Full Judgment
K.A. Swamy, C.J.
1. In all these writ appeals and writ petitions, notices issued under Rules 10 and 10-A of the Central Excise Rules, demanding certain amount of excise duty, in each one of the cases are challenged. The matter was carried to the Supreme Court in Civil Appeal No. 398 of 1981 with C.A. Nos. 401-422/81, 423-34/81, 633 & 634/82, 3019/83, 3020/83, 4418/84, 1292/81, 1293/81, 1295/81, 1296/81, 1299/81, 1300/81, 1301/81, 1303/81, 1303/81 (sic), 1304/81, 1306/81, 1308/81, 1309/81, 1310/81, 1298/81 and Civil Appeal Nos. 1166, 1168 and 1174/82 and C.A. Nos. 3296-3299, 3301-3303 & 3305-3320/82, against the judgment of this Court. The Supreme Court by judgment dt. 18.7.1995, has remitted these matters to this Court. The judgment of the Supreme Court reads thus:
This batch of appeals arises out of a judgment rendered by the Division Bench of the Madras High Court in a group of Writ Petitions Nos. 4145-4155/75 disposed of by a common judgment dated 6th October, 1975. By those writ petitions filed under Article 226 of the Constitution the relief sought was in the nature of a writ of mandamus to restrain the Revenue from executing and implementing certain demand notices issued under Rule 10 or Rule 10-A of the Central Excise Rules, 1944 (hereinafter called 'the Rules'). These demand notices were questioned on several grounds, the main being that even if the source of power for the demand notices was Rule 10 of the Rules, the demand for the payment of the differential duty was in excess of the specific period of time provided therein. So far as Rule 10-A was conferred, it was said that it was ultra vires the constitution as already held earlier. While answering that contention the Revenue contended that as the field was occupied by the earlier judgment of the said High Court which the Revenue was bound to follow which view later came to be reversed by this Court, the notices of demand could not be given covering the longer period. The question which, therefore, arose for consideration by the Division Bench of the High Court was whether the demand raised in the notices was in order and in accordance with prescription of time under the relevant rules. The Division Bench took the view as under:
The result is that on 10.12.1974 when the notices of demand were issued under Rule 10 and Rule 10-A the question arises whether the Revenue could, in exercise of the existing power to collect the same for a period over and above that specifically provided for in those Rules. It is unnecessary for us, at this stage, to go into the question
Whether the power was exercised under Rule 10-A of the Central Excise Rules, as it is common ground that Rule 10-A has been struck down by this Court in Writ Petition No. 419/1970--
As at present we are bound by that decision.'
It will thus be seen that the Division Bench rested its decision on the earlier decision of the Court by which Rule 10-A was struck down.
The question of validity of Rule 10 and 10-A of the Rules came up for consideration before this Court in Assistant Collector of Central Excise v. Ram Krishnan Kulwant Rai : [1990]184ITR387(SC) . This Court found Rule 10-A to be intra vires and upheld the validity of the demand notices issued thereunder. In the conclusion this Court passed the following order:
'The High Court having proceeded on the basis that Rule 10-A was not available to support the demand notice, we set aside the impugned order of the High Court, allow the appeal and remand the case of the High Court for disposal in accordance with law.'
The other questions were left open and the parties were directed to bear their own costs.
Since this group of appeals arises out of a common judgment delivered in Writ Petition Nos. 4145/75 by the Division Bench of the Madras High Court placing reliance on the earlier decision of that Court in Writ Petition No. 419/70 by which Rule 10-A was struck down as unconstitutional, that view having since been reversed by this Court in Ram Kiishnan's decision, the impugned decision cannot be allowed to stand and must be set aside. We, therefore, allow these appeals, set aside the order of the Division Bench of the High Court and remit the matters back to the High Court for disposal on other grounds that may be raised including the ground whether the Revenue had made out a case for invoking Rule 10-A of the Rules. We may point out that under the impugned judgment of the Division Bench of the High Court, Revenue's power to demand and bring into the net of taxation the escaped levy or the claim for difference for a period of three months prior to the date of payment or the issuance of the notice was upheld by the High Court under Rule 10. The appeals will stand allowed accordingly with no order as to costs.
2. In view of the remand made by the Supreme Court, the question that now arises for consideration is as to whether the notices in question are in accordance with Rule 10-A of the Rules.
3. Rule 10-A of the Central Excise Rules, 1944 reads thus:
10-A: Residuary Powers for recovery of sums due to Government:-- (1) Where these rules do not make any specific provision for the collection of any duty if the duty has for any reason been short-levied, or of any other sum of any kind payable to the Central Government under the Act or these rules, the proper officer may serve a notice on the person from whom such duty, deficiency in duty or sum is recoverable requiring him to show cause to the Assistant Collector of Central Excise why he should not pay the amount specified in the notice.
(2) The Assistant Collector of Central Excise, after considering the representation, if any, made by the person, on whom notice is served under Sub-rule (1) shall determine the amount of duty, deficiency in duty or sum due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined within ten days from the date on which he is required to pay such amount or within such extended period of time as the Assistant Collector of Central Excise may, in any particular case allow.
As per Sub-rule (1) of Rule 10-A of the Rules, it is incumbent on the part of the Assistant Collector of Central Excise to give reasons for demanding the excise duty, under Rule 10-A of the Rules. Under Sub-rule (2) of Rule 10-A, there is a right of representation given to the person on whom notice is served under Sub-rule (1). The Assistant Collector of Central Excise is required to consider those representations. In the instant case, the petitioners had straightaway approached this Court challenging the very validity of Rule 10-A of the Rules. This Court declared Rule 10-A of the Rules as ultra vires of the rule making power of the Central Government. However, the Supreme Court by the Judgment dt. 12.4.1989, rendered in Assistant Collector of Central Excise v. Ramakrishnan Kulwant Rai : [1990]184ITR387(SC) , has upheld the validity of Rule 10-A of the Rules. Following the said judgment, those cases have been remitted by the Supreme Court by the judgment, extracted above, to consider the contentions of the petitioners relatable to Rule 10-A of the Rules.
4. In view of Sub-rule (2) of Rule 10-A of the Rules, which gives right of representation by the persons on whom notices have been issued and which has not been availed of by the petitioners, because they challenged the validity of the rule itself, we are of the view, that the ends of justice would be better served, if they are given time to make their representation with a direction to the Assistant Collector of Central Excise to decide the same after hearing them. The learned Additional Central Government Standing Counsel has fairly submitted that such a course will protect the interests of both parties. We accordingly dispose of these writ appeals and writ petitions in the following terms:
5. (1) The orders under appeals are modified, consequently the writ petitions are disposed of in the following terms:
(2) It is open to the petitioners to file their representations to the impugned notices before the respective Assistant Collector of Central Excise, on or before 10.3.1996.
(3) On receipt of such representations, the concerned Assistant Collector of Central Excise, shall fix the date of hearing and decide the representations after hearing the writ petitioners.
(4) In the event, no representation or objection is filed by any one of the writ petitioners on or before 10.3.1996, it is open to the respective Assistant Collectors of Central Excise to proceed with the matter, in accordance law.
(5) All the contentions of both the parties are left open.
(6) It is also made clear that in terms of Sub-rule (1) of Rule 10-A of the Rules, to sustain the demand, it becomes necessary for the respective Assistant Collectors [of] Central Excise, to give justifiable reasons for making a demand.