Full Judgment
2. Learned Counsel representing the appellant submitted that all clearances effected by the appellant, of the goods were pursuant to classification and price lists approved by the departmental authorities. Even for the period subsequent to that covered by the show cause notice clearances were effected on identical terms based on approved classification and price list. In spite of the show cause notice issued, which resulted in the impugned order, according to the learned Counsel representing the appellant, identical classification and price lists were approved for clearances in relation to later periods. Since all the clearances of the goods manufactured were in strict compliance with the classification and price lists approved by the Department, the demand of differential duty is clearly illegal. In support of this argument, learned Counsel relied on the decision of the Supreme Court in Collector of Central Excise, Baroda v. Cotspun Ltd. -1999 (113) E.L.T. 353 (S.C.) and an unreported decision in Additional Collector of Central Excise, Bombay-II v. Mahindra &t Mahindra Ltd. decided on 27-1-2000. In 1999 (113) E.L.T. 353, Their Lordships observed - "The levy of excise duty on the basis of an approved classification list is the correct levy, at least until such time as to the correctness of the approval is questioned by the issuance to the assessee of a show cause notice. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such.
The levy of excise duty on the basis of an approved classification list is not a short levy. Differential duty cannot be recovered on the ground that it is a short levy. Rule 10 has then no application." This was followed by a Bench of 3 Judges in the later decision. Their Lordships in the later decision further stated that "clearances effected on the basis of approved price list is also not open to challenge by the Department to justify demand of differential duty".
3. In the instant case, it is evident from the order impugned before us that the clearances of the goods manufactured by the appellant were effected pursuant to approved classification list and price list.
Paragraph 5 of the order makes mention of this fact that all the clearances were in accordance with the price lists approved under Rule 173C and 173-1 of the Rules.
4. This being the position, the entire exercise undertaken by the Department in pursuance of show cause notice dated 31-3-1986 is illegal. The result therefore is that the order passed by the adjudicating authority has only to be set aside. We do so.
5. At the time of filing of this appeal, this Tribunal directed the appellant to deposit a sum of Rs. 1 Crore in terms of the provisions contained in Section 35F of the Central Excise Act. The amount so deposited has to be refunded. Department is directed to refund that amount as expeditiously as possible, at any rate, within one month form the date of receipt of a copy of this order by the concerned Commissioner.