Judgment:
1. This is an appeal filed on behalf of the Collector of Central Excise, Thane Collectorate, against the Order No. V.2(68)137/85/4668 dated 18-4-1985 of the Collector of Central Excise (Appeals) Bombay, under which he allowed the first appeal of M/s. Bharat Bijlee Ltd., by setting aside the Order No. V(68)4-36/84/7766 dated 19-11-1984 passed by the Assistant Collector of Central Excise, Dn.IV, Thane, under which the Assistant Collector ordered recovery of Rs. 9,80,327.19 taken as proforma credit by M/s. Bharat Bijlee Ltd. The facts of the case are that M/s. Bharat Bijlee Ltd., were manufacturing Transformers falling under Tariff Item 68 and for the manufacture of these Transformers M/s.
Bharat Bijlee Ltd., were receiving 'paper covered copper strips' manufactured by M/s. Devidayal Electronics & Wires Ltd., on which duty was being charged under item 68. The amount of duty paid on paper covered copper strips manufactured by M/s. Devidayal Electronics & Wires Ltd., was taken as credit under Rule 56A by M/s. Bharat Bijlee Ltd., for paying duty on Transformers manufactured by them and classifiable under Tariff Item 68. As a result of a petition filed by M/s. Devidayal Electronics & Wires Ltd., in the Bombay High Court, the High Court decided that paper covered copper strips were classifiable under Item 26A of the Central Excise Tariff and not under Item 68. Due to this change in the classification of the paper covered strips as a consequence of the Bombay High Court's decision it seems M/s. Devidayal Electronics & Wires got refund of duty paid by them in the past on the aforesaid strips. In view of this refund, the Assistant Collector, Central Excise, Dn.IV, Thane, seems to have issued the show cause cum demand notice dt. 11-7-1984 under Rule 56A(2) proviso 3 to recover the credit already availed of by M/s. Bharat Bijlee Ltd. After holding a due enquiry the Assistant Collector in his order dt. 19-11-1984 ordered withdrawal of the credit amounting to Rs. 9,80,327.19 from M/s. Bharat Bijlee Ltd., under Rule 56A(2) proviso. Feeling aggrieved with this decision M/s. Bharat Bijlee Ltd., filed an appeal before the Collector of Central Excise (Appeals) who vide hid Order No. M-442/TH. 85/85 dated 16-4-1985 allowed the appeal after setting aside the Assistant Collector's order. The Collector of Central Excise, Thane, has accordingly filed the present appeal to the Tribunal against the aforesaid order dated 16-4-1985 passed by the Collector of Central Excise (Appeals).
2. During the course of oral submissions Shri Pattekar on behalf of the appellant Collector referred to the facts of the case and submitted that under proviso 5 to Rule 56-A(2) credit could be varied for whatever reason and that no time limit was prescribed for this purpose.
He also contended that the Assistant Collector's show cause cum demand notice dated 11-7-1984 was not issued for recovery of the credit under Section 11-A nor for the credit under Rule 56-A(5). The Assistant Collector had taken action in terms of the proviso to Rule 56-A(2) as this was necessitated on account of the primary manufacturer of copper strips having received refund of duty as a consequence of the Bombay High Court's order. The requirements of Rule 56-A(2) were specific and did not stipulate any time limit and hence the Assistant Collector's order was correct. Accordingly, he prayed that the Collector (Appeals) order should be set aside and the Assistant Collector's order should be restored.
3. Shri Moti Ajwani, learned Advocate for the respondent submitted that the order of the Collector of Central Excise (Appeals) was quite correct. In this order he had referred to the decision of this Bench in the case of Finolex Cables Ltd., (1983 ECR 2047 D) in which it was held that the recovery of the credit wrongly availed of fell within the time limit stipulated under Section 11-A. A photocopy of this order was submitted by the advocate for ready reference. Following the ratio of this decision, Shri Ajwani prayed that the Collector's appeal should be dismissed.
4. We have examined the submissions on both the sides. The question which calls for determination is whether the time limit under Section 11-A is applicable to a case governed by the proviso to Rule 56A(2) under which it is stipulated that in case of varying of the credit subsequently, the credit allowed shall be varied accordingly, either by adjustment in the credit account or by cash recovery or refund. Section 11-A deals with recovery of duties not levied, short levied, or erroneously refunded from the person chargeable with the duty. The duty is leviable in terms of Section 3 which stipulates that the prescribed duties of excise believed and collected in such manner as prescribed on all excisable goods. Therefore, the duties leviable under Section 3 have to be collected in the prescribed manner. Under Section 2(g) "prescribed" means prescribed by rules made under the Central Excises and Salt Act, 1944. Rule 7 enjoins levy of duty on every person producing, procuring, manufacturing or storing them in a warehouse without payment of duty on any excisable goods. Similarly, Rule 56A also envisages movement of duty paid materials or component parts used in the manufacture of finished excisable goods and the credit of such duty to be utilised for paying duty on the finished excisable goods.
When goods are received by a manufacturer under Rule 56A and he takes credit of the duty paid thereon in the RG 23 account, the goods become non-duty paid in the approved manufacturing premises of a concessionaire under Rule 56A. When such new materials or components are used in the manufacture of finished excisable goods the manufacturer of such finished goods has to pay duty under Rule 7. In doing so, he can avail of the credit of duty paid on the raw materials and components. Therefore, Rule 56A is only a method of paying duty.
Under this Rule, the concessionaire is required to make good the deficiency or take the credit when there is change in the amount of duty already paid on the raw materials and components vide Rule 56A(2) proviso. In that situation under Section 11-A, the person chargeable with such short levy or a person claiming refund of excess duty is therefore the concessionaire under Rule 56A. The same position would hold good in respect of cases covered by Rule 56AA and Rule 196 where the liability to duty shifts from the original manufacturer to the concesional. Therefore even though Rule 7 talks of recovery of duty from a manufacturer, curer, or a warehouse owner or keeper, it is only one of the prescribed rules for recovery of duty. Other similarly prescribed rules are 56A, 56AA, 196 etc. Section 11A provides for recovery of duty not levied, short-levied, or erroneously refunded from the person chargeable, with the duty. There is nothing in Section 11A which would restrict its application only to a manufacturer, curer or a warehouse owner or keept. In fact, Section 11A is wide in its application covering all cases of recovery from the person who is chargeable with duty. It is also a settled law that the provisions of the Act will prevail over those of the Rules. It is in this context that this Bench has held that the time limit under Section 11A will apply to a case of recovery of duty under Rule 160 vide our Order No.1047/85 WRB in appeal No. ED(BOM) A No. 134/85 dated 2-9-1985. Besides, the explanation to Section 11A(1) takes case of a situation where a court interferes with the recovery of duty. The present case is one of such a type where M/s. Devidayal Electronics & Wires Ltd. obtained refund of duty under the order of the Bombay High Court. The Central Excise authorities would have been aware of the approach of M/s.
Devidayal Electronics & Wires Ltd. to the High Court and they should have taken precaution to issue demands to M/s. Bharat Bijlee Ltd. in time or to have assessed their goods provisionally to obviate any time bar coming in the way of recovery as in a case like the one under consideration. It was therefore in this context that the Bench held in the case of Finolex Cables Ltd. Pune that the time limit under Section 11A would apply to a case covered by Rule 56A. The ratio of that decision is reiterated forcefully in the present order. Since in the present case, the demand issued by the Assistant Collector of Central Excise Division IV, Thane is time-barred, the order of the Collector (Appeals) is correct. The same is confirmed and the appeal of the Collector of Central Excise, Thane is rejected.
5. I have had the advantage of going through the order of my brother Shri K.S. Dilipsinhji. I respectfully disagree with his view that Section 11A of the Central Excises & Salt Act, 1944 is applicable to the facts of the present case.
6. This is an appeal by the Collector of Central Excise, Thane. M/s.
Devidayal Electronics & Wires Ltd., (who will be hereinafter referred to as 'M/s. Wires Ltd') were the manufacturers of 'paper covered copper strips'. The said goods were classified by the Central Excise Authority as falling under Tariff Item No. 68. M/s Bharat Bijlee Ltd., (respondents herein) are the manufacturers of transformers. They were receiving duty paid 'paper covered copper strips' from M/s. Wires Ltd. The respondents were also availing of the proforma credit under Rule 56 in respect of duty paid 'paper covered copper strips' received by them from M/s. Wires Ltd. 7. M/s. Wires Ltd. filed a writ petition before the High Court of Bombay challenging the classification of 'paper covered copper strips' under Tariff Item No. 68. Their writ was allowed by the High Court holding that the said item fell under Tariff item No. 26A and not under Tariff Item No. 68. By reason of the judgment of the High Court M/s.
Wires Ltd. became entitled to certain refund and refund was granted to them. Thereafter, a show cause notice was issued to the respondents as, to why the proforma credit of Rs. 9,80,327.19 taken by them in respect of the 'paper covered copper strips' received from M/s. Wires Ltd., should not be recovered from them. This show cause notice is dated 11-7-1984. the respondents, however, sent their reply contending among other things that the demand was barred under Section 11A and in that connection they relied upon the judgment of the West Regional Bench reported in 1983 ECR 2647 D. The Assistant Collector who held the adjudication did not accept the respondents' contention that the provisions of Section 11A are attracted, and he distinguished the decision cited before him and held that the proviso to sub-rule (2) of Rule 56A under which action was proposed did not prescribe any period of limitation, and therefore, he rejected their contention.
8. Feeling aggrieved by the order of the Additional Collector the respondents herein preferred an appeal and the Collector (Appeals) allowed the appeal holding that the demand was for the period from 1-3-1978 onwards and there was no charge made against the respondents herein regarding suppression of facts, fraud or wilful mis-statement, and in such circumstances demand issued beyond a period of 6 months was clearly barred by time as provided under the statute. He also did not agree with the view taken by the Assistant Collector that the decision of the West Regional Bench in M/s. Finolex Cables Ltd., Pune v.Collector of Central Excise, Pune, (1983 ECR p. 2047 D) was not applicable to the facts of the case. Being aggrieved by the order of the Collector (Appeals) as stated earlier the Collector has preferred this appeal.
9. Shri N.K. Pattekar appearing for the appellant submitted that 5th proviso to Rule 56A(2) specifically authorised of varying the credit allowed to a manufacturer if the duty paid on material or component parts, in respect of which credit had been allowed was varied subsequently due to any reason. The said proviso further authorised adjustment in the credit account maintained by the manufacturer and for any reason if such adjustment is not possible it authorised cash recovery. Shri N.K. Pattekar. also contended that the proviso which provided for variation of the credit and recovery did not prescribe any period of limitation and as such, the order of the Collector (Appeals) is illegal and the same should be set aside.
10. Shri Moti Ajwani, respondents' learned Advocate contended to the contra. He urged that the decision of the Bench in the case of Finolex Cables Ltd., is applicable and that the appeal should be dismissed.
11. There is no controversy between the parties that the 5th proviso to Rule 56A(2) authorises variation of the credit allowed if the duty paid on the material, component parts in respect of which credit had been allowed was varied subsequently due to any reason. There is no controversy that the variation in credit could be by adjustment in the credit account or by cash recovery. Controversy is only on the question as to whether there is any period of limitation for cash recovery.
According to the department there is no such period of limitation. This contention is based on the ground that the proviso which permitted recovery did not prescribe any period of limitation. The respondents, however, contended that recovery has to be made within the period of 6 months, and that the provisions of Section 11A are applicable to the facts of present case.
12. My learned brother Shri Dilipsinhji accepted the contention of the respondents and has also referred to the decisions of this Bench in the case of Finolex Cables Ltd. and also in Appeal No. ED(BOM) A. No.134/85 dated 2-9-1985.
13. Having regard to the rival contentions the question that falls for consideration is whether there is any period of limitation for recovery of the excess credit, and whether the provisions of Section 11A are applicable for the recovery contemplated in the 5th proviso to Rule 56A(2).
14. Before proceeding to answer this question it is useful to refer to certain dates and also relevant provisions which have bearing on the issue involved. The show cause notice is dated 11-7-1984. The recovery is sought of the credit taken for the period from 1-3-1975 uptil the date of the issue of show cause notice. The amount sought to be recovered was Rs. 9,80,327.19. In the show cause notice there was no allegation of wilful mis-statement, collusion or suppression of facts on the parts of the manufacturer (respondents herein).
15. The date on which refund was made to M/s. Wires Ltd., is not found in any of the records produced with the appeal. Shri N.K. Pattekar had however, submitted that the Assistant Collector by his Order dated 2-3-1984 ordered refund of Rs. 89,899.96 for the period of August, 1983 to 16-1-1984 to M/s. Wires Ltd. This refund was due to the change in classification, namely, from item 68 to 26A. The copper strips which were received by the respondents herein were duty paid strips and the duty paid was as per the tariff item 68. The respondents herein by reason of the facility allowed under Rule 56A availed credit of the duty paid on the Copper strips received by them from M/s. Wires Ltd. By reason of the High Court's order there was variation in the rate of duty which resulted in refund. As stated earlier the 5th proviso to Rule 56A(2) provided for adjustment in credit account and also cash recovery if the duty paid on the inputs was varied subsequently due to any reason. The said proviso not only provided for adjustment and recovery but also provided or refund to the manufacturer if refund became necessitated due to variation in the duty on the inputs. The proviso as such did not prescribe any period of limitation in the matter of refund or recovery. Section 11B provided period of limitation for claiming refund of any duty of excise. The application for refund shall have to be made before the expiry of 6 months from the relevant date and the relevant date has been defined in that Section itself.
16. Section 11A is attracted only when any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded.
17. Admittedly, the recovery in the instant case is not because no duty of excise has been levied or paid or has been short levied or short paid or erroneously refunded. The recovery arose because there was variation in duty on the inputs in respect of which the respondents herein were allowed proforma credit. In the said circumstances there is no scope to apply the provisions of Section 11A to the recovery contemplated in the 5th proviso to Rule 56A(2). In M/s. Finolex Cables Ltd., Pune v. Collector of Central Excise, Pune, reported in 1983, the West Regional Bench to which brother Shri Dilipsinhji was a party had held that the show cause notice for review of the illegally utilised credit should be issued within the time prescribed under Section 11A.As per the facts narrated in that appeal the appellants therein challenged the demand of duty amounted to Rs. 1,01,786.90 on two grounds, firstly, the Collector's show cause notice dated 18-9-1981 for review under Section 35-A(2) of the Central Excises & Salt Act of the Assistant Collector, Central Excise, Pune's order dt. 22-9-1980 was time barred as the same was issued after the time prescribed under old Section 35A(3)(b) under which the notice should have been issued within the time limit specified in Section 11A ibid. Secondly, that the temporary irregularity in removing the raw material outside the factory premises was condoned by the Assistant Collector, and therefore, the Collector's order should be set aside. On behalf of the department it was contended that the time limit for the review was one year and therefore, the Collector's order was not hit by limitation. In reply the appellant therein had contended that though the time limit for review of the Assistant Collector's order by the Collector was one year as per the old Section 35A(2), such review relating to demand of duty not paid or less paid or erroneously refunded has to be dealt within the time limit of Section 11A. After referring to the provisions of sub-rule (2) of Rule 56A and Sections 11A and 11B the Bench held that the review by the Collector of the Assistant Collector's order should have been made within the time limit prescribed under Section 11A and since it was made beyond the period prescribed under Section 11A the order of the Collector was bad.
18. Now it is seen that in M/s. Finolex Cables Ltd., Pune's case the decision of the Bench related to period within which review of the Assistant Collector's order should be made by the Collector and the question of limitation for recovery of the credit taken due to variation in the rate of duty of the inputs was not considered or dealt with or decided. Therefore, the ratio of the said decision is not applicable to the facts of the present case. In the above view the Collector (Appeals) was not right in holding that the decision of this Bench in M/s. Finolex Cables Ltd, was applicable to the facts of the present case.
19. Brother Shri Dilipsinhji in his order did not record any finding as to whether the ratio of the decision in M/s. Finolex Cables Ltd., is or is not applicable but he had sought to explain the said decision.
20. For the conclusion which he had arrived at brother Shri Dilipsinhji had relied on another decision of this Regional Bench dt. 2-9-1985 in Appeal No. ED(BOM) No. 134/85. That appeal was filed by M/s. Hindustan Petroleum Corporation against the order levying duty on 6.110 kls. of kerosene oil which was beyond the quantity of 0.5% less noticed during the storage of the kerosene in the warehouse during the month of January, 19 83. M/s. Hindustan Petroleum Corporation had raised two contentions, firstly, that there was violation of the principle of natural justice and secondly, that the demand was barred by limitation under Section 11A of this Act. On behalf of the department it was contended that Rule 160 of the Rules did not provide for any period of limitation and that the provisions of Section HA are not attracted to the demand of duty, and therefore, the order of the Collector was perfectly legal. The Bench however, did not accept the department's case and held that the provisions of Section 11A are attracted. In my humble opinion the ratio of the decision in Appeal No. 134/85 is not applicable to the facts of the present case. Rule 160 provided for recovery of duty on goods improperly removed from warehouse or allowed to remain beyond time fixed or lost or destroyed. The demand was made there in respect of which the appellants claimed as lost due to natural causes. Therefore, admittedly, duty was not paid in respect of the quantity so lost, and therefore, recovery of duty on the goods lost can be demanded and this demand would be governed by Section 11A because that Section is applicable to cases where duty of excise has not been levied or paid.
21. The question whether any period of limitation is applicable to the recovery contemplated in the 5th proviso to sub-rule (2) of Rule 56A came up specifically for consideration in ED(BOM) No. 134/85 and this Bench in its order No. 386/85/WRB dt. 29-3-1985 held that the recovery contemplated by proviso to sub-rule (2) shall have to be made within the period of limitation prescribed under sub-rule (5) of Rule 56A.Sub-rule (5) of Rule 56A prescribed two periods. Firstly, the period of limitation prescribed was 6 months and this period was to apply if the credit had been allowed on account of an error, omission or misconstruction on the part of the officer. The other period prescribed was 5 years and this period was to apply if the credit had been allowed on account of wilful mis-statement, collusion or suppression of facts on the part of the manufacturer or the assessee. In paragraph 23 of the order the Bench considered the applicability of the limitation prescribed in sub-rule (5) to the recovery and refund contemplated in the 5th proviso to sub-rule (2) of Rule 56A. The relevant portion reads : 'The said proviso to sub-rule (2) contemplates two eventualities, They are : (1) if the duty originally paid gets varied subsequently it might result in payment of refund to the manufacturer or importers, and (2) it might also result in recovery of more duty from the manufacturer or importer. During the relevant period and subsequently also the Central Excise Rules and the Act provided a period of 6 months for claiming refund of duty from the date of cause of action for the refund arose. As there is a general provision has been made in the Rules and the Act for claiming refund of duty the Rule Making Authority wisely thought it unnecessary to incorporate any period of limitation in so far as refund is concerned. The other Rules or the provisions in the Act would not strictly apply to the recovery contemplated in the proviso to sub-rule (2) of Rule 56A. Therefore, a separate provision was made in the Rule itself i.e. sub-rule (5). As has been pointed out earlier, it provided for two periods of limitation, 6 months from the date of credit if the credit had been allowed on account of an error, omission or misconstruction on the part of the officer, and 5 years where a credit has been allowed on account of wilful mis-statement, collusion or suppression of facts on the part of the manufacturer or the assessee. It is difficult to accept the contention of the department that recovery could be made at any time. This contention runs counter to the scheme of the Central Excise Act and Rules. In the case of a manufacturer or an assessee who indulges in fraud, wilful mis-statement, collusion or suppression of facts, the recovery shall have to be made within a period of 5 years. If that be the intention then it does not stand to reason or logic that recovery contemplated in the proviso to sub-rule (2) could be effected at any time even after a lapse of several years. It is significant to note that one of the mode of recovery is by adjustment in the credit account maintained in the sub-rule (3) or in the account current maintained under : sub-rule (3) or Rule 9 or Rule 173G(1). If we turn to Rule 9, we find that a current account to be maintained shall have to be settled at intervals not exceeding one month. Similarly, Rule 173G contemplates submissions of monthly returns within 7 days after the close of each month by a manufacturer. Rule 173G requires the proper officer to complete the assessment on the return. It further requires him to send a copy of the return so completed to the assessee. Rule 54 of the Rules requires every manufacturer to submit a monthly return to the proper officer within 7 days after the close of each month.
Sub-rule (3) of Rule 56A requires the manufacturer to maintain an account in Form R.G. 23 Parts 1 and 11. The accounts so maintained are inspected and initialled by the Central Excise Officers. From the scheme of Rule 56A it would be clear that if the duty originally paid subsequently gets varied resulting in payment of refund to, or recovery of more duty from the manufacturer, the credit allowed should get varied and there should be an immediate adjustment in the account maintained by the manufacturer. Since the manufacturer is required to submit monthly returns, these variations should find place in the accounts maintained. As all assessments have to be finalised and recovery if any, have to be effected within the period prescribed under the Act, there is no scope to contend that recovery of more duty contemplated in the proviso to sub-rule (2) of Rule 56A can be made at any time and that there is no period of limitation for such recovery.
It is significant to note that under sub-rule (5) the recovery contemplated is of the credit that had been allowed under sub-rule (2). The credit that could be allowed under sub-rule (2) is only the duty suffered by the raw material or component or finished product.
The duty paid on the raw material or component or finished product could take within its ambit the varied duty contemplated by the proviso to sub-rule (2). Thus, we are of the considered view that the recovery contemplated by the proviso to sub-rule(2) shall have to be made within the period of limitation prescribed under sub-rule (5) of Rule 56A.22. Having regard to the above decision the contention of Shri N.K.Pattekar that for the recovery contemplated in the proviso in question, there is no period of limitation cannot be accepted. But then the appellant's contention that whole of the demand is barred by limitation also cannot be accepted. The cause of action for recovery was the refund made to M/s. Wires Ltd. It is because of the refund so made variation in duty occured in respect of the inputs in respect of which the respondents herein availed proforma credit. As the refund according to the statement made by Shri N.K. Pattekar was ordered on 20-3-1984, the cause of action for adjustment or recovery arose on that day. The demand notice in the instant case was dt. 11-7-19 84, and therefore, within 6 months from the date of cause of action and not barred by time. 1, therefore, allow this appeal and set aside the order passed by the Collector (Appeals) and restore the order passed by the Assistant Collector not for the reasons stated by him but for the reasons set out in this order.
23. As there is difference of opinion between the two Members the appeal records be submitted to the President for referring the points of difference set out below to one or more of the other Members of the Tribunal.
Point of difference - (1) Whether the provisions of Section 11A are applicable to the facts of this appeal and (2) whether the demand made in the show cause notice dt. 11-7-19 84 is not barred by time.
S.D. Jha, Vice President (J), K. Gopal Hegde, Member (J) and K.S.Dllipsinhji, Member (T) President of the Tribunal on difference having arisen between Brothers K.S. Diiipsinhji, Member (Technical) and Shri K. Gopal Hegde, Member (Judicial) has referred the matter for my opinion. The points of difference formulated by two Brothers are : "1. Whether the provisions of Section 11A are applicable to the facts of this appeal and 2. whether the demand made in the show cause notice dt. 11-7-1984 is not barred by time." 25. The facts of the case and the relevant provisions have been referred to in the orders of two Brothers and their further repetition appears unnecessary. The main question for decision is whether any limitation is applicable when credit of duty is varied in terms of the proviso three which is referred to by Brother Hegde as 5th proviso to Rule 56A(2). The proviso is in the following words : Provided also that if the duty paid on such material or component parts (of which credit has been allowed under this sub-rule) be varied subsequently due to any reason resulting in payment of refund to; or recovery of more duty from, the manufacturer or importer, as the case may be, of such material or component parts, the credit allowed shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) or in the account current maintained under sub-rule (3) of rule 9 or rule 173G(1) or, if such adjustment be not possible for any reason, by cash recovery from or, as the case may be, refund to the manufacturer availing of the procedure contained in this rule.
26. While according to Brother Dilipsinhji limitation under Section 11A of Central Excises & Salt Act, 1944 would be applicable to a recovery under the proviso, according to Brother Hegde limitation applicable would be as set out in sub-rule (5) of Rule 56A of Central Excises Rules, 1944. He also held that the time limit would be computed from the date of order 20-3-1984 from the file it is not clear this date refers to which order). It appears that this date is set out on the basis of information given by Shri Pattekar before the Bench. This date was treated by Brother Hegde as the date of cause of action for adjustment or recovery and in his view limitation of six months should be computed from this date.
27. At the hearing of the matter on 16-6-1986 in spite of notice none appeared before me for the appellant Collector of Central Excise, Thane. Shri 3.3. Bhatt with Smt. A.B. Kapadia appeared for the respondent. They were heard and record perused.
28. Shri Bhatt during hearing informed that the Bombay High Court order as to classification and resulting in refund in favour of M/s.
Devidayal Electronics & Wires Ltd., from whom the respondents had obtained paper covered copper strips had been stayed by the Supreme Court. It is this refund which leads to varying of credit against the respondents. A copy of the order dated 12-9-1983 of the Supreme Court in the case of Union of India v. Shakti Insulated Wires Private Limited was filed before me. I was informed that main decision of Bombay High Court is in the case of Shakti Insulated Wires Pvt. Ltd., which has been followed in another case including that of the present respondents. A letter dated 2-12-1985 from Devidayal Electronics & Wires Ltd., addressed to the respondents is also on- record from which it appears that the Supreme Court has stayed the Bombay High Court decision regarding classification of paper covered copper strips.
29. All this becomes necessary in view of the finding of the Collector of Central Excise (Appeals) Bombay to the following effect : "...The Deptt. has also taken up the issue of refund granted to DEWL with Supreme Court and is subjudice and as such confirmation of demand is pre-matured. The DEWL has also not passed on the refund amount to the appellants and thereby it will be unfair to ask the appellants to pay duty till the decision is taken by the Supreme Court finally on the issue." 30. From what I was informed during hearing that in view of stay having been granted by the Supreme Court refund had not been granted to suppliers of paper covered copper strips by M/s. Devidayal Electronics & Wires Ltd., no occasion for varying the credit against the respondents had arisen and demand is pre-mature and the questions raised hypothetically. But such a view, in view of the decision of Patna High Court in Hanutram Chandanmul v. Commissioner of Income-tax, Bihar & Orissa (1953) 23 ITR 505 as to nature and scope of Section 5A(7) of Indian Income-tax Act, 1922 which corresponds to Section 255(4) of Income-tax Act, 1961 which again in analogous to Section 129C(5) of Customs Act, 1962 read with Section 35D (Procedure of the Appellate Tribunal) of Central Excises &: Salt Act, 1944 and that being the only decision, may not be possible. For the same reason it may not be possible for me to disagree with the two learned Members and to propound a third view agreeing with Revenue's contention that no limitation would be applicable in such a case and, in any case, the parties can obtain an authoritative exposition about limitation applicable, from the High Court. I would, therefore, elect to agree with one of the learned Members.M/s. Finolex Cables Ltd., Pune v. Collector of Central Excise, Pune (1983 ECR 2047D (Cegat) on which Brother K.S. Dilipsinhji relied for holding that limitation under Section 11A of the Act, would be applicable to varying of credit, in my views, is no authority for the position. In that case, it is observed that the review show cause notice issued under old Section 35A was held time barred under Section 35A(3)(b) read with Section 11A of the Central Excises & Salt Act, 1944. In the decision whether the limitation under Section 11A would be applicable to varying of credit was not directly in issue and any observations made as to the same were obiter. On the other hand, from order of Brother Hegde (para 21) it is seen that there is a direct decision on the point of West Regional Bench, Bombay holding limitation under sub-rule (5) or rule 56A being applicable to recovery contemplated in proviso to sub-rule 2 of rule 56A(this decision in spite of search made was not available at Delhi but Brother Hegde has extracted the same in extense). Though I may have my own reservations about the date from which limitation should be computed, in view of what has been already set out above, I agree with Brother Hegde that demand notice in the instant case dated 11-7-1984 issued within six months from the date of cause of action was not barred by time.
33. The points of difference in this appeal were referred by the President in terms of Section 129C(5) of the Customs Act to the third Member Shri S.D. Jha, Vice President (Judicial) who has 'since recorded his findings above.
34. As per Section 129 C(5), the appeal has to be disposed of in terms of majority view. In this view, the appeal filed by the Collector of Central Excise, Thane is to be allowed, setting aside the order passed by the Collector of Central Excise (Appeals), Bombay and restoring the order passed by the Assistant Collector of Central Excise, Division, IV, Thane. We order accordingly and allow the present appeal.