1. This appeal seeks relief from the demand raised against the appellants as differential duty on matches. The appeal itself states that the relief is sought on humanitarian grounds.
2. The matter emanates out of Notification No. 22/82 issued by the Government on 23.2.1982 giving retrospective effect to the Notification with effect from 19.6.1980. The differential duty demanded from the appellant relates to clearances effected between 19.6.1980 to 31.3.1981. The appellants' plea is that at the material time they paid the correct duty and the entire production of this factory was supplied to units nominated by Khadi and Village Industries Commission (KVIC).
He further submitted that if he knew in advance that if his production exceeded 150 million matches in the year he would be liable to pay higher rate of duty, he would have restricted his production so as to stay in the lower duty slab. In addition to this argument which was reiterated by the learned Advocate for the appellants, Shri Vinod Sethi, it was also submitted that the demand is time-barred and that the Notification No. 22/82 and Section 52 of the Finance Act, 1982 cannot overrule the provisions of Section 11 -A of the Central Excises and Salt Act as per the ratio of the judgment of the Supreme Court in J.K. Spinning Mills v. Union of India [1987 (32) E.L.T. 235 (S.C.)].
3. Shri L.C. Chakraborty, the learned JDR opposed the introduction of fresh arguments about limitation pointing out that this plea was not raised before the lower authorities. The learned representative further argued that the Parliament amended the law retrospectively from 19.6.1980 and applying the provisions of Section 11-A to the demands arising out of such would amount to making out a new case. It would also nullify the provisions of the Finance Act and the Notification.
He, therefore, opposed the introduction of this argument which was in fact an additional ground according to him. The learned Departmental Representative also relied on a judgment of Madras High Court in Bharat Match Works, Vanaramurthi and Ors. v. Union of India and Ors. - [1984 (16) E.L.T. 3 (Madras)]. The learned Advocate for the appellants in his rejoinder submitted that the plea of limitation was not taken up before the Madras High Court and also that the views of the Supreme Court as later expressed in J. K. Spinning Mills (supra) was not available to the Madras High Court.
4. We have considered the arguments of both sides. The main question is whether Section 11-A would apply to the demand or not. We have considered the opposition of Shri Chakraborty to the introduction of this ground. But as without this ground the appellant straightaway loses his appeal and also considering that the appellant is only a small manufacturer in a remote part of the country and not familiar with the legal requirements, we feel that it will be injustice not to allow this additional ground of limitation. We, therefore, allow it.
5. In Bharat Match Works and Others (supra) the Madras High Court was examining the same notification namely 22/82-C.E. in respect of another match factory. The High Court in that judgment held that the Notification No. 22/82 was valid and that promissory estoppel cannot be availed of against Statute. The Court upheld the demand raised against the petitioner as a result of the retrospective amendment.
6. There is no doubt that the judgment is completely in favour of the Revenue's argument advanced by Shri Chakraborty. However, two points that have to be considered and raised by the Advocate for the appellants are that the question of limitation was not taken up before the Madras High Court. And that the order of the Supreme Court (in J.K.Spinning and Weaving Mills (supra) decided on 31.10.1987 (after the Madras High Court Judgment) was not available to the Madras High Court.
A perusal of the Madras High Court judgment shows that in fact the question of limitation was neither pleaded nor considered.
7. In J.K. Spinning Mills the Hon'ble Supreme Court was considering the effect of retrospective amendment to Rules 9 and 49 of C.E. Rules as a result of which duty became retrospectively payable on intermediate products. Disposing of the Government's argument that the cause of action arose on the date of amendment namely February 22nd and that the authorities were entitled to make the demands within 6 months thereof for a period even beyond six months, the Supreme Court observed as follows: 'There is no provision in the Act or in the Rules enabling the Excise authorities to make any demand beyond the periods mentioned in Section 11A of the Act on the ground of the accrual of cause of action. The question that is really involved is whether in view of Section 51 of the Finance Act, 1982, Section 11A should be ignored or not. In our view Section 51 does not, in any manner, affect the provision of Section 11A of the Act. In the absence of any specific provision overriding Section 11 A, it will be consistent with rules of harmonious construction to hold that Section 51 of the Finance Act, 1982 insofar as it gives retrospective effect to the amendments made to Rules 9 and 49 of the Rules, is subject to the provision of Section 11 A." 8. The view of the Supreme Court is quite clear as can be seen above.
There is no specific provision in Section 52 of the Finance Act, 1982 or in Notification No. 22/82 enabling the Excise authorities to make any demand beyond the periods mentioned in Section 11A of the Central Excises and Salt Act.
9. In the circumstances we follow the ratio of the Supreme Court judgment and not the Madras High Court judgment.
10. Applying the limitation provisions of Section 11A to the facts of this case we hold that the demand is time barred under the said Section. We, therefore, allow the appeal and order consequential relief to the appellants.