Collector of Central Excise Vs. D.P. Metal Works - Court Judgment

Excerpt:
1. this appeal in hand is directed against the order-in-appeal no.1145/chc/84 dated 31-12-1984 passed by the collector of central excise (appeals) new delhi, seting aside the demand of duty made by the adjudicating authority and also reducing the personal penalty from rs. 1000/-to rs. 200/- only.2. factual backdrops : during the course of periodical inspection of the accounts of the respondent firm it was observed that the respondent received back rolling bearing from different customers as defective goods for re-conditioning or repair, accounted for the same in their repair register maintained in form v but in lieu of these rolling bearings they had sent fresh rolling bearings from their stock which were cleared without accountal in their statutory records and without payment of duty and which they manufactured out of the unaccounted for raw material. in the final analysis of the inspection it was found that the respondent had cleared from 11-12-1972 to 19-9-1977 rolling bearings valued at rs. 38,656.26 paisa without payment of duty to the tune of rs. 5,798.45 paise under different gate passes. as a follow-up action a show cause notice was issued to the respondent calling upon them to show cause as to why the penalty be not imposed on them under rule 173-q of the central excise rules, 1944 and why duty amounting to rs. 5,798.45 paise be not demanded from them under rule 9(2), ibid.after the usual proceedings the adjudicating authority demanded the appropriate duty on the 918 bearings valued at rs. 20,756.75 under rule 10 (new) and rule 10a of the central excise rules, 1944. the adjudicating authority also imposed a penalty of rs. 1000/-under rule 173-q, ibid. being dis-satisfied, the respondent went in appeal before the collector of central excise (appeals), new delhi. the lower appellate authority set aside the demand of duty and also reduced the penalty from rs. 1000/- to rs. 200/- only.3. when the case was called shri k.r. chopra, learned consultant for the respondent raised the preliminary objections that the tribunal should not hear the appeal under proviso to sub-section (1) of section 35b of the central excises and salt act, 1944 and the collector being not, an aggrieved party has no right ot file the present appeal. in reply, learned sdr for the appellant submitted that the tribunal should not refuse to hear the appeal at this stage and there is no room for exercising the discretion under the said proviso to sub-section (1) of section 35b, ibid. he further contended that the present appellant has a right to file the appeal. as regards the contention of the learned consultant for the respondent that the tribunal should refuse to hear the appeal under proviso to sub-section (1) of section 35b, ibid, i am of the opinion that it would not be proper exercise of the discretion to refuse to hear the appeal at this stage more particularly keeping in view the fact that the appeal has already been listed for hearing and the questions of the applicability of an erstwhile rule 9(2) of the central excise rules, 1944 is also involved. as regards the other preliminary objection that the collector of central excise has no right to file the appeal shri chopra, learned consultant for the respondent submitted that the collector is not an aggrieved party within section 35b of the central excises and salt act, 1944 and therefore the appeal is not maintainable. in support of his contention he heavily relied upon the decision rendered in the case of collector of customs & central excise, ahmedabad and ors. v. naren-dra p unrao and ors. supra 1984 (15) e.l.t. 275 by a larger bench of this tribunal. in reply shri shishir kumar, learned sdr for the appellant submitted that the very said order of this tribunal knocks the very bottom of the preliminary objection of the respondent. after giving my due consideration to the arguments advanced by both the parties, i am of the opinion that this preliminary objection also has no force. it is an admitted fact that the present appeal is directed against the order-in-appeal passed by the collector, central excise (appeals) new delhi. it is also on record that the collector in exercise of the powers vested in him under section 35b(2) of central excises and salt act, 1944 authorised and directed the assistant collector, central excise, jalandhar to file the present appeal on his behalf. the said authorisation and direction are on record. it is on this authorisation and direction that the present appeal has been filed by the authorised office on behalf of the collector. the present chapter vi-a replaces sections 35, 35-a and 36 of the act 1 of 1944. the said change was effected by the finance (no.2) act, 1980 and the amended provision came into force on 11-10-1982. before the amendment the act conferred revisional power on the board, on the collector and also on the central government. after the appointed day the act did not provide for any revision by any authority. in other words, the revisional power of the board, the collector and central government has been altogether done away with.but then the parliament did make adequate provisions to safeguard the interests of revenue. under sub-section (2) of section 35b, the collector of central excise has been empowered to direct an officer to prefer an appeal on his behalf to the appellate tribunal, if he is of the opinion that the order passed by the appellate collector of central excise under section 35, as it stood before the appointed day or the collector (appeals) under section 35a is not legal or proper. it is on this premises that the larger bench in the case of collector of customs and central excise, ahmedabad and ors. v. narendra p unrao and ors.supra has held that the expression "any person aggrieved" appearing in sub-section (1) of section 129a of the customs act does not take within its ambit "the revenue" or "collector" and refers only to "the assessee" or other persons other than the "revenue" and therefore the appeal filed by the collector of customs and central excise against the orders passed by the central board of excise & customs were not maintainable and inter alia also held in paragraph 19 of the order that "the right to appeal against the order of collector (appeals) was conferred on the collector of customs because after the appointed day the board has not been conferred with the power of adjudication". thus the ratio of the case does not advance the case of the appellant further but tacitly supports my view.4. shri shishir kumar, leanred sdr for the appellant contended that the lower appellate authority below erred in law in holding that the demand show cause notice was time barred. from the impugned order i observe that demand show cause notice was issued on 1-6-1979. the period covered was from 22-11-1976 to 19-9-1977 and therefore the lower appellate authority held that it won't be correct to invoke rule 10a which was no longer in existence at the time of initiation of the proceedings. if further held that the extended period of limitation under the new rule 10 would also not be applicable since the appellants were discharging ail the. obligations under the central excise acts/rules including submissions of d-3 intimations. monthly rt-12 returns along with gate passes etc., and the case of short-levy was based only on the scrutiny of their records. this view of the learned appellate authority is fully covered by the decision of larger bench of this tribunal which was rendered in the case of atma steels private limited v. collector of central excise, 1984 (17) e.l.t. 331 (tribunal). in that case it was held that "re-course can be had to the provisions as prevailing at the time of initiation of proceedings, and the period available would be the one as permissible under the provisions existing at the time of issuance of show cause notice inspite of the fact that the short-levy or non-levy refers to the period when different period of limitations was available".5. the only other surviving contention of the learned sdr that invoking of wrong rule in the show cause notice when the lapse is otherwise clear, does not vitiate the action against the parties nor the central excise officers are precluded from sustaining the said notice with regard to any provisions of law also cannot be upheld. it is true that in the case of j.k. steel limited v. union of india, a.i.r. 1970 sc 1173 and n.b. sanjana, assistant collector of central excise v.elphinstone spinning & weaving mills, 1978 e.l.t. (j-399) (sc), the supreme court has held that the wrong mentioning of the section would not vitiate the proceedings. but from the record i observe that the instant case is not the case where rule 9(2) of the central excise rules, 1944 was mentioned wrongly. in the show cause notice which is on record there is no allegation of any wilful misstatement or suppression of facts by the appellant as required under old rule 10, and therefore the lower appellate authority below, if i may say, rightly held that the case was not covered by rule 10. under these circumstances, in my opinion no interference with the impugned order is called for at this end.

Judgment:
1. This appeal in hand is directed against the Order-in-Appeal No.1145/CHC/84 dated 31-12-1984 passed by the Collector of Central Excise (Appeals) New Delhi, seting aside the demand of duty made by the Adjudicating Authority and also reducing the personal penalty from Rs. 1000/-to Rs. 200/- only.

2. Factual backdrops : During the course of periodical inspection of the accounts of the respondent firm it was observed that the respondent received back rolling bearing from different customers as defective goods for re-conditioning or repair, accounted for the same in their repair register maintained in form V but in lieu of these rolling bearings they had sent fresh rolling bearings from their stock which were cleared without accountal in their statutory records and without payment of duty and which they manufactured out of the unaccounted for raw material. In the final analysis of the inspection it was found that the respondent had cleared from 11-12-1972 to 19-9-1977 rolling bearings valued at Rs. 38,656.26 paisa without payment of duty to the tune of Rs. 5,798.45 paise under different gate passes. As a follow-up action a show cause notice was issued to the respondent calling upon them to show cause as to why the penalty be not imposed on them under Rule 173-Q of the Central Excise Rules, 1944 and why duty amounting to Rs. 5,798.45 paise be not demanded from them under Rule 9(2), ibid.

After the usual proceedings the Adjudicating Authority demanded the appropriate duty on the 918 bearings valued at Rs. 20,756.75 under Rule 10 (new) and Rule 10A of the Central Excise Rules, 1944. The Adjudicating Authority also imposed a penalty of Rs. 1000/-under Rule 173-Q, ibid. Being dis-satisfied, the respondent went in appeal before the Collector of Central Excise (Appeals), New Delhi. The lower Appellate Authority set aside the demand of duty and also reduced the penalty from Rs. 1000/- to Rs. 200/- only.

3. When the case was called Shri K.R. Chopra, Learned Consultant for the respondent raised the preliminary objections that the Tribunal should not hear the appeal under proviso to Sub-section (1) of Section 35B of the Central Excises and Salt Act, 1944 and the Collector being not, an aggrieved party has no right ot file the present appeal. In reply, Learned SDR for the appellant submitted that the Tribunal should not refuse to hear the appeal at this stage and there is no room for exercising the discretion under the said proviso to Sub-section (1) of Section 35B, ibid. He further contended that the present appellant has a right to file the appeal. As regards the contention of the Learned Consultant for the respondent that the Tribunal should refuse to hear the appeal under proviso to Sub-section (1) of Section 35B, ibid, I am of the opinion that it would not be proper exercise of the discretion to refuse to hear the appeal at this stage more particularly keeping in view the fact that the appeal has already been listed for hearing and the questions of the applicability of an erstwhile Rule 9(2) of the Central Excise Rules, 1944 is also involved. As regards the other preliminary objection that the Collector of Central Excise has no right to file the appeal Shri Chopra, Learned Consultant for the respondent submitted that the Collector is not an aggrieved party within Section 35B of the Central Excises and Salt Act, 1944 and therefore the appeal is not maintainable. In support of his contention he heavily relied upon the decision rendered in the case of Collector of Customs & Central Excise, Ahmedabad and Ors. v. Naren-dra P Unrao and Ors. supra 1984 (15) E.L.T. 275 by a Larger Bench of this Tribunal. In reply Shri Shishir Kumar, Learned SDR for the appellant submitted that the very said order of this Tribunal knocks the very bottom of the preliminary objection of the Respondent. After giving my due consideration to the arguments advanced by both the parties, I am of the opinion that this preliminary objection also has no force. It is an admitted fact that the present appeal is directed against the Order-in-Appeal passed by the Collector, Central Excise (Appeals) New Delhi. It is also on record that the Collector in exercise of the powers vested in him under Section 35B(2) of Central Excises and Salt Act, 1944 authorised and directed the Assistant Collector, Central Excise, Jalandhar to file the present appeal on his behalf. The said authorisation and direction are on record. It is on this authorisation and direction that the present appeal has been filed by the authorised office on behalf of the Collector. The present Chapter VI-A replaces Sections 35, 35-A and 36 of the Act 1 of 1944. The said change was effected by the Finance (No.2) Act, 1980 and the amended provision came into force on 11-10-1982. Before the amendment the Act conferred revisional power on the Board, on the Collector and also on the Central Government. After the appointed day the Act did not provide for any revision by any authority. In other words, the revisional power of the Board, the Collector and Central Government has been altogether done away with.

But then the Parliament did make adequate provisions to safeguard the interests of revenue. Under Sub-section (2) of Section 35B, the Collector of Central Excise has been empowered to direct an officer to prefer an appeal on his behalf to the Appellate Tribunal, if he is of the opinion that the order passed by the Appellate Collector of Central Excise under Section 35, as it stood before the appointed day or the Collector (Appeals) under Section 35A is not legal or proper. It is on this premises that the Larger Bench in the case of Collector of Customs and Central Excise, Ahmedabad and Ors. v. Narendra P Unrao and Ors.

supra has held that the expression "any person aggrieved" appearing in Sub-section (1) of Section 129A of the Customs Act does not take within its ambit "the Revenue" or "Collector" and refers only to "the Assessee" or other persons other than the "Revenue" and therefore the appeal filed by the Collector of Customs and Central Excise against the orders passed by the Central Board of Excise & Customs were not maintainable and inter alia also held in paragraph 19 of the order that "the right to appeal against the order of Collector (Appeals) was conferred on the Collector of Customs because after the appointed day the Board has not been conferred with the power of adjudication". Thus the ratio of the case does not advance the case of the appellant further but tacitly supports my view.

4. Shri Shishir Kumar, Leanred SDR for the Appellant contended that the lower Appellate Authority below erred in law in holding that the demand Show Cause Notice was time barred. From the impugned order I observe that demand Show Cause Notice was issued on 1-6-1979. The period covered was from 22-11-1976 to 19-9-1977 and therefore the lower appellate authority held that it won't be correct to invoke Rule 10A which was no longer in existence at the time of initiation of the proceedings. If further held that the extended period of limitation under the new Rule 10 would also not be applicable since the appellants were discharging ail the. obligations under the Central Excise Acts/Rules including submissions of D-3 intimations. Monthly RT-12 Returns along with Gate Passes etc., and the case of short-levy was based only on the scrutiny of their records. This view of the Learned Appellate Authority is fully covered by the decision of Larger Bench of this Tribunal which was rendered in the case of Atma Steels Private Limited v. Collector of Central Excise, 1984 (17) E.L.T. 331 (Tribunal). In that case it was held that "re-course can be had to the provisions as prevailing at the time of initiation of proceedings, and the period available would be the one as permissible under the provisions existing at the time of issuance of Show Cause Notice inspite of the fact that the short-levy or non-levy refers to the period when different period of limitations was available".

5. The only other surviving contention of the Learned SDR that invoking of wrong Rule in the Show Cause Notice when the lapse is otherwise clear, does not vitiate the action against the parties nor the Central Excise officers are precluded from sustaining the said notice with regard to any provisions of law also cannot be upheld. It is true that in the case of J.K. Steel Limited v. Union of India, A.I.R. 1970 SC 1173 and N.B. Sanjana, Assistant Collector of Central Excise v.Elphinstone Spinning & Weaving Mills, 1978 E.L.T. (J-399) (SC), the Supreme Court has held that the wrong mentioning of the Section would not vitiate the proceedings. But from the record I observe that the instant case is not the case where Rule 9(2) of the Central Excise Rules, 1944 was mentioned wrongly. In the Show Cause Notice which is on record there is no allegation of any wilful misstatement or suppression of facts by the appellant as required under old Rule 10, and therefore the lower Appellate Authority below, if I may say, rightly held that the case was not covered by Rule 10. Under these circumstances, in my opinion no interference with the impugned order is called for at this end.