1. This is a revision application to the Government of India, which under Section 35P(2) of the Central Excise's and Salt Act, 1944 is to be proceeded with as if it were an appeal filed before this Tribunal.
2. At the relevant time, there was Chapter VIII-B (Rule 173-R to Rule 173RM) in Central Excise Rules, 1944 (hereinafter called Rules), which contained what was called Simplified Procedure. The object of the procedure was to give concession in duty and some other facilities to small scale manufacturers. It appears that limit of annual value for purposes of duty was fixed for different classes of manufacturers. For the class of manufacturer to which the applicant belonged it was fixed at Rs. 5 lakhs per year. This Chapter was omitted vide Ministry of Finance (Deptt. of Revenue)'s Notification No. 206/79-CE, dated 16.6.79 (GSR 822).
2a. After the appellants fulfilled the requirements of Rule 173-RA they were granted permission for discharge of duty liability in the manner provided for in the Chapter. Rule 173-RB provided for determination of duty liability of the assessee. The annual value of the appellants' Unit for the purposes of duty liability was fixed at Rs. 3 lakhs 31 thousand and 799 (Rs. 3,31,799.00). Rule 173 RC provided for revision of duty liability of the assessee in specific circumstances. It appears that the value of the goods manufactured by the appellants exceeded by 50% at the end of October, 1976. It further appears that the annual value exceeded by more than 100% and also Rs. 5 lakhs at the end of February, 1977. The information as to the excess was contained in the return submitted by the appellants for the month of February, 1977 in the month of March, 1977. It further appears that the authorities decided to take action under Rule 173RC(2)(b) on 7.7.1977. In the meanwhile the rules were amended by Central Excise (13th) Amendment Rules, 1977 w.e.f.
9.6.77.
3. The Superintendent, Central Excise, M.O.R. II, Delhi Collectorate of Central Excise by his letter No. CE 13/77/3565 dated 2.8.1977 called upon the appellants to show cause to the Assistant Collector of Central Excise, M.O.D. III, New Delhi that why differential duty amounting to Rs. 22,928.32 for the period 1.11.76 to 7.7.77 be not demanded from them. The appellants showed cause, The Assistant Collector, Central Excise by his order C. No. V(IC)3/2/77/13411 dated 27.10.1977 confirmed the demand. In the appeal Sh. K.L. Rekhi, Appellate Collector of Central Excise, Delhi by his order-in-appeal No. 363-CE/78 dated 1.6.78 partly allowed the appeal and held that liability of appellants arose w.e.f. 1.4.77. He directed the appellants to work under Chapter VII-A of the Central Excise Rules w.e.f. 1.4.1977 and pay duty accordingly.
4. Aggrieved with the order-in-appeal, the appellants filed revision before the Government of India, which as already pointed out above stands transferred to this Tribunal and is to be disposed of as an appeal filed before it.
5. The appeal was fixed for arguments on 18.2.1983, when in spite of notice of the date of hearing having been served on the appellants on 4.2.1983, none appeared for the appellants. Smt. Vijay Zutshi, Senior Departmental Representative represented the Respondent Collector. The Tribunal instead of dismissing the appeal in default, in its discretion decided to dispose of the appeal on merits. Record of the case was, therefore, perused and Smt. Vijay Zutshi, heard.
6. The contention of the appellants in the grounds of revision (appeal) is that the fact of the annual value having exceeded by more than 100% and Rupees five lakhs was discovered by the Department only on 7.7.1977 when further proceedings in the matter were initiated. The return filed by the appellants in March, 1977 for the factory production in February, 1977 is not tantamount in any case to the reporting of the excess in annual value and the stipulated limit of Rs. 5 lakhs. As the discovery was made on 7.7.1977, the appellants liability would arise only from 1.8.1977 and from that date the provision of Chapter VII A of the rules would be applicable against the applicants.
7. For the present appeal Clause(b)of Sub-rule(2)of Rule 173RC of the Rules is material. The relevant portion of the Rule is extracted below: Rule 173 RC--Duty liablity of the assessee may be revised in certain cases: (b) exceeds the annual value by more than one hundred per cent thereof, the permission granted under Sub-rule (1) of Rule 173RB shall cease on the last day of the month in which the excess is discovered by, or is reported to, the proper officer, and thereupon the duty on such goods shall be paid- (i) if the revised annual value of such goods exceeds five lakhs of rupees, in accordance with the provisions of Chapter VIIA; and (where the provisions of that Chapter do not apply to such goods, in accordance with the provisions of Chapter V) and (ii) if the revised annual value of such goods does not exceed five lakhs of rupees, in accordance with the provisions of Chapter V the sub-rule has an explanation, which is not material for the disposal of the present appeal and is not reproduced.
8. From the sub-rule extracted above, it would be seen that the permission granted under Sub-rule (1) of Rule 173RB shall cease on the last day of the month in which excess of 100% over the annual value is discovered by or is reported to the proper officer. It is undisputed that the appellants were granted permission under Sub-rule (1) of Rule 173-RB. The question is whether if the return submitted by the Appellants in February, 77 contained information showing that the annual value fixed in respect of appellants was exceeded by 100%, it can be said that excess as requisite under the sub-rule was reported to the proper officer or whether excess can be said to have been discovered by the proper officer only when he decided to intimate action on 7.7.1977. The words "or is reported to" should be given their ordinary dictionary meanings. If the return submitted by the appellants contained information from which excess annual value by 100% came to the notice of the proper officer, the requirements of the Rule as to excess being reported is fulfilled.
9. Undisputedly the information was given to the proper officer in the return submitted by the appellants for the month of February, 77 in the month of March, 1977, therefore, the permission granted to the appellants under Sub-rule (1) of Rules 173 RB for the simplified procedure ceased on the last day of the month i.e. 31.3.77. It is undisputed that the revised annual value in respect of the appellants exceeded 5 lakhs of rupees and therefore, the provision of Chapter VII A would be attracted in their case.
10. It might be mentioned that from the order of the Appellate Collector of Central Excise, Delhi, it appears that the appellants' learned Counsel Shri Harbans Singh had argued before the Appellate Collector that in the appellants' case simplified procedure would cease on 31.3.1977 and not earlier. This contention was accepted by the Appellate Collector and relief was given to the appellants. Having so argued before the Appellate Collector and obtained relief, now it is not open to the appellants to argue that in their case liability would arise only on 1.8.1977 and excess was discovered only on 7.7.77.
11. In the grounds of revision, it is also argued that amendment in the rule on 9.6.1977 could not be given retrospective effect. The order of the Appellate Collector is based on the Rules as they existed before this amendment and so is our order. We do not think that this amendment is in any way material for disposal of the present appeal.
12. As a result of the aforesaid discussion, the orders passed by the Appellate Collector of Central Excise, Delhi are maintained and the appeal dismissed.