Full Judgment
2. Moving this Misc. application, Shri Mondal, ld. SDR pleads that though the notice for recovery of the duty was issued under Section 11A of the Central Excise Act, the Collector has withdrawn the same in his order. He has observed that Section 11D itself provides the authority for demanding the duty, wherein no time limit is prescribed and accordingly he has advised them to make the deposit of the duty, which has been collected by them and retained. In the circumstances such an order advising them to pay the duty in terms of Section 11D cannot be held to be a case of time barred demand under Section 11A or to be considered as an order appealable wherein the provisions of Section 35F could be invoked for granting the stay.
3. After hearing Shri Mondal, we indicated that for considering arguments properly and also the plea made in the Misc. application it would be necessary for us to go into the appeal itself and whether he would be prepared to argue on the appeal. He sought for some time to peruse the relevant judgment of the Madras High Court, which was granted. Thereafter, the appeal itself was taken up for disposal including the disposal of the Misc. application.
The appellants are engaged in the manufacture of sugar. The Ministry of Food & Civil Supplies formulated an incentive scheme for new sugar factories and expansion projects licensed during the 6th Five Year Plan period. This is contained in their letter dated 4th November, 1987.
According to this letter addressed to all sugar factories, they are permitted to avail of certain quota of sugar to be cleared on payment of duty at the levy rate but sell them in the open market as free sale sugar. The differential amount can be retained by them as incentive for expansion and setting use of new factories or expansion projects. This is the sum and substance of this letter and pursuant to this scheme, the Ministry of Finance have also issued exemption notification allowing duty concession in respect of such clearances, at levy rate.
There is no dispute that sugar was cleared on payment of duty at the lower rate applicable to levy sugar, but they were sold at a price as applicable to free sale sugar. The differential amount is retained by them as incentive. In the circumstances there could be a case for [attracting the] of Section 11D of the C. Ex. Act, which contemplate that any assessee, who collects any amount as duty has to deposit it with the Govt. Now the question is whether Section 11D could be operated de hors. Section 11A is the main point to be considered in this appeal. The Collector in his order held as below: "I have come to the findings that the demands in the present case cannot be made under Section 11A(1) or under Rule 9(2) and I cannot find any limitation of time prescribed under Section 11D(1). I cannot find the issue of limitation of time bar to be relevant for consideration in this case." Accordingly, he advised the appellant to deposit the duty in terms of Section 11D(1) of the Central Excises & Salt Act. On this issue, we find that there is a division Bench judgment of the Madras High Court directly in the case of Gem Cables & Conductors Ltd. reported in 1994 (72) E.L.T. 848. On the question of retrospective application of Section 11D(1) of the Central Excises & Salt Act, the Madras High Court held that Section 11D has to be read in the context alongwith Section 11A for the purpose of enforcing any recovery, even if it is made under Section 11D of the Central Excises & Salt Act vide Para 9 and 10 of the said Rules. In this case, the undisputed fact revealed by Shri Mondal is that the show cause notice is dated 8-12-1993 covering the period August 89 to January 92. The entire demand is beyond the period of 6 months. However, Shri Mondal pleads that there is an allegation of suppression regarding the retention of the amount by the appellant. We are unable to accept this plea, because the Collector has given an order that Section 11A notice is withdrawn and no appeal or cross-objection has been filed by the department against these. Even if such a cross-objection has been filed, the admitted position is that as per the scheme formulated by the Govt. under which the exemption notifications are also issued by the Ministry of Finance, the sugar factories can retain this amount as incentive. Hence the facts are well-known to the dept., since it is done under the Govt. formulated scheme. The allegation of suppression for invoking the extended period under Section 11A cannot therefore be sustained. The demand has not been issued within a period of six months. Hence the entire demand is hit by time bar.
5. We find that the show cause notice has been rightly issued under the provisions of Section 11A of the Central Excises & Salt Act; but the Collector found that it is going beyond the time limit prescribed under Section 11 A. Hence, he conveniently chose to drop the demand under Section 11A and sought to enforce it under Section 11D reading it in isolation, which approach has not been approved by the Madras High Court in the case of Gem Cables (supra). Moreover as regards the Tribunal's jurisdiction challenged in the Misc. application, we find that the preamble to the impugned order of the Collector itself indicates that it is an appealable order directing that appeal should be filed before the Tribunal. It is not the case of the Collector that the aforesaid order is a communication addressed to the assessee requesting for making voluntary payment of the duty, in which case we can construe it to be a non-appealable communication and it is left to the assessee to make payment voluntarily or otherwise. When the order itself carries the preamble that it is appealable to the Tribunal and the assessee have come up in appeal before the Tribunal along with the stay petition, the Tribunal's jurisdiction to entertain both the appeals as well as the stay petition cannot be questioned. In the circumstances, we do not find any merit in the Misc. application. We have also considered the appeal in detail, in the aforesaid paragraph along with the submissions made in regard to Misc. application and held that the demand made by the Collector under Section 11D, which is in the form of an advice, has to be construed in the context of the provisions of Section 11A of the Central Excise Act and when it is so construed, it goes beyond a period of 6 months and is hit by time bar.
The extended period cannot be invoked in this case.