Ultra Automan Rubbers (P) Ltd. Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. arguing for the appellants shri j.s. agarwal, learned advocate submitted that the dispute is in respect of classification of the products namely rubber flaps used for animal drawn vehicles. he submitted that by mistake appellants have claimed classification under 4011.10 with reference to notification no. 188/86-ce., dated 3-3-1986 as amended. the classification list filed by the appellants was approved by the department upto 31-3-1987. he fairly concede that the items are correctly classifiable under heading 40.12. since there was a specific heading which was introduced from 1-3-1986. he contended that since the classification list filed by the assessee was duly approved by the department, though it was not correct it was not open to the department to raise the demand retrospectively, since revision or modification of the classification list will come into effect prospectively that is from the date of issue of show cause notice. he said that in the instant case, show cause notice was issued from the department on 23-11-1987 for raising the demand as well as revising the classification for the period 1-4-1987 to 31-10-1987. in this context shri satnam singh submitted that two show cause notices were issued under section 11a for raising the demand and the first show cause notice dated 23-11-1987 was with reference to the period 1-4-1987 to 31-10-1987 and the second notice dated 12-4-1988 raising the demand for the period 1-11-1987 to 1-12-1987. shri agarwal strongly relied upon the decision of the supreme court in the case of collector of central excise, new delhi v. bhiwani textile mills, reported in 1996 (17) rlt 1126 (s.c.). in support of his contention that demand for short levy on account of change in the classification is enforceable from the date of show cause notice proposing revision of classification and not for earlier period. shri satnam singh submitted that since the show cause notice was issued under section 11a of the act, the department was justified in raising the demand for the period of six months prior to the issue of show cause notice and this was the view of the supreme court in the case of ballarpur industries ltd. v. asstt. collector of customs & central excise, reported in 1995 (76) e.l.t. 499 (s.c.) earlier.2. we have carefully considered the submissions made by both the sides and perused the records. we find that the supreme court in the case of union of india and anr. v. madhumilan syntex pvt. ltd., reported in 1988 (35) e.l.t. 349 (s.c.) has taken the view that demand cannot be raised unless show cause notice issued whenever department wants to change the classification. further, subsequent to that supreme court has taken the view in the case of rainbow industries (p) ltd. v.collector of central excise, vadodara, reported in 1994 (74) e.l.t. 3 (s.c.) that demand can be raised prospectively from the date of issue of show cause notice and not retrospectively. but in the case of ballarpur industries ltd. v. assistant collector of customs and central excise, 1995 (76) e.l.t. 499, supreme court observed that duty short levied for the period prior to issue of show cause notice recoverable subject to time limit provided under section ha of the central excises and salt act, 1944 even with reference to the change of classification or price list approved. but in the recent case bhiwani textile mills referred to above the supreme court following the ratio of the collector of central excise v. rajasthan spg. & wvg. mills ltd. 1995 (75) e.l.t. 36 (s.c.) and union of india and ors. v. madhumilan syntex pvt. ltd., reported in 1988 (35) e.l.t. 349 (s.c) held that in respect of classification demand for short levy and on account of change in classification is enforceable from the date of show cause notice proposing revision of classification and not for earlier period. since the supreme court has taken this view, following the ratio of the decisions, we hold that the demand for short levy on account of change in classification is enforceable from 23-11-1987 since show cause notice dated 23-11-1987 was the first show cause notice issued for proposing to change the earlier classification. with this view, the appeal is disposed of accordingly.

Judgment:
1. Arguing for the appellants Shri J.S. Agarwal, learned Advocate submitted that the dispute is in respect of classification of the products namely rubber flaps used for animal drawn vehicles. He submitted that by mistake appellants have claimed classification under 4011.10 with reference to Notification No. 188/86-CE., dated 3-3-1986 as amended. The classification list filed by the appellants was approved by the department upto 31-3-1987. He fairly concede that the items are correctly classifiable under Heading 40.12. Since there was a specific heading which was introduced from 1-3-1986. He contended that since the classification list filed by the assessee was duly approved by the department, though it was not correct it was not open to the department to raise the demand retrospectively, since revision or modification of the classification list will come into effect prospectively that is from the date of issue of show cause notice. He said that in the instant case, show cause notice was issued from the department on 23-11-1987 for raising the demand as well as revising the classification for the period 1-4-1987 to 31-10-1987. In this context Shri Satnam Singh submitted that two show cause notices were issued Under Section 11A for raising the demand and the first show cause notice dated 23-11-1987 was with reference to the period 1-4-1987 to 31-10-1987 and the second notice dated 12-4-1988 raising the demand for the period 1-11-1987 to 1-12-1987. Shri Agarwal strongly relied upon the decision of the Supreme Court in the case of Collector of Central Excise, New Delhi v. Bhiwani Textile Mills, reported in 1996 (17) RLT 1126 (S.C.). In support of his contention that demand for short levy on account of change in the classification is enforceable from the date of show cause notice proposing revision of classification and not for earlier period. Shri Satnam Singh submitted that since the show cause notice was issued Under Section 11A of the Act, the department was justified in raising the demand for the period of six months prior to the issue of show cause notice and this was the view of the Supreme Court in the case of Ballarpur Industries Ltd. v. Asstt. Collector of Customs & Central Excise, reported in 1995 (76) E.L.T. 499 (S.C.) earlier.

2. We have carefully considered the submissions made by both the sides and perused the records. We find that the Supreme Court in the case of Union of India and Anr. v. Madhumilan Syntex Pvt. Ltd., reported in 1988 (35) E.L.T. 349 (S.C.) has taken the view that demand cannot be raised unless show cause notice issued whenever department wants to change the classification. Further, subsequent to that Supreme Court has taken the view in the case of Rainbow Industries (P) Ltd. v.Collector of Central Excise, Vadodara, reported in 1994 (74) E.L.T. 3 (S.C.) that demand can be raised prospectively from the date of issue of show cause notice and not retrospectively. But in the case of Ballarpur Industries Ltd. v. Assistant Collector of Customs and Central Excise, 1995 (76) E.L.T. 499, Supreme Court observed that duty short levied for the period prior to issue of show cause notice recoverable subject to time limit provided Under Section HA of the Central Excises and Salt Act, 1944 even with reference to the change of classification or price list approved. But in the recent case Bhiwani Textile Mills referred to above the Supreme Court following the ratio of the Collector of Central Excise v. Rajasthan Spg. & Wvg. Mills Ltd. 1995 (75) E.L.T. 36 (S.C.) and Union of India and Ors. v. Madhumilan Syntex Pvt. Ltd., reported in 1988 (35) E.L.T. 349 (S.C) held that in respect of classification demand for short levy and on account of change in classification is enforceable from the date of show cause notice proposing revision of classification and not for earlier period. Since the Supreme Court has taken this view, following the ratio of the decisions, we hold that the demand for short levy on account of change in classification is enforceable from 23-11-1987 since show cause notice dated 23-11-1987 was the first show cause notice issued for proposing to change the earlier classification. With this view, the appeal is disposed of accordingly.