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TMI Blog2009 (10) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... urt vide its order dated 12.05.2000 referred the captioned case to a "Larger Bench" for adjudication of two issues:- (i) The applicability of Section 11A of the Central Excise and Salt Act, 1944 (in short the "Act") before and after the final order of assessment was passed. (ii) The applicability of the judgment of the Supreme Court rendered in the case of Serai Kella Glass Works Pvt. Ltd. vs. C.C.E, Patna 1997 (91) ELT 497 (SC), more particularly, paragraph 18 of the said judgment to the instant case. 2. The occasion for reference to a larger bench arose in view of the judgments of two separate Division Benches of this court taking diametrically opposite views with respect to the issue as to whether a show cause notice, under the provisions of Section 11A of the Act could be issued, pending final assessment of a show cause notice, issued prior in point of time. 2.1 In the case of International Computers Indian Manufacturers Ltd vs. Union of India 1981 ELT 632 (Del); the Division Bench held that a show cause notice under Section 28 of the Customs Act, 1962, (which is analogous to Section 11A of the Act), could not be issued, while a provisional assessment was pending finali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kella (supra), and held that the principle enunciated by them is in consonance with the ratio of Serai Kella (supra). We have dealt with this aspect, in greater detail, in the latter part of our judgment. 4. Faced with this circumstance, the learned Additional Solicitor General (in short "ASG"), Mr. A.S. Chandhiok with usual dexterity, submitted that, the writ petition would have to be dismissed in view of the fact that, at the point in time when the show cause notice dated 28.01.1988 (i.e., which is impugned in the present writ petition) was issued, assessment proceedings were not pending. It was his submission that the final assessment proceedings culminated with the passing of the adjudication order dated 10.04.1986. 5. Therefore, the only issue which survives for our consideration is: whether order dated 10.04.1986 was a final assessment order. Because if it was not so, then the writ petition would have to be allowed without more, in view of the ratio of the Supreme Court judgment in the case of ITC Ltd (supra). 6. Mr. Ravinder Narain, Advocate who appeared for the writ petitioner submitted that even though the challenge to the impugned show cause notice was on several gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductions on account of post-manufacturing expenses, such as, marketing and distribution expenses, advertising expenses and interest, amongst others. Since the department was not in agreement with the stand taken by the writ petitioner; the Collector of Central Excise, Banglore, Meerut (earlier Kanpur), Patna issued several show-cause notices from time to time to the writ petitioner. 8.2 It is pertinent to note that in this writ petition, we are dealing with only that part of the adjudication order which pertains to the Collector of Meerut involving the Saharanpur factory of the writ petitioner. It is not disputed that in respect of Saharanpur factory of the writ petitioner, the Collector, at Kanpur had issued a show cause notice on 08.12.1978. This was followed by a supplementary show-cause notice dated 29.01.1979. The department, in order to avoid multiplicity of proceedings, got the Central Board of Excise and Customs to issue an order dated 10.09.1984, whereby the adjudication of show-cause notices, issued to the writ petitioner by various Collectors, was centralized for the purposes of adjudication with the Director General (Inspection) in the office of the Directorate-Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination by the company; (h) no part of the demand is time barred. ORDER 19.1 Considering the above discussions and findings, I make the following order:- (a) pending provisional assessments shall be finalized by the respective proper officers and where the assessment had already been finalized, differential duty demanded, on the basis of the revised assessable value(s) of the cigarettes, keeping in view the findings above; and the company shall pay the differential duty demanded, (whether on finalization of the provisional assessments or otherwise as aforesaid; and (b) penalty of Rs 1,00,00,000.00 (rupees one crore only) is imposed on the company under rule 173-Q of the Central Excise Rules, 1944. However, I do not propose to order confiscation of land, building, plant, machinery, materials, etc." 9. On 27.01.1988, the impugned show cause notices were issued for the period 27.06.1980 to 28.02.1983. According to the respondent, the said show cause notice came to be issued as they had gathered intelligence that the writ petitioner was evading the payment of appropriate excise duty by resorting to fraudulent undervaluation. On the basis of this intelligence, raids were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceeding before the Commissioner of Central Excise, Delhi, a preliminary issue was raised with regard to jurisdiction and maintainability of the impugned show-cause notice dated 27.01.1988. In respect of the writ petitioner's Calcutta (now Kolkata) factory, the then Collector vide its order dated 02.04.1996 dropped the proceedings. It transpires that the Collector, based on the submissions of the writ petitioner that the calculation of the differential excise duty had to be made in terms of the judgment of the Tribunal in writ petitioner's own case reported in 1994 (72) ELT 315, directed the representative of the Central Excise Department, Saharanpur to recalculate the demand. 11.1 On 11.02.1988, the Commissioner of Central Excise enclosed a copy of letter dated 06.02.1988 addressed by Assistant Commissioner to him enclosing a chart showing the recalculated differential duty. By this letter, the writ petitioner was called upon to submit its reply or submissions within 15 days of the letter. The writ petitioner has averred that by virtue of the recalculation, carried out by the Assistant Commissioner, the demand, in respect of the impugned show cause notice dated 27.01.1988, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court discovered that the Supreme Court had disposed of the appeal against the Tribunal's order (Chennai Bench), on 06.03.2003. This discovery, however, was made by the registry on its own initiative only in August, 2009 whereupon the present Full Bench was re-constituted. We may only observe that we expect more alacrity from counsels. It is these small but significant steps, if taken promptly by lawyers of both sides, that would enable this Court to deal effectively with the burden of pendency. 12.2 From the narration of facts and circumstances, set out hereinabove, it is without doubt established that order dated 10.04.1986 is not an assessment order, much less a final assessment order. Our reasons for coming to this conclusion are as follows: 12.3 The order dated 10.04.1986 categorically refers to the fact that after the said show-cause notices were issued for the period 01.10.1975 to 28.02.1983, and the total excise duty, which, according to the department was payable by the writ petitioner, was in the sum of Rs 5,24,31,23,735.87/-. Against this, on the department's own showing, the writ petitioner had paid a sum of Rs 4,21,01,94,370.44/-. Therefore, vide show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay differential duty to the tune of Rs 80,30,20,263.55/- in addition to the duty already paid on the goods cleared from Oct. 1975 to Feb., 1983 as per details shown in the charts attached. 5. All the previous provisional assessments made, after payment of the aforesaid amount of Rs 80,30,20,263.55/-, being differential duty, may be treated as finally settled." 12.3 In our view, therefore, the show cause notices of 08.12.1978 and 29.01.1979, as corrected by show cause notice dated 13.09.1985, culminated into a final assessment, and consequently, a final demand only by virtue of order dated 28.04.1988. In the show cause notice a provisional demand in the sum of Rs 103 crores (approximately) was made, which, upon finalisation of the assessment, got reduced to Rs 80.30 crores (approximately). 12.4 The submission of the learned ASG that the order of the Director General (Inspection) dated 10.04.1986 was itself an order of final assessment, is thus, in our view, without merit. 12.5 Great stress was laid by the learned ASG on paragraph 46 of the order dated 10.04.1986 in which the following extract of the show cause notice is found: "……accordingly ITC Ltd., Saharanpur are required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide as to what would constitute an assessment order. The income tax officer in the said case, had determined the basis on which tax had to be computed on one sheet of paper, while the calculation with regard to the exact liability was left to the office; which after due scrutiny was signed by the income tax officer. The Supreme Court in that context observed as follows: "………assessment is one integrated process involving not only the assessment of total income but also determination of tax. The later is as crucial for the assessee as the former…… If, therefore, the income tax officer first draws up an order assessing the total income and indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialed by the income tax officer that the process described in Section 143(3) will be complete." The concept of „assessment‟ for the purposes of excise has also to be understood likewise. (v)(b) A perusal of sub-paragraphs (c), (d) & (e) of paragraph 18.1 of order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of adjustment of duty after the final assessment thereof;" 13. In view of our discussions above, both questions are answered in favour of the writ petitioner. The respondent could not have issued the impugned show cause notice dated 27.01.1988, without having finalised the assessment proceedings. As discussed above, the provisions of Section 11A get triggered only upon completion of the final assessment proceedings. In the instant case, at a point in time when the show cause notice dated 27.01.1988 was issued the assessment proceedings were undoubtedly incomplete. They were provisional. The final assessment proceedings got finalized only on 28.04.1988. The order of the Director General (Inspection) dated 10.04.1986, in our view, was not a final assessment order, as contended by the respondent. 14. The other issue posed to us is with regard to applicability of the judgment of the Supreme Court in the case of Serai Kella (supra). The issue, which arose in Serai Kella (supra) was whether the order of the Tribunal passed pursuant to the directions of the High Court, whereby it had quashed the provisional assessment made by the Revenue, with a direction that a fresh assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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