1. This is an appeal against the order of the Collector of Central Excise (Appeals), New Delhi.
2. The learned Jt. C.D.R. stated that the main issue involved in this matter is whether Runners and Risers arising during the course of manufacture of steel ingots were entitled to the benefit of Notification No. 237/75.
3. The learned Collector (Appeals) has held that Runners and Risers are steel ingots or steel melting scrap depending upon what they are fit for and that the relevant notifications are applicable not only to steel ingots but also to steel melting scrap.
4. It was his submission that the order of the learned Collector (Appeals) was contrary to the Tribunal's decision in the case of Ravindra Steels. The learned Collector (Appeals) has himself said so in so many words and not followed the ratio of that order on the ground that all the points were not pressed before or brought to the notice of the Tribunal.
5. The learned Collector (Appeals) has inter alia referred to General Clauses Act and cited some examples.
6. It was their contention that the learned Collector (Appeals) has erred in his finding on facts as well as the finding on Law.
7. The matter is already covered by a number of decisions on the point including the one reported in Collector of C. E. v. Modem Steel Ltd. -1986 (26) E.L.T. 165 (Tribunal) : 1987 (29) E.L.T. 1030. The learned C.D.R. also drew attention to the judgment of the Bombay High Court in the case of Rustamji Pestonji reported in ILR 1948 Bombay 838 in support of his contention that Notification 237/75 granted exemption to steel ingots only and the same cannot be so construed as to imply a reference to steel melting scrap which was a different product known in the trade and commerce distinctly as Runners and Risers and not as ingots.
8. The learned Jt. C.D.R. also contended that since full facts had not been declared and suppression was involved, therefore, proviso to Section 11A was invokable. In view of this position it was his prayer that the order of the Collector (Appeals) may be set aside.
9. The learned Counsel stated that he would like to draw attention to the description of the Tariff Item 26 which is "Steel ingot including steel melting scrap". While he agrees that Runners and Risers could be considered as melting scrap, it was his contention that they had declared the full particulars of the goods in their classification list a photocopy of which has been produced by them. It was their submission that this classification list had been duly approved by the Assistant Collector concerned. Thus there was no mis-statement or suppression of facts and the fact of production of Runners and Risers was in the knowledge of the departmental authorities from the beginning. Hence the department should not have invoked the extended period of time.
10. It was also his submission that according to Board's clarification issued in January, 1979 the notification should be read in the context of tariff description and not in isolation and, therefore, the Runners and Risers were covered by the exemption notification. It was also their submission that as a matter of fact no manufacturing process was involved and Runners and Risers merely arise during the course of production of ingots and, therefore, were not dutiable. In this connection they would rely upon the order of the West Regional Bench reported in Kolhapur Steel Ltd. v. Collector-1983 (14) E.L.T. 1947. He would also like to refer to the order of the Government of India reported in 1982 (10) E.L.T. 486.
11. We have considered the submissions of both the sides. We note that the appellants had filed a classification list indicating the particulars of goods as "Steel ingots including steel melting scrap" and this was admittedly approved by the Assistant Collector. Hence, it cannot be said that they had suppressed any material fact. It is well known that Runners and Risers do arise in the course of manufacture of steel ingots with the aid of electric furnace. The issue as to whether Runners and Risers were liable to duty and if so whether they are covered by the exemption is an old issue which had arisen from time to time and engaged the attention of the authorities at various levels.
This is apparent by citations made by both sides. In the circumstances, when the classification list was submitted before the Assistant Collector he should have applied his mind carefully before approving the same. It is noteworthy that a person makes a declaration and prays in accordance with his understanding of the Law and the facts. The presumptions, if any, has to be that of bona fides unless proved otherwise. Therefore, if .the description of the goods was not considered as sufficient for the purpose of approval it was open to the Assistant Collector to have called for more details but it was not open to him to mechanically sign of.
12. We would like to take this opportunity to observe that the law casts a duty and responsibility on both the departmental officers as well as assessees (and this was true even in cases covered by SRP). The departmental officers, therefore, cannot ignore or avoid their own responsibility in the matter.
13. The Rule 173B providing for the filing of classification list clearly shows that what is required of the Assistant Collector is the approval "after such enquiry as he deems fit". The approval of classification list is an important part of the process of assessment and, therefore, the Assistant Collector is required to be very careful and is expected to apply his mind before according approval. He is entitled to and indeed required to make such inquiries and summoned such information as may be called for in order to arrive at the correct decision. In order words the act of approval was not merely a passive act or concurrence but involves an active decision making and the Assistant Collector was required to fully satisfy himself about the particulars of goods being manufactured and the process of manufacture wherever necessary and the relevant facts and than only determine the classification and pass appropriate orders; and once the Assistant Collector has approved the classification the department has to bear the consequences thereof.
14. In this case, therefore, the approval of the classification list is a significant fact which cannot be ignored.
15. Furthermore both the sides have stated that the order of the Collector (Appeals) also shows that the Board itself had issued certain clarifications implying that Runners and Risers were covered by the notification. Moreover the Government of India in revision had passed an order indicating that Runners and Risers were covered by exemption notification in view of the fact that Item 26 covers both ingots and steel melting scrap. In view of these developments there could well be a belief in the trade that Runners and Risers were automatically covered by the tariff description and the declaration of the particulars of goods as steel ingots including steel melting scrap was sufficient for the purpose of declaration thereof in the classification list. In fact the approval of the classification list with this much description would only imply that even departmental officers (including AC) were labouring under the same belief.
16. Further, mention or non-mention of a particular notification was not of such significance because even if a person does not claim the benefit to which he was otherwise entitled to, but the officers know that the benefit was available they could have and indeed should have extended the benefit suo moto. The department was not expected to take advantage of somebody's ignorance. In fact it was open to the Assistant Collector to make suitable addition, subtraction or modification in the Classification List and indicate whatever was deemed proper by him and to allow benefit, if any, due. In these circumstances, we consider that the department has not been able to show that there was a deliberate suppression or mis-statement of facts with the intention to evade duty or to wrongfully avail of the benefit of exemption notification. As such we are of the view that the Department was not entitled to invoke the extended time period under Section 11A.17. The learned Jt. C.D.R. has urged inter alia that the learned Collector (Appeals) has not recorded any finding on this aspect and, therefore, he would make an alternative prayer to the effect that the matter may be remanded to the Collector (Appeals).
18. We are, however, of the view that this point is a point of law which could be raised and dealt with at this stage as well; and when we are overselves in a position to give a verdict straightaway, there was no need for sending it back to the lower authorities. Regarding the point of time bar having been raised in the Show Cause Notice itself (by virtue of reference to Section 11A and applying the period beyond six months) it was open to the adjudicating and appellant (including the Tribunal) to go into this question.
19. Looking to the above facts and circumstances we consider that the demand having been raised by virtue of Show Cause Notice dated 13-10-1982 for the period 1-8-1975 to 1-5-1979 was clearly time barred.
In view of this position it was not necessary for us to go into other aspects of the matter and examine the case on merits.
20. We also note that although the show cause notice refers to the period 1-8-1975 to 31-5-1979 operative portion of the Assistant Co lector's order confines itself to the period 13-10-1977 to 31-5-1979 and discusses the question of time bar. However, even this period is beyond six months and for reasons already discussed above the demand is time barred.