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TMI Blog1991 (8) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... to be effective from 2-4-1986. In all these lists the goods in question was classified under the sub-heading 8548 as electrical parts of machinery or apparatus not specified or included elsewhere in Chapter 85. The second respondent approved the said lists by making an appropriate endorsement on the relevant lists filed by the petitioner and also by issuing a separate endorsement in that regard, which is dated 6th October, 1986. According to the petitioner he acted upon this approval and cleared the goods after crediting the excise duty thereon treating the goods under the Tariff item 85.48. Subsequently, the petitioner received a show cause notice dated 27th January, 1987 asking the petitioner to show cause to the second respondent as to why the goods in question classified hitherto as falling under sub-heading 8548 should not be classified under sub-heading 8517 and consequently why not the differential duty of Rs. 1,52,250/- as detailed should not be recovered from the petitioner in respect of the goods cleared during the period 20th August, 1986 to 22nd December, 1986 and this recovery was sought under Section 11A of the Act. The petitioner has challenged this notice as having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (3) of Section 11A, which indicates that the starting point for the period of six months is either the date on which the monthly return has to be filed by the assessee or the date on which the return is actually filed or the date on which the duty is payable under the Act or the rules. Similarly, in the case of an erroneous refund, the relevant date is the date of such refund. From this the learned standing Counsel for the Central Government urged that it is clear that Section 11A contemplates the reopening of an assessment in an appropriate case and making an order of reassessment. Proviso to Section 11A(1) was pointed out in support of the contention that the content of the power under Section 11A is to rope in for collection of any duty that has escaped from the net of collection and a larger period of 5 years is given in case such an escapement was caused by the culpable conduct of the assessee. 5. The Act levies the duty of central excise on all excisable goods which are produced or manufactured in India. The normal basis of the levy is to assess the tax on the value of the goods at the time of its removal from the manufacturing place. In other words, on completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e list the proper officer shall hold an appropriate enquiry. This Rule governs the classification of the goods. The contention of the assessee in the instant case before us is that this enquiry and the consequential approval is a quasi-judicial function and the approval is a decision which is independent of the ultimate assessment order. As in every fiscal legislation imposing tax the Act provides for appeals and further appeals to resolve the dispute under the Act. Under Section 35 an appeal lies to the Collector (Appeals), which can be invoked by any person aggrieved by any decision or order passed under the Act. Section 35E empowers the Board to call for and examine the record of any proceeding in which a Collector of Central Excise has made any order as an adjudicating authority and the purpose is to satisfy itself as to the legality or propriety of any decision or order of the Collector. But, the Board by itself cannot revise the order of the Collector. It has to direct the Collector to apply to the Appellate Tribunal for the determination of the points. Similarly, if the decision or order is of any adjudicating authority subordinate to the Collector, the Collector may call fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid or whenever the duty has been short-levied or whenever the duty was short-paid or whenever the duty paid was erroneously refunded, an appropriate notice may be served on the person chargeable with the duty etc. and then proceed to recover the amount due to the revenue within six months from the relevant date. The proviso has enlarged the period of limitation to take action. To understand the content of Section 11A, the entire Section will have to be read. The proviso to sub-section (1) throws ample light on the amplitude of this provision. If an assessee acts in such a way and escapes assessment, due to fraud, collusion or any willful mis-statement or suppression of facts etc. he maybe proceeded with for the recovery of the duty within five years from the due date. Suppose an assessee by virtue of any fraud, collusion or willful mis-statement gets an approval under Rule 173B for the list filed by him, which results in non-leviability of duty on the goods and Section 11A is not attracted to such a situation, the only other remedy available to the revenue is Section 35E. The period of limitation to invoke Section 35E is two years from the date of the decision or order to be ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the same throughout; but, the fact is, such a provision is found in the Income Tax Act. Such a power to assess the escaped subject from the net of taxation is essential to safeguard the interest of the revenue. The above situation under the Income Tax Act may be further considered with reference to Section 263 of the Income Tax Act, where under the Commissioner of Income Tax is given the power to revise an order of the Assessing Officer, if he finds the said order is erroneous and is prejudicial to the interest of the revenue; here, the power of the Commissioner is confined to examine the record of any proceedings culminating in the order sought to be revised. If the Commissioner, on examination of the record opines that an order of assessment is erroneous and prejudicial to the interest of the revenue, he may resort to this power and interfere with the order of assessment. This power to some extent covers a part of the power available to the Assessing Officer under the aforesaid Section 147(b) of the Income Tax Act. Thus, it is possible that in a fiscal legislation, certain powers may fall within more than one kind of jurisdiction. The essence of the matter is, whether the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e beyond the period prescribed by Rule 10. The notice envisaged collection of duty left payable by the assessee, in view of the earearlier under valuation of the goods by the assessee in the assessee's price list. The revenue contended that the case attracted Rule 10A in which there was no period of limitation to take action to recover the duty. Revenue's contention was accepted by the Supreme Court. In the course of its judgment, Supreme Court observed at page 2571, that: "Rule 10 presupposes an assessment which could be reopened on specified grounds only within the period given there". In other words, Supreme Court clearly indicated that Rule 10 provided a power to reopen an earlier assessment on grounds specified in the said Rule. As to the meaning of the term 'levy' under Rule 10, Supreme Court held that it was not "used in the Act or the Rules as meaning actual collection". It was a term wider in its import than the term 'assessment' and it may include both 'imposition' of a tax as well as assessment. It was further observed that: "The term 'assessment' is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tep necessary for leading to the making of an order of assessment, this approval could be a subject of modification, while reopening the assessment under Section 11A. Above conclusion of ours is sufficient to negative all the contentions raised by the petitioner. However, it is necessary to refer to a few decisions cited at the bar. 14. In N.B. Sanjana, Assistant Collector of Central Excise, Bombay and others v. The Elphinstone Spinning and Weaving Mills Company Ltd. [AIR 1971 SC 2039 = 1978 (2) E.L.T. (J 399) (SC)], the AR 1 Form filed by the assessee had been accepted and assessment order had been made. There was no suppression of any relevant material by the assessee. Later, the authorities entertained some doubt about the description of the goods and hence issued notice demanding differential duty, along with a show cause notice. The notices were issued beyond the period provided by Rule 10. Supreme Court held that the subject of the notices was covered by Rule 10 and hence the limitation prescribed there under operated as a bar to the proceedings in question. As to the applicability of Rule 10, it was observed at page 2047: "Similarly even in cases where there has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f limitation. This plea was upheld and Supreme Court applied the six months rule under Section 11A in this regard, as there was no suppression of any fact by the assessee earlier. 18. Collector of Central Excise, Hyderabad v. M/s. Chemphar Drugs and Liniments, Hyderabad [AIR 1989 (SC) 832 = 1989 (40) E.L.T. 276 (SC)] was concerned with the classification list and availing of the exemption under a particular Notification. This was found to be erroneous. But the assessee's conduct was not in any manner blame worthy. Hence, the recovery of the duty for a period of six months prior to the date of the notice was upheld under Section 11A after rejecting the revenue's contention that the larger period under the proviso was available to the revenue. 19. In Mis. Elson Machines Pvt. Ltd. v. Collector of Central Excise [AIR 1989 (SC) 617 = 1988 (38) E.L.T. 571 (SC)], the contention that the revenue cannot change the classification list, having approved it earlier was negatived. At page 619, the Supreme Court observed: "The next submission on behalf of the appellant is that the Classification Lists had been approved earlier and the Excise authority was estopped from taking a different vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter under Section 11B of the Act, thus "Rule 10 as it stood prior to its amendment on 6th August, 1977, empowered the Assistant Collector of Central Excise to determine, inter alia, whether duties or charges have been short-levied through inadvertence, error, collusion or misconstruction on the part of an officer. Under the amended Rule 10 it is the Assistant Collector who has been empowered to recover the duties not levied or not paid or short levied or not paid in full or erroneously refunded. If the successor officer cannot grant the refund, then the successor officer cannot also invoke the provisions for recovery of duty short-levied or not levied. Such construction would reduce the provisions of Rule 10 and Rule 11 of the said Rules to futility". 23. Mr. Chander Kumar read the report of the Excise Law Times under the Chapter 'Tit-Bits' cited as 1990 (47) E.L.T. A109, wherein it is stated that the Supreme Court affirmed the view expressed by the Appellate Tribunal that an approved classification list cannot be reopened especially when there is no change in the pattern of manufacture. The decision of the Appellate Tribunal is found in Aluminum Industries Ltd., Kerala v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shyam Sunder U. Nichani v. Assistant Collector of Central Excise Customs and Another) another Bench of this Court upheld the action taken to recover the duty short-levied by virtue of the approved classification list along with an endorsement that the assessee was entitled to the benefit of certain exemptions. At paragraph 10 Justice B.P/Singh speaking for the Bench observed : "On the other hand, the case of the respondents is that by reason of the mistake on the part of the respondents the classification list was approved and the appellant was given benefit of total exemption from payment of excise duty. This amounted to a "short levy" of excise duty and therefore the provisions of Section 11A of the Act were applicable for recovery of such excise duty, which was short levied. In view of the decisions of the Supreme Court on this question, the contention of the respondents must be accepted". Though at another part of the judgment there is an observation that the scope of Section 11A was not to be considered in the said case and that normally power of review will have to be specifically conferred on an authority, the said decision in no way runs counter to the conclusion we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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