event of dismissal of its writ petitions. The format of that undertaking was in conformity with the prescribed undertaking in Form B-13 referable to Rule 9B of the Rules, submitted by the assessee in the case of provisional assessment. Later on, the High Court modified the interim relief on 14.5.1985. The relevant portion of the modified interim relief reads thus: there will be no stay with regard to future payments. During the pendency of the Writ Petition, where will be stay in respect of 50% of the disputed amount of duties claimed by the respondents as arrears on the condition that the applicant furnish Bank Guarantees or renew the Bank Guarantees already furnished and keep it in force till the disposal of the writ petition. With regard to the balance of 50% of the arrears of duty which is disputed, 25% of it shall be paid within 3 months from today. With regard to the remaining 25%, the parties will pay the same in two equal installments of 12 % each in every succeeding quarter. The 25% payment whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1235/81 M/s. Bombay Dyeing Mfg. Co. Ltd. Versus Union of India and OTHERS Please refer to various correspondences exchanged on the above said state subject. I have been directed to inform you that the aforesaid case was listed on 12.3.93 before Hon ble the Chief Justice and Hon ble Mr. Justice Anil Dev Singh, Delhi High Court, New Delhi. The aforesaid case is decided in view of the orders passed by the Supreme Court of India in the case of M/s. Rohit Mills Ltd. (copy attached herewith for your information and for further action please). Before complying the aforesaid orders of the Supreme Court of India in case of M/s. Rohit Mills Ltd., on which case the Delhi High Court has disposed of the instant writ petition, this office would like to bring to your notice as under: As regards applicability of Section 11A and encashment of Bank Guarantee, it is pertinent to refer to the Hon ble Supreme Court s order in Writ Petition No.848 of 1984 filed by M/s. Bhilwara Processor Ltd. and others, wherein the issue was in dispute i.e., whether department can enforce Bank Guarantees executed in terms of Court s order without issuing Show Cause cum Demand Notice under section 11A. In the above cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was secured by the Bank guarantee furnished by the assessee in terms of the stay order of Hon ble Delhi High Court. However, complying the orders given by the Supreme Court of India in case of M/s. Rohit Mills Ltd., this office would like to know whether petitioner desires Show Cause cum Demand Notice to be issued by the respondent i.e., Union of India, for the recovery of outstanding dues. If yes, the same may be confirmed by 31.3.93 so as to enable this office to take the action as directed by the Hon ble Supreme Court of India in case of M/s. Rohit Mills Ltd. However, it will be nothing but the postponement of payment of Central Excise Duty, which is legitimate right of the Union of India, which was deprived by you by filing the instant writ petition, since 1981. If no, the consent letter should be submitted to this office for encashment of Bank guarantees, as early as possible. Your early reply is awaited in this matter. Yours faithfully, Sd/Illegible (C.K. NIRBHAVANE) ASSISTANT COLLECTOR CENTRAL EXCISE DN. FI BOMBAYI 6. The appellant in its response sent on 11.5.1993, asserted that the Show Cause Notice under Section 11A of the Act was mandatory and moreso in light of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to the Notice. In this connection we may also mention that as per the orders of the Hon ble High Court dated 10.3.1993, we have been given specific liberty to raise such other contentions as are available, before the adjudicating authority in respect to the show cause notice. We reserve our right to raise such contention as may be advised, in reply to the said show cause notice. 5. Although our contentions would be raised after the show cause notice under Section 11A is issued, we may clarify here that, in any event, no duty of excise is payable in respect of yarn after it is sized. In other words, duty of excise is not payable on the basis of the weight of the sized yarn. This has been clearly held in several decisions including the decision of the Hon ble Supreme Court in the case of J.K. Cotton Spg. Wvg. Mills Co. Ltd. and another vs. UOI (1987 (32) ELT 234). The attempt earlier made to levy duty of excise at the stage after yarn is sized, is patently illegal in view of the aforesaid decisions. The reference in your letter to provisional assessment is wholly irrelevant. In the first place, as per the directions of the Hon ble High Court, adjudication has now to be done on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the items 18A, 18III and 18E which had been assessed provisionally by the then Range Superintendent are assessed finally. By the same communication, he called upon the appellant to pay an amount of ₹ 35,92,234.67 (Rupees thirty five lakhs ninety two thousand two hundred thirty four and sixty seven paise only) pursuant to the order dated 14.5.1985 passed by the High Court of Delhi. This was followed by a notice dated 7.10.1993 from the Assistant Collector of Central Excise addressed to the appellant reiterating the position that pursuant to the interim order passed by the High Court of Delhi, provisional assessments had been made and necessary endorsements to that effect were made on the classification lists, monthly RT-12 returns, etc. Further, the appellant was obliged to make good the arrears of disputed duty amounting to ₹ 35,96,235/( Rupees thirty five lakhs ninety six thousand two hundred thirty five only) for the period starting from 25.5.1981 to 13.5.1985, which had become payable. The appellant was called upon to pay the said amount within ten days, failing which the Department would take necessary steps to enforce the bank guarantees and recover the dues from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar facts, is that in a case such as this where B-13 bonds have been executed by the assessee and clear endorsement is made on the monthly RT-12 returns that it is a case of provisional assessment, the question of issuing a Show Cause Notice under Section 11A of the Act does not arise. The assessee in that case had relied on the decisions of this Court, which have been distinguished as inapplicable to the fact situation of the case under consideration. We shall advert to the detailed reasons noted in this decision a little later. 14. We may now advert to the issues raised by the appellant in the present appeal. According to the appellant, primarily two questions arise for consideration, which are as follows: 1)Whether the demand for Central Excise for the period 25.05.1981 to 14.05.1985, as raised by the department, is barred by limitation? This question in turn is dependent upon the issue whether the assessment in this case could be said to be provisional assessment. 2) Could the respondent authorities have ignored the binding directions of the Hon ble High Court of Delhi vide its Order dated 12.03.1993 to hold that no Show Cause Notice (SCN) was required in the present case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) 3 SCC 489; Kalabharati Advertising vs. Hemant Vimalnath Narichania Ors. (2010) 9 SCC 437; Jagmittar Sain Bhagat Ors. vs. Director, Health Services, Haryana Ors. (2013) 10 SCC 136; and Coastal Gases and Chemicals Pvt. Ltd. vs. Assistant Collector of Central Excise, Visakhapatnam Ors. (1997) 7 SCC 223. 16. The respondent, on the other hand, supported the reasons recorded by the authorities/Tribunal and would contend that being a case of provisional assessment, the question of issuing a Show Cause Notice to the appellant under Section 11A of the Act does not arise. Whereas, the authorities acted as per the mandate of law and proceeded to pass final assessment orders after the disposal of writ petitions by the High Court of Delhi, and before passing such orders, opportunity of hearing was given to the appellant. According to the respondent, the order dated 10/12.3.1993 of the High Court of Delhi did not create any impediment for the authorities to proceed against the appellant in accordance with law. At best, the tenor of the order would suggest that if a Show Cause Notice is required to be issued and has not been so issued, authorities were free to issue such a notice and take deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision. Thus, the question relating to liability to pay excise duty was not and could not have been disputed by the appellant at least after this decision. Concededly, the appellant had filed writ petitions taking clue from the exposition of the High Court of Delhi in J.K. Cotton Spinning Weaving Mills Co. Ltd. Ors. (supra @ F.N.1). That view has been finally dealt with by this Court in M/s. J.K. Cotton Spinning and Weaving Mills Ltd. (supra @ F.N.12), fastening liability on the assessee to pay excise duty. 19. Additionally, it may be apposite to underscore the purport of the interim conditional stay granted by the High Court of Delhi whilst entertaining the writ petitions filed by the appellant. Initially, vide order dated 25.5.1981, interim relief was granted in terms of the Prayer clause (a) of Civil Miscellaneous Petition No. 1699/1981, reproduced hitherto. By this Prayer clause, the appellant had expressed its willingness to file undertaking/bond in Form B-13 referable to Rule 9B supported by bank guarantee for an amount equivalent to specified differential duty in respect of the yarn in question. The said interim relief was then modified on 14.5.1985. The fact remains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at the relevant time, read thus: 11A. Recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. (1) When any duty of excise has not been levied or paid or has been shortlevied or shortpaid or erroneously refunded, whether or not such nonlevy or nonpayment, short levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been shortlevied or shortpaid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been shortlevied or shortpaid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made thereunder with intent to evade payment of duty, where it is possible to do so, shall determine the amount of such duty, within a period of one year; and (b) in any other case, where it is possible to do so, shall determine the amount of duty of excise which has not been levied or paid or has been shortlevied or shortpaid or erroneously refunded, within a period of six months, from the date of service of the notice on the person under subsection (1). (2B) Where any duty or excise has not been levied or paid or has been shortlevied or shortpaid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him under subsection (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under subsection (1) in respect of the duty so paid: Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and then, the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder, 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. 22. The case at hand, however, would come within the dispensation predicated by Rule 9B of the Rules, which deals with provisional assessment to duty. The same reads thus: Rule 9B. Provisional assessment to duty. ( 1) Notwithstanding anything 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 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 writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 10/12.3.1993, is limited to accepting the fact that if notice is required to be given, the same will be given and in that case it will be open to the appellant to file response thereto and further, the authorities would take decision after giving opportunity to the assessee. Nothing more can be read into the order dated 10/12.3.1993 passed by the High Court of Delhi. It is certainly not an order to undo the obligation accepted by the assessee by voluntarily executing the bonds in the prescribed format, namely, Form B-13 referable to Rule 9B of the Rules to treat the process as provisional assessment until the disposal of the writ petitions. It is also noticed that the authorities have later on passed the final order after the disposal of the writ petitions. 25. A priori, the authorities have not violated any stipulation or direction contained in the order dated 10/12.3.1993 passed by the High Court of Delhi and for having proceeded in accordance with law for the period between 25.5.1981 to 13/14.5.1985. 26. Reverting to the decision of the Division Bench of the High Court of Judicature at Bombay in The Jam Shri Ranjitsinghji (supra), similar argument was considered and the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B-13 Bond which is applicable to provisionally assessed goods. It is pertinent to note that the Delhi High Court by its interim order had not directed the appellant to execute B-13 Bond. Apart from B-13 Bond, there are various types of Bonds specified in Appendix I to the 1944 Rules, which could be executed by the appellant. The fact that the appellant claims to have executed the B-13 Bond at the instance of the revenue clearly shows that as per the directions given by the proper officer, the clearances have been effected on provisional assessment basis by executing B-13 Bond. 36. It is not the case of the appellant that B-13 bond was executed inadvertently or by mistake. Therefore, having consciously cleared the yarn for captive consumption on provisional assessment basis by executing B-13 Bond as directed by the excise authorities, it is not open to the appellant to contend that there was no order/directions to clear the yarn on provisional assessment basis. 27. The decisions of this Court, to which our attention has been invited by the learned counsel for the appellant, have been considered by the High Court of Judicature at Bombay. The High Court rightly observed that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt by way of Civil Appeal No. 1551/2008, which came to be summarily dismissed on 7.3.2008. We are conscious of the fact that this Court had summarily dismissed the said appeal. Nevertheless, the view expressed by the High Court of Judicature at Bombay, as reproduced above, commends to us. 29. The appellant had placed emphasis on the decision in The Bhopal Sugar Industries Ltd. (supra) and R.B.F. Rig Corporation, Mumbai (supra) to contend that the Department cannot be permitted to take contrary position than the direction given by the High Court of Delhi. For the reasons indicated hitherto, in our opinion, the basis of this submission is illfounded. The authorities have not been nor could be prohibited by the High Court of Delhi from proceeding with the matter in accordance with law. In the present case, all that the authorities have done is to follow the procedure consequent to provisional assessment, by passing a final order and raising demand on the basis of that order. The appellant, as a matter of fact, in terms of the conditional interim order is obliged to discharge its obligation in terms of the bonds executed in Form B-13 and the monthly RT-12 returns filed from time to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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