Judgment:
1. The Collector of Central Excise, Bombay-I has filed this application under Section 35G to make a reference to the Bombay High Court on clarification of the points of law arising out of the order of this Tribunal No. 1259/85-WRB (ED BOM A No. 164 of 84) dated 25-10-1985 on the Collector's Appeal No. M-1488/BI-477/84. As per the application, the points which are required to be referred to the High Court for clarification, are: (1) Payment of interest on yarn duty under Rule 49A irrespective of the fabrics being cleared for home consumption or for export, (2) The interest leviable under Rule 49A on the amount of duty on yarn being different from the duty payable under Section 3 of the Central Excises and Salt Act, 1944 and (3) The Department's right to recover interest under Rule 49A irrespective of whether the fabrics are cleared for home consumption or for export.
2. Appearing on behalf of the Collector, the learned SDR drew our attention to the points for reference to the High Court as contained in para 8 of the Collector's application filed under Section 35G(1) of the Central Excises and Salt Act, 1944. Shri Senthivei submitted that the Tribunal in their order No. 1259/85 WRB dated 25-10-1985 had held in coming to the conclusion that interest was part of duty leviable under Section 3 of the Act. The Tribunal had further relied on the analogy of special Excise duty. In doing so, the Tribunal did not consider the application of Rule 13 so far as the charging of the interest on the duty on yarn was concerned. The Collector's reference therefore should be taken to mean whether the Tribunal's omission of rule 13 from consideration was correct in law. The second point made in the Collector's reference application was that the duty did not include interest. The interest was leviable under Rule 49A and it was therefore different from duty leviable under Section 3. Furthermore, Shri Senthivel contended that the duty was leviable under Section 3 at rates set for in the First Schedule to the Act. Section 3 was the charging section for the levy of the duty on an excisable commodity. Rule 49A was the authority for charging the interest. From this point of view, Rule 49A was different from Rules 9 & 49. Under Rule 49A an option was available to the assessee for availing of the concession or not doing so. Section 3 enjoined that the duty should be levied and collected in such manner as prescribed by law. Rule 49A was not a rule prescribed normally for the collection of duty. So far as the present case was concerned the Assistant Collector in the office of the Collector of Central Excise, Bombay had calculated the amount of interest leviable on the amounts of Central Excise duty leviable on the yarn and these had been debited to the Bond account of the appellant maintained for the purposes of Rule 13. The interest charges leviable for optees under Rule 49A and they were not waived. The Tribunal's order that when the duty leviable was nil the interest leviable was also nil was not correct. There were no specific provisions for waiving the interest amount in the law and hence the interest amount was payable under Rule 49A. This was different from the duty payable under Section 3 as submitted already. Both the amounts of duty and interest were debited separately in the PLA account of an assessee opting for concession under Rule 49A. Shri Senthivel submitted a copy of the PLA account of the respondent in support of his contention Shri Senthivel finally submitted that it was erroneous on the part of Tribunal to treat duty and interest identically and hence the points raised in the Collector's application were required to be referred to the High Court for correct clarification of the same.
3. On behalf of the Respondents, Dr. Jois criticised the Collector's application made under Section 35G(1). He argued that this application was more in the nature of an appeal against the Tribunal's order. It was in a sense quite vague. So far as the levy of the Central Excise duty was concerned, Dr. Jois contended that Section 3 was the authority for the same and the Central Excise Rules had been framed for the purpose of collecting the duty. The collection of duty was the administrative function of the Central Excise Department, Section 3 charged that the duty should be levied and collected in the manner as prescribed. Under Section 2(g) "prescribed" meant prescribed by the Rules made under the Act. Rule 49A was therefore one of the rules prescribed for the purpose of collecting the amount of duty leviable on yarn. This was not independent of Section 3. Referring to Rule 49A Dr.
Jois argued that it provided for collection of duty on yarn and interest thereon as leviable under the law. In the order No. 1259/85 WRB dated 25-10-1985 the Tribunal had considered these aspects and decided that where no duty on yarn was payable, there was no question of paying interest on the amount of duty leviable. Dr. Jois further submitted that the Collector's application under Section 35G was misplaced as the Collector's application raised a question regarding the rate of duty. Rule 49A prescribes the rates of interest leviable.
Therefore, there could not be any reference to the High Court in such a case. Dr. Jois relied in this behalf on the decisions reported in 1985 (20) ELT 368; 1984 (16) ELT 254 and 640 and 1984 ELT 669 and 1984 (18) ELT 449. Dr. Jois submitted that the Tribunal's order was final subject to the appeal to the Supreme Court. Hence he argued that the reference application was not valid and that the same should be dismissed.
4. Shri Senthivel contended in reply that Dr. Jois's arguments were only regarding the jurisdiction of the Tribunal to entertain the application. The same Advocate had appeared at the time of the hearing of Collector's appeal by the Tribunal and at that time he had conceded that this Bench had the jurisdiction to hear the appeal. It did not therefore lie in his mouth at this stage to say that the Tribunal did not have jurisdiction to hear this application. No question of rate of duty was involved in the appeal. Otherwise the same would not have been heard by this Bench. The levy of interest was different from the charging of duty. There was no direct answer to this proposition in the Tribunal's order and hence the Collector had, filed the reference application. The Bench pointed out to Shri Senthivel the illustration of the Cement Factory at Swai Madho-pur wherein the Government had ordered levy of interest on the duty on cement leviable so that Shri Senthivel could address the Bench further in the matter. But Shri Senthivel stated that he was not aware of this case and therefore he could not offer any further comments on the subject.
5. We have examined the submissions made on both the sides. Initially, it is necessary for us to observe that the points containred in the Collector's application under Section 35G do not arise out of the Tribunal's order. They are more or less an expression of the opinion of the Collector and not based on the interpretation of Rule 49A as contained in the Tribunal's decision. The learned SDR has, however, made a valiant attempt to salvage the application and to provide some substance to it during the course of oral arguments where none existed in the written application. Therefore taking both together, it is seen that the Collector had interpreted the Tribunal's order as meaning that interest leviable under Section 49A was a part of duty leviable under Section 3. Since the levy of duty on yarn was obviated on account of export of the fabrics in bond under Rule 13, the Collector has presumed that the Tribunal treated interest as part of duty and came to the conclusion that the interest leviable could also not be charged. This is a wrong interpretation of the Tribunal's order. Even a cursory glance of the Tribunal's order does not lead to this con-clusipn as argued by the Collector. It has been clearly held in the Tribunal's order that in the circumstances in question the duty payable on the yarn was nil and hence a percentage of duty as interest leviable would also be nil. It was in this context that the Tribunal did not consider the application of Rules 12 and 13 in the order dated 25-10-1985. In the order of the Tribunal, it was held that when interest leviable was nil the question as to whether it was permitted to be waived under Rule 13 did not arise. It was therefore for this reason precisely that the Tribunal did not go into the applicability of Rule 13 to the facts of the case. While no doubt Rule 13 permits export of goods on which duty has not been paid there is no authority therein to waive levy of interest charges. But this rule is not attracted when there is no interest leviable in terms of Rule 49A. As contended by the learned representative of the Respondent, rule 49A is also a prescribed rule for the collection of duty. But in a particular situation like the one where the fabrics have been exported in Bond and where the levy of the duty on the yarn was postponed under Rule 49A, no question of levy of duty on yarn arises and hence no amount of interest is leviable in these circumstances. There is nothing in Section 3 which can permit any different view to be taken from the one mentioned above. Besides, there is no doubt that interest is not a part of duty leviable under Section 3. From this point of view, the analogy of M/s Jaipur Udyog Ltd., Swai Madhopur, Rajasthan was pointed out to the learned representative of the Collector. But he could not offer any comments in this behalf. It is seen that under Sub-rule (3) of Rule 49, the Government has the power to permit clearance of the goods without payment of duty or only on part payment of duty and can prescribe levy of interest on the amount of duty which may be in balance. In pursuance of these provisions of law, the Government issued a Notification No. 207/76 dated 25-6-1976 as amended permitting M/s Jaiour Udyog Ltd,, Swai Madhopur, Rajasthan to defer payment of duty leviable on cement and to pay interest at the rate of 6% per annum on the amount of duty remaining unpaid.' Therefore, there is no doubt that the interest leviable either under Rule 49 or Rule 49A is not a part of duty, but is separated from the duty leviable under Section 3. The duty is to be levied and collected in the prescribed manner and the Rules are the prescribed manner for collecting the duty. Rule 49 permits levy of interest as seen above. Similarly, Rule 49 A also authorises the levy of interest at the rates mentioned therein. But Where the duty on yarn payable is nil the interest payable also becomes nil because it is a percentage of the duty leviable on the yarn. This proposition was illustrated in the Tribunal's order with reference to the special excise duty levied under the provisions of the various Finance Acts and the Addl. Duty of Excises on Textiles and Textile Articles under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1976.
The Collector has failed to understand or appreciate the observations of the Tribunal in this behalf. Except for making an assertion, no arguments have been advanced by the Collector in support of his view.
Accordingly, we find that no point arises out of the Tribunal's order dated 25-10-1985 which requires reference to the High Court for clarification of the same. The Collector's application is totally misconceived and is accordingly dismissed.