1. M/s. Zuari Agro Chemicals Limited filed a revision application dated 12-9-1978 under old Section 36 of the Central Excises and Salt Act, 1944, and this has been transferred to the Tribunal in terms of Section 35-P and is to be treated as an appeal before us. The appellants pray for setting aside the demand for Rs. 7,92,405.77 raised by the Assistant Collector of 'Central Excise, Goa, for availing of proforma credit under Rule 56A of the Central Excise Rules, 1944. The learned Advocate for the appellants stated that the appellants were manufacturing fertilisers under the brand name 'Sampurna' in which they were using1 imported Muriate of Potash as raw material. The import of Muriate of Potash was canalised through M/s. Indian Potash Limited, and they were selling the same to all consumers including the appellants at the pooled price. The pooled price did not give particulars of the countervailing duty paid by M/s. Indian Potash Limited on Muriate of Potash. Towards the end of 1975-76 the appellants received the consignment of Muriate of Potash from M/s. I.P.L. and M/s. I.P.L. in turn issued a certificate dated 1-3-1976 showing the quantity sold by the latter to the appellants and the amount of countervailing duty involved on, the same and the particulars of duty paid by the I.P.L. to the customs authorities. Accordingly the appellants requested in their letter dated 18-3-1976 to the Collector of Central Excise, Panaji, for availing of proforma credit of countervailing duty paid on the Muriate of Potash for paying the Central Excise duty on fertilisers manufactured by them under Rule 56A. The Assistant Collector of Central Excise in his letter dated 21-7-1976 accorded the permission for availing of the benefit under. Rule 56A of duty on the Muriate of Potash received by the appellants from 5-7-1976 onwards. Thereafter, another letter was issued by the Assistant Collector dated 28-10-1976 permitting the appellants to take credit in RG-23 Part I of the amount of Rs.13,80,000.55 by way of countervailing duty paid on 9937.531 metric tonnes of Muriate of Potash received upto 17-4-1976. The details of the quantity of Muriate of Potash used in the manufacture of fertilisers and the amount of proforma credit were also mentioned in this letter. The Advocate reiterated the contentions advanced in para 5(f) of the revision petition that the period between the date of application by the appellants and the date of Assistant Collector's letter dated 28-10-1976 was used by the Assistant Collector to scrutinise all the records to confirm that the amount and details were all correct. Thereafter, the appellants received another letter dated 22-3-1977 from the Assistant Collector of Central Excise referring to his earlier letter dated 28-10-1976 and informing the appellants that as their application for the grant of proforma credit under Rule 56A was dated 18-3-1976, the appellants were eligible to this benefit from 'this date only and that the benefit given by the Assistant Collector on the quantity of Muriate of Potash involving Rs. 7,92,405.77 prior to 18-3-1976 was not correct, and therefore, the appellants were asked to debit from their P.L.A. or RG-23 Part II the amount of Rs. 7,92,405.77 which was wrongly availed of as credit by the appellants. The Advocate referred to the appellants' letter dated 30-3-1977 addressed to the Assistant Collector requesting for withdrawal of the aforesaid direction. The appellants wrote another letter dated 8-2-1977 to the Assistant Collector which explained how the appellants could not make an application to the Central Excise Authorities earlier for not availing of this benefit and how the CERA team noticed the present anamoly.The Advocate stated that the appellants could apply only after the certificate dated 1-3-1976 had been received from M/s. Indian Potash Limited. He argued that before withdrawing the benefit to the extent of Rs. 7,92,405.77 under his letter dated 22-3-1977, the Assistant Collector of Central Excise did not issue any show cause notice nor give any opportunity of making any submissions or being heard. The appellants were accordingly forced to appeal to the Appellate Collector of Central Excise who in his Order No. V(14HH) 2-4/77/3571 dated 3-4-1978 rejected the appellants claim. The learned Advocate argued that the Assistant Collector's decision in his letter dated 22-3-1977 amounted to review of his earlier decision contained in his letter dated 28-10-1976, and therefore, it was not legal. In reply to our query from the Bench, Shri Ganesh clarified that the Assistant Collector's decision in his letter dated 28-10-1976 did not tentamount to review of his decision in his letter dated 21-7-1976 as in his letter dated 21-7-1976 the Assistant Collector gave permission to avail the benefit of Rule 56A on Muriate of Potash which would be received by the appellants from 5-7-1976, while in his letter dated 28-10-76 he gave the permission for similar benefit in respect of the quantity of Muriate of Potash received by the appellants upto 17-4-1976. Coming back to the impugned decision contained in the Assistant Collector's letter dated 22-7-1977, Shri Ganesh contended that there was no authority or provision in the Central Excise Act or the Rules for review of his own decision by the Assistant Collector. Moreover, no inference could be drawn in this behalf for exercise of any such power of review by the Assistant Collector. The Advocate referred to the Supreme Court's decision AIR 1966 S.C. page 641 to say that an officer cannot review his own decision unless authorised by law. He also referred to the Government of India's decision in granting the benefit of proforma credit under Rule 56A to an assessee from the date of application of his licence vide 1982 ELT 660. In addition the Advocate referred to this bench's order in the case of Rallis India Limited v.the Collector of Central Excise, Bombay-II, 1984 (16) ELT.264.
Referring to the facts of the case the Advocate stated that the Assistant Collector could not legally withdraw the permission given by him to the appellants for availing the proforma credit benefit. He stated that the present case was on all fours with the Tribunal's decision in the case of Rallis India Limited. He reiterated that the Assistant Collector's order withdrawing the concession was passed in violation of natural justice. The withdrawal of the concession amounted to demand for the levy of duty and it should have been preceded by the show cause notice. The Advocate relied on the Bombay High Court's judgment in the case of Precision Steel Fasteners and Ors. v. Union of India and Ors. 1980 ELT 693. He further argued that a review could be made only if the earlier order was patently wrong. Citing the Government of India's decision in the case of Crown Aspo Rope Manufacturing Co., 1982 ELT 660, the Advocate argued that the Government of India did not consider it erroneous in law to give the benefit from the date of application by the assessee. The Advocate also relied on the judgment of the Allahabad High Court 1978 ELT J476 to urge that the High Court granted benefit of exemption notification issued on 1-6-1970 from the date of issue of the notification even though the application for this benefit was made on 2-8-1970. The notification had provided the grant of benefit if the proper officer had been satisfied regarding the same. Shri Ganesh claimed the benefit of this ratio in the present case. He submitted that in view of the aforesaid circumstances the appeal may be allowed.
2. Shri N.K. Pattekar, for the respondent Collector stated that the only dispute was with regard to the date of eligibility for the proforma credit concession under Rule 56A. He stated that the Rule laid down that the benefit could be claimed by an assessee from the date of making an application. There was no provision in this Rule to extend its scope beyond this date. As regards the Advocate's argument regarding the Assistant Collector not having been vested with the power of reviewing -his own order, Shri Pattekar pleaded that the Assistant Collector's order was administrative in nature, and therefore, there was no question of its legal review. When the Assistant Collector realised his error in giving the benefit of Rule 56A to the assessee from a date earlier than the date of the appellants' application, he corrected his error. This did not amount to review of his order. Shri Pattekar referred to Rule 56A(2) to highlight the fact that the Collector can give the permission for availing of the benefit under Rule 56A provided an application is made in this behalf to the Collector. The facility is thus admissible from the date of application, which was 18-3-1976 in the present case. He stated that an application could not be made with retrospective effect and that Rule 56A did not envisage the same. He referred to the judgment of the Bombay High Court in the case of Zenith Tin Works Pvt. Ltd., 1976 ELT J 618 to support his contention. He also referred to the judgment of the Delhi High Court, vide 1981 ELT, page 496 to show that the benefit of Rule 56A procedure could be granted from the date of application only.
He submitted in conclusion that the Assistant Collector's order in this behalf was administrative in nature, and therefore, there was no question of its review. He submitted that the order-in-appeal was maintainable and that the appellants' revision petition to the Government of India should be rejected.
3. Advocate Shri Ganesh observed in reply that the decisions relied on by the departmental representative were distinguishable from the present case and their ratio was not attracted. One of these related to rectification of mistake and not to review of the earlier order. He reiterated that the judgment of the Allahabad High Court referred to by him was quite explicit and there was no decision of any High Court contrary to the judgment of the Allahabad High Court. The present case was not one of rectification but of review. It was also on all fours with the Tribunal's decision in the case of Rallis India Ltd. Shri Ganesh, therefore, pleaded for allowing the appeal and setting aside the orders of the lower authorities.
4. I have examined the submissions made by the appellants and the respondent. The main point for determination in the appeal is the date of benefit of Rule 56A to be given to the appellants. The appellants have contended that the Assistant Collector's order in his letter dated 28-10-1976 was correct and that a subsequent decision in his letter dated 22-3-1977 was not legal as it amounted to review of his own decision which is- not permissible under Central Excise Rules. In support of this argument, the learned Advocate for the appellants has relied on certain authorities. One is the Government of India's decision in the case of Crown Aspo Rope Manufacturing Co. In this case the Government of India gave the benefit of Rule 56A to the assessee from the date of application of the licence. It is to be seen whether this decision of the Government of India is proper and legal and whether the ratio can apply to the present case. Rule 56A (2) envisages that the Collector may permit a manufacturer of excisable goods to receive material or component parts on which duty of excise or additional duty has been paid in his factory for the manufacture of finished goods and allow the credit of the duty already paid on such material or component parts on the finished products. The Collector's permission envisages an application to be made by the manufacturer, and thereafter, to receive the material or component parts etc. for the benefit under Rule 56A. Therefore, the Rule itself is prospective in nature from the date of application by the manufacturer. There is no dispute that the appellants applied for the benefit of this procedure to the Collector of Central Excise on 18-3-1976. It was therefore, not open to the Assistant Collector vide his letter dated 28-10-1976 to give the benefit on the raw material received upto 17-3-1976. This decision of the Assistant Collector was obviously erroneous, and therefore, it was necessary for him to rectify the mistake which he did in his letter dated 22-3-1977 under which he decided to withdraw the credit amounting to Rs. 7,92,405.77 prior to 18-3-76. Examining this matter further it is seen that Rule 56A(2) cannot be construed otherwise, namely, to permit retrospective effect, otherwise the provisions in sub-Rules (2A) and (2B) would lose any meaning. Such an interpretation of law is not permissible and cannot be upheld. It is therefore, not understood how the Government passed the order referred to by the learned Advocate. In any case, the Government of India's order is silent regarding the date of making the application for the benefit of proforma credit under Rule 56A and to that extent I reject the contention of the learned Advocate that the ratio of the Government of India's decision holds good in the present case. The other authority cited by the learned Advocate for the appellants is the decision of the Allahabad High Court in the case of Satyanarayan Aggarwal and Anr. In this judgment the High Court gave the benefit of the exemption notification to the petitioner from the date of issue of the notification. The High Court was interpreting the exemption notification and in arriving at the conclusion the High Court correctly gave the benefit to the petitioner from the date of notification. It is common experience that this type of benefit is given even though the manufacturer makes an application for such a benefit after the date of issue of the notification. The notification has effect from the date of issue and in case there is delay in availing of the benefit the remedy to the manufacturer is open by way of refund claim under Section 11-B.Therefore, what the Allahabad High Court decided in that case was to give the benefit of the- notification as admissible under law. This decision is thus distinguishable from the present case where the Rule itself envisages the benefit to be granted not from the date of incorporation of the Rule in the Central Excise Rules, but from the date of application by a manufacturer. Therefore, in my view the appellants cannot claim the benefit of the ratio of the decision of the Hon'ble Allahabad High Court in this case. The learned Advocate for the appellants has further argued that the Assistant Collector should have issued the demand before withdrawing the credit, and he has relied on the judgment of the Bombay High Court in the case of Precision Steel Fasteners and Ors. Coupled with this question is the further contention of the appellants that the Assistant Collector did not have powers to review his own order under which the benefit was granted for the goods already received in the factory of the appellants before the date of application. Taking up the first aspect of the contention, it is seen that the judgment of the Bombay High Court was with reference to Rules 10 and 10-A of the Central Excise Rules, 1944. These Rules envisage notices of demand being issued earlier and the demands being confirmed subsequently by the Assistant Collector. No such provisions find place in Rule 56A. Hence the ratio of the Bombay High Court's decision does not apply to this case. On the" other hand the last proviso to Sub-rule (2) of Rule 56A lays down that in case the credit allowed under that sub-rule is varied subsequently due to any reason resulting in payment of refund to or recovery of more duty from the manufacturer, the credit allowed should be varied accordingly, if necessary by grant of refund or recovery in cash. This is a mandatory proviso and does not admit of any adjudication by the Central Excise Officer. Hence the contention of the appellants that no notice was issued by the Assistant Collector before withdrawing the amount of credit has no force. This leaves me with the remaining argument of the appellant that the Assistant Collector became functus officio after passing his order in his letter dated 28-10-1976, and therefore, he had no authority to review his own order dated 22-3-1977. The appellants' Advocate has placed reliance on this Bench's decision lYi the case of Rallis India Ltd. In this decision my learned brothers Shri D.N. Lal and Shri K. Gopal Hegde exhaustively dealt, with the legal aspect as to whether withdrawal of the proforma credit by the Assistant Collector amounted to review of his own order, and concluded that it did not. I fully concur with the views of my learned brothers. I would however, like to add that the provisions of Rule 56A are not quasi-judicial in nature, and hence any decision in terms of this Rule is not a judicial decision, and therefore, liable to be changed by the officer passing the decision. I have already observed above that certain provisions of Rule 56A like varying of the credit, are mandatory in nature and they are binding.
Such provisions cannot be called quasi-judicial -as the decision once reached thereunder is required to be changed subsequently depending on the change of circumstances. Besides, it is seen that Rule 56A gives power to the Collector to grant the benefit. Admittedly, this power is exercised by the Assistant Collector in the present case. If the powers under this Rule had not been administrative in nature, the Assistant Collector would not have exercised these powers which are specifically vested in the Collector without specific delegation. Hence, I cannot accept the contention of the appellants that the Assistant Collector had no authority to change the credit originally afforded to the appellants under his letter dated 28-10-1976. In view of the aforesaid facts I have no hesitation to hold that the orders under appeal are correct and accordingly, I reject the appeal.
5. I have had the advantage of going through the order of Brother Shri K.S. Dilipsinhji. I respectfully dis-agree with his view viz., that the provisions of Rule 56A are not quasi-judicial in nature, and hence any decision in terms of this Rule is not a judicial decision, and therefore, liable to be changed by the officer passing the decision. I further dis-agree with the view of my brother that the powers conferred on the Collector under Rule 56A is administrative in nature. I further dis-agree with his view that the appeal should be rejected.
6. The undisputed facts are - M/s. Zuari Agro Chemicals Limited were at the relevant time engaged in the manufacture of fertilisers having the brand name 'Sampurna'. In the manufacture of 'Sampurna1 the appellants were using imported Muriate of Potash as one of the raw materials. At the relevant time Muriate of Potash was canalised item. M/s. Indian Potash Limited were the canalising agency. This canalising agency was importing Muriate of Potash and were selling the same to all the consumers at the pooled price. This pooled price did not give particulars of the countervailing duty paid by M/s. Indian Potash Limited. On 1-3-1976 the appellants obtained a certificate from M/s.
Indian Potash Limited showing the quantity of Muriate of Potash sold to the appellants during the year 1975-76 and also giving the amount of countervailing duty paid in respect of the sales effected to the appellants. By their letter dated 18th March, 1976 addressed to the Collector, Central Excise, Panaji (Goa) the appellants requested the Collector to allow them to take credit of countervailing duty under Sub-rule (2) of Rule 56A of the Central Excise Rules on a quantity of 3532.250 tonnes of Muriate of Potash purchased by them from M/s. Indian Potash Limited. The appellants renewed their above request by another letter dated 28th April, 1976. The Assistant Collector of Central Excise, Panaji (Goa) by his letter dated 21-7-1976 permitted the appellants to avail of the facility of taking credit of the countervailing duty on the Muriate of Potash which they were receiving from 5-7-1976 onwards under Rule 56A of Central Excise Rules, 1944. In this letter the Assistant Collector required the appellants to maintain the accounts and also directed them to follow the procedures contained in the Rules. He, further, indicated that the supporting document for taking credit in RG-23 Part II will be a'certificate issued by M/s.
Indian Potash Limited.
7. The Assistant Collector of Central Excise, Panaji (Goa) vide his letter dated 28-10-1976 after referring to his letter dated 21-7-1976 informed the appellants that their records (appellants' records) revealed that they had obtained 9937.531 M.T. of Muriate of Potash upto 17-4-1976. The countervailing duty paid by the importers on this quantity works out to Rs. 13,80,000.55. The appellants were permitted to take credit in RG-23 Part I the amount of Rs. 13,80,000.55. It was further stated in this letter that from the records of the appellants it was seen that they had cleared 22774 M.T. of Sampurna fertilizer in which- Muriate of Potash was used as raw material, upto 30-6-1976 on payment of duty at the rate of 15% Adv. This had resulted in realisation of duty on duty as the actual debit in the Personal Ledger Account should have been the duty at 15% less the duty adjusted in the RG-23 Part II. It was further stated "for manufacture, of 22774 M.T. of Sampurna 7560.97 M.T. of Muriate of Potash has been used. (This has been worked out on the basis of 0.332 M.T. of Muriate of Potash per M.T. of Sampurna). The duty element on 7560.97 M.Ts. amounts to Rs. 10,39,229.19. As you are entitled to debit this amount in the proforma credit you are hereby permitted - 8. It may please be assured that all these book transactions are carried out on the same day bearing the same date." 9. Thereafter, vide his letter dated 22-3-1977 the same Asstt.
Collector of Central Excise, Goa after referring to his letter dated 28-10-1976 informed the appellants that the amount of Rs. 13,80.000.55 includes a sum of Rs. 7,92,405.77 representing the credit of countervailing duty paid on the quantity of 5902.879 M.Ts. of Muriate of Potash brought by them into the factory prior to 18-3-1976 and already utilised by them. As their application for the grant of Proforma Credit of duty of Muriate of Potash under Rule 56A was dated 18-3-1976, it was now held that they are not entitled to the Proforma Credit of Rs. 7,92,405.77 being prior to 18-3-1976 and they were directed to debit from their RG-23 Part II or PLA the amount of Rs. 7,92,405.77 under intimation to his office.
10. Feeling aggrieved by the order of the Asstt. Collector of Central Excise, Goa dated 22-3-1977 the appellants herein preferred an appeal before the Appellate Collector of Central Excise, Bombay. The Appellate Collector of Central Excise, Bombay by his order dated 3-4-1978 rejected the appeal holding that the Rules did not permit grant of Proforma Credit for the period prior to the date of application, and therefore, there was nothing wrong in the Asstt. Collector's order withdrawing the facility which had been wrongly given to the appellants.
11. During the hearing of this appeal Shri S. Ganesh, the appellants' learned Advocate urged the following grounds:- (1) The order dated 22-3-1977 is a purported review of the order dated 28-10-1976. Neither the Central Excise Act nor the Rules made thereunder confer a power of review on the Asstt. Collector and therefore, the order is bad in law. In support of his contention Shri Ganesh relied on the following decisions:-Harbhajan Singh v. Karam Singh and Ors., (ii) 1984 (16) ELT p.264 in the case of Rallis India Ltd. v. the Collector of Central Excise, Bombay-II. (2) Before passing the order dated 22-3-1977 no show cause notice was issued to the appellants. The appellants were not heard in the matter. Thus, there was a breach of the principles of natural justice. Further directing the appellants to debit the amount in RG-23 Part II amounted to raising a demand and therefore in the absence of a show cause notice the demand raised was illegal and void. In support of the above proposition Shri Ganesh relied on the following decision: 1980 ELT p.693 (BOM) - Precision Steel Fasteners and Ors. v. Union of India and Ors.
(3) Rule 56A did not prohibit grant of proforma credit from the date prior to the date of application. The Asstt. Collector was satisfied as to the quantity of Muriate of Potash received by the appellants utilised in the manufacture of Sampurna and the reason for the delay in making the application and having satisfied, he passed the order dated 28-10-1976 allowing the appellants to take credit of the amount of Rs. 13,80,000.55. There was nothing wrong in the order passed by the Asstt. Collector, and therefore, the subsequent order directing the appellants to debit Rs. 7,92,405.77 solely on the ground that the proforma credit could be granted only from the date of application and not anterior to that, is totally illegal. In support of the above contention Shri Ganesh relied on the decision of the Allahabad High Court reported in 1978 ELT-J 476 - in the case of Satyanarayan Aggarwal and Anr. v. Government of India and Ors.
12. Shri N.K. Pattekar the learned Departmental Representative contended that there is no illegality in the order dated 22-3-77 passed by the Asstt. Collector of Central Excise, Goa. The proforma credit was allowed by the Asstt. Collector. He is entitled to modify the earlier order. Rule 56A did not prohibit the modification of the order already made. Shri Pattekar further contended that the order dated 22-3-77 is not a purported review of the order dated 28-10-76 but it is only an order of rectification and that the Asstt. Collector is entitled to rectify the mistake in the order. Shri Pattekar urged that before a person could avail the facility of proforma credit he has to make an application to the Collector and has to follow the procedure laid down in Rule 56A. Looking to the procedure laid down in Rule 56A the credit could be allowed only with effect from the date of application and not retrospectively. Therefore, if the Asstt. Collector had rectified the order, no objection can be taken to such an order of rectification. In support of his contention that proforma credit could be granted only with effect from the date of application and not anterior to that Shri Pattekar relied on the following decisions:- (1) 1967 ELT - J 618 - in the case of Zenith Tin Works Pvt. Ltd. v. K.K. Verma and Ors.
(2) 1981 ELT (DEL) p.496 - In the case of Electronics Ltd. v. Union of India and Ors.
13. In reply Shri Ganesh contended that what could be rectified is only a clerical error or mistake and that the order dated 28-10-76 did not contain any such error or mistake, and therefore, the order dated 22-3-77 cannot be considered as an order of rectification.
14. I have carefully considered the submissions made on both sides and perused the records of the case. Having regard to the above contentions, the points that fall for consideration are: (i) Is the order dated 22-3-77 passed by the Assistant Collector of Central Excise, Goa is a purported review of the order dated 28-10-1976 or an order of rectification? (ii) Whether the Asstt. Collector has power or jurisdiction to review his earlier order? (iii)Is the order dated 22-3-77 amounts to a demand and, if so, whether such a demand can be made without issue of a show cause notice? Ans. to pts: Undisputedly, the application to avail of proforma credit was made on 18-3-76. In this application the appellants herein stated that the suppliers of Muriate of Potash have certified that countervailing duty @ 15% has been paid to the Customs on the Muriate of Potash supplied to them. It was further stated in this application that the appellants may be allowed credit of the duty already paid by them on the quantity of 3532.250 M.Ts. of Muriate of Potash purchased by the them from Indian Potash Ltd. They had also attached a copy of the certificate issued to them by M/s Indian Potash Ltd. The certificate is dated 1-3-76. This certificate indicates that a quantity of 3532.250 M.Ts. of Muriate of Potash had been supplied by M/s Indian Potash Ltd. to the appellants after the period 17-3-72 and the qquantities and dates on which they had supplied are also indicated in the certificate. In his order dated 21-7-76 the Asstt. Collector permitted availing of the facility of taking credit of the countervailing duty on Muriate of Potash which the appellants received from 5-7-76 onwards The credit was allowed not from the date of application i.e. 18-3-76 but from a prospective date viz. 5-7-76. But in his order dated 28-10-76 the Asstt. Collector allowed proforma credit of Rs. 13,80,000.55 on a quantity of 9957.531 M.Ts. of Muriate of Potash said to have been obtained by the appellants upto 17-4-76.
This order further indicates that upto 30-6-76 the appellants had cleared 22774 M.Ts. of Sampurna and that for manufacture of that quantity they had used 7560.97 M.Ts. of Muriate of Potash. The duty element on 7560.97 M.Ts. amounts to Rs. 10,39,229.19.
15. In the order dated 22-3-77 it was stated that a sum of Rs.7,92,405.77 representing the credit of countervailing duty paid on the quantity of 5902.879 M.Ts. of Muriate of Potash brought by the appellants into their factory prior to 18-3-76 and already utilised by them. It was then stated in this order that the application for grant of proforma credit under Rule 56A was dated 18-3-76, it was held that the appellants are not entitled to the proforma credit of Rs. 7,92,405.77 being prior to 18-3-76.
16. From the narration of facts it is seen that the Asstt. Collector purported to have passed three independent orders in the matter of allowing proforma credit to the appellants. The first order is dated 21-7-76. Under this order the credit is allowed in respect of raw materials brought to the factory with effect from 5-7-76. Though the application for permission was made on 18-3-76 the permission was granted from a prospective date. In the order dated 28-10-76 the credit was allowed for the entire quantity brought upto 17-4-76. This is a detailed order. The reasons are also assigned for allowing the credit.
In this order the quantity brought to the factory upto 17-4-76 and the quantity utilised in the manufacture of sampurna are also given. The third order is dated 22-3-77. By this order the same Asstt. Collector had stated that the appellants are not entitled to proforma credit of Rs. 7,92,405.77 because that sum represent the credit of countervailing duty paid on the quantity of 5902.879 M.Ts. of Muriate of Potash brought by the appellants to their factory prior to 18-3-76 and utilised by them upto 18-3-76. This order virtually modifies the order dated 21-7-76 as well as 28-10-76. As stated earlier under the order dated 21-7-76 the Asstt. Collector allowed the facility of proforma credit in respect of duty paid raw materials received in the factory with effect from 5-7-76. But by this order availment of proforma credit was allowed for the quantity received with effect from 18-3-76. It modified the order dated 28-10-76 by disallowing the credit for the quantity received and utilised upto 18-3-76. In the order dated 22-3-77 the Asstt. Collector has stated among other things "as your application for the grant of proforma credit of duty on Muriate of Potash under Rule 56A is dated 18-3-76 it is now held that you are not entitled to the proforma credit of Rs. 7,92,405.77 being prior to 18-3-76 as mentioned above". The expression 'now held' clearly support the contention of Shri Ganesh that the Asstt. Collector purported to have reviewed his order dated 28-10-76. The contention of Shri Pattekar that what had been done by the Asstt. Collector is not purported review but only a rectification of the order dated 28-10-76 is rather difficult to accept. It is nowhere stated in the order dated 22-3-77 that there was an error or mistake in the order dated 28-10-76 requiring to be corrected. Further what could be rectified is an apparent mistake appearing on the record. As has been stated earlier, by the order dated 22-3-77, the Asstt. Collector not only modified the order dated 28-10-76 but even modified the order dated 21-7-76. As pointed out earlier the order dated 28-10-76 is detailed order. In that order the Asstt. Collector gives the particulars of the quantity received and the quantity utilised in the manufacture of the fertilisers and the proforma credit to which the appellants became entitled. If there had been any error or mistake as to the quantity received or utilised in the manufacture of fertilisers mentioned in the order dated 28-10-76, probably such a mistake could have been rectified. But that was not the case. By the order dated 22-3-77 the Asstt. Collector disallows the proforma credit of Rs. 7,92,405.77 on the ground that the appellants were not entitled to that credit because the quantity was received and utilised prior to 18-3-76. The Asstt. Collector in the order dated 22-3-77 makes clear that it is now held that the appellants are not entitled to the proforma credit for a period prior to 18-3-76.
Therefore, what had been done by the Asstt. Collector is not rectification of any mistake or error apparent on the face of the record but purported review of the two orders dated 21-7-76 and 28-10-76.
17. The next question for consideration is whether the Asstt. Collector has power or jurisdiction to review his earlier order? Shri Pattekar could not point out any provisions in the Central Excise Act or Rules conferring such a power on the Asstt. Collector. The power conferred on the Collector under Rule 56A is a statutory power. The statutes should expressly provide a power of review. In the absence of an express provision conferring the power of review the authority which passed the order cannot review its earlier order.
18. In AIR 1966 Supreme Court Page 641 it was observed "there is no provision in the Act granting express power of review to the State Government with regard to an order made under S.42 of the Act. In the absence of any such express power, it is manifest that the Director, Consolidation of Holdings, cannot review his previous order of 3rd April, 1958 dismissing the application of Harbhajan Singh under S.42 of the Act. It follows therefore, that the order of the Director dated 29th August, 1958 is ultra vires and without jurisdiction and the High Court was right in quashing that order by the grant of a writ under Article 226 of the Constitution" 19. The above observations of the Supreme Court apply to the facts of the present case. Rightly or wrongly the Asstt. Collector by his order dated 28-10-76 permitted the appellants to avail of proforma credit for the entire quantity of Muriate of Potash received by them upto 17-4-76 and utilised in the manufacture of fertilisers 'sampurna'. The order dated 28-10-76 on the face of it shows the applicability of the mind by the Asstt. Collector. In the absence of express provision in the Central Excise Act, the Asstt. Collector cannot review the said order.
It is true that the order dated 28-10-76 can be considered as a purported review of the order dated 21-7-76. But then, the Department did not challenge the order dated 28-10-1976. the Central Excise Act, as it" then" stood, 'conferred" "power of revision on higher authorities. The higher authorities did not choose to exercise their power to rectify the illegal order passed by the Assistant Collector.
The order dated 28-10-1976 conferred certain rights on the appellants.
Such a right cannot be taken away by the same authority in the purported review of the order when such a power of review was not conferred by the statutes. I, therefore, hold that the order dated 22-3-1977 is without jurisdiction and the same is liable to set aside.
20. Though the above finding is sufficient to dispose of this appeal, I shall briefly consider the contention of Shri Pattekar that no proforma credit can be granted for a period prior to the date of application.
From the scheme of Rule 56A the proforma credit is to be granted in respect of material or component parts or finished products brought to the factory and utilised in the manufacture of finished products. From the wording of Sub-rule (2) to Rule it may be possible to contend that unless and until the permission is granted to receive the raw material, no proforma credit can be allowed and that permission could be granted only when a request to that effect was made. In other words, availment of proforma credit could be permitted with effect from the date of application and not earlier. But then, looking to the object behind granting of proforma credit viz., to avoid double payment of duty the Collector in appropriate cases could grant proforma credit in respect of the raw material received even prior to the date of application. The subsequent amendment of Rule 56A recognised the power of Collector to grant the proforma credit in respect of raw materials received even prior to the date of application. By Notification dated 21-2-1981 Sub-rule 2(B) was inserted. This Rule authorises the Collector to condone the delay in making the application, and further authorises him to allow a manufacturer to take credit of the duty already paid on the materials or component parts even though the procedures laid down under Rule 56A have not been complied with. It is true that at the relevant time this Rule 2(B) was not in the statute book. But, then the existing Rules did not specifically prohibit granting of permission to avail proforma credit in respect of raw materials or component parts received in the factory prior to the date of application. Apparently because of that the Asstt. Collector though by his order dated 21-7-76 allowed proforma credit in respect of raw materials received from 5-7-76 allowed proforma credit for the raw materials received upto 17-4-76 in his order dated 28-10-76. In the said circumstances, it cannot even be contended that the order dated 28-10-76 is illegal or unauthorised.
21. Brother Shri Dilipsinhji is of the view that the power conferred on the Collector under Rule 56A is administrative in nature. He had observed if the powers under Rule 56A had not been administrative in nature, the Asstt. Collector would not have exercised these powers which are specifically vested in the Collector without specific delegation. It may be stated here that if the power conferred on the Collector under Rule 56A is an administrative power no appeal or revision would lie against an order made under the said Rule. But then, against the order of the Asstt. Collector dated 22-3-77 the appellants herein preferred an appeal before the appellate collector. The Department did not contend that no appeal lies against the order of the Asstt. Collector. After they failed in their appeal, the appellants preferred a Revision Application before the Government of India. This Revision Application statutorily stood transferred to the Tribunal for being heard as an appeal. During the hearing of this appeal the Departmental Representative did not contend that three orders passed by the Asstt. Collector viz. 21-7-76, 28-10-76 and 22-3-77 are administrative orders against which no appeal lies. The Central Excise Act provide for delegation of Board's power to the Collector of Central Excise and the powers of the Collector of Central Excise to the Deputy Collector or to the Asstt. Collector of Central Excise. Apparently, the power conferred on the Collector under Rule 56A was delegated to the Asstt. Collector. As a matter of fact, Shri Pattekar, the learned Departmental Representative did not contend that the power under Rule 56A has not been delegated to the Asstt. Collector, If there had been no such delegation, the order of the Asstt. Collector would have been a nullity and no appeal could have been filed against his order.
22. The power conferred on the Collector under Rule 56A is a statutory power. If a Collector arbitrarily or unjustly refuses a permission to avail of the proforma credit, his order could be challenged before the appropriate appellate authority. When an Act or Rules provides for filing an appeal or revision against an order then that order would acguire the character of being a quasi-judicial order and the authority which passes the order would be considered as a quasi-judicial authority.In Kraipak v. Union of India (AIR 1970 S.C. Page) the Supreme Court held that the power of a selection board to prepare a selection list from amongst the public servants' for appointment in the senior and junior scales to be quasi-judicial although the board had no power of appointment itself. In doing so, the Court observed that the dividing line between judicial and administrative functions was thin and gradually evaporating and that the functions performed by those doing judicial function and administrative function, where the rights of citizens are affected to their prejudice had the same object, namely, to do justice and deciding the question fairly and justly. The Court also pointed out that in recent years the concept of quasi-judicial power has been undergoing a radical change. Refusal to grant of availment of proforma credit would result in civil consequences. The authoritity which is conferred with the power to grant of proforma credit is, therefore, required to observe the principles of natural justice. When an authority is required to observe the principles of natural justice, the power which he exercises would become quasi-judicial power. For the above reasons, I am unable to agree with my brother that the power conferred under Rule 56A is not a quasi-judicial power but an administrative one.
24. The order dated 22-3-77 has the effect of raising the demand. By the order dated 28-10-76 the appellants were allowed to avail certain credit. By the order dated 22-3-77 the certain credit already allowed was disallowed. Before passing the order dated 22-3-77 no show cause notice was issued to the appellants. The appellants were not heard in the matter. Thus, there was a breach of principles of natural justice.
Further, no demand can be raised without a show cause notice. This has been made clear in the decision relied on by Shri Ganesh - 1980 ELT page 693.
25. In the result and for the reasons stated in the preceding paragraphs, I allow this appeal and set aside the order dated 22-3-77 passed by the Asstt. Collector as well as the order passed by the Appellate Collector. The appellants be granted consequential relief.
25A. As there is difference of opinion, the appeal records may be forwarded to the President for referring the following points to one or more members of the Tribunal: (1) Whether the power conferred on the Collector under Rule 56A is administrative in nature? Collector,Central Excise, Goa is a purported review of the order dated 28-10-76 or an order of rectification? * (3) Whether the Asstt. Collector has power or jurisdiction to review his earlier order? (4) Is the order dated 22-3-77 amount to a demand and, if so whether such a demand can be made without issue of a show cause notice? 26. As there was difference of opinion between the two learned Members who comprised the Bench, the President assigned the matter to me for disposal under Section 129-C(5) of the Customs Act, 1962 read with Section 35-D(1) of the Central Excises and Salt Act, 1944.
27. After due notice and making available copies of the orders already recorded by my learned brothers, I have heard both sides at Bombay today. Shri S. Ganesh, Advocate, appeared for the appellants and Shri S. Senthivel for the department.
28. Relying on the authorities at AIR 1970 SC 150; AIR 1981 SC 818; AIR 1978 SC 851; 1978 ELT-J 416 (5C); 1980 ELT-693 (Bom).
Shri Ganesh pleaded that the second order of the Assistant Collector dated 22-3-77 which had the effect of divesting the appellants of the benefit given to them by his first order dated 28-10-76, was a nullity since it was not preceded by a show cause notice and that observance of the principles of natural justice was a must regardless of the fact whether the order was quasi-judicial or administrative in nature. He reiterated that the Asstt. Collector could not review his own earlier order. I drew his attention to Rule 56A (5) of the Central Excise Rules, 1944 and the Delhi High Court judgment in the case of Bawa Potteries reported at 1981 ELT 114 (Delhi) which had held that the then existing Rule 10 (analogous to Rule 56A (5) gave a limited power of review to the Assistant Collector. Shri Ganesh stated that it was so but added that there were contrary authorities of other High Courts on the proposition whether an authority could review its own earlier order. Lastly, Shri Ganesh added that the Assistant Collector himself had asked the appellants to file an appeal if they felt aggrieved by his order, that they did file an appeal to the Appellate Collector and later a revision application to the Central Government (now the present appeal) both of which were entertained by the respective authorities which fact showed that all authorities had treated the Assistant Collector's order dated 22-3-77 as a quasi-judicial order, appealable under the Act.
29. The learned representative of the department stated that for recovery of the credit wrongly given to the appellants it was not necessary to follow the principles of natural justice and that at any rate the appellants had been later heard by the higher appellate authorities. When his attention was drawn to the show cause notice procedure prescribed in Rule 56A(5), he had nothing to say.
30. I have carefully considered the matter and I record my views and order seriatim on the difference of opinion points:- (1) Rule 56A is not administrative in nature. It is a statutory power to grant certain duty benefit to the assessees with a view to obviating the cascading effect of Central Excise levies. The power is to be exercised in accordance with the statutory procedure laid down in the Rule.
(2) The Asstt. Collector's order dated 22-3-77 was not an order of rectification but review of his considered order made earlier on 28-10-76.
(3) The Asstt. Collector had the power and jurisdiction to review his earlier order. This power flowed from the specific statutory provision in Rule 56A(5) which empowered the Asstt. Collector to recover any credit which had been allowed on account of an error, omission or misconstruction, after issuing a show cause notice within 6 months (5 years in the case of fraud etc.). In saying this, I rely on the authority of supra on the analogous provision of Rule (4) The Asstt. Collector's order dated 22-3-77 amounted to a demand.
Proforma credit given by means of book credit entry, is as good as cash refund because the assessee can use the credit amount towards payment of central excise duty on his finished goods. Principles of natural justice as well as the relevant Rule 56A(5) specifically required that a demand or direction to withdraw the credit already given should be preceded by a. show cause notice. No such notice was issued by the Asstt. Collector. His order dated 22-3-77 has, therefore, to be held as arbitrary and null and void. I agree with brother Shri Hegde, -set aside the impugned orders and allow the appeal.
31. Final Order: The points of difference in this appeal were referred by the President in terms of Section 129-C(5) of the Customs Act read with Section 35D of Central Excises Act to the third Member and that Member has since recorded his findings.
32. As per the provisions of these Sections, the appeal has to be disposed of in terms of the majority opinion. Accordingly, we allow the appeal and set aside the order dated 22-3-77 passed by the Asstt.
Collector as well as the order passed by the Appellate Collector and grant consequential relief to the appellants.