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TMI Blog1998 (11) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Central Excise Act on a direction given by this court, at the instance of the Collector, Central Excise, Patna. The two questions on which the Tribunal was directed to state the case and refer to this court are as follows : "(i) whether provision of limitation as prescribed under Section 11A of the Central Excise Salt Act, 1944 which relates to demand of duty not levied, not paid, short levied, short paid or refunds erroneously granted and does not relate to credit of duty can be engrafted in Rule 57-I of the Central Excise Rules, 1944 for disallowing credit and whether Section 11A will over ride Rule 57-I ? (ii) whether decision in Collector's conference observing application of time limit prescribed in Section 11A for the recovery of wrong credit taken in terms of provisions of Rule is binding when there is no time limit prescribed in Rule, 57-I itself ?" 3. The Tribunal has submitted a common statement in all the three cases which are as follows : "The respondent, M/s. Tata Engineering Locomotive Company Ltd. Jamshedpur and availed themselves of the facility of Modvat credit in terms of Rule 57A of the Central Excise Rules, 1944. Under the said rule, Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector of Central Excise (Appeals) who by order, dated 31-10-1988 held that the assessee was entitled to Modvat credit on the two articles in question. Against that order the Collector, Central Excise preferred appeal before the Customs Excise Gold Control Appellate Tribunal, Calcutta. The Tribunal by order, dated 30-3-1990 allowed the Revenue's appeal on merits holding that the Modvat credit was wrongly availed of by the assessee on the two articles in question. The Tribunal, however, restricted the demand for recovery of credit made by the department to the period within six months from the date of the issuance of the notice holding that the period prior to six months from the date of notice was barred by limitation as provided under Section 11A of the Act. 5. Both the assessee and the Revenue made applications under Section 35G(1) of the Act asking the Tribunal to refer to this court certain questions of law which according to their respective cases arose out of the Tribunal's order. On the application filed by the assessee the Tribunal drew up a statement of the case and referred the following two questions of law for a decision by this Court : (i) Whether the Tribunal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n all those cases) that arises for consideration is whether a demand for recovery of Modvat credit wrongly availed of can be made under Rule 57-I regardless of any period of limitation or whether the period of limitation provided under Section 11A of the Act would also govern a demand for recovery under Rule 57-I. Tax Case No. 4/1991 (R) and C.W.J.C. No. 3867/1993 (R) pertain to question whether Modvat credit of excise duty paid on Endless P.B. Wire Mesh and Industrial Cloth would be available in the manufacture of printing paper ? 10. I propose to first take up the question of limitation in a demand for recovery of Modvat credit under Section 57-I of the Rules. 11. Prior to 6-8-1977 the provisions concerning recovery of duties and the period of limitation for such recoveries were contained in Rules 10 and 10A of the Central Excise Rules, 1944. The provisions of those rules were substituted by Notification No. 267/77-C.E., dated 6-8-1977 by a single Rule 10 which provided for a period of limitation of six months for recovery of duties which were not paid for reasons other than fraud, collusion or any wilful mis-statement or suppression of facts; in the latter cases, the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 195; x x x" x x x x x 13. Rule 57-I is part of Modvat credit scheme which was given legal sanction by incorporating Rules 57A to 57J under sub-chapter AA in Chapter 5 of the Central Excise Rules by Notification No. 176/86-C.E., dated 1-3-1986. Rule 57-I at the time when the disputes in all these cases arose and prior to its amendment on 6-10-1988 was as follows : 57-I. Recovery of credit wrongly availed of or utilised in an irregular manner. - (1) If the credit of duty paid on inputs has been taken wrongly, the credit so taken may be dis-allowed by the proper officer and the amount so dis-allowed shall be adjusted in the credit account or the account-current maintained by the manufacturer or if such adjustments are not possible for any reason, by cash recovered from the manufacturer of the said goods : Provided that such manufacturer may make such adjustments on his own in the credit account or the account-current maintained by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 57J of the Rules; and that Rule 57-I being an integral part of a self contained code and pertaining to the special provisions concerning Modvat credit scheme it must be held to be unfertered and un-affected by the period(s) of limitation prescribed for recovery of excise duty as provided, in a `general manner', under Section 11A of the Act. Further, according to the Revenue Section 11A would be attracted to a case where same error was made in the assessment of excise duty leviable whereas Rule 57-I simply provided for adjustment and settlement of accounts maintained under Rule 57-G. It was submitted that though both Section 11A and Rule 57-I related to recovery of duties, the recovery under Rule 57-I was of special nature, as it was not dependent upon leviability of duty under Section 3 of the Act. According to the Revenue, therefore, a credit of duty taken unlawfully or irregularly by the assessee before the amendment of Rule 57-I on 6-10-1988 could be recovered without any limitation. 16. In substance all the submissions advanced on behalf of the Revenue are arguments in different forms arising from the principle of Generalia Speciali- bus Non Derogant in support of its cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the basic principles of interpretation of statutes. In this connection reference may be made to a decision of the Supreme Court in the case of J.K.C.S. Mills v. State of UP reported in AIR 1961 Supreme Court 1170. In para 9 of the judgment the Supreme Court has held that specific provision prevails over the general provision and the general provision applies only to such cases which are not covered by special provision. The rule applies to both type of cases, that is, while interpreting different provisions in different statutes as well as in the same statute. The Supreme Court has observed as follows : `The learned Attorney General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (XVIB) of the Act is a place of subordinate legislation. In my view, the two provisions being on two different levels, the principle of Generalia Specialibus Non Derogant cannot be properly applied for judging the relationship between the two. It may be noted that in J.K.C.S. W. Mills v. State of U.P. - AIR 1961 S.C. 1170 on which reliance was placed in the Gujrat decision, the Supreme Court considered the provisions contained in different clauses of the same Government order. In para 9 of the Supreme Court judgment quoted and relied upon in the Gujrat decision, the Supreme Court applied the principles of general provisions yielding to special provisions observing that the principle would apply for resolving a conflict between general and special provisions in the same legislative instruments and further observed, "that when the same person gives two directions - - - - ." In the case in hand Section 11A is part of the enactment made by the Parliament while 57-I is a rule framed by the Central Government, in exercise of the delegated powers under Section 37 of the Act. The two provisions are, thus, neither in the same legislative instrument nor are they framed by the same person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be read along with the provisions of the Act and not in isolation." Then after quoting the relevant parts of Section 11A, it is further observed as under : "This provision speaks about the recovery of any duty of excise which has (not) been levied or paid or which has been short-levied or short-paid or erroneously refunded and takes in its cover all excise duties which have been erroneously paid, not levied or short-levied or short-paid. There is nothing in this Section which would enable us to presume that the duty which was paid against finished goods and to which the Modvat Scheme was applicable is excluded from the operation of this Rule, nor the Rule which stood before the amendment in the year 1988, had anything which would suggest that the rule excludes the operation of the limitation prescribed in Section 11A." 22. On the question of applicability of the period of limitation provided under Section 11A to a demand for recovery made under the un-amended Rule 57-I, a division bench of the Madras High Court has also taken the same view in Advani Oerlikon Ltd. v. Assistant Collector of Central Excise - 1993 (63) E.L.T. 427. Thus, in para 14 of the judgment, it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for recovery made under Section 57-I of the Rules even though there was no limitation provided in the rule before its amendment on 6-10-1988. 26. For the reason discussed above, I have no hesitation in answering question No. (i) in Tax Case Nos. 1, 2, 3 and 5 of 1991 (R) in the affirmative, that is to say, in favour of the assessee and against the Revenue. 27. In view of my answer to question No. (i), nothing really remains in so far as question No. (ii) in Tax Case Nos. 1, 2 and 3 of 1991 (R) is concerned. It may, however, be pointed out that the Tribunal while restricting the demands for recovery within the period of limitation as provided under Section 11A nowhere stated in its order that the decision in the Collectors' conference was binding on it nor did it pass its order on the basis of the decision in the Collectors' conference. It simply referred to the decision taken in the Collectors' conference as being in accord with the view taken by it. Therefore, question No. (ii) in Tax Case Nos. 1, 2 and 3 of 1991 (R) does not in fact arise from the Tribunal's order and needs no answer from this court. 28. A few words are, however, required in so far as question No. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1970 SC 196, the Supreme Court observed as follows : " The second contention of Mr. Aggarwala relates to the claims being barred under Article 137 of the Limitation Act, 1963. This ground of limitation has not been raised either before the Labour Court or even in the special leave application filed in this court. The appellant has filed C.M.P. No. 1259 of 1969 for permitting him to raise this question of limitation based upon Article 137 of the Limitation Act of 1963. As no fresh facts had to be investigated and as the matter could be dealt with as a pure question of law, we permitted the appellant to raise this plea of limitation." 32. In view of the aforesaid facts, I am clearly of the opinion that in the facts of the case the Tribunal was quite right in applying the period of limitation provided by law and to restrict the demand of recovery made by the department on that basis. In the facts and circumstances of the case, I answer question No. (ii) of Tax Case No. 5/1991 (R) in the affirmative, that is to say, in favour of the assessee and against the revenue. 33. The only question that now remains to be examined is question No. (i) in Tax Case No. 4/1991 (R). As noted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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