1. Briefs facts of the case are that the respondent, Klas Engineering (P) Ltd., Bangalore were manufacturing and clearing various goods, some of which were being assessed under Item 27(e) of the Central Excise Tariff and others under Item 68 thereof. During the years 1980-81 and 1981-82 it so happened classification of the goods which were being assessed under Item 27(e) was in dispute and payment had been made under protest or assessment made provisional. However in so far as goods under Item 68 were concerned there was no dispute. The value of the goods assessed under Item 68 during 1980-81 was Rs. 23,12,361.81 and those under Item 27(e) was Rs. 19,62,135.99, both totalling Rs. 42,74,502.80. During the year 1981-82 the value of the goods assessable under Item 68 (excluding those which were being assessed under Item 27(e) was Rs. 18,07,980.59. As the respondent was manufacturing and clearing goods assessable under Item No. 27(e), he had been licensed., He also filed regular RT 12 during the various months of the years 1980-81 and 1981-82. On the basis that the clearances of goods liable to classification under Item 68 was only Rs. 23.12 lakhs (well under the limit of Rs. 30 lakhs as then existing) clearances of goods assessed under Item 68, in the first instance, during April, 1981 to January, 1982 were made without payment of any duty. Dispute regarding classification of industrial components which were being assessed under Item 27(e) of the Tariff was finally resolved by a classification order dated 7-12-1981. Refund arising from out of such re-classification came to be made on 19-3-1982, 7-4-1982 and 8-4-1982. Because of the re-classification of the goods formerly assessed under Item 27(e), under Item 68 the value of the goods that was assessable to duty under T.I. 68 and cleared during the year 1980-81 now become Rs. 42.75 lakhs.
This naturally resulted in the goods originally cleared during April 1981 to January, 1982 free of duty under Item 68, becoming liable to payment of duty as during the previous year clearance of goods assessable under Item 68 was over Rs. 30 lakhs. The Department issued a demand on 5-8-1982 seeking to recover the sum. The Assistant Collector took the view that there was erroneous refund granted to the party on 19-3-1982, 7-4-1982 and 8-4-1982 and within 6 months from those dates he could recover the duty due in respect of goods cleared originally under Item 68 during April 1981 to January, 1982, and confirmed the demand in toto. When the matter was taken up in appeal to the Collector of Central Excise (Appeals), that authority found that the demand has to be examined with reference to the time limit stipulated under Section 11A of the Act and not with reference to any notional date. He did not accept the view of the Assistant, Collector that with the date of making of refund in respect of goods originally assessed under Item 27(e) but later brought under Item 68 say, the date for purposes of levy of duty in respect of the goods initially classified under Item 68 and cleared free of duty during the year 1981-82 got shifted. He thus found that demand was enforceable only for clearances during January, 1982 and the demand for the rest of the period was barred by limitation. The present appeal is against this order of the Collector (Appeals).
2. In support of the appeal, SDR claims that the act of re-classification of goods originally assessed under Item 27(e) under Item 68 resulted in the arising of a factor which made the goods cleared during 1981-82 free of duty earlier becoming dutiable. This factor could not have been anticipated by the department at an earlier point of time; so that liability to duty should be determined as having arisen when this factor was determined and effective action taken by way of grant of refund of duty. On the finding that there was suppression of fact, he stated that in the assessee proceeding to clear the goods under T.I. 68, did not inform the Department regarding the likely re-classification of goods originally classified under Item 27(e). This plea however is not supported by the facts as enumerated earlier, as at the relevant time the respondent has been filing RT 12 returns. In the alternative the SDR suggested that the amount now sought to be claimed could be retained by the Government in terms of Section 11 of the Act as sums payable to Government, and in that sense in making refund on the various dates, 19-3-1982, 7-4-1982, and 8-4-1982, there has been an erroneous refund which could be recovered by means of issue of a less charge demand under Section 11A within six months of the making of the erroneous refund.
3. The representative of the respondent urged that at the time the goods assessed under Item 68 were cleared free of duty during the year 1981-82 it was accepted as entitled to such free clearances. The fact that on a later determination the status of these goods changed does not by itself justify the issue of less charge claim basing the period of limitation from the date when the later decision was given effect to by means of refund orders.
4. We have considered the arguments of both sides. Section 11A no doubt provides that when duty or other sums are payable to Central Government, an officer empowered by Central Board of Excise and Customs may deduct the amount so payable from any money owing to the person from whom such sum may be recoverable or due which may be in his hand or under his disposal or control. In the present case; for one thing the determination that sums are payable has not been made under the Act or the Rules at the time the refunds in respect of industrial components were made; for another, the refund was in fact made without making any deduction therefrom of any sum that could have been determined as payable to Government by the assessee. We therefore find that the provisions of Section 11 will not be applicable to the facts of this case. Nor would that Section warrant the issue of less charge demand, the date of making of refund in the case of goods initially assessed to duty under Item 27(e) being taken as the relevant date. The refund made was in respect of other goods than the one classified under Item 68 and was not erroneous insofar as those other goods were concerned.
5. Section 11 A provides that when any duty of excise has been short-levied - in the present case, in respect of the goods originally cleared free of duty under Item 68 during 1981-82 there was such a short levy, as evidenced from subsequent development - the demand has to be issued within six months from the relevant date. In terms of Section 11 A(3)(ii)(a)(A) in the present case that date will be the one on which the relevant R.T. 12 returns were filed. The finding of the Collector (Appeals) is on this basis that the demand in respect of clearances for January 1982 will alone survive is correct in law and is based on facts.
6. In passing we note that when the Rules/Act intended to modify an action already taken on the basis of changed circumstances arising at a later point of time, specific provisions has in fact, been made e.g.
the proviso to Rule 56A(2) Central Excise Rules. In the circumstances the absence of such a provision in Section 11 or Section 11A should be considered to be a deliberate omission.