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TMI Blog1986 (1) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15-9-1975 on the same basis were also approved. 4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. 5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. 6. These show-cause notices are challenged by the petitioners-company on various grounds : (i) that the impugned notices were issued under a misconception of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of 17-7-1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17-7-79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. 10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. 11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows: "5. Where the excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Section 4, 4(d) defines what is the value in relation to any excisable goods. "(d) value in relation to any excisable goods; (i) xx xx xx xx xx xx xx xx xx xx xx xx (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale". (underlining is mine) What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. 18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. 19. The next case relied upon Sri Bhat is : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated. 25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6-8-1977 and the show-cause notices dated 21-7-1977 and 17-7-1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6-8-1977 and the limitation period of one year should apply to the case. 26. In support of his argument he relies upon a decision reported in AIR 1973 Supreme Court page 2585 (The C.I.T. Bombay v. O.Meghraj Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. 27. In AIR 1962 S.C. 918 (ITO v. S.K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act, 1922, which was only prospective. 28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. 34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the records and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. 35. For the reasons aforemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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