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TMI Blog2022 (4) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... cal control system. All samples were drawn during the manufacturing process and moved to the laboratory situated within the premises of the bonded factory of ITC which is under the physical control of the Central Excise authorities since May 1979. The movement of cigarette samples to the laboratory inside the factory was undertaken as a part of regular process of the manufacturing cigarettes and there is no material disclosed that there was attempt on the part of the appellant to conceal such movement or concealment of any material fact with regard to the removal of samples of cigarettes. Extended period of limitation - HELD THAT:- The demand of duty in respect of cigarettes cleared for testing purposes for the period March 1, 1983 to December 27, 1990 is sustainable only in respect of normal period of 6 months as contained in Section 11A(1) of the Central Excise Act, 1944 during the material period. The extended period of limitation contained in the Proviso to Section 11A(1) of the Act is inapplicable. Consequently, the demands beyond the period of 6 months from the respective dates of issuance of the SCNs in respect of cigarettes cleared during this period are barred by limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant under the specified provisions of the CER. (iv) On same grounds three other show cause notices, dated January 24, 1991, January 31, 1991 and February 18, 1991, were thereafter issued, each demanding central excise duty as in the case of first show cause notice and also proposing imposition of penalty upon the appellant as per the CER provisions stated therein. (v) The details of the four show cause notices (hereinafter referred to as SCN ) are as under: SHOW CAUSE NOTICE PERIOD AMOUNT 1. SCN dated 25-July- 1990 March 1973 to April 1990 ₹ 65,45,630.02 2. SCN dated 30-January- 1991 May 1990 to July 1990 ₹ 2,36,189.24 3. SCN dated 24-January- 1991 August 1990 to October 1990 ₹ 2,21,281.49 4. SCN dated 18- February-1991 November 1990 to December 1990 ₹ 1,56,807.75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 demanding ₹ 12,06,223/- was on ad valorem basis and all assessments were provisional. The finalization of assessments by the Order No. 2/2002 dated August 29, 2002 of the Deputy Commissioner of Central Excise, Bhagalpur Division referred to in para 26 of the impugned order, was set aside by this Tribunal by Order No. FO/A/75444-754454 dated May 12, 2016, passed in Appeal Nos. E/190-191/2005 and the matter was remanded to the adjudicating authority for de novo adjudication in terms of direction contained in the order. The said de novo adjudication is pending. Hence, the assessments for this period are still provisional. Therefore, the condition precedent for invoking Section 11A(1) is not satisfied. The demand for this period is thus premature and untenable, as held by the Supreme Court in CCE Vs. ITC Ltd., 2006 (203) ELT 532 (SC). (b) The show cause notice dated July 25, 1990 in relation to the period March 1983 to June 1985 demanding ₹ 2,05,474/- has been issued beyond even the maximum period of five years contained in the Proviso to Section 11A(1) of the Act. During this period the assessments for cigarettes cleared from the factory had to be finalized at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alised as per the said notification (on length basis) left no scope for any provisional assessment of the cigarettes cleared. The clearances were, undisputedly, on final assessment basis. (ii) The period from March 1987 to April, 1990 is covered by SCN dated July 25, 1990. The amount involved as per Annexure to the impugned order is ₹ 11,09,538.52 for this period. Hence, except for the period January 1990 to April 1990, the demand for the balance period is barred by limitation. (iii) The period from May 1990 to December, 1990 are covered by the other three SCNs dated 30.01.1991, 24.01.1991 and 18.02.1991 and the periods involved are May, 1990 to July, 1990, August 1990 to October 1990 and November 1990 to December 1990 respectively. The SCN dated 30.01.1991 the demand for the period May 1990 to June 1990 (out of the total period of May 1990 to July 1990) is barred by limitation the SCN having been issued beyond the period of 6 months from the relevant date as per the provisions of Section 11A(1) then prevailing. The demands covered by the SCNs dated 24.01.1991 and 18.02.1991 are however within the normal period of limitation. (iv) Against the demand of confirmed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 was provisional as per the submission of the Ld. Sr. Counsel of the Appellant before the New Delhi Bench. (v) In view of the above, the appeal filed by the Appellant may be dismissed. 5. We have heard Dr. Samir Chakraborty, Ld. Senior Advocate and Mr. S.S. Chattopadhyay, Ld. Authorized Representative on behalf of the parties through video conferencing and have perused the appeal records. 6. This Tribunal, in its Order No. 117-120/95-D dated 23.03.1995, after holding that cigarettes removed for testing within the factory were excisable and hence it would be permissible for the Department to recover the duty on all clearances of cigarettes by the appellant including those which were meant for the purposes of test within the factory while finalising the provisional assessments for the relevant period , it was further observed and held as under: On perusal of the records of the case, we find that whereas the demand for the recovery of duty on cigarettes removed during the period March 1973 to April 1990 for the purposes of test was issued under Section 11A of the Central Excise Salt Act, 1944. The Collector rejected the appellant s contention that the demand for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisional assessments as ordered by CEGAT in their order referred to above, we find that the Commissioner, without finalisation of the provisional assessment, has passed the impugned order. His reasoning carries no weight. In view of the above, we are constrained to remand the matter again to the Commissioner for re- adjudication in terms of the observations made by the CEGAT, New Delhi in their order referred to above. After setting aside the impugned order, appeal is thus decided by way of remand. 8. In paragraph 26 of the impugned order the Commissioner has observed as follows: 26. I find that the Hon ble CESTAT, vide their order no. A- 119/Kol/04 dated 20.01.04, while remanding the case for denovo adjudication have directed that the case should be decided after finalisation of provisional assessment. I find that the various issues relating to valuation matters, which were under dispute between the assessee and the revenue, and for that reason the assessments were provisional, have been finalised by the jurisdictional Deputy Commissioner, Central Excise, Bhagalpur vide his Order-in-Original No. 02/BGP/02 dated 29.08.02. After the finalisation of the disputed issues, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod of quantification of differential duty. 5. In view of the above observations these appeals filed by the appellant are allowed by way of remand to the adjudicating authority. Needless to say that an opportunity of personal hearing should be extended to the appellant to explain their case before deciding the issues in remand proceedings. We may also make it clear that this bench has not made any observations on the merits of the case. The same has to be decided by the adjudicating authority on the basis of orders passed by adjudicating authorities at Bangalore, Parel, Saharanpur and Kidderpore factory and also the ratio laid by Apex Court on these deductions. 10. In that view of the matter the finding of the Commissioner that the subject assessments had been finalised on 29.08.02 does not survive. The said assessments continue to remain provisional. We have been given to understand that finalisation of the said provisional assessments in terms of the direction contained in the order dated 12.05.2016 of this Tribunal is still pending before the jurisdictional authority. In view of the above the contention of the Appellant that the demand for the period from 01.03.73 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1 of 1944), from so much of the duty of excise leviable thereon under the said Acts, as is in excess of the amount calculated at the rate specified in the corresponding entry in Column (2) of the said Table. THE TABLE Description Rate Cigarettes (being cigarettes packed in packages) of which the adjusted sale price as per one thousand- (i) does not exceed rupees fifty Thirty five rupees per one thousand. (ii) exceeds rupees fifty but does not exceed rupees sixty Thirty five rupees per one thousand plus three rupees and fifty paise per one thousand for every increase of rupees five or fraction thereof in the adjusted sale price in excess of rupees fifty. (iii) exceeds rupees sixty Forty two rupees per one thousand plus three rupees and seventy five paise per one thousand for every increase of five rupees or fraction thereof in the adjusted sale price in excess of rupees sixty. Provided that the amount of duty so levied shall be apportioned in the ratio of 2.75: 1.00 between the duty leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified in the corresponding in Column (2) of the said Table. Provided that the amount of duty so levied shall be apportioned in the ratio of 2:l between the duty leviable under the Central Excises and Salt Act, 1944 (l of 1944) and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), respectively. Description Rate Cigarettes (being cigarettes packed in packages) of which the adjusted sale price per one thousand- (i) does not exceed rupees sixty Forty two rupees per one thousand. (ii) exceeds rupees sixty but does not exceed rupees one hundred and seventy One hundred and twenty five rupees per one thousand; (iii) exceeds rupees one hundred and seventy but does not exceed rupees three hundred Two hundred and twenty five per one thousand; (iv) Exceeds rupees three hundred but does not exceed rupees five hundred and fifty Four hundred rupees per one thousand; and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisional assessments. As appears from the Hon ble Supreme Court s decision, dispute arose in respect of this period as to whether there was undervaluation of the cigarettes cleared in terms of the said two notifications and demands were raised towards short levy or short payment of central excise duty against the appellant in terms of Section 11A of the Central Excise Act, which ultimately stood resolved by the abovestated decision of the Apex Court in ITC Ltd. Vs. Commissioner of Central Excise (supra). The contention raised on behalf of the Revenue that the Appellant itself in its submission before this Tribunal in the appeals, resulting in order dated 23.03.1995 of the Tribunal, had contended that the assessment for the entire period from March 1973 to April 1990 was provisional through its Senior Counsel has no merit in view of the finding of this Tribunal in its order dated 23.03.1995, approved by the Apex Court. 13. In respect of the cigarettes cleared during the period from March 1, 1987 to December 27, 1990 duty of excise on cigarettes was leviable on the basis of length of cigarette in terms of Notification No. 34/87-CE dated 1.3.1987, the relevant part of which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) bear a declaration specifying the length of the cigarettes; and (c) have surface designs approved by the Director (Audit) in the Directorate of Inspection and Audit (Customs and Central Excise): . 14. The manner in which duties are to be levied and realised as per the said notification leaves no scope for any provisional assessments of the cigarettes cleared. We therefore agree with the contention of the Appellant that the clearances of cigarettes during this period were on final assessment basis only. 15. Therefore in respect of the entire period from July 1985 to December 1990 there was no scope of any provisional assessment in effecting clearance of cigarettes removed. All clearances during this period was on final assessment basis. 16. In the instant case at all material times cigarettes were under physical control system. All samples were drawn during the manufacturing process and moved to the laboratory situated within the premises of the bonded factory of ITC which is under the physical control of the Central Excise authorities since May 1979. The movement of cigarette samples to the laboratory inside the factory was undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Central Excise Vs. Grasim Industries Ltd., 2005 (183) ELT 123 (SC), we hold that no penalty is imposable upon the appellant in the instant case and the penalty imposed is therefore set aside. In paragraph 20 of the judgment the Hon ble Supreme Court observed and held as under: 20. However, by this Order, the Commissioner has also imposed penalty in a sum of ₹ 10,00,000/- under Rule 173Q of the Central Excise Rules. While the conclusions of the Commissioner that the Respondents were not entitled to the benefit of the Notification are correct, the fact still remains that the Tribunal has in a number of matters given an interpretation as understood by the Respondent. It therefore cannot be said that the Respondents could not have taken the view they did. It cannot be said that they could never have concluded that they were entitled to the benefit of the Notification. We therefore feel that this is a case where penalty should not be imposed. We therefore delete the imposition of penalty on the Respondents. 19. In view of the above observations and findings, the impugned order is set aside and the instant appeal is allowed by way of remand to the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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