Full Judgment
On 31.3.1980, the Inspector, Incharge of the appellants factory, scrutinised the registers and noted that the proforma credit under Rule 56-A had been erroneously given under Notification 104/79-C.E., dated 33.1979 as the watch movements have attracted duty under Tariff Item 68. There was a demand in respect of amount availed as set of. The total amount of countervailing duty paid was Rs. 1,02,496.95. The appellants had utilised Rs. 93,134.24 towards the payment of duty on the watches during 18-12-1979 to 31-3-1983 and then upto 17-5-1980. The Range Super intendent, Ordered the payment of Rs. 31,772.50 for the month of March, 1980 and the appellants paid the amount by debiting in their PLA. The remaining amount of Rs. 61361.76 was allowed to remain as having been availed and utilised in the payment of excise duty leviable on the watches cleared during the relevant period. On 7-6-1980, a show cause notice was issued to the appellants stating that the set of was not admissible under Notification 201/79-C.E. and as such the duty of Rs. 61361.76 was payable by them. The appellants, inter alia contested the notice on the ground that the demand was not covered by the provisions of Rule 10 and/or Section 11-A. They also emphasised that the countervailing duty was availed of with the expressed permission of the department.
2. The Assistant Collector rejected their submission and confirmed the demand. On appeal, the Collector (Appeals), New Delhi held that the set off was not applicable in respect of countervailing duty under the notification set out (supra). He also held that the demand under Rule 10 was tenable even though that rule was omitted and Section 11A had come into force in the mean time.
3. Sh. Bipen Garg, Learned counsel for the appellants submitted that the show cause notice was issued on 7-6-1980 under Rule 10 for the period 26-12-1979 to 17-5 1980 for the demand of Rs. 61,361.76. His main argument was that Rule 10 was omitted on 17-11-1980 and Section 11-A had come into force from that date. AccOrding to him, Section 11-A did not contain any saving clause and as such the demand raised was not valid since Section 11-A was prospective in nature and not retrospective to cover cases of past period. He relied on the decision of the Allahabad High Court reported in 1982 ELT 201 (Ajanta Paper Products, Ratanpur v. C.C.E., Kanpur). This ruling relied on an earlier ruling of the Supreme Court in the case of Rayala Corporation (P) Ltd. v. Director of Enforcement reported in AIR 1970 (S.C.) 494. The Allahabad High Coun held that as Rule 10 was rescinded w.e.f.
17-11-1980 and as Section 11-A did not contain any saving clause to cover past cases, the demands made under rule from 17-11-1980 on wards were not valid and do not have the authority of law. The Learned counsel urged that since the parties residing within the jurisdiction of the Allahabad High Court, the ratio of that decision would apply to them. He relied on 1987 (27) E.L.T. 107 (Sat Pal, Amritsars. C.C.E., Chandigarh). In that decision, the Tribunal has held that the proceed ings in that case arose within the jurisdiction of the Punjab & Haryana High Court and, therefore, if any reference had to be made by the Bench on the question of law, it would be to the Punjab & Haryana High Court.
North Regional Bench applied the law as laid down by the said High Court on a similar matter.
4. Sh. A.K. Rajhans, JDR submitted that the Notification did not provide for atty set off and the appellants have wrongly availed the credit. Rule 10 applied at the time of the show cause notice. He cited 1977 E.L.T. J 92 (Universal Cables v. U.O.I.) and 1984 (18) ELT 35 to support his contention that a re-assessment could be made even if the set off had been availed with the concurrence of the department.
5. On the question of limitation, he cited 1983 (14) ELT [1927 Sriram Pistons & Rings Ltd., Ghaziabad v. C.C.E., Meerut]. The North Regional Bench of the Tribunal, after considering the authorities, following the decision of the Madhya Pradesh High Court reported in 1982 (10) ELT 844 (Gwalior Rayon Mfg. (WVG.) Co. v. Union of India And Ors.) held that as the ruling framed under the Act was a part thereof, even though Rule 10 was omitted from 17-11-1980. Section 11-A in any similar wording came into force simultaneously the show cause notice will not evade and the saving clause is not needed to continue the proceedings initiated prior to the appeal or omission of the enact ment. The Tribunal followed the decision of the Madhya Pradesh High Court cited (supra) after adverting to the decision of the Allahabad High Court also cited (supra). A later ruling reported in 1987 (30) E.L.T. 954 [Synthetic Detergent Ltd v.C.C.E., Cochin] has followed the ruling of the Madhya Pradesh High Court.
6. It is not disputed that the appellants had availed the set off under Notifica tion 201/79-C.E. The Learned counsel for the appellants did not seriously challenge the findings of the authorities below that set off the countervailing duty could not have been availed under the said notification or the later notification amending the same. The ap pellants have availed the set off wrongly and they are bound to return the same. The fact that such wrong availment of the set off was done with the concurrence of the depart ment has a bearing only on the question of limitation and not as to the validity. A show cause notice was issued within the period of six months and this objection is also not tenable.
7. The main question to be decided is whether the deletion of Rule 10 based on which the show cause notice was issued on 7-6-1980 would have any affect on the proceedings. The Learned counsel for the appellants mainly relied on the decision of the Allahabad High Court in the case of Ajanta Paper Products Ltd. (supra). But we must say that the decision of the Madhya Pradesh High Court in the case of Gwalior Rayons Co. has differed from the ruling of the Allahabad High Court and have also set out in paragraph 13 the reasons why they were unable to concur with a view taken by the Al lahabad High Court. It must be mentioned that the Allahabad High Court mainly relied on the decision of the Supreme Court in the case of Rayala Corporation cited (supra). But in paragraph 13, the Hon'ble Madhya Pradesh High Court has considered the decision of the Supreme Court and how it could be distinguished in respect of the facts of the case. The ruling of the Madhya Pradesh High Court would, in our view, apply to the present facts. The Tribunal has also in the two decisions cited earlier has preferred to follow the decision of the Madhya Pradesh High Court. It may be that the appellants are within the jurisdiction of the Allahabad High Court but there is no question of a reference in the present proceedings and hence the ruling cited in 1987 (27) ELT107 (supra) does hot apply. In the ruling reported in 1983 (13) ELT 1342 (supra) it is ob served as follows: - "...The Law declared by a High Court is binding on all its subordinate courts and Tribunals and if proceedings are initiated in violation of it, such notices are invalid and proceedings started thereunder are without jurisdiction." 8. But in Atma Steels Pvt. Ltd. and Ors. v. C.C.E., Chandigarh, 1984 (17) ELT 331 (Tribunal), it was held that the Appellate Tribunal working on an All India basis have the freedom to consider judgments holding a conflicting views given by dif ferent High Courts and then see for ourselves as to which authority applied more fully and aptly to the facts of a given case. This would be irrespective of the fact that one as sessee was within the jurisdiction of a specified High Court or the original adjudicating authority was located there.
9. In view of the above ratio, we hold that the proceedings could be continued Under Section 11-A which replaced Rule 10. The demand raised can be confirmed Under Section 11-A of the Central Excises and Salt Act.