Commissioner of C. Ex. Vs. National Rayon Corpn. - Court Judgment

SooperKanoon Citationsooperkanoon.com/10003
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided OnSep-10-1996
Reported in(1996)(88)ELT182Tri(Mum.)bai
AppellantCommissioner of C. Ex.
RespondentNational Rayon Corpn.
Excerpt:
1. this appeal of the department is directed against the order-in-original no. 123/addl. collr. dated 16-11-1992 of the additional collector, central excise, bombay-iii dropping the proceedings initiated in the show cause notice dated 17-12-1986 for recovery of rs. 21,150/-from the respondents for wrong utilisation of the credit availed of between 15-3-1986, to 24-3-1986. the show cause notice was issued invoking provisions of rule 57-i of the rules, read with section 11a of the central excises and salt act by the superintendent. initially the said show cause notice was adjudicated upon by the assistant collector. in the appeal before the collector (appeals) it was observed that because the period involved was beyond the normal period of six months, it was not open for the assistant.....
Judgment:
1. This appeal of the Department is directed against the Order-in-Original No. 123/Addl. Collr. dated 16-11-1992 of the Additional Collector, Central Excise, Bombay-III dropping the proceedings initiated in the Show Cause Notice dated 17-12-1986 for recovery of Rs. 21,150/-from the Respondents for wrong utilisation of the credit availed of between 15-3-1986, to 24-3-1986. The Show Cause Notice was issued invoking provisions of Rule 57-I of the Rules, read with Section 11A of the Central Excises and Salt Act by the Superintendent. Initially the said Show Cause Notice was adjudicated upon by the Assistant Collector. In the appeal before the Collector (Appeals) it was observed that because the period involved was beyond the normal period of six months, it was not open for the Assistant Collector to adjudicate and hence the said order was set aside and the matter was remanded for being placed before the Competent adjudicating authority and pursuant thereto, the same was placed before the Additional Collector who passed the impugned order.

2. Mr. Talajia, the ld. DR has pleaded that the Show Cause Notice under Rule 57-I could be issued by any proper officer and was placed before the Additional Collector for adjudication. He has pleaded that no period of limitation was prescribed for raising demand under Rule 57-I of the Rules at that relevant time, the amendment thereof is on 6-10-1988. Referring to the Gujarat High Court judgment in Torrent Laboratories Ltd. v. Union of India - 1991 (51) E.L.T. 25 (Guj.), the ld. DR has pleaded that Modvat Scheme being self-contained, the statutory period laid down in Section 11A could not be invoked and there was no limitation prescribed and no provision existed for invocation of larger period and hence the approach of the ld.Adjudicating Authority is not proper and cannot be sustained.

3. Mr. M.H. Patil, the ld. Advocate for the Respondent has pleaded that besides the fact that the subject notice has specifically invoked provisions of Section 11A of the Act, even going by the ratio of Gujarat High Court Judgment, the notice has to be issued within a reasonable time and for this, he has referred to the decision of the Supreme Court in Government of India v. Citedal Fine Pharmaceuticals - 1989 (42) E.L.T. 515 (SC). In his submission reasonable period under all taxation laws have been taken as six months. It is also his submission that this Bench and other Benches of the Tribunal have been consistently holding that Rules are always supplementary to the statutory provisions and for raising demand even under the pre-amended Rule 57-I, the period prescribed was applicable. He refers to the latest decision of the Tribunal in Brakes India Ltd. v. Collector -1996 (15) RLT 68 (CEGAT-SRB) and further pleads that the view contrary to the one of the Gujarat High Court is held by Karnataka High Court in Tungabhadra Steel Products Ltd. v. Superintendent of Central Excise - 1991 (56) E.L.T. 340 (Kar.) and by the Madras High Court in Advani Oerlikon Ltd. v. Assistant Collector -1993 (63) E.L.T. 427 (Mad.). The ld. Advocate pleads that the Respondents have their factory in State of Maharashtra.

4. Considering the submission, the Show Cause Notice is apparently beyond the period of six months, from the date of issue of Show Cause Notice. Admittedly the Show Cause Notice is issued by the Superintendent and besides Rule 57-I of the Rules, provisions of Section 11A have been invoked.

5. The main issue is whether the provisions of Section 11A stood attracted, to the demand under Rule 57-I. The basic fundamental of law is that the Rules framed under the statute are always supplementary to the statutory provisions and unless otherwise expressly provided, the provisions of the Sections are to be read as applicable. Rule 57-I at the relevant time, did not provide any time limit, but the provisions of the statute had made such a provision and hence, the time provided in Section 11A at all times stood applicable. This is also the view held by Karnataka High Court in Re: Tungabhadra Steel Products Ltd. (supra) and by Madras High Court in Advani Oerlikon Ltd. (supra).

6. The decision of Gujarat High Court may not operate as binding to the instant case, and there is no decision from the Bombay High Court. But even going by the ratio of the Gujarat High Court judgment in Re : Torrent Laboratories (supra), the said High Court has observed that notice ought to be served within a reasonable period, without specifying as to what could be construed as reasonable time and considering the entire scheme of the Taxation Law, reasonable time could be six months and obviously the notice is not issued within six months.

7. When extended period has to be invoked and when provisions of Section 11A of the Act have been brought, the proper officer to issue notice would be only the Collector.

8. Further, in the earlier proceedings the Collector (Appeals) has held that the Collector to be the proper authority to adjudicate, meaning thereby that the provisions for extended period were invoked. The said decision has not been challenged in appeal.

9. In any case, from whatever is discussed above, there is no cause to interfere with the order passed by the authority below and hence the appeal is rejected.