9911796707
TMI Blog1990 (8) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner was called upon to furnish certain material relating to cost of production, sale vouchers issued by the depots, sale price at the factory and so on. On a consideration of the material furnished by the petitioner, the Collector, Central Excise directed that since some goods were sold at the factory gate itself, the price charged at the gate shall be the wholesale cash price. Accordingly, the Assistant Collector called upon the petitioner through his letter dated 18-5-1976 to file a fresh price list, which the petitioner did under protest. He requested the Assistant Collector either to revise his order or to pass an appellate order so as to enable him to pursue the remedy of appeal. The Assistant Collector replied that his letter dated 18-5-1976 may be treated as an appellate order. The petitioner, however, did not file any appeal or pursue the matter further. He submitted to the directions of the Assistant Collector and furnished the price list on the basis of ex-factory wholesale price, which was provisionally approved by the Assistant Collector through his letter dated 5-7-1976. The petitioner was removing the goods and selling them both at the factory gate and also at its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of duty, allegedly evaded by the petitioner, in a sum of Rs. 4,01,36,959.15P. Soon upon receiving this notice, the petitioner approached this Court by way of this writ petition, without furnishing an explanation to the notice. At his instance, all further proceedings in pursuance of the impugned notice have been stayed. 7. Sri S.P. Gupta, learned Senior Advocate appearing for the petitioner, assailed the validity of the impugned show cause notice on the following grounds :- (i) The impugned notice is barred by time, having been issued beyond six months of the order of the Assistant Collector proposed to be revised. Any proceeding in pursuance of such a notice would amount to a clear harassment of the petitioner and must, therefore, be interdicted. (ii) Inasmuch as the earlier notice issued by the Superintendent (Preventive) on 6-5-1981 under Section 11A of the Act was bad in law, the present notice, seeking to revive and continue the proceedings in pursuance of that notice, is equally bad. There is absolutely no allegation of suppression of facts in the show cause notice issued by the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the other hand, Sri Markandey Katju, the learned counsel appearing for the Department, contended that the show cause notice under Section 11A was based upon an elaborate inquiry and a voluminous material. The case against the petitioner is that he has by suppression of relevant facts and on the basis of mis-representations obtained approval of the price list and, therefore, the show cause notice under Section 11A seeking to revise the price list within the permissible period of five years from the date of the said notice is perfectly valid in law. The said show cause notice clearly alleges that there was suppression of relevant facts and mis-representation. The order of the Assistant Collector dated 17-6-1981 dropping the proceedings under Section 11A was based upon a misapprehension of facts and law and, therefore, the Collector sought to revise and set aside the same under the impugned notice. The impugned notice is neither barred by time, nor can it be said to be without jurisdiction. The petitioner is really seeking a writ of prohibition, which lies only where total want of jurisdiction is made out. No such suggestion can be made in this case. A writ petition against a sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of secret dealing between the petitioner and his favoured buyers. Only a small percentage, i.e., less than 4% of the total sale, has been supplied at the factory gate to such buyers with whom the petitioner had secret dealings. In this manner, the petitioner manipulated to get the whole range of his goods assessed at a lower price. Further the Hindustan Safety Glass Works Ltd., to whom the goods have been supplied at a favourably low price, are deemed to be under the same management as contemplated under Section 370(IB) of the Companies Act, 1956. Inquiries have revealed that no industrial buyer of the same class could get the goods from the petitioner at the prices at which such goods were sold to Hindustan Safety Glass Works Ltd. The petitioner has, by adopting the above modus operandi, evaded payment of duty amounting to Rs. 4,01,36,959.15P during the period in question. 11. As stated above, in the list of documents annexed to the notice, as many as 51 documents were referred to. A copy of the inquiry report of the Superintendent (Preventive) IOD, Allahabad, was also enclosed alongwith several annexures appended thereto. Since the inquiry report forms part of the show cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The result of investigation carried out at Hyderabad was found to be startling and induced the Department to study the basis for the approval of the price list. Accordingly, the Superintendent visited the premises of M/s. Harakh Chand & Sons, a wholesale purchaser from the petitioner. It was found that he was selling goods at double the value on which the duty was paid. Elaborate inquiries were made, which too re-inforced the Department's belief that the price disclosed as the sale price at the gate of the factory was a misleading one. It was further found that the petitioner (Triveni Sheet Glass Works Ltd.) and the bulk purchaser at the gate (Hindustan Safety Glass Works Ltd.) are controlled by the same H.U.F. (Particulars in support of the said allegation were set out). In short, it was pointed out that the same family held 66% of public shares in the petitioner company and 100% share in the Hindustan Safety Glass Works. Further, it was found that the registered office and administrative office of both the companies are situated in the same building at Calcutta and the affairs of both the companies are being looked after from the same office. Same officials attend to the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mis-statement and suppression of facts." It is further alleged that the petitioner has "wilfully mis-stated and suppressed facts and incorrectly declared the values for approval contrary to the declaration given in the price list No. 7/76." It then says that the order of the Assistant Collector dated 17-6-1981 is based on erroneous facts and is not proper, legal or correct. The impugned show cause notice proposes to set aside the order dated 17-6-1981 and to confirm the demand of Rs. 4,01,36,959.15P. 14. It would be appropriate at this stage to refer to the relevant provisions of the Act as they stood at the relevant time. Section 4(1) reads as follows :- "Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale :" Clause (c) of sub-section (4) of Section 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been passed under this Act or the rules made thereunder by a Central Excise Officer subordinate to him (not being a decision or order passed on appeal under Sec. 35) for the purpose of satisfying himself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as he thinks fit. (3)(a) No decision or order under this section shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence. (b) Where the Board or, as the case may be, the Collector of Central Excise is of opinion that any duty of excise has not been levied or has been short-levied or erroneously refunded, no order levying or enhancing the duty, or no order requiring payment of the duty so refunded, shall be made under this Section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in Section 11A. (4) No proceedings shall be commenced under this Section in respect of any d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he one under Section 11A; it is only a revisional power; there could be no allegation of fraud or misrepresentation or other grounds mentioned in the proviso to Section 11A(1) in the case of proceedings sought to be revised under Section 35A; hence such proceedings must necessarily commence within six months of the decision or order proposed to be revised. Sub-section (4) provides for cases of the nature other than those mentioned in clause (b) of sub-section (3). In short, clause (b) of sub-section (3) provides for a special and shorter limitation in cases where duty is sought to be levied or enhanced or the refunded amount directed to be re-deposited; in other cases sub-section (4) applies. Two decisions rendered by Delhi and Bombay High Courts are relied upon in this connection besides certain decisions of the CEGAT. On the other hand, the Department submits that Section 11A provides for two periods of limitation, one in the main limb of sub-section (1) of Section 11A and the other in the proviso thereto. There is nothing to show that only the first of the two limitation periods is imported into Section 35A(3)(b). Both the limitations should be read into the said clause. Subsect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot inclined to agree with the interpretation placed upon the said provisions by the learned counsel for the petitioner, namely, that Section 35A(3)(b) provides special period of limitation of six months for exercise of the power of revision under the said section where it relates to non-levy/short-levy/erroneous refund and that sub-section (4) applies to other cases. In our opinion, the language of the Section does not admit of such a construction. If the intention of the Legislature was to provide for a shorter period of limitation, namely, six months, in proceedings of the nature referred to in clause (b) of Section 35A(3), nothing was easier than to provide so specifically; it was not necessary to refer to the time limit specified in Section 11A. We also do not see any warrant to construe the reference to Section 11A as a reference to the main limb of Section 11A(1) but not to its proviso. Both the main limb and the proviso are part and parcel of the same sub-section. Such a language was only meant to import both the periods of limitation mentioned in Section 11A into Section 35A(3)(b). There is yet another reason for not entertaining this plea at this stage. The said period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so is of a general character, the third proviso is in the nature of a special provision, carving out a particular area from within the larger area covered by the second proviso. Accordingly, the Bench was of the opinion that where the action proposed is of the nature mentioned in the third proviso, proceedings have to be initiated within a period of six months. The Bench was of the further opinion that the words "time limits specified in Section 11A" used in the third proviso should mean a period of six months only for the reason that under Section 36(2) what is sought to be revised is the decision or order of a Central Excise Officer and that it is not an original proceeding like the one under Section 11A. We have already expressed our opinion that if the intention of the Parliament was to provide a period of six months only, nothing was easier than to say so expressly. It was not necessary to refer to the "time limit specified in Section 11A". Further, Section 11A does not specify a single period of limitation, but to two different periods of limitation. The similarity of the language employed in Section 35A(3)(b) and Section 11A induces us to hold that where an order under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. We may reiterate that the plea of limitation is premature. That question will arise only when the final order to be passed proposes to levy or enhance the duty or if it proposes to direct payment of the duty erroneously refunded. It is at that stage that this question would arise. The proceedings may be dropped or the order of the Appellate Collector may be merely set aside and the matters remitted for fresh consideration, in which case the question of limitation would not arise. 22. For all the above reasons, we cannot hold that the impugned show cause notice must be quashed on the ground that it is barred by limitation. 23. We are not impressed by the argument that the original notice under Section 11A itself is bad for the reason that it does not propose to modify the approved price list. We cannot accede to the proposition that until and unless the price list is modified, a proceeding under Section 11A is not maintainable. A reading of the notice under Section 11A shows that according to it, the approval of the price list was vitiated for several reasons mentioned therein and on that basis it has raised a specific demand in the sum of Rs. 4,01,36,959.15P. Similarly, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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