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TMI Blog1979 (8) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval by respondent No. 2, the aluminium coils were exempted from the whole of the duty of excise leviable in view of Notification No. 120/67, dated June 14, 1967. Subsequently, by virtue of Notification No. 55/70 dated March 1, 1970, the earlier Notification was rescinded. By another Notification dated March 1 1970, the Central Government exempted aluminium coils manufactured by the petitioners. However, by Notification No. 74/70, dated March 26, 1970, the Central Government amended the Notification No. 46/70 and the result of which was that the products manufactured by the petitioners were liable to excise duty. 3. Though the Notification No. 74/70 came into force on March 26, 1970, the petitioners cleared the product manufactured in their factory without payment of excise duty till December 20, 1971. It is required to be stated at this juncture that the petitioners are securing the aluminium sheets from the customers and are merely doing labour work in their factory for converting it into aluminium coils. The petitioners cleared the goods from their factory in spite of Notification No. 74/70 and the respondents did not object to that even after the period subsequent to March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents called upon the petitioners to produce gate passes for fixing the exact amount of excise duty leviable on the products cleared between March 27, 1970 and December 19, 1971. The petitioners could not produce the gate passes but produced the requisite challans and ultimately the respondents informed the petitioners that they are not co-operating with the Department for assessing the correct excise duty leviable on the products for the relevant period. The respondent No. 2 served a demand notice dated July 2, 1974 for an amount of Rs. 3,57,704.98 upon the petitioners and this notice was issued under Rule 9(2) and Rule 173-Q of the Rules. The validity and legality of this notice is under challenge. 5. It is required to be stated that the petitioners carried on appeal against this demand notice but the same came to be dismissed by an order dated December 2, 1974 but before that the petitioners have preferred this petition on November 20, 1974. 6. In view of Notification No. 74 of 1970, Mr. Bhandare, the learned Counsel appearing in support of the petition, ....did not challenge the order of adjudication and the fact that the petitioners were liable to pay the excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners were not told either to file classification list or not to clear the goods without payment of excise duty for a considerable long time. The learned Counsel submits, and there is no serious challenge, that the goods were removed openly and to the knowledge of the Department. The learned Counsel submitted that in view of these undisputed facts, the Department was in error in issuing demand notice under Rule 9(2) of the Rules and the case would squarely fall under Rule 10(1) of the Rules. Rule 10(1) provided for recovery of duties or charges short-levied. or erroneously refunded and reads as under:- "(1) When duties or charges have been short-levied through inadvertence, error, collusion or misconstruction on the part of an officer, or through mix-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charges, after having been levied, has been owing to any such cause, erroneously refunded, the proper officer may, within three months from the date on which the duty or charge was paid or adjusted in the owner's account-current, if any, or from the date of making the refund, serve a notice on the person from whom such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where these Rules do not make any specific provision for the collection of any duty or of any deficiency in duty if the duty has for any reason been short-levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, the proper officer may serve a notice on the person from which such duty, deficiency in duty or sum is recoverable requiring him to show cause to Assistant Collector of Central Excise why he should not pay the amount specified in the notice. (2) The Assistant Collector of Central Excise, after considering the representation, if any, made by the person on which notice is served under sub-rule (1), shall....determine the amount of duty, deficiency in duty or sum due from such person not being in excise of the amount specified in the notice and thereupon such person shall pay the amount so determined within ten days from the date on which he is required to pay such amount or within such extended period as the Assistant Collector of Central Excise may in any particular case, allow." 11. This rule also came for consideration before the Supreme Court in Sanjana's case and the Supreme Court observed that Rule 10-A does not apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The duty or charges were short-levied through inadvertence or error on the part of the Officer in permitting the clearance of the goods with nil rate of duty. 13. Mr. Bhandare is right in his submission that the petitioners had not removed the goods clandestinely and the duty or charges were not levied because of the error on the part of the Officer and, therefore, the Department could have proceeded against the petitioners only under Rule 10 of the Rules. Mr. Bhandare submits that the impugned demand notice dated July 2, 1974 was served after expiry of three months from the date on which the duty was liable to be paid and as such the action of respondents cannot be sustained. Mr. Talyarkhan did not dispute that if the case falls within the ambit of Rule 10, then the demand notice would not be valid. In my judgment, in view of the decision of the Supreme Court in Sanjana's case, the case squarely falls under Rule 10 of the Rules, and Rules 9 (1) and 10-A of the Rules have no application whatsoever. In this view of the matter, the demand notice deserves to be quashed. 14. Accordingly, the rule is made absolute in terms of prayer (a) of paragraph 21 of the petition. It hardly r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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