Indian Aluminium Company Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. few assessments have seen so many to-and-fros and up-and-downs like this assessment. it is a long history and began in 1967 with the assistant collector telling these manufacturers indian aluminium company to pay duty on their aluminium foil scrap at crude rate i.e.under central excise tariff heading 27(a)(i). when the appellants asked for refund of the duty that they had paid on the scrap from august, 1965 to november, 1967, they were told that their claim was time barred. then in november, 1975 they were told to submit a classification list for assessment of the foil scrap under heading 27(c) as foils. this alarmed the appellants, as well it might, and so they asked for confirmation from the collector about assessment of the foil scrap as scrap and for this purpose they wrote one or two letters to him seeking instructions on the assessment of the scrap. eventually in june, 1976, a meeting was held at which it was decided that the aluminium foil scrap was to be charged to duty as foil under heading 27(c) and not under heading 27(axi).2. not satisfied with this, the bombay central excise issued a trade notice dated 7th february, 1978 announcing that aluminium arising in the manufacture of aluminium foil was assessable under'tariff heading 27(a)(i); that is, it was back to crude aluminium, the heading favoured in november, 1967. with this, started these proceedings with a notice dated 1-4-1978 to indian aluminium from the superintendent of central excise telling them that orders had been received that aluminium scrap arising out of the manufacture of aluminium foil was assessable as aluminium in crude form under heading 27(a)(i). he told them that the differential duty should be paid within eight days for all the period where duty had not been paid at 4096. this notice was followed by another dated 18th july, 1978, from the superintendent, telling indian aluminium to show cause to the assistant collector why they should not pay short differential levy of rs. 1,163,497.05. this differential levy was said to have been duty short levied and, therefore, recoverable from the factory under rule 10 of the central excise rules, 1944. the assistant collector adjudicated the dispute by an order no.b(30)misc-142/78-1054, dated 20th january, 1981 in which he directed the superintendent to issue a fresh demand covering differential duty for the period of six months from 1-4-1978, the date of the first notice from the superintendent to indian aluminium after the issue of the trade notice dated 7-2-1978. notice was duly issued by the superintendent in which he demanded under rule 10 a sum of rs. 2,42,005.98. this notice is dated 24-1-1981.3. the learned counsel for indian aluminium vehemently attacked the changes in assessment from one heading to another and back to the old heading. in the last change back to crude aluminium assessment, they say that they would not be able to recover the money from their customers, since they had cleared the scrap at the foil rate in accordance with the directions given to them by the central excise authorities at the meeting held in the central excise collectorate in june, 1976. the central excise somehow appeared to have fastened on the date of 1-4-1978 of the first notice issued by the superintendent after the issue of the trade notice dated 7-2-1978, but the learned counsel was unable to see the relevance of this notice or why it should figure for counting the six-month limit. he says that this was not a notice of demand, as the true demand was only in the notice dated 17th july, 1976 which, for the first time, stated the reasons for the demand and the amount claimed to have been short levied. if a short levy can be said to have taken place, six months can run only from this day and not from 1-4-1978.4. returning to the frequent changes, the counsel said that the assessment of the foil scrap as foil, and, before that, as crude aluminium were assessments under the directions of the central excise department. the central excise department cannot now change its assessment suddenly and demand duty under the crude head ignoring the fact that the assessment as foil was its own assessment. they had taken the precaution of writing to the collector when the department wanted to change the assessment from crude to foil, that they would not be responsible for any loss of duty following from this change. but sure enough, what they had feared came to pass, and in a few years, they were again told that the correct assessment of their aluminium foil scrap was as crude aluminium and that they would have to pay all the duty for the past period. the superintendent did issue a revised demand which scaled down the original rupees eleven lakh demand to a rupees two lakh demand, but it is still bad enough, said the counsel. they are not liable to pay even one np. he repeated that the past assessment as foil was under the central excise directions and, therefore, the central excise cannot arbitrarily change the assessment to demand duty for the past. they can, if they wish, assess their goods under another head even if it meant a higher rate of duty; and when notice is given to them of such new assessment, they will be placed in a position to price their goods accordingly so that they do not have to bear the duty themselves. but when demand notices like this one are issued for goods which they have sold at the lower rate of duty, they would only have to bear the extra duty themselves, since they will not be able to recover the money from their customers, none of whom will agree to pay more for the goods they have already bought and paid for.5. the learned counsel for the department, however, very strongly opposed the statement that the department cannot change its assessment and cannot issue demand for past periods. he quoted 1984(18) elt 310 entremonde polycoaters and read para 19 of the order of this tribunal which said that approval of a classification list did not bar an assistant collector from issuing a demand in accordance with the law.he also read order no. 79/87-b1, dated 4-7-1987 and 1983 elt 1853. he pointed to the observation in the collector (appeals) order that the manufacturers acquiesced in the classification of the foil scrap under 27(a) with effect from 7-2-1978. this effectively bars the appellants from making a grievance of the present assessment. but he said that the six months should count from the date of the notice issued on 1-4-1978.6. the learned counsel for the department also pointed to the fact that they did not pay the duty under protest and this was clear acquiescence and that they complied with what they called the unilateral assessment of the department. he read the factory's letter dated 7-1-1976 (ex. c) to support his argument.7. one does not often see such caprice and vagary as this assessment.there were four mutations in the assessment between 1967 and 1978. the last change in february, 1978 back to crude from foil was caused by a notice issued by the collector clarifying that aluminium foil scrap was assessable as aluminium in crude form. not content with this, the collectorate want to exact duty which they say had been short levied in the past. a question then arises in my mind whether there has been a short levy. rule 10 permitted the proper officer to serve notice within six months on the person "where any duty has not been levied or paid or has been short levied or erroneously refunded or any duty assessed has not been paid in full", to ask that person why he should not pay the amount. it is only these kinds of moneys that enable the proper officer to issue a notice under rule 10. the notice dated 18th july, 1978 claims that duties have been short levied, but in reality there was no short levy. the duty that was levied as aluminium foil in the immediate past was not because of any approval of classification list or any such processes, but because the central excise collectorate directed the appellants in november, 1975 to submit a classification list for assessment of foil scrap under tariff heading 27(c), which till then was being assessed under heading 27(a)(i), also under central excise orders. the notice of 18th 3uly, 1978 was the result of the public notice of 7-2-1978 and it cannot, therefore, be said that the demand notice of the superintendent was the discovery of short levy. there was only a change of opinion and indeed a reading of the trade notice confirms this.8. the trade notice said that the classification of aluminium scrap arising in the process of manufacture of aluminium foils when cleared as such was under consideration. in the second paragraph the notice says it had been decided that aluminium scrap arising out of the manufacture of aluminium foil was assessable as aluminium in crude form. please note carefully that this decision was not the result of confirmation of an opinion upon discovery of new hitherto unknown facts or technological knowledge. the facts remained the same and the goods remained the same. only the authorities, after considering this and that, decided that they should now assess the foil scrap as aluminium in crude form.9. we have already seen that the assessment of the foil scrap under that foil head was the result of deliberation by the central excise and that they arrived at this decision after discussion with the factory.the assessment of the goods that followed was, therefore, correct and this held until the issue of the public notice in february, 1978 and so cannot be said to have been incorrect. if the assessment was not incorrect, there can be no short levy.10. an incorrect assessment is one we associate with an error. but the "error" was the result of a deliberation in june, 1976 between senior officers of central excise and officers of the factory. at the meeting, the tax officers' views prevailed and the goods, aluminium foil scrap, had a change in classiciation, to foil head. but lest you should wonder about the classification till then, i might tell you that that classification was, like the one of the june, 1976 meeting also a reflection of the department's views. this was done in november, 1967 by means of the assistant collector advising the factory to pay duty on aluminium scrap at crude rate. and this itself wrought a change from a classification current till then. when they shift so frequently, never allowing a classification to hold undisturbed, i have very great difficulty in seeing and accepting the "short levy" the collectorate says had occurred and for which rule 10 provides the answer. a short levy results from an incorrect assessment which arises from one of several reasons, all of which can be attributed to human failure. but when the endeavour is only to collect more duty because the former classification is no longer in favour, then it is clear that the search is not for short levied duty, but only for money that the officers would like to add to the duty.11. but the habitual and frequent turnarounds we have seen in the assessments of the foil scrap totally discredit the claim of short levy. the demand is not of duty short levied, but only of money.12. or is the amount demanded an amount erroneously refunded; nor is it duty that had not been levied or paid or any duty assessed which had not been paid in full. the amount, therefore, does not qualify for recovery under rule 10 as'demanded by the superintendent in his notice dated 18th july, 1978.13. it is not possible to cast the notice of 1st april, 1978 in any role in this play. it is not a demand notice, because it states neither amount demanded nor period, nor does it ask the notice receiver to show cause as notices of this nature must do. this omission itself invalidates this notice to a notice of no effect, only to be ignored and discarded.14. the learned counsel for the department made a good point when he read paragraph 19 of the entremonde polycoaters decision of this tribunal. the difference between this case and that one, however, is that in the entremonde polycoaters case, a classification list which had been approved had been found to be incorrect, as an exemption had been allowed which the assistant collector came to the conclusion was not in order. for this purpose, he issued a demand under rule 10 and also asked the manufacturers to show cause why the exemption should not be withdrawn. in so doing, he followed all the prescriptions of the law and sought to recover duty which had been short levied by reason of the past assessment.15. there was none of the quick-changes we see in our present case re: indian aluminium. it is easy to see that in the entremonde case, it was a straight business of an erroneous assessment that the assistant collector had to make good, not by just a new classification but by recovering duty that had been levied short by reason of the erroneous assessment.16. it is not a case of recovering duty short levied here. the assessee should not be at the mercy of every whim that may take the fancy of the assessor. the damage these changes cause cannot be described, but they happen too often. and if one can do something to break the chain, one would feel one has done a little to bring some realism and justice to the system. in the entremonde polycoaters demand, the assistant collector found that the assessment was mistaken and, therefore, he had to issue a demand, even though he had approved the classification list himself. these incessant changes are unrelieved by any motivations of that kind. it is one arbitrary change after another, and always to the detriment and injury of the assessee. i at least would not be able to support, leave alone confirm, it. 1 hold that this was not a short levy and that, therefore, the department cannot recover duty for the past period. the reassessment can take place only from the date of the trade notice which the learned counsel told would not work to their disadvantage since they have been assessing the goods accordingly since that time.17. the order-in-appeal makes an odd observation. the collector appeals said that the assessees acquiesced in the classification of the scrap under heading 27(a) with effect from the date of the trade notice since the duty was not paid under protest. this is a most singular enunciation. is the collector suggesting that whenever a trade notice is issued, all the people affected should protest? 1 see no acquiescence in their payment of duty at crude rate following the trade notice. if they are aggrieved by the demand, it is only because for periods before 7-2-1978 they would not have any means of recovering it from their customers as manufacturers normally do, because the goods have been sold. from 7-2-1978 the central excise served notice on them that duty would have to be paid at crude rate and so they started clearing duty at that rate.18. the order of the assistant collector, however, must fail for another, and more serious reason. 1 will reproduce below the last two paragraphs of his order :- regarding show cause cum demand for rs. 11,65,497.03 the issues to be decided by me are as to whether the clarification made by the collector in the trade notice is question can be given retors-pective effect in the circumstances of the facts of the case and whether the above show cause cum demand is within the provisions of the rule 10 of central excise rules, 1944. it is a fact to be know-ledged that every manufacturer licensed under central excise act and rules expects that there should be uniformity in assessment of goods manufactured by him and similar ones manufactured by others. it is with this intention that the matters are examined at the higher level and clarifications by way of trade notices are issued from time to time. while giving effect to such trade notifications one has to adhere to the provisions made in this connection in the central excise act and rules, 1944. for this purpose the provision has been made in rule 10 (then in existence) central excise rules, 1944. in the instant case the provisions of rule 10(1) are correctly applicable irrespective of finalisation of rt-12 returns since the duty has not been paid under protest. the range superintendent vide his letter dated 1-4-1978 has asked m/s. indal to pay differential duty for all the past period during which central excise duty has not been paid at the rate applicable to tariff item 27(a)(i) and also has issued the impugned show demand for rs. 11,65,497.03 covering the period from 1-7-1976 to 6-2-1978. this demand covering the period from 1-7-1976 to 6-2-1978 is therefore not in order. in view of the my above findings 1 hereby order for withdrawal of the show cause cum demand dated 11-7-1978 for rs. 7,057.22. regarding the second demand for rs. 11,65,497.03. 1 order that the range superintendent should issue a fresh demand covering differential duty of the period prior to six months of 1-4-1978. the amount of differential duty for the rest of the period of the impugned demand order as time bar under rule 10(1) of central excise rules, 1944.you will notice that he says the range superintendent in his letter dated 1-4-1978 asked indian aluminium to pay differential duty for all the past period during which central excise duty had not been paid at the tariff heading 27(a)(i) and had issued the impugned demand of rs. 11,65,497.03 covering the period 1-7-1976 to 6-2-1978. the assistant collector then held that this demand covering the period from 1-7-1976 to 6-2-1978 was not in order. this demand was issued not in the notice dated 1-4-1978 but in the notice dated 18-7-1978 which also specified the period of short levy to be 1-7-1976 to 6-2-1978. the notice dated 1-4-1978 did none of these. it is the notice of 18-7-1978 that the assistant collector found to be not in order; this demand for rs. 11,65,497.03 has been destroyed.19. the assistant collector then ordered the superintendent to issue "a fresh demand covering differential duty of the period prior to six months of 1-4-1978". this the superintendent dutifully does demanding a sum of rs. 2,42,005.98 by his notice no. c.ex.r/vii/78/112, dated 24th january, 1981. since in accordance with the order of the assistant collector, this demand is for the period of six months preceding 1-4-1978, it is time barred and, therefore, is null and void.20. nor can the assistant collector's order validate this notice, because the law requires a demand notice to be issued before the demand is confirmed. this demand has not been confirmed. on the contrary, the assistant collector first issues a demand, nullifies it, then issues an order directing the superintendent to issue a demand for a stated period and leaves it unconfirmed. this demand of 24th january, 1981 remains unconfirmed till today. it is, therefore, invalid and no action can be taken under it to recover any money. besides, as i have already stated, it is time barred and a time barred demand is a dead demand.so, even if we accept that there was a short levy, this demand cannot ake that loss good.21. i set aside the demand and prohibit recovery of money under it.however, the assessment at crude rate from 7-2-1978 after the issue of the public notice is in order and that assessment shall not be altered or disturbed.

Judgment:
1. Few assessments have seen so many to-and-fros and up-and-downs like this assessment. It is a long history and began in 1967 with the Assistant Collector telling these manufacturers Indian Aluminium Company to pay duty on their aluminium foil scrap at crude rate i.e.

under Central Excise Tariff Heading 27(a)(i). When the appellants asked for refund of the duty that they had paid on the scrap from August, 1965 to November, 1967, they were told that their claim was time barred. Then in November, 1975 they were told to submit a classification list for assessment of the foil scrap under Heading 27(c) as foils. This alarmed the appellants, as well it might, and so they asked for confirmation from the Collector about assessment of the foil scrap as scrap and for this purpose they wrote one or two letters to him seeking instructions on the assessment of the scrap. Eventually in June, 1976, a meeting was held at which it was decided that the aluminium foil scrap was to be charged to duty as foil under Heading 27(c) and not under Heading 27(aXi).

2. Not satisfied with this, the Bombay Central Excise issued a trade notice dated 7th February, 1978 announcing that aluminium arising in the manufacture of aluminium foil was assessable under'Tariff Heading 27(a)(i); that is, it was back to crude aluminium, the heading favoured in November, 1967. With this, started these proceedings with a notice dated 1-4-1978 to Indian Aluminium from the Superintendent of Central Excise telling them that orders had been received that aluminium scrap arising out of the manufacture of aluminium foil was assessable as aluminium in crude form under Heading 27(a)(i). He told them that the differential duty should be paid within eight days for all the period where duty had not been paid at 4096. This notice was followed by another dated 18th July, 1978, from the Superintendent, telling Indian Aluminium to show cause to the Assistant Collector why they should not pay short differential levy of Rs. 1,163,497.05. This differential levy was said to have been duty short levied and, therefore, recoverable from the factory under Rule 10 of the Central Excise Rules, 1944. The Assistant Collector adjudicated the dispute by an Order No.B(30)Misc-142/78-1054, dated 20th January, 1981 in which he directed the Superintendent to issue a fresh demand covering differential duty for the period of six months from 1-4-1978, the date of the first notice from the Superintendent to Indian Aluminium after the issue of the trade notice dated 7-2-1978. Notice was duly issued by the Superintendent in which he demanded under Rule 10 a sum of Rs. 2,42,005.98. This notice is dated 24-1-1981.

3. The learned counsel for Indian Aluminium vehemently attacked the changes in assessment from one heading to another and back to the old heading. In the last change back to crude aluminium assessment, they say that they would not be able to recover the money from their customers, since they had cleared the scrap at the foil rate in accordance with the directions given to them by the Central Excise authorities at the meeting held in the Central Excise Collectorate in June, 1976. The Central Excise somehow appeared to have fastened on the date of 1-4-1978 of the first notice issued by the Superintendent after the issue of the trade notice dated 7-2-1978, but the learned counsel was unable to see the relevance of this notice or why it should figure for counting the six-month limit. He says that this was not a notice of demand, as the true demand was only in the notice dated 17th July, 1976 which, for the first time, stated the reasons for the demand and the amount claimed to have been short levied. If a short levy can be said to have taken place, six months can run only from this day and not from 1-4-1978.

4. Returning to the frequent changes, the counsel said that the assessment of the foil scrap as foil, and, before that, as crude aluminium were assessments under the directions of the Central Excise department. The Central Excise department cannot now change its assessment suddenly and demand duty under the crude head ignoring the fact that the assessment as foil was its own assessment. They had taken the precaution of writing to the Collector when the department wanted to change the assessment from crude to foil, that they would not be responsible for any loss of duty following from this change. But sure enough, what they had feared came to pass, and in a few years, they were again told that the correct assessment of their aluminium foil scrap was as crude aluminium and that they would have to pay all the duty for the past period. The Superintendent did issue a revised demand which scaled down the original rupees eleven lakh demand to a rupees two lakh demand, but it is still bad enough, said the counsel. They are not liable to pay even one nP. He repeated that the past assessment as foil was under the Central Excise directions and, therefore, the Central Excise cannot arbitrarily change the assessment to demand duty for the past. They can, if they wish, assess their goods under another head even if it meant a higher rate of duty; and when notice is given to them of such new assessment, they will be placed in a position to price their goods accordingly so that they do not have to bear the duty themselves. But when demand notices like this one are issued for goods which they have sold at the lower rate of duty, they would only have to bear the extra duty themselves, since they will not be able to recover the money from their customers, none of whom will agree to pay more for the goods they have already bought and paid for.

5. The learned counsel for the department, however, very strongly opposed the statement that the department cannot change its assessment and cannot issue demand for past periods. He quoted 1984(18) ELT 310 Entremonde Polycoaters and read para 19 of the order of this Tribunal which said that approval of a classification list did not bar an Assistant Collector from issuing a demand in accordance with the law.

He also read Order No. 79/87-B1, dated 4-7-1987 and 1983 ELT 1853. He pointed to the observation in the Collector (Appeals) order that the manufacturers acquiesced in the classification of the foil scrap under 27(a) with effect from 7-2-1978. This effectively bars the appellants from making a grievance of the present assessment. But he said that the six months should count from the date of the notice issued on 1-4-1978.

6. The learned counsel for the department also pointed to the fact that they did not pay the duty under protest and this was clear acquiescence and that they complied with what they called the unilateral assessment of the department. He read the factory's letter dated 7-1-1976 (Ex. C) to support his argument.

7. One does not often see such caprice and vagary as this assessment.

There were four mutations in the assessment between 1967 and 1978. The last change in February, 1978 back to crude from foil was caused by a notice issued by the Collector clarifying that aluminium foil scrap was assessable as aluminium in crude form. Not content with this, the Collectorate want to exact duty which they say had been short levied in the past. A question then arises in my mind whether there has been a short levy. Rule 10 permitted the proper officer to serve notice within six months on the person "where any duty has not been levied or paid or has been short levied or erroneously refunded or any duty assessed has not been paid in full", to ask that person why he should not pay the amount. It is only these kinds of moneys that enable the proper officer to issue a notice under Rule 10. The notice dated 18th July, 1978 claims that duties have been short levied, but in reality there was no short levy. The duty that was levied as aluminium foil in the immediate past was not because of any approval of classification list or any such processes, but because the Central Excise Collectorate directed the appellants in November, 1975 to submit a classification list for assessment of foil scrap under Tariff Heading 27(c), which till then was being assessed under Heading 27(a)(i), also under Central Excise orders. The notice of 18th 3uly, 1978 was the result of the public notice of 7-2-1978 and it cannot, therefore, be said that the demand notice of the Superintendent was the discovery of short levy. There was only a change of opinion and indeed a reading of the trade notice confirms this.

8. The trade notice said that the classification of aluminium scrap arising in the process of manufacture of aluminium foils when cleared as such was under consideration. In the second paragraph the notice says it had been decided that aluminium scrap arising out of the manufacture of aluminium foil was assessable as aluminium in crude form. Please note carefully that this decision was not the result of confirmation of an opinion upon discovery of new hitherto unknown facts or technological knowledge. The facts remained the same and the goods remained the same. Only the authorities, after considering this and that, decided that they should now assess the foil scrap as aluminium in crude form.

9. We have already seen that the assessment of the foil scrap under that foil head was the result of deliberation by the Central Excise and that they arrived at this decision after discussion with the factory.

The assessment of the goods that followed was, therefore, correct and this held until the issue of the public notice in February, 1978 and so cannot be said to have been incorrect. If the assessment was not incorrect, there can be no short levy.

10. An incorrect assessment is one we associate with an error. But the "error" was the result of a deliberation in June, 1976 between senior officers of Central Excise and officers of the factory. At the meeting, the tax officers' views prevailed and the goods, aluminium foil scrap, had a change in classiciation, to foil head. But lest you should wonder about the classification till then, I might tell you that that classification was, like the one of the June, 1976 meeting also a reflection of the department's views. This was done in November, 1967 by means of the Assistant Collector advising the factory to pay duty on aluminium scrap at crude rate. And this itself wrought a change from a classification current till then. When they shift so frequently, never allowing a classification to hold undisturbed, I have very great difficulty in seeing and accepting the "short levy" the collectorate says had occurred and for which Rule 10 provides the answer. A short levy results from an incorrect assessment which arises from one of several reasons, all of which can be attributed to human failure. But when the endeavour is only to collect more duty because the former classification is no longer in favour, then it is clear that the search is not for short levied duty, but only for money that the officers would like to add to the duty.

11. But the habitual and frequent turnarounds we have seen in the assessments of the foil scrap totally discredit the claim of short levy. The demand is not of duty short levied, but only of money.

12. or is the amount demanded an amount erroneously refunded; nor is it duty that had not been levied or paid or any duty assessed which had not been paid in full. The amount, therefore, does not qualify for recovery under Rule 10 as'demanded by the Superintendent in his notice dated 18th July, 1978.

13. It is not possible to cast the notice of 1st April, 1978 in any role in this play. It is not a demand notice, because it states neither amount demanded nor period, nor does it ask the notice receiver to show cause as notices of this nature must do. This omission itself invalidates this notice to a notice of no effect, only to be ignored and discarded.

14. The learned counsel for the department made a good point when he read paragraph 19 of the Entremonde Polycoaters decision of this Tribunal. The difference between this case and that one, however, is that in the Entremonde Polycoaters case, a classification list which had been approved had been found to be incorrect, as an exemption had been allowed which the Assistant Collector came to the conclusion was not in order. For this purpose, he issued a demand under Rule 10 and also asked the manufacturers to show cause why the exemption should not be withdrawn. In so doing, he followed all the prescriptions of the law and sought to recover duty which had been short levied by reason of the past assessment.

15. There was none of the quick-changes we see in our present case re: Indian Aluminium. It is easy to see that in the Entremonde case, it was a straight business of an erroneous assessment that the Assistant Collector had to make good, not by just a new classification but by recovering duty that had been levied short by reason of the erroneous assessment.

16. It is not a case of recovering duty short levied here. The assessee should not be at the mercy of every whim that may take the fancy of the assessor. The damage these changes cause cannot be described, but they happen too often. And if one can do something to break the chain, one would feel one has done a little to bring some realism and justice to the system. In the Entremonde Polycoaters demand, the Assistant Collector found that the assessment was mistaken and, therefore, he had to issue a demand, even though he had approved the classification list himself. These incessant changes are unrelieved by any motivations of that kind. It is one arbitrary change after another, and always to the detriment and injury of the assessee. I at least would not be able to support, leave alone confirm, it. 1 hold that this was not a short levy and that, therefore, the department cannot recover duty for the past period. The reassessment can take place only from the date of the trade notice which the learned counsel told would not work to their disadvantage since they have been assessing the goods accordingly since that time.

17. The order-in-appeal makes an odd observation. The Collector Appeals said that the assessees acquiesced in the classification of the scrap under Heading 27(a) with effect from the date of the trade notice since the duty was not paid under protest. This is a most singular enunciation. Is the Collector suggesting that whenever a trade notice is issued, all the people affected should protest? 1 see no acquiescence in their payment of duty at crude rate following the trade notice. If they are aggrieved by the demand, it is only because for periods before 7-2-1978 they would not have any means of recovering it from their customers as manufacturers normally do, because the goods have been sold. From 7-2-1978 the Central Excise served notice on them that duty would have to be paid at crude rate and so they started clearing duty at that rate.

18. The order of the Assistant Collector, however, must fail for another, and more serious reason. 1 will reproduce below the last two paragraphs of his order :- Regarding show cause cum demand for Rs. 11,65,497.03 the issues to be decided by me are as to whether the clarification made by the Collector in the Trade Notice is question can be given retors-pective effect in the circumstances of the facts of the case and whether the above show cause cum demand is within the provisions of the Rule 10 of Central Excise Rules, 1944. It is a fact to be know-ledged that every manufacturer licensed under Central Excise Act and Rules expects that there should be uniformity in assessment of goods manufactured by him and similar ones manufactured by others. It is with this intention that the matters are examined at the higher level and clarifications by way of trade notices are issued from time to time. While giving effect to such Trade notifications one has to adhere to the provisions made in this connection in the Central Excise Act and Rules, 1944. For this purpose the provision has been made in Rule 10 (then in existence) Central Excise Rules, 1944. In the instant case the provisions of Rule 10(1) are correctly applicable irrespective of finalisation of RT-12 returns since the duty has not been paid under protest. The Range Superintendent vide his letter dated 1-4-1978 has asked M/s.

Indal to pay differential duty for all the past period during which Central Excise duty has not been paid at the rate applicable to Tariff Item 27(a)(i) and also has issued the impugned show demand for Rs. 11,65,497.03 covering the period from 1-7-1976 to 6-2-1978.

This demand covering the period from 1-7-1976 to 6-2-1978 is therefore not in order.

In view of the my above findings 1 hereby order for withdrawal of the show cause cum demand dated 11-7-1978 for Rs. 7,057.22.

Regarding the second demand for Rs. 11,65,497.03. 1 order that the Range Superintendent should issue a fresh demand covering differential duty of the period prior to six months of 1-4-1978. The amount of differential duty for the rest of the period of the impugned demand order as time bar under Rule 10(1) of Central Excise Rules, 1944.

You will notice that he says the Range Superintendent in his letter dated 1-4-1978 asked Indian Aluminium to pay differential duty for all the past period during which Central Excise duty had not been paid at the Tariff Heading 27(a)(i) and had issued the impugned demand of Rs. 11,65,497.03 covering the period 1-7-1976 to 6-2-1978. The Assistant Collector then held that this demand covering the period from 1-7-1976 to 6-2-1978 was not in order. This demand was issued not in the notice dated 1-4-1978 but in the notice dated 18-7-1978 which also specified the period of short levy to be 1-7-1976 to 6-2-1978. The notice dated 1-4-1978 did none of these. It is the notice of 18-7-1978 that the Assistant Collector found to be not in order; this demand for Rs. 11,65,497.03 has been destroyed.

19. The Assistant Collector then ordered the Superintendent to issue "a fresh demand covering differential duty of the period prior to six months of 1-4-1978". This the superintendent dutifully does demanding a sum of Rs. 2,42,005.98 by his notice No. C.Ex.R/VII/78/112, dated 24th January, 1981. Since in accordance with the order of the assistant collector, this demand is for the period of six months preceding 1-4-1978, it is time barred and, therefore, is null and void.

20. Nor can the assistant Collector's order validate this notice, because the law requires a demand notice to be issued before the demand is confirmed. This demand has not been confirmed. On the contrary, the Assistant collector first issues a demand, nullifies it, then issues an order directing the Superintendent to issue a demand for a stated period and leaves it unconfirmed. This demand of 24th January, 1981 remains unconfirmed till today. It is, therefore, invalid and no action can be taken under it to recover any money. Besides, as I have already stated, it is time barred and a time barred demand is a dead demand.

So, even if we accept that there was a short levy, this demand cannot ake that loss good.

21. I set aside the demand and prohibit recovery of money under it.

However, the assessment at crude rate from 7-2-1978 after the issue of the public notice is in order and that assessment shall not be altered or disturbed.