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TMI Blog2005 (7) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn manufactured and consumed captivity, and the court by its order dated 8-5-1981 stayed the recovery of the disputed duty subject to the appellants furnishing a bond for the same and furnishing a bank guarantee for 50% of the disputed amount of duty. The appellants executed the bond in Form-B-13 along with requisite bank guarantees in respect of 50% of the duty payable on yarn captivity consumed. The bond was accepted and assessments were made provisional under Rule 9B of the Central Excise Rules, 1944 pending the disposal of the writ petition before the High Court. By Notification 22/82 dated 20-2-1982 Rules 9 and 49 of the Central Excise Rules were amended with retrospective effect by the Finance Acts requiring payment of duty even on captively consumed yarn. The Delhi High Court in the case of J.K. Cotton Spinning and Weaving Mills reported in 1983 (12) E.L.T. 239 (Del) held that yarn captively consumed is chargeable to duty and the writ petition filed by the present appellant was also disposed of following the principles laid down in the J.K. Cotton Mills case. The Court, however, observed that the present appellants would be entitled to invoke the provisions of Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995 contending that the question of assessment was not an issue and it was incorrect to levy and collect duty on yarn captively consumed and contending that they were entitled to refund of Rs. 68,78,320.65 already paid by them under protest in accordance with the interim order of the Supreme Court, as the recovery was barred by limitation. They also filed civil suit before the Court of Civil Judge, Senior Division Solapur, seeking a declaration that the entire proceedings initiated by the Superintendent on 11-4-1995 was without jurisdiction but the suit was dismissed both on maintainability and on merits, and the appeal against the dismissal was disposed of by the High Court directing the appellants to prefer a statutory appeal under the Central Excise Act, 1944. The provisional assessment was finalised by the Range Superintendent, who directed the appellants to pay the balance duty of Rs. 63,57,102.76 (out of the total dues of Rs. 1,37,56,641.30 payable as per RT-12 returns for May, 1981 to May, 1984 the assessees had already paid Rs. 68,78,320.65 through PLA and an amount of Rs. 5,21,217.89 was adjusted against a sanctioned refund). An appeal before the Commissioner (Appeals) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisional assessment, there is no requirement of issuing the show cause notice under Section 11A. The fact that the assessments were provisional is borne out by the fact that the appellants have opted to furnish bank guarantee and the bonds in form B-13 in favour of the Central Bank. This bond specifically says that the appellants desire that the assessments should be made provisional till the matter is decided by the Hon'ble High Court/Supreme Court. It is important to note that it was not the direction of the Hon'ble High Court or Hon'ble Supreme Court to execute the bond in form B-13 but it was the appellants themselves who have chosen the format of such a bond to be executed in favour of the Government as per directives of the Hon'ble Supreme Court. Moreover the figures of the amount of 50% are drawn as per provisional assessment itself and they are precisely mentioned in the terms thereof. The Hon'ble Supreme Court has asked the appellants to pay 50% of the past dues and to provide guarantee for the balance amount. If the appellants were of the view that there was no demand pending against them and the assessments were not provisional, they should have pointed out the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Rule 9B from the appellants and that is what the Supdt. has precisely done, who is the proper officer to assess RT 12 returns under Rule 173(1) and, therefore, while finalising the assessment he has demanded differential duty. As directed by the Hon'ble Supreme Court, the jurisdictional Supdt. has offered every opportunity to the appellants to present their say in the matter and after considering them he has demanded the deficiency in the duty. The Hon'ble Karnataka High Court has in the case of NGEF Ltd. v. Asstt. Collector, 1991 (56) E.L.T. 518 (Karnataka) held that provisional assessment includes incomplete assessment which the authorities are entitled to finalise under Rule 9B/173(i). Since in the present case the assessments were not finalised, they have to be treated as provisional. In the Swan Mills v. Union of India, 1989 (44) E.L.T. 601 (Bom), the Hon'ble High Court has held that issue of notice under Section 11A is not necessary when the assessments are not finalised. Further the Hon'ble Supreme Court has itself stated in its order that the Bank guarantees shall be furnished to the dept. for its encashment. This is precisely what has been done in this matter that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard both sides. 6. We agree with the appellants that this is not a case where any payment of duty was effected pending finalisation of classification or price lists, as seen from the facts set out above but a situation where the issue was subjudice. In these circumstances the ratio of the Larger Bench decision in the case of Rajiv Mardia v. CCE, Indore, 2000 (118) E.L.T. 627 holding that there should be material on record to show that the procedure laid down in Rule 9B was followed for the purpose of showing that assessments are provisional, namely, that there should be a provisional assessments order in terms of Rule 9B, is squarely applicable. The Larger Bench held that decisions of the Apex Court in the case of Samrat International Pvt. Ltd. v. Collector, 1992 (58) E.L.T. 561 holding that the clearances between the date of filing of classification list and approval of the same must be presumed to be provisional was not limited to cases of refund but applied even to cases of demand. The subsequent Larger Bench decision of Rajeev Mardia v. CCE,. Indore, 2001 (129) E.L.T. 334 to the effect that the procedure contemplated by Rule 9B need not be followed for payment pending d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vires of the amended rules as well as the retrospective effect thereto notified in 1982 was upheld by the High Court, and the appellants' petition was disposed of by the High Court on 17-4-1984. While disposing of the writ petition, the Hon'ble High Court directed that the petitioners would be entitled to invoke the provisions of Section 11A when recoveries were sought to be made from it for the past period (emphasis supplied). Similarly, the court directed that the respondents would be entitled to claim the benefit of Section 11B of the Act where returns are to be made. While granting the petitioner's prayer and certifying the case as fit for appeal to the Supreme Court, the High Court directed that interim orders passed by the court during the pendency of the petition will continue to operate till 8-5-1984. The appellants filed an appeal before the Supreme Court thereafter. 12. The Supreme Court [1996 (83) E.L.T. 259 (S.C.)] admitted the appeal and passed the following order :- "In this group of cases common questions arise for determination. They are covered by the decision of this Court in M/s. Cotton Spinning and Weaving Mills Ltd. Anr. v. Union of India and others [1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-1995, the Supreme Court upheld the validity of the amendments to Rules 9 and 49 made in 1982. The Supreme Court also observed that it would cause enormous hardship to the appellants if the retrospective nature of 1982 amendment was interpreted to mean that the department could recover duties right from 1944. It therefore ordered that the demands for duty could be made only in terms of the provisions of Section 11A (limitation etc. applies). 14. The Commissioner (Appeals) held that the appellants' case is one of provisional assessment and therefore no notice under Section 11A was necessary while finalising the assessments for the period May 1981 to May 1984. During this period the assessments were pending finalisation due to interim orders of the High Court and subsequently the apex court. 15. Neither the High Court nor the Supreme Court directed the appellants to execute a provisional assessment bond nor directed the department to provisionally assess the goods during the pendency of the litigation (1981 to 1984). It is only the appellants who requested the department to assess the goods provisionally and accordingly executed a bond binding themselves to pay the differential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcept to keep the assessments provisional and incomplete. The court directed the appellants to execute a bond binding themselves to pay duty if they were required to do so. They, all the same, chose to seek provisional assessment. In the light of the fact that the appellants did not file a revised CL after they obtained a stay, the clearances made by them during the period have to be held provisional even in terms of the Tribunal's decision in Rajeev Mardia's case. 17. The appellants' contention that procedure envisaged under Rule 9B is not followed in their case and therefore their case does not come within the purview of provisional assessment has to be rejected. A five-member Bench of the apex court in a case reported in 1994 (53) ECR 329 (J.K. Synthetics v. CTO) held that when a statutes levies a tax, it does so by inserting a charging section by which a liability is created and provides a machinery to make the liability effective. It therefore provides the machinery for the assessment of duty liability already fixed by a charging section. Ordinarily, the charging section is strictly construed like in other statute but the rule of strict construction is not extended to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by past period. Viewed in the light of the Supreme Court's observation that it would cause enormous hardship to the assessee if duties are demanded from 1944 onwards because of the retrospective nature of amendment made in 1982. the past period', the Supreme Court had in mind, is not the period between 1981 and 1984 but some period prior to that. This is because the period between 1981 and 1984 is covered under a bond. If the department were to demand duties prior to 1981, it should surely be covered under the provisions of Section 11A. It cannot be argued that a litigant can get away from his obligations under the bond on the plea that a notice has not been issued under Section 11A. The Hon'ble Supreme Court in the case of CC, Shillong v. Wood Crafts Products Ltd., 2002 (143) E.L.T. 247 held that an assessee is obliged to make a restitution in case the department succeeds in a particular case. The facts of that case are slightly different from the present one, but the principle laid down by the Supreme Court applies to this case as well. It is not open to the appellants to say that they would not abide by the decision of the Supreme Court by not allowing the department to enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment was resorted to by the department. I therefore hold that no notice under Section 11A need to be issued in their case. 22. The appeal therefore has to be rejected and the impugned order of the Commissioner (Appeals) upheld. Sd/- (Moheb Ali M.) Member (Technical) 23. The following difference of opinion is placed before the Hon'ble President for reference to Third Member for resolving the difference:- Whether the present case cannot be treated as one of provisional assessment and issue of show cause notice was necessary, and since no notice under Section 11A of the Central Excise Act, 1944 was issued to the appellants for recovery of the duty confirmed, the impugned order is required to be set aside and the appeal allowed, as proposed by Member (Judicial)? OR Whether the case is one of provisional assessment and no notice under Sec. 11A needs to be issued and the order is required to be upheld and the appeal rejected, as proposed by Member (T)? Sd/- Moheb Ali M. Member (Technical) Dated: 18-3-2006 Sd/- (Jyoti Balasundaram) Member (Judicial) Dated: 18-3-2006 23.1 [Order per : S.S. Sekhon, Member (T)]. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for issuing the Show Cause Notice under Section 11A on the grounds : (i) The ld. Advocate has relied upon the decisions where facts were entirely different. In the case of J.K. Cotton Spg Wvg. Mills, case, the Delhi High Court granted stay in terms of prayer (a) in the petition which reads as follows : "It is therefore, most respectfully prayed that this Hon'ble Court may be please to : (a) grant of stay permitting the petitioners forthwith to further process yarn, in its composite mill in the manufacture of fabrics at nil rate of duty and to clear cotton fabrics only (without payment of duty on cotton yarn) and to restrain the respondents 4 to 6 from taking any action or proceedings pursuant to and/or on the same basis as the contents of the directive of the Board, respondent no. 2, and to stay further proceedings pursuant to notices dated 4-5-1981 and addenda dated 5-5-1981." Whereas in this case, the stay granted by Delhi High Court reads as follows : "...In the meanwhile, we stay the recovery of the disputed excise duty subject to the petitioner giving a Bond for the disputed duty and a bank guarantee for 50% of the disputed duty..." In pursuant to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. In this decision, the endorsement made on RT-12 Returns is reproduced which is as below: "Duty of goods removed under a gate pass/es and included in this return has been assessed provisionally under Rule 9B and the provisions of said rule shall apply for recovery of the deficiency in or refund of excise duty stayed bonding disposal of W.P. filed in the court of law." In para 37 the ld. Civil Judge, after referring to B-13 bond has observed that: "If it was not provisional assessment as alleged by plaintiff or that the duty was in fact being barred by limitation during pendency of writ petition in High Court or Supreme Court, it was their duty to bring this fact to the notice of Lordships." 24.2 I have gone through the records of this case as well as the submissions made by both sides before me. It is found: (a) Ld. Member (Judicial) has relied upon the Larger Bench decision in the case of Rajiv Mardia v. CCE, Indore, 2000 (118) E.L.T. 627 wherein it was held that there should be material on record to show that the procedure laid down in Rule 9B was followed for the purpose of showing assessments are provisional, namely that, there should be a provisional assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Metal Forgings v. UOI, 2002 (146) E.L.T. 241 (S.C.), in Para 12, the Supreme Court has observed as below: "to establish that the clearances were made on provisional basis they should be first of all an order under Rule 9B of the Rules, and then material to show that the goods were cleared on the basis of said provisional classification. These facts in the instant cases are missing, therefore, in our opinions there is no material in the instant case to establish the fact that either there was a provisional classification or there was an order under Rule 9B empowering the clearances on the basis of such provisional classification." Member (Judicial) had observed that there should be a specific provisional assessment order in terms of Rule 9B to constitute assessment as provisional. I find in this case, the appellant has filed B-13 Bond and in this bond has specifically requested the department to make provisional assessment of Excise Duty, pending final assessment in terms of Rule 9B. Appellant had also undertaken to observe all the formalities relating to such provisional assessment and to pay the duty on the basis of the decision of High Court within 10 days from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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