Judgment:
1. Being aggrieved with the Adjudication Order No. 17/90 dated 30-5-1990, passed by the Additional Collector of Central Excise, Hyderabad, M/s. Veena Organics (P) Ltd. have filed this appeal before the Tribunal.
2. The appellant is engaged in the manufacture of 'Paracetamol' classifiable under Heading 29.42, sub-heading 2942.00 ("other organic compounds") of the Schedule to the Central Excise Tariff Act, 1985. By Notification No. 31/88-C.E., dated 1-3-1988 issued under Rule 8(1) of the Central Excise Rules, 1944, the Central Government exempted "Bulk drugs (including salts, esters and derivatives, if any) specified under the First Schedule to the Drugs (Prices Control) Order, 1987, as amended from time to time" from payment of the whole of the excise duty leviable thereon and "other bulk drugs" from excise duty leviable thereon in excess of 5% ad valorem. (The said Order is hereinafter referred to as the 'DPCO'). Paracetamol is admittedly a bulk drug and figured in the First Schedule to the DPCO. However, it was deleted from the First Schedule and inserted in the Second Schedule to the order by the Drugs (Price Control) Amendment Order, 1989, dated 18-1-1989.
Therefore, Paracetamol became liable to duty at 5% ad valorem with effect from 18-1-1989. There was a short-levy of duty amounting to Rs. 93,213.05 (basic excise duty) and Rs. 4,660.65 (special excise duty) on the value of clearances of Rs. 18,64,261 in excess of the first clearances free of duty in terms of Notification No. 175/86 applicable to registered small scale units, the period of shortlevy being from 18-1-1989 to 20-3-1989. A show cause notice was issued and, on adjudication, the Additional Collector confirmed the said demand by his order dated 30-5-1990. Hence, this appeal.
3. We have heard Shri V.S.V. Subramanyam, Chartered Accountant, for the appellant and Shri M. Jayaraman, SDR, for the respondent-Collector.
4. Shri Subramanyam, for the appellant, has produced for our perusal a copy of the Govt. of India's Gazette Extraordinary Part II, Section 3, sub-section (ii), Volume 37 dated 18-1-1989 notifying the Drugs (Prices Control) Amendment Order, 1989 deleting Paracetamol from the First Schedule to the Order and inserting it in the Second Schedule. In response to a letter dated 9-11-1990 from the appellant, the Assistant Controller (Periodicals), Department of Publication, Govt. of India, Delhi, has stated in his letter also of the same date that the said Gazette was made available for public sale on 25-1-1989 as per the records of that Department. Relying on this letter, Shri Subramanyam submits that the dutiability of Paracetamol at 5% ad valorem shall be deemed to have commenced only on 25-1-1989. For this purpose, he relies inter alia on the Bombay High Court judgment in GTC Industries Limited, Bombay and Anr. v. Union of India and Anr. - 1988 (33) E.L.T. 83 (Bom.) and the Tribunal's decision in Haryana Plywood Industries v. Collector of Customs - 1991 (51) E.L.T. 119 (Tri.), holding that it is the date the Gazette containing the notification was made available to the public, and not the date printed on the Gazette, that determines the date the notification comes into effect. In view of this settled position, Shri Jayaraman, SDR, does not make any submission in this behalf. In the result, the appellant is liable to pay duty on Paracetamol at 5% ad valorem, for the period from 25-1-1989 to 20-3-1989. The demand for the period from 18-1-1989 to 24-1-1989 is set aside.
5. The next submission of Shri Subramanyam is that the appellant should be extended the benefit of Modvat Scheme. In this context, he submits that when the appellant approached the Department for a licence it was not granted on the ground that the Department had no knowledge of the amendment of the DPCO. The show cause notice was also issued after about three months from the date of the amendment. It was therefore that the appellant could not claim the benefit of Modvat relief in respect of inputs lying in stock and that received on or after 18-1-1989 (now it would be 25-1-1989) and used in or in relation to the manufacture of Paracetamol. In this connection, he places reliance on the Tribunal's decision in Lili Foam Industries (P) Ltd. v. Collector of Central Excise - 1990 (46) E.L.T. 462 (Tri.). It has been held therein that even though an assessee may not contest the correct rate of duty on a commodity cleared by him earlier, whenever the Department seeks to reopen the assessment and demands differential duty for whatever reasons, it is open to the assessee to contest the demand for the higher differential duty with an argument that the rate of duty originally applied was wrong. It was further held that the Tribunal simply could not shut out the argument on the ground that the appellant had not raised the dispute regarding the rate of duty till the proceedings were initiated against him under Section 11A of the Central Excises & Salt Act for demanding differential duty. It is Shri Subramanyam's submission that once the Department reopened the assessment under Section 11A of the Act, the entire assessment is at large and whatever relief the appellant is legitimately entitled to could be sought and, if established, it should be granted. Shri M.Jayaraman, for the Revenue, submits that the appellant had not put forth the claim for Modvat relief before the Additional Collector and he is not in a position to say whether the appellant is eligible. He seeks to distinguish the present case from the Lili Foam case by submitting that the present case is not one of re-opening an assessment earlier made but one of asking the assessee to pay duty for the first time. This distinction, to our mind, does not make any difference to the applicability of the decision in the Lili Foam case. If the appellant can establish its eligibility for the benefit of Modvat relief and also the quantum of relief that is admissible to it, we do not see why even at this stage the Additional Collector should not be directed to examine the claim and pass appropriate orders after affording due opportunity to the appellant to put forth its case. We order accordingly.
6. There was some discussion on whether the aforesaid plea of Modvat relief would not amount to an additional ground. Shri Subramanyam relies on the Supreme Court judgment in the Commissioner of Income-tax v. Mahalakshmi Textile Mills Ltd. AIR 1968 (SC) 101. In para 4 of the judgment, it has been held that there is nothing in the Income-tax Act (we may note that the ratio will apply to proceedings under the Customs and Excise Act also) which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions, whether of law or of fact, which relate to the assessment of the assessee may be raised before the Tribunal. The right of the assessee to relief is not restricted to the plea raised by him.
He also relies on the Tribunal's decision in Mohan B. Samtani v.Collector of Customs - 1990 (50) E.L.T. 592 (Tri.) wherein it has been held that any additional ground can be allowed to be raised even before the Tribunal if relief on that ground can be granted to the party.
However, Shri Jayaraman, SDR, seeks to distinguish the present case from the two decisions relied on by Shri Subramanyam. His submission that the judgment of the Supreme Court does not apply because it is not the right of the assessee that is in question but its very eligibility lacks force.
7. We do not think it is necessary to discuss the case law cited before us because, in our view, the benefit of any duty relief that is admissible to the appellant in terms of a statutory notification or rule cannot be denied to him simply on the ground that at the earlier stage of the proceedings no claim was made in this behalf. In any event, we are not expressing any definite views on the eligibility and, if eligible, the quantum of relief due. We would leave this to the Additional Collector for determination. However, if the claim is established, it shall not be denied on the ground that it was not made during the initial adjudication proceedings. On the Tribunal's decision referred to above, Shri Jayaraman's submission is that the question there was one of jurisdiction which is not so in the present case. This distinction again is, in our view, not of significance. What is significant is the principle laid down that an additional ground can be raised before the Tribunal if relief on that ground can be granted to the party.
8. The appeal is disposed of in the above terms. The matter is remanded to the Additional Collector with the above directions.